Lawyers at the conference said the legal landscape in the
wake of the case, known in transport law circles simply as
“Schramm v Foster,” remains muddled. One said brokers
and their attorneys are still “in a state of chaos and confusion” over how to interpret the body of law on the books
since Motz’s 2004 ruling. “Brokers are the victims of this
confusion,” said another, Wesley S. Chused, from the
Boston firm of Looney & Grossman LLP.
The deepening bond between shippers, intermediaries,
and truckers has only thickened the legal quagmire.
According to SJ Consulting, a Pittsburgh-based consultancy, roughly 20 percent of the less-than-truckload industry’s
revenues are generated through brokers and 3PLs. That figure reflects the growing influence of intermediaries in the
shipper-carrier relationship.
NO RELIEF
Shippers and brokers hoped they would get relief from a
March 2011 policy directive by the Federal Motor Carrier
Safety Administration (FMCSA), the sub-agency of the
Department of Transportation tasked with truck safety. The
agency said at the time that under its “CSA 2010” program
for grading carrier and driver performance, unless a truck-
er in its database received an “unsatisfactory” rating or was
ordered by FMCSA to discontinue operations, the carrier is
“authorized to operate on the nation’s roadways.”
However, FMCSA has said that CSA should be only one
tool for shippers and intermediaries to use in vetting a carri-
er. The agency has also made clear that it is not mandated to
give business guidance to private industry and that legal issues
surrounding liability and negligence are beyond its scope.
None of this sat well with conference attendees. One complained that FMCSA doesn’t provide enough information in
CSA for shippers and brokers to perform proper due diligence
in evaluating a carrier’s safety fitness. Attendees also voiced
concern that, absent a simple “thumbs-up, thumbs-down”
from the agency on which carriers are fit to operate and which
are not, shippers and brokers face enormous liability risk even
though their own research may have indicated the driver was
fit and the carrier safe before they were hired.
SUGGESTED REMEDIES
Over the years, various attorneys have suggested ways brokers can protect themselves. The first is to remember the
general rule that a broker has a duty to use reasonable care
in selecting the truckers it dispatches to haul a shipper’s
cargo. That means ensuring the trucker has valid operating
authority, has adequate cargo and liability insurance, and is
free of federal safety violations. It is also the broker’s duty to
check a carrier’s safety statistics for any infractions.
According to legal experts, a broker-carrier contract
should explicitly state that the broker is not the driver’s
employer and that the driver is paid by the carrier, not the
broker. Brokers should also understand that if they provide
go figure …
15.6%
The annualized rate of increase in the dollar value
of U.S. exports between 2009 and 2011. The pace is
greater than the 14.9-percent annual increase
required to meet President Obama’s 2010 goal of
doubling U.S. export value by the end of 2014.
SOURCE: U.S. IN TERNATIONAL TRADE ADMINIS TRATION
a carrier with all or most of the carrier’s business, courts
and juries may assume the carrier serves as the broker’s
employee, according to legal experts.
It’s all about perceptions of control, wrote Bradford T.
Child, a partner in the Los Angeles law firm of Millard,
Holweger, Child & Marton, in a 2007 paper. “The more the
broker controls the manner in which the trucker and driver perform their job, the more likely the broker may be
found to have a master/servant relationship such that the
broker will have liability for the negligence of the trucker
and truck driver,” he wrote.
The same holds true for a 3PL, whose duties may extend
beyond the broker’s job of just arranging transportation.
Eric L. Zalud, a Cleveland-based lawyer, wrote in 2005 that
although a 3PL can get involved to some degree in the daily
operations that affect the movement of goods it is contracted to transport, too much involvement might not be wise.
A 3PL having “frequent operational contact” with a driver to provide daily or regular instructions could, in the eyes
of a judge or jury, frame that 3PL as a “carrier” and expose
it to unnecessary and costly liability, Zalud said at the time.
TEN YEARS AFTER
A decade after the Maryland accident and nearly eight years
after Motz’s ruling, the case still generates much emotion and
controversy. Defense attorneys grouse that the judge grasped
at straws to create a duty for Robinson beyond what was
required of it. Many in the transport law community consid-
er it to be a bad ruling from a lower court that, in the words
of Henry E. Seaton, partner in the Vienna, Va.-based law firm
of Seaton & Husk LP, has “scared an entire industry.”
Nevertheless, the law is the law, and everyone who moves
goods by truck for a living will be faced with the fallout for
years to come. In what would become a portentous com-
ment, Motz wrote in his decision that “this is a case in
which the law may simply have to catch up with an obliga-
tion that Robinson has voluntarily assumed, presumably in
response to the demands of the market.”
The “catching up” may have just begun. ;
—Mark Solomon
