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Judge Rules Vicarious Liability Applies in Lawsuit Against Carrier

August 25, 2014

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What one media outlet calls a “landmark decision” by a federal court pushes aside a nearly decade-long federal protection for vehicle leasing companies. It's expected to affect trucking companies whose owner-operators are involved in accidents when certain leasing arrangements are used.

The case involves the Graves Amendment, a federal provision that was ruled not to apply in a civil case filed against a truck’s owner in the Western District of New York, according to the Buffalo Business Journal/Buffalo Law Journal.

Michael Stratton is suing over the death of his wife in a 2009 crash that was caused by a truck driver who was watching pornography at the time of the crash along the New York Turnpike.

The driver has since been convicted of second-degree manslaughter and is currently in jail.

Named in the suit are a number of defendants, including the trucker’s employer, Millis Transfer; the tractor-trailer’s owner, Great River Leasing; and the parent of both Millis Transfer and Great River, Midwest Holding Group.

The judge ruled the parent company, Midwest Holding Group, can be held liable for the actions of its affiliates, even if the owner was not operating the vehicle at the time of the crash, essentially rejecting an argument that the Graves Amendment pre-empts states’ vicarious liability laws.

The Graves Amendment granted immunity to vehicle rental and leasing companies by overriding the laws of states that held vehicle owners "vicariously liable" for the acts of their drivers.

But the judge said that with both companies being owned by the same parent corporation, the lessor and lessee were related by more than just a lease agreement.

The ruling is expected to be significant for thei ndustry, according to the attorney for the plaintiff, with the ruling setting “a precedent for trucking company operators.”

Read more about it from Buffalo Business Journal/Buffalo Law Journal.

Comments

  1. 1. Greg Foreman [ August 25, 2014 @ 03:23PM ]

    Substantially, I agree with this courts decision. In the trucking industry, which is not alone in this approach, shield corporations are created for the sole purpose of protecting or limiting the main, owning corporation, exposure to civil liability.
    Four or five corporations, separate legal entities, are created to “shield” the “mother shield”, I.e, the corporation actually controlling operations-in some cases a holding company, from civil liability. The truck is “leased” by one company(shield 1) that then subleases the truck to a carrier(shield 2) both companies, shields, being owned by the “mother shield”. Payment for the leased equipment originates with the “mother shield” but is “laundered” to the lessee, shield 1, as a lump payment with the lessee making the lease payments.
    The same "liability laundering" is practiced by many companies in many different industries all with the same goal-limiting corporate civil liability as much as possible. Hopefully, this decision will establish a precedent applicable to industries across the board.

  2. 2. thomas horn [ August 28, 2014 @ 05:51PM ]

    I also agree it doesn't mater who owned the leasing company. Unless the driver company purchase the the insurance with the least at the time of lease. Saying that the company would problery won't to settle out of court. Rember the compamy would had to set aside a 5 million dollars at the time of death per person . I sorry for the family that lost mother grandmother wife etc in this accident the head lines on the news the net etc would be bad bad for getting new customers etc. And keeping the old customers . You also might check in for during internet company for disclosers on not using the internet will driving. (customers phone contract ) once again I sorry for the death bit umfortionly there will meany more safety is nothing more to a company but a runner stamp . Also check for safety meetings held with this by dot law they have to safety meetings per year
    This death was um called for . I wonder how many years this driver has been drivening? You alsomau want to check out the porn site for there discloser when signing up for a porn service. As you can tell I really have zero tolerance for drivers who think that I have it under control or this can happen to me I have been in truck industery for 30 yes and safety for 26 years I learn something everyday on the road. You always have yo be ready and looking for spmething to happen I pray for healing with this family and for the drivers family for something could had been avoided from the get go

 

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