Vicarious Liability Lawsuits Hitting Shippers

A Vested partnership with a supplier, 3PL or transportation provider can help insulate a business from “vicarious liability” lawsuits, according to TranzAct Inside, a group that provides information and research on transportation management. In its new executive briefing, “27 Million Reasons for Shippers to Address Vicarious Liability,” “vicarious liability” is described as a form of secondary liability that assigns responsibility to the superior for the acts of their subordinate, i.e., the responsibility of any third party that had the “right, ability, or duty to control” the activities of a violator.

Mike Regan, president of TranzAct Technologies, cites two recent judgments as prime examples of this.

In an Oregon case, Linhart v. Heyl Logistics LLC, a jury found that Heyl Logistics failed to perform due diligence when it hired a Washington Transportation driver to haul goods for bottled water giant Nestle Waters North America. They awarded $5.2 million to the family of a person killed in an accident, when the driver fell asleep at the wheel. (The facts in the case indicated that the driver was coming off of a crystal methamphetamine high.) It is apparently the first punitive damages verdict against a transportation broker in a case involving a negligent hiring claim.

Another case, Nancy Hoffman v. Dorlan Crane, et al., finalized this month in Illinois, resulted in an award of more than $27 million to a woman left paralyzed when a truck carrying steel coils ran into her vehicle. The judgment was against the company that the driver leased the truck from, the logistics company that arranged the transportation and the coil supplier. The shipper was found liable due to the manner in which it sourced and contracted its carriers, under the principle of vicarious liability.

The TranzAct briefing points to three lessons from these cases and the layers of liability:

• Evaluate all of your carriers and brokers in all modes and regions on an ongoing basis;
• Understand, at all levels in the organization, how current sourcing and contracting practices protect you or create the potential for liability;
• Ensure that you have valid contracts in place with all vendors, inbound and outbound.

TranzAct concluded: “In addition to an increased number of cases and more costly judgments on the horizon, the myth that brokers provide an extra layer of protection for the shipper has been dispelled.”

Related Editorial:

Shipping Safety and Risk since Titanic

Contingency Planning: Ten Good Ways to Keep a Supply Chain from Going Bad

Who’ll Handle Your Hazmats?

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