In late 2022, the U.S. Supreme Court refused to hear a case involving C.H. Robinson, one of the largest property brokers in the world, in which Robinson was alleged to have negligently hired a motor carrier that caused a bad accident and severely injured the plaintiff in the case. Robinson contended these types of lawsuits against property brokers are preempted by a federal law known as the Federal Aviation Administration Authorization Act or FAAAA, which generally prohibits states from enforcing any laws that affect the rates, routes, or services of motor carriers or property brokers. The Ninth Circuit Court of Appeals—the highest federal court on the West Coast—disagreed, holding the plaintiff could proceed with his negligence claim against Robinson. And SCOTUS’s decision to deny review in the case meant the Ninth Circuit’s ruling would stand.
In November of 2022, Robinson settled the case for an undisclosed amount, but almost certainly more than the $27.3 million originally proposed by the plaintiff in June.
This case is yet another cautionary tale for property brokers. One in a growing line of similar cases where brokers are being called to task for tendering freight to carriers with discoverable safety deficiencies. The message is clear: If you’re a property broker and you’re not taking basic precautions when selecting your carrier partners, you’re a sitting duck.
What exactly should you be doing? Well, there’s no one-size-fits-all approach, but there are some fundamental things you should understand, which we’re discussing in this article.
Understand the regulatory scheme in which you operate
Highway transportation is heavily regulated, both at the federal level and in many states. While so-called “deregulation” in the 1980s unwound many of the commercial regulations that governed trucking like filed tariffs, it did not impact the thousands of safety-related rules that continue to apply to this day.
Property brokers, themselves, are not immune from governmental oversight. Indeed, to lawfully operate in interstate commerce as a property broker—defined by federal law to mean a “person, other than a motor carrier…that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation”—a broker must first be “authorized” by the Federal Motor Carrier Safety Administration (FMCSA) to do so. This entails applying for property broker operating authority and filing proof of a surety bond of at least $75,000 with the agency. In another article, we addressed recent guidance from the FMCSA concerning who exactly requires broker authority and how the agency views so-called “dispatch services.”
Aside from the operating authority and surety bond requirements, federal regulations have little else to say about property brokerage, especially when it comes to their dealings with regulated trucking companies. But as we’ll discuss later in this article, this is not a free pass for brokers to conduct their operations in a reckless or negligent manner.
In their role as the “middle man” between shippers and carriers, brokers are tasked with finding and hiring motor carriers to transport their shipper-customers’ freight. As demonstrated by the recent C.H. Robinson case and others like it, this is where things tend to go wrong for brokers and can cause massive problems.
Similar to property brokers, motor carriers must be authorized by the FMCSA to haul freight for-hire in interstate commerce. And to obtain the necessary motor carrier authority, carriers must file proof of at least $750,000 of commercial auto-liability insurance with the agency. Unlike for property brokers, this is not the end of the regulatory story for motor carriers.
A body of federal laws known as the Federal Motor Carrier Safety Regulations (FMCSRs) govern nearly every aspect of motor carriers’ operation of commercial vehicles on public highways. These rules touch on everything from driver qualification to vehicle maintenance, drug/alcohol testing to driver licensing, hours of service to accident registers, and much more. We’ll address the FMCSRs in greater detail later in this article, but sufficed to say, these rules are aimed at keeping unsafe drivers and vehicles off public highways. And its these rules, and motor carriers’ efforts to comply with them, that can influence a broker’s liability in highway accident litigation.
Understand your duty of care
While the recent C.H. Robinson case was newsworthy for a few reasons, it’s important to understand what that case didn’t do. The case did not say that C.H. Robinson was liable for the damages sustained by the plaintiff in the highway accident at issue. It merely stood for the proposition that the plaintiff could pursue that legal argument had the case not settled. This might sound like a minor distinction to some, but it’s not.
