10/24/2018 LOOKOUT: DRONE DELIVERY PRESENTERS 49 U.S.C Point Counterpoint.

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1 LOOKOUT: DRONE DELIVERY Point Counterpoint. Does, can or should the Carmack Amendment to the Interstate Commerce Act apply to or govern delivery via drone in the 21 st Century? PRESENTERS Thomas C. Martin, Esq., Partner, Price Meese Shulman & D Arminio, P.C. New York and New Jersey Marshal M. Pitchford, Esq. Partner, DiCaudo, Pitchford & Yoder, Esqs. Ohio 49 U.S.C (a) General Liability. (1)Motor carriers and freight forwarders. Applies to a carrier providing transportation... subject to... subchapter I or III of chapter Shall issue a receipt of bill of lading. Liable to the person entitled to recover under the receipt or bill of lading. actual loss or injury to the property 1

2 caused by the initial carrier, the delivering carrier or another hired carrier Used to be called convenience interlining MAP 21 did away with convenience interlining Key Points Is a drone a Carrier providing service? Is it subject to jurisdiction under subchapter I or III of chapter 135? Subchapter I of Chapter 135 The Secretary and the Board have jurisdiction, as specified in this part, over transportation by motor carrier and the procurement of that transportation, to the extent that passengers, property, or both, are transported by motor carrier in interstate commerce 2

3 Subchapter III of Chapter 135 (b)exemption of Certain Air Carrier Service. Neither the Secretary nor the Board has jurisdiction under subsection (a) of this section over service undertaken by a freight forwarder using transportation of an air carrier subject to part A of subtitle VII of this title. FAA or DOT or STB which one governs? Is a drone an Air Carrier According to the U.S. Department of Transportation Air transportation service requires two separate authorizations from the Department of Transportation Economic Authority from the Office of the Secretary of Transportation i.e., a certificate for interstate passenger and/or cargo authority Safety Authority through an Air Carrier Certificate and Operations Specifications from the FAA. Montreal Protocol / Montreal Convention Special Drawing Rights. accident embarking or disembarking Period of limitations Venue provisions Carrier s (i.e., the drone) place of business or place of incorporation 3

4 Labor Issues TEAMSTERS TELL UPS: NO DELIVERY DRONES OR DRIVERLESS TRUCKS. Wall Street Journal, Thursday, January 25, st Century FAA Modernization and Reform Act of 2012, Pub. L. No , 126 Stat. 11 (2012). Class G Airspace 500 feet to 1,200 feet Below 500 feet is generally considered to be unregulated. The FAA Recently changed the airspace rule Manned and unmanned aircraft are regulated by FAA Game of Drones: The Uses and Potential Abuses of Unmanned Aerial Vehicles in the U.S. and Abroad: ARTICLE: THE RISE OF THE DRONES --- THE NEED FOR COMPREHENSIVE FEDERAL REGULATION OF ROBOT AIRCRAFT, 8 Alb. Gov't L. Rev. 63 (2015) (Takahashi). 4

5 The FAA Modernization and Reform Act of 2012 The FAA is directed to integrate "civil unmanned aircraft systems into the national airspace system. Allows select users to operate drones in the public airspace without going through the traditional airworthiness certification process. Issue "certificates of waiver" or "certificates of authorization" In lieu of traditional airworthiness certificates. The FAA Modernization and Reform Act of 2012 Provides specific details how a "certificate of waiver" or "certificate of authorization" works. Different from government certifying aircraft designs. FAA DRONE OPERATIONS FAA allows drones to operate: (1) by a governmental entity (local, state or federal) as a "public aircraft" with an FAA issued Certificate of Waiver; (2) a private entity (person or corporation) may operate a drone as a "civil aircraft" with a Special Airworthiness Certificate; or (3) an entity (government, person or private corporation) may be allowed to fly in restricted airspace with the express permission of the FAA or the Military. In addition, persons may fly a "model aircraft" for private, noncommercial use at low altitudes, within line-of-sight of the operator. 5

