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Brokers Held Liable
Interesting read I thought.
Link to Article 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." 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.
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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.
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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!
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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? 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.
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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. |
It should not make any difference whether a carrier has had their authority revoked or not as far as the broker or any other third party having liability. The only reason they went after CHR is that they had no chance of collecting from the carrier and they felt that they could find a sympathetic jury. Apparently they were correct. Personally, I think juries should be given an IQ test before they are allowed to sit on ANY jury. Often the law doesn't have anything to do in a civil judgment. If the plaintiff's attorney's can make the jury sympathetic to their client then they have a good chance of getting a judgment. It doesn't matter whether it is right or wrong. Lawyers want a jury to feel sorry for their client. They want them to punish the defendent for the wrongs the one actually responsible. Basically, they want something for nothing. I feel sorry for those who had loved ones who were hurt, but it doesn't do any good to extort money from someone or company that had nothing to do with this incident. All they did was book a load of freight. At the time the carrier had authority and insurance. That is all that should matter when a broker books a load. He should not have to worry about being sued in court if the carrier has an accident. If this isn't over turned on appeal it will open a huge can of worms.
The fmcsa no longer publishes the actual amount of liability insurance for carriers, only the minimum requirement is listed. The reason is that lawyers and those who were involved in any sort of accident with a carrier would check to see how much insurance the carrier had and that is what they sued for. Again, they go after the deep pockets. |
CH Robinson has a clause in their contract deeming the carrier responsible for any accidents or violations.
I agree,since the fly-by-night trucker went out of business the only party with deep pockets is the 3rd party,which is Ch Robberson. The lawsuit is B.S. |
Originally Posted by GMAN
(Post 459433)
It should not make any difference whether a carrier has had their authority revoked or not as far as the broker or any other third party having liability. The only reason they went after CHR is that they had no chance of collecting from the carrier and they felt that they could find a sympathetic jury. Apparently they were correct. Personally, I think juries should be given an IQ test before they are allowed to sit on ANY jury. Often the law doesn't have anything to do in a civil judgment. If the plaintiff's attorney's can make the jury sympathetic to their client then they have a good chance of getting a judgment. It doesn't matter whether it is right or wrong. Lawyers want a jury to feel sorry for their client. They want them to punish the defendent for the wrongs the one actually responsible. Basically, they want something for nothing. I feel sorry for those who had loved ones who were hurt, but it doesn't do any good to extort money from someone or company that had nothing to do with this incident. All they did was book a load of freight. At the time the carrier had authority and insurance. That is all that should matter when a broker books a load. He should not have to worry about being sued in court if the carrier has an accident. If this isn't over turned on appeal it will open a huge can of worms.
If you look at the BOL's in these three cases with CH,you can see that they are the carrier of record. That and the "negligent"hiring makes them liable also. This is far from the first case of this,the only thing that draws the attention is the dollar amount. |
Originally Posted by chris1
(Post 459503)
Revocation of a carriers "license" is no different than the revocation of a drivers license. The use of either can open yourself to negligence.
If you look at the BOL's in these three cases with CH,you can see that they are the carrier of record. That and the "negligent"hiring makes them liable also. This is far from the first case of this,the only thing that draws the attention is the dollar amount. :thumbsup::thumbsup::thumbsup: I agree with Chris. |
Originally Posted by chris1
(Post 459503)
Revocation of a carriers "license" is no different than the revocation of a drivers license. The use of either can open yourself to negligence.
If you look at the BOL's in these three cases with CH,you can see that they are the carrier of record. That and the "negligent"hiring makes them liable also. This is far from the first case of this,the only thing that draws the attention is the dollar amount. If the carrier had active authority and insurance at the time the load was given to him then I don't see how CHR should be held liable. In addition, the carrier is not an employee of the broker therefore I don't think that the liability would (should) be the same as if the carrier were an employee. Regardless of the dollar amount I does gain my attention. Any time someone other than the one actually responsible is held liable for an action it gets my attention. This type of lawsuit is one reason we all pay so much for insurance and other products. |
So if a carrier uses a driver as a "contractor" instead of employee they should have no liabilty for the "contractors" actions? A determination of tax status has no bearing. You are responsible for the actions of your employees and/or agents. The carrier is an agent of the broker.
