The Data Cloud with a Silver Lining (Part One)

This year, the Federal Motor Carrier Safety Administration (“FMCSA”) is expected to finalize rules requiring regulated motor carriers to use Electronic Logging Devices (“ELDs”) by 2017.  However, ELDs, which help ensure the accuracy of drivers’ Hours of Service (“HOS”) logs by monitoring their tractors’ engines, are only the tip of a much larger technological iceberg.  A host of new fleet management and safety systems, referred to as telematics, are poised to change the way carriers assess and handle risk.  As the experiences of early adopters have already shown, this technology has pros and cons.  A good understanding of both is essential to successfully navigate the evolving regulatory and legal landscapes.  This article presents an overview of current and emerging telematics systems and their attendant risks. Next week I’ll address the benefits they offer when properly implemented.

What Are Telematics?

“Telematics” was coined by two advisers to the French government, Simon Nora and Alain Minc, in a 1978 report titled “L’Informatisation de la Société” (“The Computerization of Society”).  It refers to the related fields of telecommunications and informatics, and, in its broadest sense, encompasses any combination of the two—including the internet itself.  However, the term is most commonly used to describe devices that gather data about motor vehicles, then transmit that data through cellular networks to the cloud for storage and/or analysis.  Information that can be collected in this manner includes:

• Electronic Control Module (“ECM”) data: ECMs are standard equipment in modern tractors.  Though the modules vary from manufacturer to manufacturer, their essential function is to track and control the tractor’s critical systems, like engine, steering, and brakes.  They receive continuous streams of information about the vehicle’s throttle position, engine RPMs, speed, cruise control settings, anti-lock brakes, and other variables.  Most ECMs are designed to preserve a snapshot of this data in the event of a “hard brake” (generally defined as a deceleration of seven miles per hour more in one second).  Telematics allow the data to be continuously transmitted and preserved, either at fixed intervals or when certain conditions are met.

• GPS: for more than a decade, drivers have used GPS to locate destinations and plan routes.  Though telematics, carriers can use this same technology to track their tractors, trailers, and cargo.  Positioning information can also be overlaid on top of data from other devices, like ECMs and ELDs to pinpoint the location of a tractor when a given event occurs.  It is anticipated that the FMCSA’s forthcoming specifications will require ELD equipment to capture GPS position as another means of verifying drivers’ reported HOS.

• Optical systems: in-vehicle cameras are growing increasingly popular for both private and commercial vehicles.  These devices come in a wide variety of designs: some face outward and others inward; some are intended to capture the run-up to collisions, while others monitor drivers for signs of drowsiness or watch for lane excursions.  Video files’ relatively large size has long limited the feasibility of transmitting them wirelessly, but the development of affordable and widespread 3G and 4G cellular networks is making it increasingly feasible for carriers to collect video from their fleets in near real time.  In turn, this is expanding the role of in-vehicle cameras beyond documenting accidents to preventing them by helping carriers spot fatigued or unsafe drivers.

Potential Risks

The wealth of new data available to carriers through telematics comes with a number of new risks and downsides.  Some of the most significant of are discussed below.

Privacy Concerns

Some drivers fear that carriers’ growing ability to monitor their location and duty status will lead to harassment.  In fact, a 2011 attempt by the FMCSA to mandate ELDs for certain carriers deemed high-risk was struck down by the Seventh Circuit Court of Appeals on these grounds.[i]  Potentially harassing activities include: interruption during off-duty time; asking the driver to work when they feel tired; and pressuring drivers to falsify their logs in order to work longer or delay a break.  It may be that these concerns are overblown, with a recent survey of truck driver showing that only 2% of ELD users reporting resulting harassment.  Nonetheless, it is anticipated that the FMSCA’s new ELD rules will contain provisions designed to address the issue, such as: ensuring that telematics data resides with drivers and carriers rather than government agencies; requiring that drivers be given access to their own records; instituting a procedure for driver complaints; and stiffening penalties for the unlawful use of ELD technology.  In an early sign that that these safeguards may be viewed as insufficient, the Owner Operator Independent Driver Association, a plaintiff in the challenge to the 2011 ELD mandate, has expressed renewed opposition to the FMCSA’s proposals.[ii]

Increased Record Retention Costs and Potential Claims of Spoliation

Federal regulations require motor carriers to maintain HOS logs and “all supporting documents” for a period of six months.   A 2008 memorandum issued by the FMCSA makes it clear that this requirement encompasses “records from GPS and other advanced information technology systems.”  Carriers that do not comply with this requirement can be fined and have and/or have their operating authorities suspended.  Additionally, the vast majority of jurisdictions recognize a duty to preserve relevant evidence upon notice that a claim has been or is likely to be made.  In the event of an accident, failing to preserve telematics information can subject a carrier to severe sanctions, including jury instructions that the missing evidence be presumed damaging.  These risks make it imperative for carriers to preserve the telematics data they collect for at least six months, and possibly longer if a loss occurs.  As the volume of collected data grows, so too does the expense of storing it.  Increasingly, carriers are turning to third-party Software as a Service (“SaaS”) providers like Telogis, Oracle TMS, Omnitracs, and PeopleNet, which offer one-stop solutions for cloud-based storage and analysis of telematics.  The cost for a large fleet can be substantial, with the FMSCA estimating that compliance with even a basic EDL mandate could cost between $165 and $832 per truck annually.

Exposure to Punitive Damages

Advance knowledge that a driver is fatigued, falsifying HOS logs, or otherwise unfit can expose a carrier to a claim for punitive damages if the driver is subsequently involved in an accident.[iii]  Personal injury lawyers are beginning to recognize telematics data as a potentially useful tool for showing a pattern of negligence or recklessness of which the carrier was or should have been aware.  More such arguments should be expected as telematics data becomes more widely available.  On the other hand, increased monitoring of drivers and equipment, if combined with appropriate remedial action, can help combat another grounds for awarding punitive damages: failure to supervise.[iv]

Next week, a look at the benefits of telematics for motor carriers.