That an injured plaintiff can pursue a property broker for damages resulting from an accident is not a new phenomenon. It’s been the law of the land for decades. The tougher question is when exactly is a broker liable for those damages? What type of action or inaction on their part will result in them being held liable? This all hinges on a legal concept known as “duty of care.” The American Bar Association breaks it down like this:
After being presented evidence by the lawyers, a judge or jury will decide what an "ordinary" or "reasonable person" would have done in similar circumstances. In the example of an automobile accident, a judge or jury is likely to find a driver negligent if his or her conduct departed from what an ordinary reasonable person would have done in similar circumstances. An example would be failing to stop at a stoplight or stop sign.
“Duty of care” is one of a few elements in a negligence claim. To prevail on a theory of negligence, an injured plaintiff must prove that (1) the defendant owed a duty of care to the plaintiff; (2) the defendant breached that duty; (3) the defendant’s breach of the duty was the proximate cause of the plaintiff’s injury; and (4) the plaintiff suffered damages as a result.
In cases like C.H. Robinson’s, the injured plaintiffs often seek damages not only from the truck driver who caused the accident, but also from his or her employing motor carrier and then up the chain to the property broker and potentially the shipper. To prevail on a theory of negligence, the injured plaintiff must prove by a preponderance of the evidence each of the four elements for each defendant. As you would imagine, however, the more attenuated the connection between a particular defendant and the circumstances of the accident, the more difficult it is for the plaintiff to prevail.
When it comes to property brokers specifically, the plaintiff’s theory typically is that the broker had a legal duty to hire a safe motor carrier, and that but for the broker’s negligence in that regard, the plaintiff would not have been injured. This theory is commonly known as “negligent hiring” or “negligent selection.” The claimed negligence is not the unsafe operation of the commercial vehicle but rather the broker’s failure to properly vet the motor carrier that it put on the roadway.
So what exactly is a property broker’s duty of care in the context of highway accident litigation? What would a “reasonable” property broker have done to prevent the accident under the circumstances? These are the million-dollar questions!
Unfortunately, the answers can vary from state-to-state and court-to-court. What one judge or jury decides is “reasonable” conduct could be held “unreasonable” by another judge or jury.
Fortunately, in our system of jurisprudence we have doctrines like “stare decisis” and precedence, whereby decisions reached by courts in one case are either binding, or at least persuasive, in future cases involving similar facts. This helps ensure some stability in our legal system and allows individuals and businesses to better conform their conduct to established norms.
When it comes to a property broker’s “duty of care” in selecting or hiring a motor carrier, the leading case on the topic is one out of Maryland from 2004 known as Shramm v. Foster. That case arose out of a highway accident between a passenger vehicle and a tractor-trailer. The plaintiffs, guardians and family members of two individuals who were severely injured in the accident, brought a personal injury action against defendants, a truck driver, the driver's employer, and C.H. Robinson, the broker that arranged the shipment of the load. You read that right…another case involving C.H. Robinson!
In this case, the plaintiffs alleged, among other things, that Robinson was negligent in its hiring of the motor carrier that caused the accident. For its part, Robinson sought summary judgment on its liability, claiming it owed no duty of care to the injured plaintiffs. In partially denying Robinson’s request, the U.S. District Court for the District of Maryland first held that property brokers like Robinson must “use reasonable care in selecting the truckers whom [whom they maintain in their] stable of carriers.” Further, “[t]his duty to use reasonable care in the selection of carriers includes, at least, the subsidiary duties (1) to check the safety statistics and evaluations of the carriers with whom it contracts available on the SafeStat database maintained by FMSCA, and (2) to maintain internal records of the persons with whom it contracts to assure that they are not manipulating their business practices in order to avoid unsatisfactory SafeStat ratings.” The court concluded these “obligations are not onerous” and “further the critical federal interest in protecting drivers and passengers on the nation's highways.”
Although the Schramm case was decided under Maryland law, many courts throughout the U.S. have cited it favorably in subsequent cases involving similar facts. See, e.g., Jones v. C.H. Robinson Worldwide, Inc., 558 F. Supp. 2d 630, 646 (W.D. Va. 2008) (citing Schramm and holding that broker had a duty to investigate the fitness of the motor carrier prior to hiring it to carry the subject load on the public highways).
