(Editor’s note: the original article has been supplemented with information about a request for Supreme Court certioari filed by the attorneys for Ying Ye in a case that deals with the question of broker liability).
A brokerage has once again been found not to be liable for a fatal accident, adding to a conflicting body of law that the legal industry hopes may eventually make its way to the Supreme Court.
And to add a twist to the case involving UPS (NYSE: UPS) subsidiary Coyote Logistics, the load in question was double brokered, and Coyote didn’t hire the carrier involved in the October 2020 wreck on Interstate 81 in Lackawanna County, Pennsylvania. Not only that, the decision by Judge Karoline Mehalchick in the U.S. District Court for the Middle District of Pennsylvania notes that Coyote didn’t even know about the accident until two weeks after it occurred.
The specific action taken by Mehalchick last week was to rule favorably on a request by Coyote for summary judgment to dismiss the plaintiffs’ charges against it in the case brought by the estates of the two people killed in the accident, Raven Lee and Anderson Bastone. The lawsuit against other defendants, including the two carriers involved in the double brokering, will continue.
The Lee/Bastone case adds to a body of decisions that mostly have favored the conclusion that the Federal Aviation Administration Authorization Act (F4A) precludes brokers from being held liable for injuries or death caused by a carrier they hired to deliver a load. But it isn’t unanimous; the Miller vs. C.H. Robinson case, which last year was denied review at the Supreme Court, held the giant 3PL liable for injuries suffered in an accident that involved a carrier hired by Robinson (NASDAQ: CHRW).
As Mehalchick wrote, “neither the Supreme Court nor the Third Circuit have addressed this specific issue of whether such claims against brokers are preempted by the FAAAA.” She added: “Federal district courts are sharply divided on how to apply these guiding principles.”
When the Supreme Court punted on reviewing Miller vs. Robinson, it left the 3PL legal industry looking for a trip back to the Supreme Court for another attempt to have the high court resolve the conflicting views of broker liability. A conflict in the Circuit Court decisions since then is what lawyers had hoped for, and the Ying Ye v. GlobalTranz Enterprises case, in which an appellate court found GlobalTranz not liable in a fatal accident, gave them one part of it. It is possible that the Coyote Logistics case now adds a second federal court decision that stands, with Ye, in opposition to the findings of Miller vs. Robinson.
Ironically, just a few days before the Coyote decision was handed down, attorneys for Ying Ye did file a request for certiorari with the Supreme Court. That now appears to be the best path for a SCOTUS review. Cases such as the Coyote case would need to first go through an appellate process before a request could for certiorari could be made. The Ye decision already was one that came out of the appellate division for the Seventh Circuit, which would mean the Supreme Court is next.
(Another could be the case involving Landstar and “a guy named James,” which didn’t involve death or injury but found that Landstar (NASDAQ: LSTR) did not have liability in the stolen cargo case.)
Todd Rubenstein of the law firm of Taylor Nelson, which has been involved in several other cases involving brokers and F4A preemption, said in an email that the court in the Coyote case “rightfully concluded that plaintiffs’ allegations strike at the heart of Coyote doing what Coyote does … being a freight broker. In other words, plaintiffs didn’t allege that Coyote failed to exercise reasonable care required by any other member of the general public, but rather, that Coyote was negligent in its actions specifically as a broker, as the one who arranged for the transportation of the freight.”
In the Coyote case, Michael Lee, representing the estates of the two people killed in the accident, sued Golf Transportation, which Coyote had booked to move the load of soup. The defendants in the suit also included JP Logistics, O’Connor Trucking, and food distributor UNFI and its subsidiary UNFI Transport. UNFI was the consignee that hired Coyote to move its load. JP Logistics owned the trailer that was being hauled by driver Greg Lesdowski on the night of the wreck. (JP Logistics also sought summary judgment to have itself removed from the case; that was denied.)
The judge’s decision extensively reproduces the terms of the contract between Coyote and Golf. One section of that contract prohibits Golf from double brokering the load.
But it happened anyway. The load was picked up by a driver named Victor Bordo, and as the judge writes in the recap of the brokerage path, “neither Golf nor (a Golf employee named Mark Myslek) know who Victor Bordo is.” Golf also said it didn’t know what carrier picked up the load.
But it was O’Connor Trucking that ultimately was supposed to deliver the cargo after a cross-country journey between Oregon and New York. Golf, according to the judge, did not know how it got delivered between those two points.
The recap of the case is a bit unclear on how the cargo picked up by Bordo eventually was transported in a truck driven by Lesdowski. He was behind the wheel when it collided with a car carrying the two people who died, with the driver— according to a separate document —found to have been under the influence of marijuana. (A recap of the crash in the original complaint portays an incident in which both the truck and the car were changing lanes in proximity to each other, and the car eventually ended up under the truck.)
The heart of the federalism argument about F4A is that any state regulation that could impact a “price, route or service” of trucking — that term taken directly from the 1994 law — is preempted by F4A unless it falls under what is known as the “safety exemption.” That part of F4A holds that state regulations regarding safety and liability are not necessarily precluded by the federal law.
Citing an earlier case known informally as Bedoya, Mehalchick said the plaintiffs’ claims were preempted by F4A “because imposing Pennsylvania’s common-law negligence liability upon Coyote would directly target and significantly impact the broker’s services.”
The focus on Coyote’s brokerage activities is “based entirely upon Coyote’s decision to select Golf as the motor carrier to transport the … load,” the judge wrote. “Plaintiffs’ claims have a significant impact on Coyote’s service with respect to the transportation of property because the claims seek to enforce a duty of care related to how Coyote, the broker, arranges for a motor carrier to transport shipments.”
Doing that would “require Coyote to perform additional services, such as hiring, retaining and supervising a qualified driver,” the court wrote. That would have “substantial financial consequence” for Coyote, and that would “hinder the objectives of the FAAAA.”
The court also rejected the claim by the plaintiffs that the safety exemption under F4A could be the basis for finding Coyote liable.
“A broker, by definition, may not provide motor vehicle transportation for compensation; only a motor carrier may perform that task,” Mehalchick wrote.
Given that the safety exemption involves motor vehicles, Coyote’s role in the supply chain means it has “no direct connection to motor vehicles,” shooting down the plaintiffs’ safety exemption claim.