1. State the issue in this case.

2. Can one trucking company engage in both common and contract carriage? What distinguishes a common motor carrier from a contract motor carrier?

3. Did the ICCTA abolish the distinction between the two types of carrier?

M. Fortunoff of Westbury operates a chain of department stores in New York and New Jersey. In March 1997, the company entered into a contract with Frederickson Motor Express, whereby the carrier agreed “as contract carrier and independent contractor … to transfer shipments … as authorized in Carrier’s contract carrier permit … issued by the ICC.” The contract further provided: “Although carrier is authorized to operate … as a common carrier, each and every shipment tendered to carrier by shipper … shall be deemed to be a tender to carrier as a motor contract carrier….” Fortunoff’s goods were damaged in transit, prompting it to make a claim against Frederickson. When the carrier went out of business, Fortunoff asserted the same claim against the carrier’s insurer, Peerless Insurance Co., for $13,249.42 under the BMC-32 indorsement (the mandatory attachment to all common carrier insurance policies), which was part of Frederickson’s insurance policy. From a judgment for Fortunoff, on the ground that the ICCTA mandated the extension of BMC-32 indorsements to all motor carriers, Peerless appealed.

JUDICIAL OPINION

CARD AM ONE, C. J.… [The] question is whether 49 U.S.C. § 13906(a)(3) (2000) (amended 2005), enacted as part of the Interstate Commerce Commission Termination Act of 1995 (ICCTA or Termination Act), to replace the Motor Carrier Act’s insurance provisions, allowed the Federal Motor Carrier Safety Administration (agency or FMCSA)—the successor agency to the Interstate Commerce Commission (ICC) in this area of regulation—to continue to distinguish between types of motor carriage when requiring cargo liability insurance.…

Although Congress’ aim was to eliminate the separate registration requirements for common and contract carriers, we do not believe that fact is dispositive in this case. Rather, what is most important is the method by which Congress saw fit to implement the Termination Act. With respect to insurance, Congress left it to the Secretary of Transportation’s discretion to require cargo liability insurance. As we have stated, § 13906(a)(3) replaced former § 10927(a)(3) and gave the Secretary discretion over whether “a registered motor carrier,” including carriers once classified as common or contract, must insure cargo.…