In a Form 8-K filing with the Securities and Exchange Commission, Eden Prairie, Minn.-based global third-party logistics (3PL) services provider and freight forwarder C.H. Robinson said that a Dallas County, Texas jury issued an advisory verdict against the company and also two other defendants in “a lawsuit related to a trucking accident involving an independent motor carrier,” with compensatory damages of $604 million that could be assessed against C.H. Robinson.
C.H. Robinson said in the filing that the advisory verdict remains subject to post-trial proceedings before the court enters a final verdict and expects to appeal if the jury’s verdict is entered as final.
The verdict is related to Lipe v. Lupus Superior, in which the carrier at issue was reportedly above the intervention threshold in two Safety Measurement System (SMS) BASIC categories criteria that would potentially place it among what the Federal Motor Carrier Safety Administration (FMCSA) deems to be “high-risk” motor carriers that are prioritized for investigation, stated the Transportation Intermediaries Association (TIA). And Baird analyst Daniel Moore wrote that this lawsuit arose from a fatal March 2021 truck accident in Mississippi, which alleged that C.H. Robinson negligently selected an unsafe motor carrier.
This follows a mid-May ruling by the United States Supreme Court, in Montgomery v. Caribe Transport II, LLC, which, in a unanimous ruling stated that the Federal Aviation Administration Authorization (FAAAA) does not preempt state-law negligent hiring claims against freight brokers when those claims fall within the Act’s safety exception.
“We extend our deepest sympathies to everyone affected by this tragic accident,” said Dorothy Capers, Chief Legal Officer at C.H. Robinson. “Every loss of life on our nation’s highways is one too many. We strongly disagree with the verdict in Lipe v. Lupus Superior, LLC, et al. and will immediately appeal. C.H. Robinson should not be held liable and did not act negligently. The carrier had safely delivered nearly 270 loads for our customers and held a Satisfactory FMCSA rating when we selected it. That rating remained Satisfactory following a federal review of this accident. The carrier is an independent motor carrier, and the driver worked for them. C.H. Robinson does not employ drivers.
Safety is core to how we operate and always has been. We go beyond federal requirements and apply multiple layers of safety and risk criteria that we continuously re-evaluate and strengthen. The shipments we arrange overwhelmingly move without incident, with one serious accident claim filed for every 500 million miles driven on our customers’ loads. The extreme nature of this verdict means it is even more imperative that Congress and the Federal Government act with urgency to establish clear and proper accountabilities across the transportation industry that enhance highway safety and support the uninterrupted flow of goods across the United States.”
Going back to the Supreme Court’s decision in mid-May, for Montgomery v. Caribe Transport II, LLC, there has been a large amount of attention by industry stakeholders placed on higher expectations for carrier vetting, with freight brokers expected to demonstrate reasonable care when selecting motor carriers. Another key takeaway has been that relying solely on FMCSA safety data is no longer considered sufficient and that brokers should use multiple sources of information.
In a statement, Chris Burroughs TIA President & CEO said that shippers, brokers, and the public rely on the Federal Motor Carrier Safety Administration (FMCSA) to ensure motor carrier compliance and safety.
“While the agency operates under significant resource constraints, it has made meaningful efforts to address complex safety challenges,” said Burroughs. “However, this incident dramatically highlights the urgent need for greater transparency and modernization in the system and a longstanding and well-documented issue in the motor carrier safety rating process. The carrier involved in this $600+ million verdict, Lupus Superior, has maintained a ‘Satisfactory’ safety rating since 2014—which was reaffirmed by the FMCSA in 2021 and most recently this past April. This suggested adequate safety management controls were in place, yet in this case, the jury was given access to data regarding this particular carrier’s prior incident and safety record that is not available to the public, including brokers.
Burroughs added that the safety of America’s roads is TIA’s utmost priority, while observing that the industry requires a clear, consistent framework for evaluating motor carrier safety, supported by the agency responsible for oversight.
“To that end, TIA has formally petitioned FMCSA to establish a clear motor carrier selection standard and to make the so-called ‘high-risk’ carrier list publicly available,” he said. “In addition, raising the standards for entry into the industry—for both motor carriers and brokers—must be addressed without delay. Meaningful reform is necessary to improve safety outcomes and restore confidence in the system.”
In a research note, Baird’s Moore wrote that to his firm’s knowledge, this is the first significant negligent-selection verdict involving a freight broker following the Supreme Court’s decision on Montgomery v. Caribe Transport II.
“While the headline figure is significant, the advisory verdict is not a final judgment,” he wrote. “And, as is customary, we would expect any ultimate award to be subject to post-trial proceedings and appeal, where it is often meaningfully reduced.”
