Drive near any major city and close to half the billboards along the major arteries promote personal injury attorneys. It is human nature that when something bad happens, we have to find someone to blame. Lawsuits are big business, and the lawyers are there to make sure someone pays.
Of course, it is fair and just for someone to be compensated when an accident occurs. However, determining whom to blame can often be problematic. Take the world of intermediary brokers. They act as middlemen, contracting with carriers to haul freight for their clients. If they contract with a carrier, are they legally responsible for the carrier’s actions or are they simply matchmakers who align needs with resources?
This is a question that the U.S. Supreme Court addressed last month in Montgomery v. Caribe Transport II LLC. The court ruled in a surprisingly unanimous vote that brokers can indeed be held liable for the carriers they hire. In this particular case, the court ruled that, since Caribe had a “conditional” safety rating due to violations, the broker, C.H. Robinson, was liable for hiring it.
It will take some time to determine how all this shakes out for the industry. We have already seen higher spot rates, and insurance premiums are likely to rise. Costs will only increase as brokers invest more to qualify carriers. Capacity will tighten as carriers with spotty safety records exit the industry.
But what role does the government play in all this? After all, it is a government agency—the Federal Motor Carrier Safety Administration (FMCSA)—that registers and grants operating authority to the nation’s truckers. If a carrier is not qualified, should it be registered and allowed to operate?
But neither the FMCSA nor most brokers have the resources to properly vet carriers to weed out the bad actors. With nearly 1 million independent drivers out there, that is a monumental task. It has been reported that there are currently some 300,000 trucks operating with conditional safety ratings. How do you determine which of these poses real liability concerns if hired?
Getting back to who should pay, attorneys typically go for the deeper pockets. Independent drivers don’t have the resources to pay out big judgments, unless their insurance pays. But large brokers are easy targets for lawsuits, and so are some shippers.
Aside from cases where a broker knowingly contracts with a carrier that has proved to be unsafe, I question whether others should be held responsible for third parties they hire but do not control or directly supervise—especially when the government has already “qualified” those carriers by granting them operating authority.
