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FreightCasts Weekly Recap (5/18-5/24)

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You can find every FreightWaves podcast conveniently in one feed via the free FreightCasts channel on freightwaves.com/podcasts, iTunes, Spotify or wherever podcasts are found. Subscribe to FreightCasts to never miss a FreightWaves podcast.

The full list of FreightWaves media can be streamed via the FreightWavesTV app available for your smartphone, Apple TV, Roku and Fire TV. The app is free on all platforms.

Users of the FreightWavesTV app also have access to a full lineup of FreightWavesTV content, including weekday live streaming, special reports, news segments, past shows, SONAR demos, rapid-fire demos and exclusive interviews.

Coronavirus Freight Market Update

  • Raises, losses and recruitment
    • On the Coronavirus Freight Market Update, Michael Vincent and Kevin Hill talk about the economic impact COVID-19 is having on freight and the transportation industry. They cover the latest news and freight flows, backed by data-driven insights powered by SONAR.
    • This episode features Marilyn Surber, Advisory Team at Tenstreet LLC; Alan Adler, reporter at FreightWaves; and Market Experts Andrew Cox, Zach Strickland and Anthony Smith.
    • This is a live, interactive event. Viewers are encouraged to comment during broadcasts Tuesdays and Thursdays at noon on FreightWaves’ Linkedin and Facebook channels.
  • How COVID-19 is changing Uber’s focus
    • This episode features William Driegert, co-founder and head of operations at Uber Freight; Lori Ann LaRocco, CNBC senior editor of guests, maritime trade columnist for FreightWaves and author of “Trade War Containers Don’t Lie,” as well as Market Experts Andrew Cox, Anthony Smith, and Zach Strickland.

WHAT THE TRUCK?!?

  • Home of the free, because of the brave
    • Dooner and The Dude talk about broker margins coming in weak, Gartner’s Supply Chain Top 25, woeful auto cybersecurity and whether supply chains can cause allergies.
    • This episode features Doug Potvin, chief financial officer, Trinity Logistics; Mark Vickers, CEO of Borderless Coverage; and Ken Sherman, vice president and general manager, IntelliTrans.
    • Good News Bad News features e-scooters, Kohl’s, Target, fugitive smuggling and donkey reunions. 
    • Then we hear from you in Comment Section Rodeo.
  • Comcar and Uber hit where it Hertz
    • Dooner and The Dude talk about Comcar filing for Chapter 11 bankruptcy. Are more carriers in trouble? Why Hertz’s bankruptcy will make the auto industry’s troubles go from bad to worse. Also, Uber cuts thousands of jobs and shuts down its self-driving truck program.
    • This episode features Michael Leto, CEO at Emerge; Laurance Alarado, CEO and co-founder at WARECAP; and John Kingston, editor-at-large, FreightWaves.
    • Plus, a SONAR-powered breakdown of the freight market as we dive deeper into where rates and volumes are headed.
    • And, Emily Szink has this week’s Big and Little Deals concerning freight volumes, new truck drivers, retail shutdowns, 5G hoaxes, video games and more.

FreightWaves LIVE @HOME

Put That Coffee Down

  • Are your freight sales teams ready to return to normal?
    • Dooner and Hill talk about getting back to the day-to-day of sales and how to approach internal and external selling in the new normal. 
    • They’re joined by special guest Trent Broberg, COO at TruckStop.com.
    • Plus, listener feedback, advice and community building!

Freightonomics

  • Our actions today affect our lives tomorrow
    • Anthony and Zach discuss what to make of the recent recovery in volumes and what is happening today that may affect capacity later in the year, as well as recent economic developments.

Great Quarter, Guys

Fuller Speed Ahead

Drilling Deep

  • A broker defends his industry
    • Steve Moss is the general manager of DTS Logistics in Montana. He’s heard the fierce criticism drivers are leveling against the 3PL industry as rates fall, with a great deal of blame being placed at the feet of the brokerage sector.
    • Moss reached out to FreightWaves to spell out his case for why this criticism is unfair, and we speak to him on Drilling Deep about his views of the complaints, based on 20 years in the business.
    • We also look at something that seems incredible: The price of diesel at the pump has been amazingly steady in the midst of an otherwise volatile market. Host John Kingston talks about the role inventories are playing in that stability.

On The Spot

  • Freight markets remain stable
    • Zach Strickland and Kevin Hill discuss what’s been happening in the trucking sector over the past week. They talk about the tightening capacity in Los Angeles and Southern California, consumer spending, and auto sales.

