SCDigest editorial staff

A recent court ruling and subsequent settlement may raise important risk and liability issues for 3PLs, transportation brokers, and possibly shippers.

The issue arose after a carrier hired by broker/3PL C.H. Robinson caused an accident that left a man permanently and seriously disabled. His family sued not only the carrier, but also C.H. Robinson, which had procured the carrier on behalf of a shipper. Historically, only the carrier had been held liable for damages they caused. But in this case, the plaintiff also went after the deeper pockets of C.H. Robinson.

A federal judge in Maryland dismissed C.H. Robinson’s motion for summary dismissal of the suit on historical precedent and common law. The judge rejected that motion in the strongest terms, noting that “its self-proclaimed status as a 3PL providing one point of contact service to its shipper clients is sufficient under Maryland law to require it to use reasonable care in selecting the truckers whom it maintains in its stable of carriers.” C.H. Robinson subsequently settled out of court.

According to William Augello, a lawyer, adjunct professor at Arizona University and author of the popular book Logistics, Transportation and the Law, this case raises two key issues: (1) the possibility that other courts and plaintiffs will use this ruling to increasingly go after 3PLs, brokers and even shippers for damages carriers they hire may cause, with the immunity they have historically had to such liability being threatened; and (2) 3PLs and shippers must careful examine their marketing materials, web sites, contracts and insurance policies to minimize exposure and maximize protection.

“The court spelled out all the things C.H. Robinson had said about it’s “turnkey role“ in procuring transportation services, including showing a picutre of a truck on its web site with the C.H. Robinson name,“ said Augello. “There is no doubt future plaintiffs will use this decision to include brokers and even shippers liable for damages caused by independent carriers.“ He noted that already courts have held shippers liable for personal injury caused when freight falls out of the back of a trucks and causes injury.

Augello also said that only the largest carriers and brokers have sufficient insurance to cover major injury suits – and that plaintiffs will move up the chain to find the deepst pockets if these first two stops have insufficient coverage.

“3PLs, brokers and even shippers must perofrm a lot more due diligence in the areas of market, contracts and insurance policies,“ stated Augello. “Right now, most companies hardly even read this stuff. But the legal environment is now making it a necessity to be deeply aware of the specifics of these things.“

Are you surprised by this ruling? Do you expect 3PLs and shippers to face increasing liability risks for the actions of their third-party providers? Let us know your thoughts.