ORLANDO, Fla. — The brokerage industry, almost 10 months after the resolution of Miller v. C.H. Robinson raised the threat of greatly increased 3PL liability in lawsuits over truck accidents, is looking to several ongoing court cases that could reverse the impact of that decision.
The significance of Miller v. C.H. Robinson Worldwide Inc. to the brokerage industry was clear in the title of a panel Thursday on the case presented at the annual meeting of the Transportation Intermediaries Association: “The shot heard around the world” is how the organizers described the case.
In his summary of broker liability, Marc Blubaugh, head of the transportation practice at the Benesch law firm and panel moderator, took a slightly more tempered view. “Miller is disappointing but not necessarily devastating,” he wrote on a slide presented to the audience at the end of the discussion.
The panel presented a history of recent cases involving the question at the heart of Miller: If a carrier is involved in a collision or some other incident that results in tort litigation, is the brokerage liable because it hired the carrier?
Attorneys for the industry generally say no. They cite the Federal Aviation Administration Authorization Act (F4A) as the basis, with its strict limitation on state action that might impact a deregulated transportation industry, whether it be in air travel, trucking or logistics. Under F4A, states may not take actions impacting “prices, routes and services.”
But a section of the F4A allows state law on safety to potentially override the federal preemption of state rules that could impact that trio.
In Miller, a 9th Circuit appellate court overruled a lower court ruling that said C.H. Robinson could not be held liable for a December 2016 accident between a truck hired by the 3PL and Allen Miller. Miller was driving a vehicle that was struck by the truck, operated by a company called RT Service, after it crossed the median on a snow-covered road. Miller was left a quadriplegic.
“In enacting that exception, Congress intended to preserve the States’ broad power over safety, a power that includes the ability to regulate conduct not only through legislative and administrative enactments, but also though common-law damages awards,” the 9th Circuit appellate court wrote in overturning the lower court and dragging C.H. Robinson back into the case.
An appeal by C.H. Robinson to the Supreme Court for review was rejected in late June 2022 at the close of the court’s judicial year. A settlement between Robinson and Miller was reached in November.
Ben Campbell, the chief legal officer and secretary at C.H. Robinson (NASDAQ: CHRW) and a TIA meeting panelist, said the company had “big decisions to make” about whether to appeal to the Supreme Court.
“It doesn’t make a lot of sense unless you have a conflict between two circuits,” Campbell said, adding that without that, the chances of having the high court hear a case are “minimal.” And in the end, C.H. Robinson didn’t get its appearance before the high court.
But attorneys for the brokerage industry, driven by concern over the Miller precedent, expressed hope during the panel session that those sorts of intercircuit conflicts are emerging, creating a renewed opportunity for Supreme Court review.
In a fortuitous piece of timing just before the TIA meeting and the discussion on Miller, the 11th Circuit last week ruled that Landstar (NASDAQ: LSTR) was not liable and wouldn’t be required to compensate an insurance company.
The insurer was forced to pay one of its clients, Tessco Technologies, which hired Landstar to move a truckload of Tessco products only to see the freight stolen by a scam artist impersonating the actual carrier that Landstar had hired. The court’s complex ruling ultimately found that while Landstar was negligent and helped to create the opportunity for the thief, Landstar isn’t a motor vehicle. The court ruled that the safety exemption — which covered the negligence — applied only to a motor vehicle, not to a broker.
The term “the 11th Circuit” was heard repeatedly over the course of the day at the TIA meeting, as the Landstar case is seen as chipping away the precedent that may have been established in Miller and which the 3PL sector sees as a major threat.
But the legal arena for determining whether the F4A protects brokerage companies from liability remains very much in flux, according to the panelists.
“What has happened since Miller has been more confusing,” said Coby Page, the general counsel at Nolan Transportation.
Page cited Louisiana state court action in which a lower court granted summary judgment to KLLM Transport Services, a 3PL, involving an accident between a truck hired by KLLM and a motorcyclist. That court cited F4A in its decision.
But Page said that on appeal, a Louisiana appellate court ruled partially in favor of KLLM but also ruled that the safety exemption did apply. “So what looked like a better case for us is now a so-so case for us at this point.”
