Truck Broker Liability Legal Precedents

It is important to understand that broker liability is a developing area, not a mature area of the law. The exercise and narrative below will simply prove the need for coverage.

As relates to truck brokers, the insurance coverages being offered today in the marketplace vary from truck broker liability ( viewed as the best coverage available today) to hired and non-owned to contingent auto liability. The bottom line is that there is a growing trend on behalf of plaintiff's attorneys to show both malfeasance and tort liability in truck brokers'operations- specifically as it relates to carrier selection.

Case # 1 Shramm versus Foster (Maryland )-2004

This is the case that changed everything. Prior to this case being tried there was no known legal precedent establishing and confirming liability on behalf of the broker.

In Schramm, C. H. Robinson (CHR) was a 3PL specializing in brokering the shipment of goods. CHR did not own or maintain equipment but matched shippers with motor carriers who did own and operate equipment. Robinson had brokerage contracts whereby truckers ( carriers)  agreed to haul loads on behalf of shippers. CHR's promotion material provided that CHR was the one point of contact in its services to shippers. The promotional material also asserted that CHR only worked with motor carriers with adequate insurance. Finally their "promotional" material stated that they had excess liability to pay for damages in the event of exhaustion of a carriers insurance limits. As you will see, their advertising and marketing materials ended up hampering their defense in this case.

The trucker that CHR hired  was an authorized motor carrier. This carrier unfortunately ran an intersection and hit a pickup truck and caused severe injury with irreparable neurological damage. The driver had been driving over the maximum hours allowed by law..

CHR's defense successfully confirmed with the court that CHR was not liable for damages under the Motor Carrier Act or for Federal Motor Safety Violations. CHR also successfully averted liability under negligence/ respondeat superior that Robinson was an agent of the driver. ( there was no written agreement between the driver, the trucker and CHR- basically confirming the agreement that the trucking company and driver were independent of CHR ). That is the good news that came out of this case.

The bad news is that the court found CHR liable for negligent hiring of an independent contractor. The reason for this is that CHR did not use reasonable care in their selection of a carrier. What is too bad is that even though Safestat had a threshold at the time that a score of 75 or below was satisfactory, the trucker CHR hired had a score of 74!

In the Schramm case, CHR only lost the negligent hiring aspect of the case- but that was enough to start the precedent of broker liability.

See more complete information on this case based on the link below:

http://www.sfl-legal.com/Recent%2005/SchrammvFoster.htm


Whereas Schramm is the decision that changed the game, there are other legal precedents where tort liability was established against the truck broker. In these cases, this involved defendent C. H. Robinson ( the nations largest truck broker). Likewise, I would be stunned if CHR is still doing business ( i. e. carrier selection and risk management) the same way today as they were prior to these claims, judgements, and loss payments.

Case # 2- Jones versus D'Souza ( Virginia)-2007

This case involves another unfortunate death claim where CH Robinson brokered a load to a trucking company whose driver crossed the median and hit another tractor trailer.

Like Schramm was able to successfully defend their claim that they were not:

• Negligent per se
• Violated conditions relative to the Motor Carrier Act

C. H. Robinson lost however specifically the negligent nuances of negligent hiring and negligent entrustment.  What is interesting is that even though the negligent trucker was deemed to be an independent contractor supported by a contractural arrangement of same with a motor carrier, the court still deemed that the trucker should not have been hired nor should CH Robinson have entrusted the load to such a potentially high risk trucker. By the way the trucker had a conditional DOT.

See link below for a more eloquent analysis of this case:

http://www.forwarderlaw.com/library/view.php?article_id=474

Case # 3- Sperl versus Henry (Illinois) -2009

This case got a lot of peoples attention. Two reasons:

1. It again involved C. H. Robinson
2. The jury verdict against CH Robinson was $24,000,000 ( almost)

The case involved another death claim. This time the tractor trailer involved rear-ended a number of private passenger cars involving injury and death. And to add insult to that injury, the trucker hired by Robinson had previously been fined for falsifying hours of service log books and had a lapsed drivers license. Unlike the Jones v. Souza case, the jury failed to rule in any favor to CH Robinson. Basically the jury found that C.H. Robinson was vicariously liable and had been involved in negligent hiring.

So what theories were proved here

• Vicarious liability. C. H. Robinson was held liable for the acts of a third party as if C. H. Robinson was driving and operating the truck. There need not be any direct relationship between the parties, and their mere involvement in certain, often hazardous, transactions render them liable.
• Negligent hiring of a subcontractor. C. H Robinson failed to ascertain that the carrier was properly qualified to undertake the move.The lapsed state of the driver's license most certainly was a factor in establishing liability.

Another link that offers a better perspective:

http://www.truckline.com/AdvIssues/Litigation/2009%20Forum%20Documents/Trends%20in%20Damage%20Awards/CH%20Robinson%20for%20ATA.pdf

So if an insurance agent or truck broker tells you that they believe it is not worth the expense to have insurance coverage, we believe this article and these legal precedents will prove to the contrary. Aside from insurance, it is important to employ best practices in carrier selection.

At the end of the day, an insurance agent and insurance company have to prove both their viability and relevance to the end customer. We suggest you prove yourself here.