6 Challenges to Operations The FAA notes some "limited carriage of property" by small drone are authorized. Any such operations have to be in compliance with the use of a trained remote pilot and line-of-sight operation. The FAA considers these restrictions to be so great that the FAA does not consider "the limited transport of property for compensation... to constitute 'interstate air transportation.'" 81 Fed. Reg. at 42,074 at 42,077. Electronic Privacy Information Center v. Federal Aviation Administration, 892 F.3d 1249 (D.C. Cir. 2018). Aguirre v. Genesis Logistics, 2012 U.S. Dist. LEXIS (C.D. Cal. 2012) Are drone like motor carrier routes exempt from FAAAA preemption Reinhardt v. Gemini Motor Transport, 869 F. Supp. 2d 1158 (E.D. Cal. 2012) Trespassers will be shot on sight The United States Supreme Court has held shooting ordinance across the land of an adjoining owner constitutes a trespass. Peabody v. United States, 231 U.S. 530 (1913) A trespass occurs when someone "drives an airplane through the air, over the land of another, sufficiently low to invade that space which the owner of the soil may effectively possess. Swetland v. Curtiss Airports Corp., 41 F.2d 929, 934 (N.D. Ohio 1930)(emphasis added). 6

7 Carrier or Drone Liability to Third-Parties Trespass Invasion of Privacy Nuisance Negligent Brokering? Local Government Drone Free Zone. Federal Preemption Ouch! This case involves an incident that occurred on May 25, 2016 at Circleville Park in State College, Pennsylvania. Appellant, his wife and co-worker, were playing frisbee golf at the park on that date. Victim was also at the park, test-flying a new drone he had recently purchased. Apparently believing Victim had been sexually assaulting Wife by following her through the park with the drone, Appellant approached and confronted Victim, physically assaulting him. The group pursued Victim through the park as he tried to escape the assault. It was not until the arrival and intervention of a third party good Samaritan that victim was able to escape to his vehicle. The police were called to the scene and interviewed all participants. Victim suffered physical injuries as a result of the incident and his drone was destroyed. Commonwealth v. Stanton, 2018 Pa. Super. Unpub. LEXIS 3482, 2018 WL (Pa. Sup. Ct. 2018). Who is Liable Fact Patterns Bill of Lading does not mention drone delivery. Shipper would have objected to drone delivery had it known. Destination in Bill of Lading is carrier s distribution hub. Final delivery is accomplished by drone equipped van. Where does carrier s responsibility end? 7

8 When is Delivery Complete Depending on Tariff or Contract Terms: Relinquish Control over the freight at destination in the Bill of Lading. Constructive Delivery by placing the freight at the disposal of the consignee. Drone drop at the front door. New Scenario Shipper/Carrier Contract says no drone delivery for freight over a certain value. Broker arranges for carriage via motor carrier. No declared value on the Bill of Lading. Carrier has no drones but contracts with a drone company. Drone company is not a carrier. Holds itself out as providing innovative solutions for faster and safer inspections, deliveries and photography. Damage at the Door The freight (a small, lightweight electronic item) arrives at the door of the consignee damaged. No one is present to see the drone deliver the freight. 8

9 Retail Drone Retain outlet store uses drones, vans and in some cases company office personnel to delivery goods purchased in store on line. Damage ensues. Issues Raised Does Carmack even apply? What about Montreal Protocols? Does the Retail Outlet qualify as a carrier requiring Federal carrier authority. Tariff / Bill of Lading Can or should the traditional transportation documents (Tariff and Bill of Lading) incorporate new language covering liability for cargo loss, damage and/or delay via drone. Should it address driverless vehicles as well. Automated Pick & Pack warehouses and warehouse receipt. 9

10 Limitation of Liability Can or should there by a revised scale limitation of liability for drone delivery? Do current Tariff / Bill of Lading terms and conditions address liability and damages? Can or should Shipper/Carrier Contracts be amended to address or include drone deliveries? Claims to be Made / Potential Causes of Action Shipper s Claims Breach of Contract Carmack Amendment Montreal Protocol Negligent selection of a drone company as a carrier Breach of Bailment Conversion Common Law If not Carmack, is there negligence/bailment/conversion of the carrier Can the amount of the damages be capped under the Tariff or Bill of Lading 10

11 Liability to Third-Parties Negligence Trespass Nuisance Invasion of Privacy Bodily injury Other considerations Does the drone affect CSA Scores Does the drone have its own CSA Score Safety Inspections Operator licensing and testing Defective product Freight is dropped GPS is wrong Software is sub par Hacking Vendor Drone Operator Consideration of Contract terms between traditional motor carrier and a third party drone operator. Liability. Defense, Indemnity and Hold Harmless. 11

12 Conclusion Brutality and injustice made us raise our hands towards the sky for years; God didn t respond us, but drones came to our rescue. M.F. Moonzajer 12