The merging of transportation functions, some might even say identities, is a significant feature of transportation’s evolution since deregulation of the various modes was accomplished in the 1990s. Intermodalism in the current era has become more than just systematic management of freight movement through different means of carriage. Rather, technology, economic dynamics, regulation and business planning have incentivized players of all sizes to wear shipper, intermediary, carrier and other hats – in the air, on the ground, or in the water – frequently within a single transaction.
All that’s fine, until it causes a service provider to lose sight of the implications such different hats have on its liability. Just ask CH Robinson Worldwide, which recently found itself on the wrong end of a $23.7 million judgment after a truck driver was involved in a fatal accident. CH Robinson is one of America’s largest and most prominent transportation companies, and generally recognized to be primarily a surface freight broker and freight forwarder. But apparently, its business activities extend into actually procuring cargo ownership as part of its transactions with customers or, perhaps better said, business partners.
CH Robinson had an arrangement with Jewel Food Stores whereby the former would purchase food products, warehouse them, and provide ongoing transportation services on the latter’s behalf. CH Robinson had contracts with a series of motor carriers, including Toad L. Dragonfly Express (“Dragonfly”) in Illinois. Recognizing master-servant and vicarious liability risks employers bear, that contract was careful to specify that the carrier and its drivers were independent contractors and not employees of intermediary-cum-shipper CH Robinson.
But that’s about all CH Robinson did to distance itself from responsibility for accidents. In addition to looking a lot like a shipper on the property ownership side of the equation, it looked even more like a motor carrier on the transport side. CH Robinson actually dispatched the drivers of its contracted motor carriers, offering them loads at stated comp rates. It imposed on those drivers a complex and encompassing list of very strict rules regarding each haul. These included constant notification of the driver’s whereabouts; verification of freight and its condition; delivery times; and fines for late delivery.
In accordance with prescribed procedure, Dragonfly driver DeAn Henry contacted CH Robinson in search of a load. She was dispatched to run a cargo of potatoes from Idaho to Bolingbrook, Illinois. Tragically, her rig collided with several vehicles on Intestate 55, causing two fatalities and other serious injuries. When the estates and injured individual sued, Dragonfly and she admitted liability, but couldn’t come up with the tens of millions plaintiffs were after. The suit also named deep-pocketed CH Robinson, which denied liability on the ground, hey, Dragonfly and Henry were independent contractors, and not its employees.
After all, urged CH Robinson, Dragonfly is a motor carrier which is the lessee of owner operator Henry’s rig, and which has a freight brokerage contract with CH Robinson that clearly defines the relationship. These arrangements are industry standard, and both federal and Illinois state law recognize that brokers generally aren’t liable for the mishaps of their independently contracted motor carriers.
But this is quite a different situation than the garden-variety broker-motor carrier arrangement presents. The common law analysis of whether an entity bears vicarious liability for the wrongdoing of its help hinges on the level of control that entity exercised, or had the right to exercise, over the worker bee. In other words, call her what you will, but if you control her extensively in her work activities for you, she’s your employee. Here, the level of control was extensive (arguably, greater in some ways than what motor carriers have over their own drivers). CH Robinson controlled virtually aspect of Henry’s activities. Indeed, it’s tough to see any significant aspect of Henry’s work that Dragonfly had say-so on.
Perhaps the most compelling point of control was that the parameters of CH Robinson’s direction of the haul would have made it impossible for Henry to deliver the load on time, within speed limits, and in compliance with federal regs regarding hours of service. Had she complied with those regs, CH Robinson’s late fines would have eaten up her entire freight charge.
Precedents addressing similar circumstances in which intermediaries skated free are distinguishable, again, because the level of control over trucking operations in those cases didn’t approach what CH Robinson had going here. Thus, an Illinois appellate court affirmed a jury’s multimillion dollar award, and refused to set aside the trial judge’s denial of CH Robinson’s motion for a judgment notwithstanding the verdict.
While transportation’s evolution focuses less on mode and role specificity, and more on market freedom, efficiency and profitability, industry participants should be mindful that with new roles come new liability exposures. And it’s not enough just to say in a contract that you’re something you’re not.
Ref: Sperl v. CH Robinson Worldwide, Inc., et al., pending in the Appellate Court of Illinois, Third District, under Nos. 04-L-428, 05-L-812, and 09-L-005, Opinion dated March 30, 2011.
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