FreightWaves Morning Minute

  • Monday-Friday
    • The fastest minute in freight.
    • The top headlines from FreightWaves.com every weekday morning. Available on FreightWaves.com/podcasts, your favorite podcasts player and Alexa by adding the skill “FreightWaves.”

Source: https://www.freightwaves.com/news/freightcasts-weekly-recap-5-18-5-24

Automotive

Commentary: The power of control

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Note: In the case of Edwards v. Cardinal Trucking, Inc., the U.S. Court of Appeals for the 4th Circuit addressed whether a jury instruction was proper and whether the verdict rendered was against the weight of the evidence. However, the true “heart” of the case centered around the issue of whether Cardinal had the power of control over a co-defendant. This commentary focuses on the power of control and what factors are considered by courts when a party’s status as an independent contractor is challenged.

Jay-Z once said “[t]his is the life I chose, or rather the life that chose me.”[1] At its most basic, the distinction between whether someone is an independent contractor or an employee can be summed up by the same sentiment. An independent contractor chooses “the life,” i.e., day-to-day management of work, billing and collection issues, and the manner and scope of work performed. Conversely, an employee can be said to have been chosen by “the life,” i.e., the employer, who directs the manner and scope of work performed, handles billing and collection, and manages day-to-day issues. In other words, the proper classification often focuses on which party retains the power of control. If companies seek to retain too much control over an independent contractor, then the distinction between an independent contractor and an employee becomes blurred, resulting in similar outcomes as those seen in a recent decision from the U.S. Court of Appeals for the 4th Circuit in Edwards v. Cardinal Transport, Inc., et al, No. 19-1034.

The Edwards case has raised concerns over how the court could have upheld the jury award of $5 million to plaintiff Richard Edwards Jr. when, arguably, defendant Cardinal Transport Inc. should have been protected by an Independent Contractor Agreement between it and co-defendants McElliotts Trucking LLC and Danny McGowan. The decision was based, in part, on the determination by the court that, despite the Independent Contractor Agreement, the jury reasonably could have found that Cardinal retained the power of control over McElliotts and McGowan that resulted in the relationship becoming that of an employer/employee, thereby subjecting Cardinal to vicarious liability for the negligence of McGowan. 

Background

The plaintiff, Edwards, was injured while helping McGowan load metal rods onto one of McGowan’s trucks. One of the rods fell from a forklift that was operated by McGowan, crushing the plaintiff’s foot, ultimately requiring the amputation of the lower portion of his leg.[2] Edwards claimed McGowan was an employee of Cardinal and, as a result, Cardinal was vicariously liable for his injuries. The trial court held that 49 C.F.R. §376.12(c)(1) created a rebuttable presumption that McGowan was an employee of Cardinal, and the jury was instructed as such.[3] Cardinal appealed after the jury found in favor of the plaintiff and awarded him $5 million, claiming that the jury instruction regarding the rebuttable presumption of an employment relationship was in error.

Discussion

In Cunningham v. Herbert J. Thomas Mem’l. Hosp. Ass’n., the West Virginia Supreme Court of Appeals held that the four factors of an employment relationship necessary to prevail on a claim of vicarious liability are: (1) the selection and engagement of the servant; (2) payment of compensation; (3) the power of dismissal; and (4) the power of control.[4] In fact, the court in Cunningham stated that the power of control is the determining factor.[5] Further, in Roberston v. Morris, the West Virginia Supreme Court held that an employment relationship, or master-servant relationship, is established when one party retains the power over the process of the work performed.[6] In the context of transportation, controlling the outcome (i.e., on-time delivery of a shipment) does not establish an employer/employee relationship. However, controlling the process (i.e., day-to-day operations) will give rise to such a relationship.

In Edwards, Cardinal admitted it retained the power of selection, payment of compensation and dismissal over McGowan. Cardinal only disputed that it retained the power of control over McGowan.[7] However, the trial court found that the terms of the Exclusive Freight Sales Agency Agreement and the Independent Contractor Agreement between Cardinal and McGowan “… support a reasonable inference that McGowan was an employee of Cardinal and thus Cardinal could be subject to vicarious liability for the negligence of McGowan.”[8]

For example, the trial court found that the terms of the sales agency agreement incorporated the terms of the Cardinal Agent’s Policy Manual, which, among other things, provided the process for approving and onboarding new customers, that Cardinal controlled the shipping rates that would govern, and that a contract was considered finalized only when Cardinal provided the agent with a final contract.[9] Moreover, the Cardinal Agent’s Policy Manual provided that billing and accounts receivable are handled by Cardinal, and that any money collected by the sales agent is the property of Cardinal unless and until Cardinal sends the agent his or her commission. 