The extent of a property broker’s duty is, unfortunately, not clearly defined. Even the holding from the Schramm case has become quite stale, given that the FMCSA’s SafeStat system is no longer in place, replaced by Compliance, Safety Accountablity (CSA). So, while courts across the country tend to agree that brokers have a duty to use reasonable care in vetting the motor carriers they put on the highways, there is no clear consensus on what exactly that involves.
That said, brokers are left to surmise what a “reasonable” broker would do to ensure the carriers it uses are safe. In our opinion—this is not legal advice and should not be taken as such—this involves, at minimum:
Ensuring the carrier has the necessary operating authority;
Verifying the carrier has the required level of insurance on file; and
Confirming the carrier is not subject to an unsatisfactory safety rating.
As addressed in cases that came after Schramm, this may not be the end of a broker’s inquiry. For example, if the initial vetting reveals the carrier has a conditional safety rating—suggesting the FMCSA had found serious compliance deficiencies during a previous audit—then the broker may need to do additional digging to satisfy its duty of care. In another article, we discussed 5 important safety metrics that measure a regulated carrier's compliance-related performance.
Sufficed to say, it is generally accepted that property brokers have a duty to use reasonable care in selecting or hiring motor carriers to haul their customers’ freight. And while the specific extent of that duty is not entirely clear or consistent from case to case, the basic idea is that brokers should be using publicly available safety data to vet their carrier partners.
Have a basic working knowledge of the Federal Motor Carrier Safety Regulations
As detailed previously, regulated carriers are subject to thousands of safety-related regulations contained within the FMCSRs. Having a basic working knowledge of these regulations and how they are enforced is, in our view, critical for property brokers. If a broker has no basic understanding of these rules, how can it possibly discharge its duty to use reasonable carrier in selecting a safe motor carrier?
Fortunately, it's not too difficult of a task for brokers to bring themselves up-to-speed on what is expected of motor carriers from a regulatory perspective. Resources on this topic abound. We even offer a crash course on the topic through our Trucksafe Academy.
At minimum, it’s critical for brokers to understand:
What types of commercial vehicles are regulated
How the FMCSA and its state partners monitor regulated carriers’ compliance
What is a safety rating
How to view and understand a regulated carrier’s registration details
What type and amount of commercial auto-liability insurance is required
What are CSA scores and why do they matter
What are out-of-service rates
Once you have a handle on these fundamental concepts, you will be much better equipped to determine whether particular carriers are suitable to transport your customers’ freight.
Develop and follow basic carrier selection protocol
Ultimately, the steps to take in vetting motor carrier partners are up to each individual property broker. Many subscribe to online services like Carrier411 that do much of the work for them. Regardless, brokers should strongly consider documenting the basic steps they will take each and every time they onboard a new carrier in what we like to call “carrier selection protocol.” The content of that protocol will vary from broker to broker, but being able to prove that you have such a protocol in writing and follow it to a T will undoubtedly serve you well in the event you are pulled into highway accident litigation.
Broker liability stemming from highway accidents is not a new concept. Recent court decisions cement the viability of these types of claims. The real question is what exactly a property broker must do to ensure the motor carriers it hires are safe. While there is no uniform hiring standard, many courts in the country agree that brokers must, at minimum, verify through publicly available safety data that the carriers they engage are minimally qualified to operate. Ensuring you have protocol in place to do this will go a long way to help you minimize your exposure.
About Trucksafe Consulting, LLC: Trucksafe Consulting is a full-service DOT regulatory compliance consulting and training service. We help carriers develop, implement, and improve their safety programs, through personalized services, industry-leading training, and a library of educational content. Trucksafe also hosts a monthly live show on its various social media channels called Trucksafe LIVE! to discuss hot-button issues impacting highway transportation. Trucksafe is owned and operated by Brandon Wiseman and Jerad Childress, transportation attorneys who have assisted some of the nation’s leading fleets to develop and maintain cutting-edge safety programs. You can learn more about Trucksafe online at www.trucksafe.com and by following Trucksafe on LinkedIn, Facebook, Twitter, and YouTube.