The case that the panel suggested was the one most likely to create another pro-3PL precedent that could lead to the Supreme Court taking up the issue of the F4A and brokerages is Ying Ye v. Global Sunrise. That case, heard initially in the Northern District for Illinois and now on appeal to the 7th Circuit, already has seen a lower court decision protecting GlobalTranz from liability due to F4A.
In that case, a November 2017 accident in Texas between a Global Sunrise truck and a motorcycle led to the death of the cycle rider. The motorcyclist’s widow, Ye, filed suit against Global Sunrise and GlobalTranz, the brokerage that hired Global Sunrise. The case was in Illinois because Global Sunrise is headquartered there.
The case did result in a $10 million judgment in favor of Ye against Global Sunrise. But the judge in the case, Elaine Bucklo, also granted a motion by GlobalTranz that it be removed from the case in part over the issue of F4A exemption.
An appeal was argued late last year. But there has been no ruling on that appeal.
Jeff Simmons, the general counsel for GlobalTranz, said during the panel discussion that if the appeals process on the Ye case upholds the earlier dismissal, “it will create a federal circuit split” with the 11th Circuit Landstar case and the 7th Circuit Ye case on one side of the divide and the Miller/C.H. Robinson decision on the other side.
“If we can get a counter to Miller, it will give other district courts a hook to hang on if they are leaning against the safety exemption,” he said.
Whether the attempt comes out of the Landstar case or that of GlobalTranz, “there’s going to be another attempt to get the Supreme Court to accept [certiorari],” Simmons said.
Simmons said the inconsistency in the circuits now means that the Miller precedent — holding C.H. Robinson liable for the collision that left Miller a quadriplegic — is operative in the 9th Circuit, where it was handed down, but not elsewhere. “If we can get a final uniform rule, it will help our exposure as brokers,” he said.
To illustrate where a court could come down on the question in opposition to the goals of the F4A while being dismissive of the exemption, Page cited language in a case that went against Coyote Logistics, in which a request for an exemption under F4A was denied.
“Let’s not beat around the bush,” that South Dakota court wrote. “If Coyote Logistics is right about the preemption issue, [the plaintiff, who was involved in an accident] will be left holding the bag and the tortfeasor will go about his merry way, free to harm someone else.”
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Don T.
The shippers and brokers have a good thing going and no way wanting to prove to the carrier what the real transportation cost is to the shipper because most things are shipped prepaid by the shipper that inflates the shipping cost to the receiver. Then the cost for prepaid is taken off the revenue what is left the broker takes his cut kicks back the prepaid up mark to the shipper. Broker then takes his 20-50% off [ or what ever he can get away with ] for his cut . The carrier don’t know what the freight charges are because the broker says carrier has no need to know . Fed. regulations say the carrier has a right to know but is not enforced by DOT .
Ohio
Broker is absolutely and unequivocally responsible for the truck it hires just as hospital is absolutely and unequivocally responsible for the surgeon it hires. This notion that somehow because the truck is an “independent contractor” is a nonsense. Especially if brokers name is noted on the bills as a carrier of the record. And I will argue even further, not only is the broker responsible but shipper who chose that broker is responsible as well. If an attorney can prove that proper vetting of the carrier wasn’t done the ability to bring both in the lawsuit is a no brainer and winnable. As it should be. Because to literally load all the liability on a carrier who is the least able of the three to carry the consequences of everyone’s actions is not only unfair to the injured plaintiff but also to the carrier who is literally talking all the risk for most likely the minimal compensation. Holding shippers and brokers liable will essentially wipe out the “double brokering” entities and will give carriers who are doing things the right way an opportunity to earn fair compensation for the investments they are making. In addition, it will hold brokers and shippers accountable by making sure they are compensating carriers fairly for their safety and service efforts.
Gary Adkins
If The Broker Hires An Unsafe Carrier Fir The Cheaper Rates Then They Should Be Liable For Any Accident That Happens
Wisconsin
There is an obvious shift by big 3PLs to “hire” trucks that are simply owner-operators with a fresh USDOT number and one truck who then haul only loads for that broker, usually via some smartphone app. The person in the seat is the safety department, ELD compliance manager, head of maintenance, he even manages the drug testing. The broker only appears to have an arms-length relationship with his new slave.
These truck brokers are operating as carriers and pretending not to, but I assume the trial attorneys are starting to figure this out.