SHIPPERS AND BROKERS

Attorney Annette Sandberg said she has acted as an expert witness for the defense in these sorts of cases and is seeing more and more shippers and brokers being sued.  Plaintiffs are suing shippers and brokers under one or more of these 3 theories:

• Vicarious Liability

The shipper or broker has some liability if they utilized a carrier who they had some kind of relationship with.

• Negligent Hiring

The shipper or broker should have known what type of safety profile the carrier had and if they didn’t, they were negligent in an area that they were responsible for.

• Negligent Retention

If you broker a load and know that the carrier potentially poses a danger, you bear some level of responsibility.

Ms. Sandberg said that the CSA 2010 system potentially opens brokers up to more liability, particularly if the broker doesn’t, at least, look at the scores, understand the scores and understand what the scores means to their carrier base.   Two things Shippers and Brokers must do and know:

• Due Diligence.  Care or attention to how your select and provide your carriers.  Is it sufficient enough to avoid a claim of negligence?

• Reasonable Care.  The degree of caution and attention to possible dangers that an ordinarily prudent and rational person would use in similar circumstances.  This is particularly true regarding the use of carriers on an ongoing basis.

The two basic things that a shipper or broker must do are:

• Ensure the carrier has proper authority and adequate insurance.

• Look at the system that is available to see how safe the carrier is (due diligence).

It is not enough to ask the carrier if they have a Satisfactory rating.  The courts are taking the viewpoint that if, with the stroke of a couple keys, the broker can obtain safety information on a carrier that they will be hiring, it would be negligent to not do that for the good of society.

Taking the above two steps isn’t enough.  First, the safety rating can be old, so the date of the rating needs to be taken into account.  Satisfactory ratings have been viewed that were set in the 1980’s.  This doesn’t give an adequate idea as to the performance of the carrier today.  Second, plaintiffs have seized on the scores (in the old SafeStat system and now in the new system) that are more dynamic and may be more of an indicator of a carrier’s profile.

Ms. Sandberg identified the above standards, not because there is a bright line in the law stating how a broker should behave or how they should rate their carriers, but at a minimum brokers should understand and have a conversation with their carriers about what their scores look like and what the broker’s expectations of the carrier (without breaching that duty of independent contractor).  The broker should also ask themselves, is there a point where this carrier is bad enough that they would no longer be in our carrier base?  What would that point be?

Brokers need to look beyond the numbers with this new system, just like with SafeStat.  The DOT never intended for brokers to look at the 75 score on SafeStat and use it as the determiner as to whether or not a broker will use a carrier.  If a broker decides to hire a carrier with concerning scores and they get sued, that broker must be prepared to articulate why they chose to use that carrier.  What was their conversation with the carrier that made you choose to use them?  Was the carrier able to adequately explain their scores and assure the broker that they are operating safe and proper?  An example of an important question might be, “Have you looked at your score?  Can you tell us what you are doing to improve it?”  It is important that the broker shows that they are performing due diligence in order to hire a relatively safe carrier.  Another manner of evaluating the carrier is to look at their 24 month SaferStat trend.  Are they improving?  Were they poor and but making improvements and their rating is going down?

In looking at the bigger picture, brokers should look at where their carrier base stands, overall.  Look at their data.  What makes sense?    What kind of risk are you, the broker, willing to assume?

Shipper & Broker Expectations:

The Schramm v. Foster decision clearly stated that the broker has a degree of responsibility and that the driver is an Agent for the Shipper/Broker.  A number of things have been pointed out from this case law and other cases with regard to what’s expected to the broker:

• Brokers should make sure their attorney has performed a recent review of their carrier contract.

• Brokers should be careful of the types of controls they have over their carriers.  If it looks like their carrier is more than an independent contractor then it may impute a certain type of liability.

• What is the broker’s due diligence?  The TIA and others offer a framework to brokers in qualifying a carrier and, at a minimum, this should be something brokers should follow.