Sure, i would like to know that i would never be held liable for what my "agents" do. There are a few other things i would like also in that utopian world. |
I am not saying you could not make a case for having contingent liability, but that doesn't make it right. A broker has no control over what a carrier does or doesn't do. Neither does the carrier have control over the actions of the broker. I think a good lawyer without ethics could make a case in both situations. Juries and the courts are too willing to pass massive judgments on to those who are not responsible simply because they can afford to pay. It isn't right. I hope this judgment is over turned in the appeal process. No matter what you think about CH Robinson this type of miscarriage of justice should not be allowed to stand. The judge in this matter should have struck down the judgment. Next we will start requiring brokers to withhold taxes from carriers.
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Originally Posted by GMAN
(Post 459580)
Next we will start requiring brokers to withhold taxes from carriers.
I'm not an advocate of punitive damages,awards should be limited to making someone whole again. But the laws differ from my personal opinion so that is what i have to go by. |
Originally Posted by chris1
(Post 459581)
If the carrier gives an invalid TIN# on a W9 you can be held liable for 28% to the IRS. So you verify the number/name.
I'm not an advocate of punitive damages,awards should be limited to making someone whole again. But the laws differ from my personal opinion so that is what i have to go by. I don't know that the carrier gave the wrong fein on his W9 in this case. I have not heard anything about the IRS holding someone responsible for the taxes of another entity simply because they gave the wrong number. I am not sure what measures one would need to do in order to insure that those with whom we do business have a valid fein. The IRS seems to look for any way in which to shake down business, whether you are in the right or not. The problem with "making someone whole again" is really a myth. If someone suffers serious injury due to negligence from someone then they are entitled to damages. Unfortunately, mindless juries and unscrupulous attorney's have taken advantage of the situation and moved over to include anyone who was remotely involved with a company or individual. For instance, if you are in an airplane accident the lawyers will likely sue everyone remotely involved in the manufacture of the airplane, from the rivets to the propeller. It doesn't matter if the pilot failed to do a proper pretrip. Had the pilot done a proper pretrip he would have found a problem that would have prevented him from crashing. Lawyers will file suit against everyone in hopes of finding the deepest pockets who may be willing to settle. That is one reason Piper left this country to manufacture their planes for a number of years. They got tired of being sued for things for which they should have no responsibility. In the mean time, all those companies who were sued and spent thousands of dollars on legal expense to defend themselves have no recourse to collect their losses. The plaintiff and their attorney's get off scott free with a windfall. We need some serious legal reform in this country. As long as we continue electing lawyers to legislative office that is not likely to happen. It is simply wrong to sue someone just because you can. This is one reason so much of our industry has moved their operations abroad. |
Originally Posted by GMAN
(Post 459582)
I don't know that the carrier gave the wrong fein on his W9 in this case. I have not heard anything about the IRS holding someone responsible for the taxes of another entity simply because they gave the wrong number. I am not sure what measures one would need to do in order to insure that those with whom we do business have a valid fein. The IRS seems to look for any way in which to shake down business, whether you are in the right or not.
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In any case, we were discussing whether CH Robinson or any other broker should be held liable for the behavior of a carrier with whom they contract to do business. My opinion is that they should not be held liable whether the carrier is out of business or not. Just because the one responsible is no longer able to be held liable doesn't mean that the next one in line should be held liable for any damages. Any judge worth his salt should have dismissed this case before it came to trial.
