View
38
Download
1
Category
Tags:
Preview:
DESCRIPTION
3 rd National Forum. Defending & Managing Trucking Litigation. 11.29.2012. Extending Liability to Brokers. The Scope & Nuances of Recent Court Decisions & Their Impact on the Course of Litigation. Introduction. Source material & bibliography. Discussion of broad topic area. - PowerPoint PPT Presentation
Citation preview
Defending & ManagingTrucking Litigation
11.29.2012
3rd National Forum
The Scope & Nuances of Recent Court Decisions
& Their Impact on the Course of Litigation
Extending Liability to Brokers
Introduction
Discussion of broad topic area
Source material & bibliography
History of the
Case Law
Structured commercial relationships result from:
• Contract of transportation/bailment
• Transportation= intangible service = space – time – distance
Bill of Lading
1
Regulation
2
Peripheral involvement
of intermediarie
s
3
Bills of lading separate & structure risk exposure
Two asset-based parties are involved in transportation
Asset-based shipper= consignor= consignee= beneficial owner
1
Asset-based carrier EXCEPT for
truckload owner operator fleets
2
Owner operators = independent contractors
• Legal concepts of independent contract breaking down
• Principal Agent case law
• Truth In Leasing imposed control on non-asset based carriers
• Regulatory duties expanded carrier tort exposure – placarding liability jumps contract privity pre-deregulation
Historically, torts arising out of transportation basically confined to
carrier
Third parties not acting as intermediaries
• Brokers, brokered or purchased transportation … did not provide it
• Freight bill auditors acted peripherally
• Consolidators (shippers’ agents – shippers’ association = exempt forwarders) aggregated or deconsolidated … did not assume responsibility
• Warehousemen released to/received from transportation bailment … did not provide it
Conclusion…
...Commercial business
of transportation legally
structured without
intermediaries under
regulation
Evolutionary Changes to the
Case Law
Are breaking down transportation functions &
spreading transportation responsibilities to non-asset service providers
Deregulation eliminated structure…
i.e. 49 USC §14101(b) &
49 USC § 14706(c)
Intermediary development roughly followed Australian deregulation experience
1
Brokers broadened service beyond brokerage
2
Intermodal Marketing Companies (IMC) broadened exempt freight forwarding
3
Logistics service providers broadened brokerage with IT offerings managing
freight
4
Exempt transportation & produce brokers expanded offerings … C. H.
Robinson
5
Intermediaries assumed some or all of transportation functions
• Carrier qualification• Dispatch• Tracing• Meeting transit time requirements• Rate negotiation• Claims management• Litigation defense
6
Economies of scale resulted in intermediary growth
Summary…
Some major intermediaries’ options blend into …non-asset based motor carrier or freight forwarder
options… but without operating authority
Intermediary operations are fluid & generate complex litigation
• FedEx brokered to Aero Terra, Inc., (A Broker)
Who brokered to Stallion Logistics, Inc., (A Broker)
Who Brokered to King’s (A Carrier)
Who Brokered to A Sister Infinity Logistics, Inc. (A
Broker)
Who brokered to & paid a number of carriers
• FedEx paid but Infinity not paid
• Kings & Infinity start suit against all intermediaries
& 186 shippers/consignees
King’s Express, Inc., et. al. v. FedEx Freight Corporation, 06 L 10929 (Cir. Ct. Cook Co., IL)
1
• Joseph T. Ryerson & Son, Inc. subcontracted all transportation management to 3PL Corp. (A 3PL/Broker) Who subcontracted shipment to Illinois Motor Service, Inc. (A
Carrier) Who subcontracted to Dorlan Crane (Ind. Contractor/Owner
Operator)
• All contracts assured operations as independent contractors
• Crane ran over Hoffman family
• Ryerson had $100,000,000 coverage
• 2.12.2012 – Jury Verdict For Hoffman family = $27.67 Million
• Coordinated operation between all parties was joint venture
Hoffman, et. al. v. Crane, et. al. 07 L 11406 (Cir. Ct. Cook Co. IL)2
Conclusion
• In Schramm v. Foster, 341 F. Supp. 2d, 536 (D. Md. 2004) Judge Motz’ Holding is prophetic
• Since 1995, broadened direct relief against parties up the supply chain has evolved
…(i)n the last analysis, this is a case in which the law may simply have to catch up with an obligation that Robinson has voluntarily assumed, presumably in response to the demands of the market…
“”
Contemporary &
Evolving Causes of Action
Elements of some
causes of action sounding
in tort successfully used
against parties
up supply chain
Torts arise based on
what parties did
…not what contracts say
… facts control, not privity
Duties on which torts rest also rest on…
1
statutes
…as well as classic tort duties
2
regulations
3
contracts
Cause of action can arise from principal-agent relationship
applying classic respondeat superior concepts to impose vicarious liability
• Negligent action • That is proximate cause • Of plaintiff’s injury • By independent contractor • Who has become an agent • By control or right to control of principal
Citation Example
Sperl v. C. H. Robinson, Inc. 408 Ill.App.3d 1051 (2011) cert. den.
