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Forced
to Second-guess DOT
A Vicarious liability remains one of the most troubling issues facing intermediaries in transportation. When small undercapitalized motor carriers with only $1 million in insurance are involved in crashes that cause significant injuries, plaintiffs lawyers often try to reach deep pockets up the supply chain by naming the intermediary or the shipper as a party defendant. These attorneys rely on vicarious liability and state law theories such as negligent hiring, assumption of duty, joint venture or agent/principal theories. The case law is mixed at best, and judges tend to let the issue go to the jury unless they can find as a matter of law that there is no issue of fact upon which a reasonable man could find for the plaintiff. There is no easy vaccination that can inoculate an intermediary against a finding of vicarious liability, but some of the cases are instructive in showing what you should avoid. All too frequently, to satisfy shipper demands, intermediaries agree to assume carrier-like duties and accept the role of a “service provider.” Assuming such carrier-like duties can lead to factual disputes with adverse consequences over the role of the intermediary as a “pure broker” or “arranger” of transportation. The recent decision in Jones v. C.H. Robinson Worldwide Inc. (2008 U.S. Dist. Lexis 45325; W.D. Va. June 10, 2008) again confirms, I believe, that the best practice is for a “third-party logistician” to define its role clearly as that of a property broker who agrees to retain a carrier that is “licensed, authorized and insured” in accordance with Federal Motor Carrier Safety Administration regulations. Regulations prohibit brokers from representing themselves as carriers. The common but mistaken practice of naming the broker as the carrier on the bill of lading at time of pickup only confuses the broker’s actual role in the transaction and makes it more likely that an injured party will name it as defendant in a lawsuit. At the urging of plaintiff’s bar, I think that the courts have misapplied the federal safety regulations to infer wrongly that a shipper or intermediary has some obligation to second-guess the Department of Transportation when choosing a carrier. Congress has imposed a pervasive scheme of safety regulations for determining whether a carrier is fit, willing and able. The safety regulations impose a nondelegable duty on the carrier – and the carrier alone – to ensure compliance with hours of service, drug testing, equipment maintenance, etc. FMCSA uses the SafeStat system, among other tools, to determine when to audit a carrier. DOT has sole responsibility for determining when a carrier is safe for the public to use. The comprehensive federal statutes and safety regulations should be found to preempt and trump state law where the issue is confined to carrier selection. (See article entitled “A Different Point of View,” www.transportationlaw.net/pdf/different_point_of_view-in_transit11-07.pdf). The suggestions by the plaintiffs bar’s experts that shippers or brokers should examine SafeStat to rule out carriers that DOT otherwise finds fit to operate is an implausible and unworkable standard that would kill transactional brokerage and deprive small carriers of backhauls in the spot market. SafeStat was not intended for that purpose, as the caveats on the public website clearly indicate, and second-guessing the agency should not be required. At the end of the day, motor carriers are highly regulated public utilities, and the “shipping public” (i.e., shippers, brokers and other carriers) – just like the “traveling public” – should be allowed to rely upon DOT’s determination of fitness. In this regard, in 2010, FMCSA will replace the current SafeStat program with a more complex continuing compliance system. Clearly, this new program, from what I am seeing, will defy third-party analysis of a carrier’s continuing safety compliance. It is time for everyone in the supply chain to insist that the federal safety regulations preempt state law and seek statutory confirmation of this fact. info@transportationlaw.net |