How Do Brokers Know They’re Contracting With a Safe Carrier?

Motor carriers aren’t the only transportation entities dealing with “nuclear verdicts” in lawsuits resulting from truck crashes. Brokers and third-party logistics companies can get caught up in these lawsuits, as well.

In an interview on the state of the broker business for the October issue of HDT, I talked with two officials from the Transportation Intermediaries Association, and learned that this is a major concern. TIA represents brokers and 3PLs of all sizes, including those that are arms of asset-based carriers.

“I think we can all of us agree that these nuclear verdicts are ridiculous for the carriers,” said TIA Interim CEO Doug Clark. Plaintiffs’ attorneys will go after brokers for negligent hiring of an independent contractor if they should have known that carrier was potentially unsafe.

“Brokers are subject to huge liability risk in terms of negligent selection lawsuits and vicarious liability lawsuits that exist out there in the marketplace,” explained Chris Burroughs, TIA’s vice president of government affairs.

In 2012, an Oregon jury returned a verdict of nearly $5.2 million, including punitive damages, to the family of a man killed by a commercial truck, in a case that may have involved the first punitive damages verdict against a transportation broker in a case involving a negligent hiring claim.

Plaintiffs’ attorneys argued successfully that trucking broker Heyl Logistics failed to perform due diligence when it hired Washington Transportation to haul goods for bottled water giant Nestle Waters North America. In 2008, Washington Transportation truck driver Daniel Clarey was apparently coming off a crystal methamphetamine high and falling asleep at the wheel when he plowed into and killed Kelly Linhart, another truck driver, who was standing roadside inspecting his vehicle's brakes. It was shown in court that Washington Transportation was without insurance and without operating authority when the broker tendered the load.

In a press release, the plaintiffs’ attorneys said, “There is little government oversight of transportation brokers. Brokers are essentially middlemen that hire truck companies for shippers. But there is no regulatory watchdog to oversee brokers' hiring practices. Right now, it's up to the courts to keep our roads safer by providing some deterrent to careless brokers.”

Motor Carrier Safety Selection Standard

TIA is pushing government officials to address issues regarding how brokers check on carriers’ safety records before contracting them to handle a load. The “nuclear verdicts” that have become such a large problem in the trucking industry also can reach out to include the broker that contracted with the motor carrier to haul freight.

TIA has been working with Congress to establish a Motor Carrier Safety Selection standard. In July, a bill was introduced in the U.S. House that would require anyone selecting motor carriers to check certain data points before tendering a load. There currently is no standard or requirement for entities to check prior to selecting a motor carrier, according to TIA.

Specifically, H.R. 7457 would require entities to ensure that any carrier they contracted to transport a load of freight on behalf of their customer:

• Is properly registered with the Federal Motor Carrier Safety Administration;
• Has obtained the minimum required insurance; and
• Has not been placed out-of-service at the carrier level for any reason.

However, the bill has not progressed in this Congress. A similar bill was introduced in 2015.

Safety Fitness Determination

TIA also has been pushing for the Federal Motor Carrier Safety Administration to finish its work on a new safety fitness determination. This has been in the works at the agency since the CSA Compliance, Safety, Accountability program rolled out in 2010. The agency’s plan was to formally incorporate the CSA data and rating system into a standard for determining if a carrier is fit to operate. Right now, although CSA data may help inspectors target problem carriers for compliance inspections, it’s not officially part of the determination as to whether a motor carrier is fit to operate. Only compliance inspections result in those Satisfactory, Conditional, and Unsatisfactory ratings, meaning a great many carriers actually have no safety fitness ratings at all.

FMCSA finally issued a proposal in January 2016, which would have replaced the three-tier “satisfactory–conditional–unsatisfactory” ratings system in place since 1982 with a single determination of “unfit” – “essentially a red light-green light” system, Burroughs explained.

But it ran into roadblocks. Much of the trucking industry said the safety-fitness determination proposal should take a back seat to fixing the CSA system, citing flaws in the data that drives the current Safety Measurement System (SMS) within CSA. FMCSA scrapped the proposal in 2017.

“CSA is obviously broken,” Burroughs said, although the agency has initiated several projects to fix it, including the new Crash Preventability Determination Program that launched this year to keep carriers from having their CSA scores affected by crashes that were clearly not the motor carrier’s fault.

Another project that has been in the works to fix CSA, using item response theory as recommended by the National Academies of Science, seems to be stalled. In fact, Scopelitis Transportation Consulting has gone out on a limb and is predicting that FMCSA will not replace the current CSA SMS scoring algorithm with the much-talked-about IRT scoring method.

“It’s years away from fixing,” Burroughs said. “For the meantime, we need a fair system for carriers and a fair system for drivers and shippers.”