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Brokers Held Liable

Interesting read I thought.

Link to Article

Quote:

A March 19 verdict in an Illinois court has put domestic truck brokers in the unprecedented and potentially costly position of assuming liability for the actions of motor carriers t hey contract with to move customers' freight.

A circuit court jury in Will County, Ill., found C.H. Robinson Worldwide, one of the nation's largest brokers, liable in a fatal 2004 collision involving Utah-based Toad L. Dragonfly Express, which Robinson hired to haul a load of potatoes. Two people were killed and another seriously injured in the accident. The driver was reported to have been driving on a suspended license with falsified logbooks. The trucker eventually went out of business. Robinson was named as a defendant based on legal doctrine that makes an employer "vicariously liable" for an employee's actions when they occur within the scope of employment. Robinson argued that it only booked the load with Dragonfly and that the driver was an independent contractor, not a Robinson employee. However, the jury determined that the trucker was considered part of the brokerage company instead of an independent carrier, and that Robinson was liable as an employer. Robinson itself was not accused of negligence or any unsafe actions.

Robinson officials declined to be interviewed for the story, citing pending litigation. In a statement, Angie Freeman, a Robinson vice president, said the company would appeal the verdict.

Continues below

Unwanted exposure
If upheld on appeal, the verdict may open up a new and troublesome legal frontier for brokers and intermediaries across all transport modes. Historically, brokers have not been held liable for accidents caused by a carrier they hire. Rather, the carrier and insurance company assumed all accident-related liability for bodily injury, property damage, and loss and damage to freight.

Even so, said an article in the April 2009 issue of TransDigest, published by the Transportation & Logistics Council Inc., the Illinois case "clearly demonstrates that a third-party logistics provider can have significant liability for the acts of motor carriers that [it] hires." And the liability could run into the millions of dollars. Jon A. Langenfeld, transportation analyst for the Milwaukee-based investment firm Robert W. Baird, says Robinson maintains a $5 million deductible on its liability coverage, the amount it could be liable for if the verdict is upheld.

Langenfeld says that although plaintiffs' lawyers would be more likely to pursue deep-pocketed brokers like Robinson for monetary damages, smaller brokers would actually be hurt the most should the Illinois verdict become precedent. Langenfeld contends insurers would be compelled to raise premiums and to limit access to adequate liability coverage, actions that would add significant costs to already thinly capitalized third parties.

Ann Christopher, vice president and general counsel for Kenco, a third-party logistics company, told attendees at the recent Warehousing Education and Research Council annual meeting that the verdict could have "dramatic implications" for brokers and third parties. In the future, she said, brokers will need to be more careful in conducting due diligence on a carrier's safety record before engaging that carrier.

Christopher also warned that the case is a shot across the bow for the entire industry. Transportation, she said, "is the next cash cow that tort attorneys will go after."

Could this lead to better rates due to brokers watching the safety rating of the carriers it chooses to do business with, thereby weeding out the fly by nighters (less truck capacity) OR just higher insurance rates for everyone? Probably just higher premiums. :roll3:

What do you guys think?

I think it will get overturned on appeal. The broker is not the carrier, and simply subcontracted the work to the carrier. They had no control over how the carrier did the job at any point.

This ruling was more a product of Illinois' specific laws regarding the contractor-subcontractor relationship and the related liabilities. I wouldn't look for much impact to come from it...other than more verbiage in broker/carrier agreements.

I see it more of a cash cow that lawyers are going after,than the needed justice.This will impact not just the parties involved,but even the whole industry,where "smart"lawyers will know were to milk to cow. Kind of sad, i would say!

Quote:

Originally Posted by RostyC (Post 458801)

Interesting read I thought.

Link to Article

Could this lead to better rates due to brokers watching the safety rating of the carriers it chooses to do business with, thereby weeding out the fly by nighters (less truck capacity) OR just higher insurance rates for everyone? Probably just higher premiums. :roll3:

What do you guys think?

Have to keep a larger percentage now to cover possible costs.:)
This case was a punitive damage's award for the negligent "hiring" of the carrier. They used a sub-standard rated carrier. No different than a carrier leasing on an O/O that has multiple accidents/tickets.

This is BS...

CH Robinson cannot be liable and as much as I would love to see them pay for all of those lies that i have been told over the years when i was pulling their loads in a van, they are right in this scenario...

Just the fact that they got sued tells a little story about our legal system...

Lawyers will usually go after the deep pockets, regardless of responsibility. Their hope is to get a jury to be sympathetic to the plaintiff or for the defendent to settle. In either case the lawyer gets his piece of flesh. There are those who want a free ride. They want to blame someone and if they can't get the one they feel is actually responsible then they go after the one who has the money. In this case it was CH Robinson. Frankly, I am surprised that any judge or jury would find in favor or the plaintiff in this case. If brokers had to eliminate any carrier with a poor safe stat record then they would have to eliminate many of the largest carriers in this nation.

All "employers" are responsible for the actions/in-actions of their employees and/or agents. The fact they have "deep pockets" just enhances their chance of collecting. If it was a small broker with no assets or additional insurance why bother.
No different than a building that a general contractor "hires" a sub-contractor who does inferior work and the building collapses. The general will be sued also.
There is a difference between the safestat score and a rating. Many carriers have no rating(a new entrant audit does not give a rating) In this case they had a sub-standard rating. Thus the negligent hiring practice award.

This isn't CHR's first dance in court.

Schramm v. Foster:

Schramm v Foster

Jones v. D'Souza

Jones v. D'Souza

CHR has a pattern of doing this. They will contract any swinging d**k with authority and an insurance certificate. Sad.

In the first case the safe-stat score was below the "deficient" level but had no rating. The authority had also been voluntarily revoked and re-instated.
In the second case the rating was conditional.
Both cases opened up the possibilty of negligence.
Any broker that uses a carrier that has had the authority revoked,whether voluntary or in-voluntary,bad safe-stat,no rating or bad rating could be held liable.
Many independents have no rating or have had authority revoked"either way" which would knock them out of the ability to take loads if all brokers adhered to such a policy.
You're in business and take chances. Sometimes it doesn't work out.
Not defending CH but the percentage of negligence to the total amount of loads is not even measurable.