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New Case Law Holds Manufacturers Liable In Trucking Industry Suits

By: Michelle Corbet, Reporter
Memphis Business Journal

New Case Law Holds Manufacturers Liable In Trucking Industry Suits

If an 18-wheeler crashes with another vehicle, the truck driver and the trucking company could be held liable. But, so could the company that makes the product sitting in the truck or the logistics company that subcontracted the shipment.

Recent broker liability law enables injury attorneys to not only go after the truck driver who physically causes an injury or loss but any company along the way that uses a freight broker or middleman to subcontract that driver.

The law emerged with several high-profile court rulings that awarded plaintiffs multimillion-dollar verdicts against logistics brokers who had subcontracted shipments to trucking companies.

“Liability can occur when a manufacturer of a good or product retains a major logistics company and, unbeknownst to the manufacturer, the work is subcontracted out,” said Glenn K. Vines Jr., an attorney with Nahon Saharovich & Trotz PLC and chair of the firm’s Trucking Litigation Section.

Nahon Saharovich & Trotz, which exclusively handles plaintiff’s cases, has recently litigated several complex broker liability cases.

“After extensive litigation and the expenditure of significant time, resources and litigation expenses, each case resolved just prior to trial for seven-figure settlements,” Vines said, not able to speak to specifics due to confidentiality agreements.

As Vines represented the more than 100 families who experienced injuries or death due to trucking accidents, he and his team began to witness a pattern — the 18-wheeler involved was typically owned by a small company with few assets and little insurance.

Vines also often found that, typically, the original manufacturer had hired a publicly traded logistics company with a proven history, assets, safety polices and reputation. But, without the manufacturer knowing, the logistics company would then utilize a freight brokerage service to subcontract the shipment to a smaller trucking operation for a lower cost.

“As we peeled back the layers, often the major logistics company was hiring [subcontractors],” Vines said.

Because the trucking industry has experienced rapid growth in the past few years, the federal government has not been able to keep up its regulatory pace, and a large number of licensed companies that are taking these brokered deals have not yet been audited by the Federal Motor Carrier Safety Administration.

But, both the logistics company and the manufacturer can be held liable if something goes awry. While a major logistics company has the assets and insurance in place to protect the manufacturer, a smaller company often doesn’t.

“If a logistics company knows a company is unrated, it needs to do more investigative work on the front end,” Vines said.

He suggested that manufacturers also need to ask more questions before signing a Transportation Brokerage Agreement, which sets forth the rights between the logistics company and the manufacturer.

Manufacturers need to thoroughly review the agreement and determine affirmatively if the logistics company is brokering the work out or shipping it themselves. If the work is being subcontracted, the manufacturer ought to demand the logistics company use companies who have a satisfactory safety rating.

“In representing these families, not only do we want to get compensation for harms they’ve suffered, but we also want to make this community and region a safer place,” Vines said. “One way we can do that is by ensuring logistics companies who subcontract this work out are brokering these loads to competent and safe trucking companies.”