Additionally, the Independent Contractor Agreement required McGowan to only hire drivers who met specifications set by Cardinal, that certain insurance coverages be maintained by McGowan, that McGowan file with Cardinal all log books, physical examination certificates and accident reports, and that all of McGowan’s drivers check in with Cardinal’s dispatch daily to provide updates on shipment progress.[10]

As a result, the lower court found that Cardinal “… had the power to review potential customers and the rates negotiated … provided McGowan with forms … collected shipping fees, paid McGowan his commission, and reminded customers of their outstanding balances.”[11] The net result of all of these factors was that the plaintiff had established a prima facie case of vicarious liability based on Cardinal maintaining the power of control over McGowan, thus giving rise to an employment relationship. On appeal, the 4th Circuit held that, based on the evidence, the jury’s verdict supports a “… finding that Cardinal failed to show that McGowan was an independent contractor.”[12]

Conclusion

As a word of caution, the Edwards decision has two red herrings: (1) whether 49 C.F.R. §376.12(c)(1) creates a rebuttable presumption of an employment relationship; and (2) whether the jury instruction on the aforementioned rebuttable presumption was correct. Assuming, arguendo, that 49 C.F.R. §376.12(c)(1) creates a rebuttable presumption of an employment relationship and that the jury in Edwards was properly instructed, that still means that Cardinal was required to show that it did not maintain the power of control over McGowan. However, as noted above, the two agreements governing the relationship between Cardinal and McGowan, as well as the course of conduct between the parties during the contractual terms, showed that, arguably, Cardinal did maintain the power of control.

It is not enough that a company has a contract that claims one party is an independent contractor. Rather, the conduct of the parties must be such that one party does not exercise the power of control over the other. Remember, a contract simply spells out the course of conduct between two parties; how those parties act under the agreement is just as important as the contractual language itself. In a perfect world we would be able to trust that the terms of the contract would absolutely control how courts determine issues of employment relationships and vicarious liability. However, in the landscape of litigation, you cannot rest on the fact that the language in a contract supports your position; you must prepare as if everything were a rebuttable presumption.


[1] Jay-Z, December 4th, on The Black Album (Rock-A-Fella/Def Jam 2003). [2] Edwards v. McElliotts Trucking, LLC, et al, 268 F. Supp.3d 867 (S.D. W.Va. 2017). [3] Edwards v. Cardinal Transport, Inc., et al, No. 19-1034 (4th Cir. 2020). [4] 737 S.E.2d 270, 277 (W. Va. 2012)(citations and quotations omitted). [5] Id. [6] 546 S.E.2d 770, 773 (W. Va. 2001). [7] Edwards v. Cardinal Transport, Inc., et al, No. 19-1034 (4th Cir. 2020). [8] Edwards v. McElliotts Trucking, LLC, et al, 268 F. Supp.3d 867 (S.D. W.Va. 2017). [9] Id. [10] Id. [11] Id. [12] Edwards v. Cardinal Transport, Inc., et al, No. 19-1034 (4th Cir. 2020). Source: https://s29755.pcdn.co/news/commentary-the-power-of-control

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Automotive

Junkyard Gem: 1973 Chevrolet Vega with V8 Swap

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The Chevrolet Vega plot follows a trajectory very similar to that of some other 1960s-1980s GM machines that seemed like serious engineering breakthroughs at first but then caused many headaches for the company, e.g., the Chevrolet Corvair, Chevrolet Citation, and Pontiac Fiero. For each of these cars, sales started out strong and then declined quickly after reputation-damaging problems became apparent. In the case of the Vega, though, fast depreciation and a rear-wheel-drive platform meant that GM’s innovative subcompact made a great recipient for the dime-a-dozen Chevrolet small-block V8 engine. For decades, V8 Vegas could be found all over American roads and screaming down American dragstrips; you’ll still find some at the strip these days, but the street version has all but disappeared. Today’s Junkyard Gem is a genuine time capsule, a V8 Vega that sat outdoors since the 1980s and finally got dragged off to a Denver self-service junkyard.

The Vega never came with a V8 engine from the factory (all Vegas had 2.3- or 2.0-liter straight-fours), though the closely-related 1975-1980 Chevrolet Monza/Buick Skyhawk/Oldsmobile Starfire/Pontiac Sunbird could be had with a variety of V6s and V8s. Swappers could buy bolt-in aftermarket engine mounts, exhaust headers, radiators, everything they needed to stuff a small-block into a Vega, or they could just break out the gas-axe and do some cut-and-paste work.

