C.H. Robinson Case: Brokers Learn Liability Lesson

Q: I read about a recent case in which a jury awarded $23.7 million against a transportation broker who hired a motor carrier that was involved in a fatal automobile accident. As I understand it, the transportation broker did not own or operate the truck that caused the accident. How is it possible that the broker was held responsible? As a freight broker, how do I protect myself against a case like this?

A: The case you refer to is Sperl v. Henry, et al, and it has many freight brokers asking the same question.

According to published reports, while acting as a transportation broker, C.H. Robinson hired motor carrier company Toad L Dragonfly to move a shipment. While transporting the shipment on an interstate highway near Plainfield, Ill., the Dragonfly driver reportedly lost control of the tractor-trailer and rear-ended multiple vehicles.

At the time of the accident, the driver was reported to have a suspended license and falsified log books. The collisions caused the deaths of Joseph Sperl and Thomas Sanders, and serious injuries to William Taluc.

Multiple law suits followed in which Dragonfly, the driver, and C.H. Robinson were all named as defendants. In the course of the litigation, it was learned that both Dragonfly and the driver had a limited amount of insurance coverage. C.H. Robinson claimed that it had no liability for the accident because it did not control Dragonfly or its driver, who were independent contractors. The case was tried before a jury who rendered the multi-million-dollar verdict against C.H. Robinson. At press time, it was not certain whether any appeals will be filed.

In cases such as this, plaintiffs rely on a number of theories to impute liability on the freight broker.

• Vicarious liability. This theory holds an operator liable for the acts of a third party as if he were standing in its shoes. 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. Under this theory, a party is alleged to have failed to ascertain that the carrier was properly qualified to undertake the move. In the Robinson case, the lapsed state of the driver’s license may have been a factor in establishing liability.

The tragic consequences of this case demonstrate the importance of all transportation intermediaries acting prudently when contracting with service providers. This begins with selecting a reputable company. Databases are available that can verify the status of a motor carrier’s operating license and proof of its insurance. Depending on the commodities being transported, minimum insurance limits can range between $1 million and $5 million. In light of the case at hand, ascertain whether the carrier has excess limits as well. This should all be verified through certificates of insurance.

Get the transportation agreement between you and your carrier in writing. Make sure it contains an indemnification running from the carrier to you for any claim arising from a failure of due diligence when selecting a driver. The carrier should name you as an additional insured on its policy, obligating the carrier to undertake your defense in the event of an accident. Defense costs alone can be substantial.

Finally, make sure you are properly insured for these accidents. Although you are a transportation intermediary, you can be held liable for accidents caused by vehicles that you do not even operate. Ask your liability insurer to confirm that you will be covered for this exposure.

Have a liability question or concern? I will try to help. Please send your questions to me via e-mail at: [email protected]