C.H. Robinson Supreme Court Case Takeaways

By now you probably saw the big news hitting the trucking and logistics industries from the U.S. Supreme Court. The Supreme Court ruled in Montgomery v. Caribe Transport II, LLC that brokers can be held liable for negligently hiring the motor carrier in a motor vehicle accident. To be clear, the court did not say C.H. Robinson is liable; the court simply said a broker can be held liable under state law. This is a big deal for both brokers and carriers.

You can read a lot of good recaps of the case. I am going to jump right to my initial takeaways for brokers and carriers.

The Lawyers Win Again

The only constituency that definitely wins is lawyers. Lawyers win because litigation will explode even more.

Brokers Should Review Carrier Selection Practices

Caribe Transport, the carrier involved in this accident, was a conditionally rated carrier with a number of recorded violations. The most critical takeaway for brokers from this case is to review your carrier selection practices. Good carrier selection practices include collecting proof of insurance, getting contracts in place, confirming operating authority, reviewing public safety data, and more. Review your practices to make sure your practices are (a) written down, (b) effective in vetting out riskier carriers and favoring good ones, and (c) consistently applied. Now is the time to take a fresh, critical look at your practices.

Brokers Should Know Their Insurance Coverage

Talk to your insurance agents to make sure you know what your liability insurance policies will and will not cover if you get sued in a motor vehicle accident case.

• What policy exclusions could stop you from getting coverage? Get into the weeds with your agent to make sure you know your operational and administrative practices support you being covered by insurance, and do not trigger exclusions and exceptions.
• If an accident occurs, what should you do? Talk to your insurance agent about what you should do if an accident occurs. What phone number do you call? What data do you collect? How involved should you be in the accident on day 1? Your first steps can have a big impact on getting insurance coverage later. Will your insurance company hire a law firm for you right away and help you collect records and data and coach you through the aftermath from the accident on day 1? Or are you supposed to hire your own lawyer or do things on your own first? Get into the details with your insurance agent and establish a post-accident protocol for your team.

Good Carriers Should Sell Their Good Safety Records

In theory (who knows what reality will bring), if brokers face increased liability exposure for hiring bad carriers, brokers will be more incentivized to prioritize carriers with good safety records. If you are one of those good carriers, promote your record. Preach it to your broker customers to get higher up their priority list, to earn more rate, better loads, etc. If you do not have your best record right now as a carrier, prioritize improving your safety practices and safety records so you can pass what could be more stringent carrier selection practices from brokers.

If you have questions about what this ruling means for your operation as a broker or a carrier, your carrier vetting practices, or your broker-carrier contract language, reach out to The Grawe Group. We are here to help you navigate it.

The Grawe Group, LLC is here to bring peace of mind to you and your business. We are a professional services firm focused on the transportation industry. With a team of experienced executives, we provide general counsel, executive leadership, and special project services for trucking and logistics companies. From legal and risk management matters, to operational, financial, and leadership challenges, the Grawe Group has the practical expertise in trucking and logistics to help you build sustainable success. www.thegrawegroup.com

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