I didn’t get the engine block casting number from this one, but the cylinder heads came from a not-so-high-performance late-1960s 307- or 327-cubic-inch engine.

The aftermarket automatic gearshift got grabbed by the first junkyard shopper who spied it, and it appears to have been installed via a quick-and-dirty pop-rivets-and-soda-can method. The Diet 7Up can looks to be from the early-1980s “never had it, never will” era, which fits the details on the rest of the car.

Milodon has been selling V8 Vega swap oil pans for many years. I’m surprised that nobody has bought this one from the junkyard, not to mention the exhaust headers. Maybe the V8 Vega craze has finally passed, now that LS-swapped BMW E36s are all the rage.

These bias-ply Super Cat tires look intensely 1970s, especially with the old-time letter-based sizing. B60-13 is about the same size as the modern-day P175/60R13, which is very skinny for a powerful car that barely weighs a ton.

Always insist on genuine Super Cats!

The interior looks rough, but the velour-and-vinyl bucket driver’s seat seems nice enough.

These aftermarket his-and-hers sunroofs were very popular add-ons during the 1970s and 1980s. Sure, they leaked, but so stylish!

Some sort of decklid spoiler once lived here.

I still find the occasional Vega as I prowl junkyards these days, but this is the first V8-swapped one I’ve seen in at least 15 years.

Related Video:

Source: https://www.autoblog.com/2020/07/05/junkyard-gem-1973-chevrolet-v8-vega/

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Automotive

Trump signs PPP extension, program lives until August 8

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The Paycheck Protection Program has life until August 8.

Late on Saturday, July 4, President Donald Trump signed an extension of the Paycheck Protection Program (PPP) into law, according to the White House. The signing comes after both the Senate and then the House passed an extension of PPP via unanimous consent votes.

When the program’s authorization ended on June 30, the PPP had disbursed $520.6 billion to about 4.85 million recipients. The average size of the loan through June 30 was $107,199. The number of lenders who participated in the program was 5,459.

In the first report of the amount that was loaned, released April 16, the average size of the loan was $206,000, showing how smaller borrowers increasingly made up the base of borrowers as the program progressed.

But the $520.6 billion didn’t account for the entire authorized amount of roughly $659 billion, though the first tranche of money, $349 billion, was exhausted after about two weeks in early April. Congress then passed the additional funding to take up authorization to $659 billion, but that additional amount was not disbursed. 

That means the extension will make available another roughly $140 billion for borrowers. There is no new funding in the extension, just a continuation of what hasn’t been claimed.  

Todd Amen, the president and CEO of ATBS, which has helped many truckers through the PPP process, said it was likely that the process for obtaining the loans may have kept some truckers from applying. The rules changed frequently, enough that the Small Business Administration, which administers PPP, kept putting out clarifications and updates almost weekly.

“They kept hearing the money was going to run out, so why bother?” Amen said in an email to FreightWaves. “They are procrastinators. They didn’t have their paperwork together and couldn’t get their accountants to do their 2019 tax return because they were closed or too busy.” Tax returns from 2019 are necessary to meet some of the requirements of PPP.

There has been a school of thought that the PPP kept alive some trucking companies that might otherwise have gone out of business. When the money runs out – and PPP money can now be used to cover certain expenses for up to 24 weeks, up from an original eight weeks – the view of those espousing that theory assumed a lot of them would go out of business and tighten trucking capacity.

Amen agreed with only part of that. The PPP funds did help keep some companies alive, he said in his email, “but now they are working hard to make it in the new normal business environment,” he said. “So I don’t expect a bunch of PPP zombies to disappear in the next 90 days. Banks will work with folks on payments or extensions, because they don’t want assets back in this environment.”

The next big shoe to drop in the PPP “watch” is the list of companies that have received the loans. Treasury Secretary Steve Mnuchin announced more than two weeks ago that the identity of borrowers that received loans of more than $150,000 would be disclosed. No date for that information to be released has been announced.

The majority of the money loaned under PPP is in loans that exceeded $150,000. The loans that are less than $150,000 accounted for approximately 86% of the total outright number of loans, but only a little more than a quarter of the money loaned.

PPP loans are eligible for full forgiveness if several criteria are met, most notably that 60% of funds needed to be used to keep employees on the payroll. That figure had been reduced from 75%, allowing more of its funds to be directed toward other expenses.

More articles by John Kingston

Senate vote would give PPP six more weeks

SBA to release data on who got PPP loans

PPP debuts easy form for program that remains complicated for some

Source: https://www.freightwaves.com/news/trump-signs-ppp-extension-program-lives-until-august-8

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