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When has a Shipment Been Brokered?
By John Anderson
 | | John Anders |
A broker asks: What determines when a shipment has been brokered? If we tender the shipment to one carrier, who does not have brokerage authority, but they give the shipment to another carrier, is it brokered? How do owner-operators fit into this, and whose authority and insurance is the carrier running under?
Response: A broker is "a person, other than a motor carrier or employee or agent of a motor carrier ... that ... sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation. 49 USC 13102(2).
Further, "motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers ... when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport." 49 CFR 371.2(a).
Unfortunately, it is common to say that a shipment was "brokered" anytime a motor carrier arranges for another motor carrier to transport a shipment. That is incorrect. By definition, a motor carrier is not a broker once it accepts and legally binds itself to transport a shipment. If the first motor carrier arranges for a second motor carrier to transport the shipment, it is "subcontracting," not "brokering."
On the other hand, a non-asset based broker holding broker authority only "brokers" a shipment when it arranges for a motor carrier to transport a shipment or for another broker to arrange for the transportation (a co-broker situation).
Once a motor carrier accepts a shipment it is authorized to transport, it remains a motor carrier with respect to the shipment even if it hires (subcontracts) a second motor carrier to actually transport the shipment. This is the case even if the first motor carrier also holds broker authority. Only in the unlikely situation that the first motor carrier makes it expressly clear to the shipper that it accepts the shipment under its broker and not its motor carrier authority can the first motor carrier argue that it was acting as a broker. However, motor carriers seldom, if ever, make this distinction.
If a motor carrier uses owner-operators, the answer depends on whether the owner-operator is leased to the motor carrier or operates as an independent motor carrier. When the owner-operator is leased to the motor carrier, the owner-operator's equipment is treated as the motor carrier's equipment, and service must be provided under the motor carrier's own name, authority, USDOT number and insurance. If there is no lease, then the owner-operator must operate under its own name, authority, USDOT number and insurance and, in this situation, the owner-operator is a motor carrier operating as a subcontractor for the first motor carrier.
Brokers need to have written Broker-Carrier Contracts that not only prohibit the motor carrier from "brokering" shipments, but also prohibit the motor carrier from subcontracting or otherwise delegating to another the motor carrier's obligation to actually transport shipments.
The Broker-Carrier Contract also should require the motor carrier to transport every shipment with equipment registered/licensed by it, identified with its own name and USDOT number, operated under its own authority, and insured under its own insurance policy; and the motor carrier should be obligated to indemnify and hold harmless the broker from and against any and all losses or damages resulting from its failure to do so.
John Anderson - Email John |
2011 Estate Tax Changes
By Andrew Schlegel
 | | Andrew Schlegel |
Since our last Estate Tax update in September, major changes to the Estate and Gift Tax laws of our nation have been implemented. In December's "lame duck" session, Congress and the President acted to prevent the Estate Tax exemption from dropping to $1 million. Highlights of this legislation include: - An increase in the Federal Estate Tax exemption to $5 million per person (up from $3.5 million in 2009);
- The introduction of "portability" of the Estate Tax exemption between spouses;
- Reunification of the Estate and Gift Tax exemptions, meaning that a person can take full advantage of the exemption before death; and
- Lowering of the maximum Federal Estate Tax rate to 35%.
However, while these changes are beneficial for the estates of business owners, there are still planning issues to be dealt with. First, Oregon's Inheritance Tax exemption remains in place at $1 million, with no portability provision (although legislation has been introduced to raise the exemption to $1.5 million). Additionally, Congress did not implement any permanent changes. The changes enacted by Congress will be in effect for the next two years only. After that, new legislation will need to be passed, or else we again will face a drop to a federal $1 million exemption and a maximum Federal Estate Tax rate of 55%.Additionally the spousal portability provisions will expire on that date, January 1, 2013. This is just a brief synopsis of the changes that have been implemented. If you have any questions regarding how this may affect your estate plan, feel free to Terry Yamada or myself.
Andrew Schlegel - Email Andy
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Criminal Defense Representation
By Kevin Anderson
 | | Kevin Anderson |
While many of you know that I focus on transportation and related matters for our clients, you may not know that I also represent clients in criminal matters.
My legal background has focused on both transportation and criminal defense. While at the University of Denver Sturm College of Law, I interned for two years with the Colorado Public Defender's Office. There I was certified to appear in court as a law student and was entrusted with handling all misdemeanor criminal cases brought in Gilpin County, Colorado. I have continued to pursue criminal defense matters at Anderson and Yamada, P.C. and look forward to expanding this practice area for our clients.
I welcome referrals in the following types of criminal matters:
- Drunk Driving (DUII)
- Drug Charges
- Assault
- Domestic Abuse
- Theft and Fraud
- Probation Violations
- Expungements
- Juvenile Crimes
- Weapons Charges
Kevin Anderson - Email Kevin
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The information presented in this communication should not be construed to
be formal legal advice
nor the formation of a lawyer/client relationship.
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