(June 2024) - According to the U.S. Chamber of Commerce Institute for Legal Reform, nearly one in four auto accident trials that result in a verdict of $10 million or more involve a trucking company. Faced with the prospect of such high payouts, the plaintiff's bar is increasingly searching for deeper pockets in motor carrier personal injury cases by targeting third parties. Freight brokers are most often dragged into such cases under theories of negligent hiring and vicarious liability, though defending against such fact-intensive claims can be costly and difficult. Fortunately, brokers can limit exposure to vicarious liability through clear delineations of responsibilities in their contracts with motor carriers and strict adherence to the contracts' terms. Here's an excellent example.
In a huge win for freight brokers, a panel of the Appellate Court of Illinois on September 28, 2023 reversed a jury verdict, including an $18,150,750 award, against a broker. The panel reached its conclusion after finding that all the evidence presented at trial, viewed in the light most favorable to the plaintiff, overwhelmingly favored the conclusion that a driver and motor carrier were not agents of the freight broker.
In Cornejo v. Dakota Lines, Inc., No. 1-22-0633, 2023 IL App (1st) 220633 (Ill. App. Ct. Sep. 27, 2023), a freight broker had a long-standing contract with a motor carrier for the transportation of automotive parts for the broker. Following an accident involving a driver-employee of the motor carrier, a lawsuit was filed against the driver, motor carrier, and freight broker.
The matter proceeded to trial. The evidence presented at trial established that the motor carrier hired, trained, and paid the driver and that the driver did not communicate with anyone directly employed by the freight broker. The evidence further demonstrated that the freight broker did not have the power to hire or fire the driver, did not instruct the driver on what routes to take, and did not own the equipment used by the driver, including the truck and trailer. Moreover, the contract between the freight broker and motor carrier stated expressly that the motor carrier was an independent contractor and that the motor carrier was solely responsible for its employees and agents.
At the conclusion of trial, the jury answered a special interrogatory finding that the motor carrier was an agent of the freight broker at the time of the accident. After the trial court denied the freight broker's motion for judgment notwithstanding the verdict, the freight broker appealed.
On appeal, the freight broker raised numerous issues. The appellate court panel, however, found it need address only the first issue raised: whether the trial court erred by declining to grant judgment notwithstanding the verdict in favor of the freight broker because the freight broker was not vicariously liable for the driver's negligence, since neither the driver nor the motor carrier were agents of the freight broker. The panel found that the trial court so erred.
In reaching this conclusion, the panel emphasized that the "cardinal consideration" in determining whether there is an agency relationship is whether the freight broker "retains the right to control the manner of doing the work." The panel then cited the following non-dispositive factors that aide in making the determination: "(1) the question of hiring, (2) the right to discharge; (3) the manner of direction of the servant, (4) the right to terminate the relationship, and (5) the character of the supervision of the work done."
The panel found that these factors were not met based on the evidence presented at trial. Indeed, the panel found that "all the evidence—when viewed in the light most favorable to plaintiff—so overwhelmingly favors" the freight broker "by showing, as a matter of law," that the driver and motor carrier were not agents of the freight broker and "that no contrary verdict based on that evidence can stand." The court specifically pointed to the fact that the freight broker did not hire, train, pay, fire, or otherwise control the motor carrier's drivers. Notably, the court further found that it was undisputed that the freight broker and motor carrier adhered strictly to the terms of their contract, which provided that the motor carrier had full control over its personnel and would perform services as an independent contractor. The panel further pointed to the fact that the motor carrier and freight broker did not have an exclusive relationship.
Finally, the panel rejected plaintiff's argument that the requisite level of control was established based on the fact that the freight broker required the motor carrier to add the broker as an additional insured on its insurance, to use a specific communication platform, and to abide by requirements regarding seal integrity, freight bills, and cargo security. Specifically, based on a robust review of Illinois caselaw, the panel concluded that none of these factors showed the degree of control over the work performed necessary to support the conclusion that an agency relationship existed.
This case highlights the difficulties freight brokers face when confronted with vicarious liability claims related to motor carriers and their drivers. Nevertheless, these difficulties can be overcome with clear delineation of responsibilities in contracts between motor carriers and freight brokers, as well as strict adherence to the terms of those contracts. On a broader scale, this decision demonstrates that freight brokers generally do not have the requisite level of control over drivers to expose themselves to vicarious liability. The underlying plaintiff filed a petition for discretionary leave to appeal with the Illinois Supreme Court and leave to appeal was denied. As a result, such favorable case law, especially if followed in other jurisdictions, should result in less vicarious liability claims lodged against freight brokers.
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