It’s a tragedy but we didn’t cause it

“But acknowledging that a terrible tragedy occurred is not the same as having caused it,” Bozeman said. “C.H. Robinson did not act negligently and should not be held liable in this case.”

A jury did find C.H. Robinson negligent in its hiring of Lupus Superior, whose driver in 2021 plowed into several cars, killing three people. The driver of the Lupus Superior truck also died, leaving unanswered the question of just what happened behind the wheel to lead to the crash.

More chillingly for C.H. Robinson (NASDAQ: CHRW) and brokers in general, the jury found that the driver was essentially an employee of the 3PL.

“C.H. Robinson does not employ drivers,” Bozeman said. 

That new world

Several references were made during the call to the “post-Montgomery world,” the general term for the legal landscape brokers face with negligence and liability protection offered by the Federal Aviation Administration Authorization Act stripped away through the Supreme Court decision in Montgomery vs. Caribe Transport II.

Lupus Superior had in its history hauled 270 loads successfully for C.H. Robinson, the company said. It also had a Satisfactory rating from the Federal Motor Carrier Safety Administration (FMCSA), handed down both before the crash and after as well.

The jury verdict has yet to be certified by Judge Dianne Jones. That fact was raised several times on the call. 

Bozeman also said appeals could take “years.”

In the wake of the verdict, C.H. Robinson released a statement calling for federal guidance on what level of vetting would protect a broker in situations like the Mississippi crash. 

FMCSA had given thumbs up

The fact that the broker hired a carrier with a Satisfactory rating and still got hit with one of the biggest nuclear verdicts in the history of trucking has helped to drive home the question of just what actions a 3PL needs to undertake to avoid such a fate. That call by C.H. Robinson echoes what the Transportation Intermediaries Association, the brokerage industry’s trade group, said in a recent petition to FMCSA  seeking a rulemaking that would establish guidance on what constitutes proper procedures in hiring a carrier in the wake of Montgomery vs. Caribe Transport II.

“We go beyond federal requirements and apply multiple layers of safety and risk criteria that we continuously reevaluate and strengthen,” Bozeman said in his remarks. “The extreme nature of this verdict means it is even more imperative that Congress and the federal government act with urgency to establish clear and proper accountabilities across the transportation industry that enhance highway safety and support the uninterrupted flow of goods across the United States.”

When Bozeman moved away from his scripted remarks on the call, the message was the same, if maybe a bit more pointed. 

“We really believe this case was decided based on emotion rather than the law,” he said. He reiterated that if the jury’s decision is entered by Judge Jones as final, “we will immediately appeal and we are very confident in the facts and the law on appeal.”

Settlement had been rejected

Providing some detail on how the case ever got to trial in the first place and wasn’t settled on the courthouse steps, as the phrase goes, Bozeman said C.H. Robinson’s insurance carriers “were not willing to settle based on the plaintiff attorneys’ demands.” Bozeman added he would not provide further information on that process, given the ongoing litigation.

But even if C.H. Robinson can spin a victory out of a present defeat from the case, the impact on the industry was on the minds of analysts, both during the call and after.

Analyst sees charges and insurance hits

In a post-call report from the transportation research team at TD Cowen, the lengthy impact of Lipe vs. Lupus Superior was raised as a concern.

“Such a large outstanding award raises the risk of other litigation in our view as ambiguity in negligence standards likely generated an incoming wave of lawsuits that could inflate insurance premiums and claims charges,” the TD Cowen report said. 

While the issue did not come up on the call, C.H. Robinson has yet to take any sort of charge based on the award (which as noted is not final yet). But TD Cowen said it thinks the 3PL may need to do so, “well before the appeals process can be resolved.”

In response to an analyst’s question, CFO Damon Lee said C.H. Robinson “knows insurance is going to inflate year-over-year” but added the company is covered through the end of 2026. “We are just now starting to have preliminary discussions with the various insurance carriers that we deal with on insurance coverage.”

Lee said a higher insurance cost is “just another headwind. We get paid to solve problems and headwinds every single day, every single week, every single month.”

But TD Cowen was not impressed. “Commentary on the call likely did little to allay investor concerns regarding the insurance overhang, and this will be an important theme to monitor, in our view,” its report said.  

More articles by John Kingston

Trump promise on military CDLs sounds similar to existing programs

Briefs in as sides gets read to rumble over non-domiciled CDLs

Werner CEO Leathers: just the 3rd inning in driver attrition