2011 Ill. LEXIS 1450
Cause of action can arise from negligent hiring
• Negligence in failing to exercise• Reasonable care• Selecting fit carrier requiring• Affirmative due diligence, i.e., no
reincarnated carrier but safety evaluation required where public safety involved
Citation Example
Schramm v. Foster, 341 F. Supp. 2d 536 (2004)
Cause of action can arise from negligent entrustment
• A person charged to do something• Permits a third person• To use a thing or engage in an activity• In a manner so as to create an
unreasonable risk• When the person controls or has a right to
control the third person
Citation Examples
Cf. Harris v. Velichkov, 2012 U. S. Dist. LEXIS 63021 (Neb. 2012)
Jones v. C.H. Robinson Worldwide, Inc., 558 F. Supp 2d 630 ( W.D.
Va. 2008)
Statutory cause of action under 49 usc 14704(a) allowed
• A carrier or broker• Damages to a person• Caused by an act or omission of broker or
carrier• In violation of Part IV of the Interstate
Commerce Act• Minority rule allows cause of action for
personal injury
Citation Examples
Minority Rule: Marrier v. New Penn Motor Express, Inc. 140 F. Supp. 2d 326 (D. Vt.
2001)
Majority Rule: Lipscomb v. Zurich American Ins. Co., 2012 U.S. Dist.
LEXIS 72955
No Cause Of Action Under 49 USC 14707(a): Tierney v. Arrowhead
Concrete Works, Inc., 791 N.W.2d 540 (Mn. App. 2010)
Also, No Cause Of Action Under 49 USC 14707(a)
• A carrier or broker• Damages to a person• Caused by an act or omission of broker or
carrier• In violation of Part IV of the Interstate
Commerce Act• Minority rule allows cause of action for
personal injury
Other examples of torts that lie against non-carrier participants
1
Tortious interference with contract
2
Theft by deception
3
Conversion
4
Strict liability, i.e., shipper tender of hazardous materials
Cf. Senator Linie GMBH & Co. Kg v. Sunway Line, Inc. 291 F.3d 145 (2d Cir.
2002)
5
But note pre-emption of negligence on freight claims
Cf. Non Typical, Inc. v. Schneider Logistics Int., Inc. 2012 U.S. Dist. LEXIS
73452
Conclusion
Breakdown in historical structure of transportation
1
Realigns business relationships
2
Expands risk of tort liability extending up supply chain
Successful representation of supply chain participant requires careful weighing of:
New innovative transportation concepts that provide economies of scale & efficiencies of service
vs Risk exposure &
insurance requirements
Pay attention to legal audits
resulting from multi-party
relationships
SULLIVAN HINCKS & CONWAY
Daniel C. Sullivan120 West 22nd Street, Suite 100
Oak Brook, Illinois 60523
Phone: 630.573.5021
Fax: 630.573.5130
www.shlawfirm.com
counsel@shlawfirm.com
Small Firm. Big Experience.
Recommended