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I believe who ever this carrier lied and used somebody's else authority. I deal with CH and have seen guys whose insurance was due to cancel in a day or two and CH will not book the load if it was due to deliver after insurance cancellation. I have been sent notices from CH when my insurance was due to expire for renewal. Honestly I don't think they should be liable for this accident. I'm not defending them, but we have seen guys help friends out by booking a load under their authority because their friend had some problems with theirs. They can't check to see if this truck is actually leased on to that person.
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The lawyers want someone to blame who has deep pockets. In this case it was CH Robinson. The actual one who is to blame has no way to pay so they go after the broker.
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Originally Posted by GMAN
(Post 459999)
The lawyers want someone to blame who has deep pockets. In this case it was CH Robinson. The actual one who is to blame has no way to pay so they go after the broker.
:angryblue: Quite frankly, I am surprised that the lawyers didn't name the shipper, or the farmer whom owned the product (it was potatoes wasn't it?) in the lawsuit, as well as CHR. CHR has allowed their employees and agents free reign, to treat carriers and drivers like slaves whom owe CHR a debt. It is to bad that the individual at CHR, whom dealt with the truck directly, wasn't involved in this settlement. I have dealt with enough brokers, and CHR was one of them, whom demanded that the truck run illegal, after the driver spent hours sitting at a shipper, waiting to get loaded, then spent hours helping to load the product. It is standard procedure in this industry, that the truck driver arrive on time to load the product, that the driver load said product by hand on frequent occasions, for pennies on the pound, or for free, then log said time spent loading the truck, as off duty time, so that said driver can drive the truck hundreds of miles, before shutting down. This is something that is expected by Shippers, by Brokers, by the Consignee, and by trucking company Owners and Managers. Should a driver fail to do all of those things happily, he is considered a large pile of fecal matter, and black balled by the industry. It is unforgivable for a driver to deliver late. If the driver draws an illegal log book, and does something such as the driver of this discussion, those same people expect to be held unaccountable. Shippers, Brokers, Consignees, trucking company Owners and Managers, do not want to hear said driver talking about being hungry, exhausted, over worked and under paid, out of hours, or anything else. So why shouldn't all of them share in the penalty, when said driver screws the pooch and kills another individual? You would be surprised how many Shippers and Brokers changed their tune (after calling and demanding that a truck be run hard), when I told them in clear language, that I would be happy to send the truck in question back, and they could remove the product from the deck of the truck, OR, they could keep their demands to themselves, and allow us to run our business, letting the truck make it's run legally and safely. I was always happy to provide regulation numbers for those whom doubted my knowledge. I still am happy to tell ignorant managers what they can do with their expectations. There have been instances where I have offered to provide the lubrication, for their opinions and anatomical body parts to enter orifices easily. This attitude that "It is the fault of the driver, all by him or her/self" makes my butt hurt. If people cannot look at a map, divide a certain number of miles, by a certain and legal mile per hour, add in the time needed for legally required rest breaks and vehicle service periods and come to a legitimate arrival time, from point A to point B, for a delivery time....then everybody, including the driver whom fails to stand up for him or her/self, should ante up when it comes time to "Pay the Piper". As an "Owner Operator" I get all warm and giggly, when I tell a manager that it is not his place to treat me as an employee, unless of course I am receiving all the benefits of a company employee. I have a contract and I have read that contract. I am a business man, and the company I am leased to is my business partner. I expect to be afforded the respect that being a partner deserves. :pissedoff: :pissedoff: :pissedoff: :pissedoff: just sayin |
Well said. It's upon the broker to verify the carriers insurance and safety rating. It looks like a lack due diligence upon the broker. and this lack of verification is what allows sub-standard carriers to create problems for all carriers.
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I believe the carrier had insurance at the time of the accident. It is my understanding that the problem came in with their safety rating and that they went out of business. Since they were out of business they came after CH Robinson. Essentially, they were following the money. If CH Robinson not had the resources to pay this type of judgment they would likely not have been named.
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