April 2, 2012 1:30 AM, EDT

TIA Pushes Broad Offensive to Lower Brokers’ Liability

By Rip Watson, Senior Reporter

This story appears in the April 2 print edition of Transport Topics.

SAN ANTONIO — The Transportation Intermediaries Association has launched a broad offensive to reduce brokers’ liability in accident cases by using judicial, legislative and regulatory approaches.

During its annual meeting here late last month, the trade group outlined its agenda, including pushing for the passage of a law that would force the Federal Motor Carrier Safety Administration to rate carriers as either “Safe to Use ” or “Unsafe to Use,” along with language stating that brokers or shippers using “Safe” carriers won’t be subject to liability suits.

TIA said it is taking steps in response to a growing number of court cases in which brokers have been accused of negligent hiring or vicarious liability, the legal doctrine that can make one party, such as a broker, liable for the actions of another, such as the trucker hired by the broker.

“It seems like every other month there is a case coming out where brokers are being accused of negligent hiring or vicarious liability,” Alec Gizzi, TIA’s chairman and president of JBS Logistics, told Transport Topics.

He called the issue “a major concern” that TIA has decided to tackle “head on” for the first time.

Less than three weeks before TIA’s action, an Oregon jury found broker Heyl Logistics and a trucker liable for $5.1 million in damages. After that decision, lawyers for the family of a trucker killed by another driver moving Heyl’s load reached a financial settlement with the broker (3-26, p. 2).

In that case, the jury found the broker was negligent in hiring a company that in turn found another company, whose operating authority wasn’t active, to move the load.

After the verdict, plaintiff’s lawyer Rena Samole said, “Right now, it’s up to the courts to keep our roads safer by providing some deterrent to careless brokers.”

As part of its effort, TIA said it will offer assistance in court cases, and conduct member education sessions to help further its goals.

Another part of the plan is “to work with FMCSA on improving CSA scores,” Gizzi said.

TIA’s efforts are emerging as FMCSA considers a broad effort to establish new carrier safety fitness standards to supplant the current “Satisfactory,” “Conditional” and “Unsatisfactory” ratings.

Those ratings are remnants of its SafeStat system, which was supplanted by the Compliance, Safety, Accountability program, and scores derived from Behavioral Analysis Safety Improvement Categories (BASICs), such as unsafe driving.

The agency hasn’t yet said when it would propose those new standards, leaving brokers and others to use scores released by the agency to select carriers.

Speaking at TIA’s meeting, FMCSA Assistant Administrator Jack Van Steenburg did not disclose details, but said FMCSA wanted to make the new fitness determination system “fair.”

He also said the CSA process has successfully helped 83% of carriers that received FMCSA warning letters about safety problems improve their scores.

“It is difficult to deal with a gray line [around broker liability] that is constantly moving,” Gizzi said. “When plaintiff’s attorneys use the scores to argue whether brokers should or should not have selected a carrier, then it makes it difficult for shippers and brokers to select any carrier, even if their rating is not ‘conditional’ or ‘unsatisfactory.’ ”

Broker liability for accidents by carriers they hire first was raised in a 2004 Maryland case.

More recently, an Illinois state appellate court last year upheld a $23.7 million judgment against broker C.H. Robinson in a negligent hiring and vicarious liability case.

On the other hand, Robinson won an earlier state court case in Virginia, in which a judge found that the company was not liable for a fatal accident involving a truck carrying a Robinson-brokered load.

The company did not respond to messages seeking comment by press time.

“We really want to push legislation where interstate commerce is only dealt with in the federal courts,” said Gizzi, whose firm is based in the Chicago area. “We don’t feel state or local courts have jurisdiction to handle these cases.”

Asked for comment on TIA’s plan, American Trucking Associations spokesman Sean McNally said, “FMCSA plans to propose expanding its CSA program into the safety rating arena. ATA believes, however, the CSA program needs to be improved significantly before it should be used in this manner.”

Gizzi also emphasized that while scores from the Safety Measurement System categories such as unsafe driving are im­portant, they are not the final word.

“(CSA scores) are not the determining factor as to whether a carrier is safe or unsafe,” he said. “That is FMCSA’s responsibility. If a carrier is unsafe, I don’t want to use him.”

He also said that TIA supports increased inspections to take unsafe carriers off the highways.