By Miles L. Kavaller
Conventional wisdom might suggest that a broker cannot be held liable for the damages suffered in a personal injury case. [i] But Schramm v. Foster[ii] recognized a cause of action for negligent hiring under Maryland law. [iii] Evidence of negligent hiring can be found by consulting FMCSA statistics which at the time included the following:
“The FMSCA provides information regarding carriers on several websites and internet pages. This information includes “SafeStat,” which reports on and rates carriers’ safety performance. fn4 ‘Safety Evaluation Area’ values used on this site range from 0 (best) to 100 (worst). According to SafeStat, only SAE ratings of 75 or higher are deemed to be deficient. In September 2001, Groff Brothers had an SEA rating of 74.00 in the driver safety evaluation area. By March 23, 2002, this rating had decreased to 70.63.”[iv]
Of course, there are other sources of information which can be used in establishing a negligent hiring claim and negligent hiring claims against brokers are now commonplace as merely “Shepardizing” Schramm v. Foster demonstrates. Notably, however, in Schramm v. Foster decided in 2004, FAAAA[v] preemption was not asserted.
It took more than 15 years and in its September 28, 2020 opinion the 9th Circuit articulated the issue before it as follows:
“No circuit court has yet considered an FAAAA preemption challenge brought by a broker, and district courts have reached differing conclusions as to whether negligence claims like Miller’s are ‘related to’ broker services.”[vi]
And now, the 9th Circuit Court of Appeals in its Miller decision has concluded that a negligent hiring claim survives FAAAA preemption because it fits into the “safety regulation” exception in 49 U.S.C. §14501(c)(2)(A) which provides that the FAAAA does not restrict the safety regulatory authority of a State with respect to motor vehicles.
The scope of FAAAA preemption has been at issue in many cases and contexts since its adoption in the ADA.[i] Miller is but one of a number of cases in which it has been raised as a defense in personal injury litigation. It has also been raised in any number of areas including wage and hour cases[ii] , employment discrimination matters[iii], workers compensation claims[iv] and general negligence actions.[v]
Plaintiff’s counsel will no doubt retain experts to testify about the current statistics the FMCSA maintains and reports it has published to support the allegation that the carrier defendant should not have been selected by the broker due to its safety record. So, for example, a recent study found on the FMCSA’s website entitled “Safety Analysis of Interstate Carriers with UCR, IFTA or IRP Violations, 2017 [Analysis Brief]”[vi] could be one source used by an expert to prove that the broker was negligent in hiring the defendant carrier. Counsel defending personal injury claims will certainly assert that whatever statistics the FMCSA maintains and the reports it publishes should be excluded from evidence because their use is for regulatory decisions and are not probative of any particular carrier’s safety record. An analysis of cases where the introduction of this type of evidence was at issue is beyond the scope of this article.
The focus of this article is the court’s analysis of the “related to” language in the FAAAA. The district court ruled that the negligent selection claim against broker C.H. Robinson was preempted and not within the safety exception. The 9th Circuit however saw it a little differently, opining as follows:
“We agree with the district court that Miller’s claim is “related to” C.H. Robinson’s services. Brokers arrange for transportation by motor carrier, and Miller alleges that C.H. Robinson was negligent in performing that service. But we hold that the district court erred in holding that the safety exception does not apply. In enacting that exception, Congress intended to preserve the States’ broad power over safety, a power that includes the ability to regulate conduct not only through legislative and administrative enactments, but also though common-law damages awards. Miller’s claim also has the requisite ‘connection with’ motor vehicles because it arises out of a motor vehicle accident. We therefore reverse and remand.”
There are two prongs to this logic. First, the state’s broad power over safety includes the law applicable in civil actions. This must mean a state’s tort law which of course includes negligence. The second prong is that an automobile accident involves motor vehicles. This logic may be seen as somewhat of a non-sequitur; it simply just does not follow that Miller’s claim “also has the requisite ‘connection with’ motor vehicles because it arises out of a motor vehicle accident.” Be that as it may, the safety exception does contemplate state tort law which includes motor vehicle accidents.
The importance of this case cannot be understated. Those who draft the typical contracts between brokers and carriers, brokers and shippers, brokers and brokers (co-brokering”) and even carriers and carriers, must address this issue. That essentially means one or more of the parties should insure negligence liability and that is typically an error or omissions policy.
Not only will this case impact the transactional aspect or a transportation lawyer’s practice, it will also be a major question for how clients are advised of what steps to take in order to protect them from negligent hiring liability. Schramm v. Foster and other cases have addressed those criteria.[i] But, bear in mind this is a developing area.
The takeaway from the Miller case is this:
- Negligent hiring is a viable cause of action against a broker in a personal injury case;
- It is not preempted by the FAAAA; and
- State law determines the elements of the negligent hiring cause of action.
FAAAA preemption continues to evolve. It can be both a sword and a shield.
[i] Schramm, supra note ii, at 551, et seq. See also, The T. Le v. Total Quality Logistics 431 P.3d 366 (Okla. Civ. App. 2018). But compare, CGU Intern. Ins. PLC v. Keystone Lines 2004 W.L. 1047982 N.D. Cal. 20034) ( “having verified that Europa was duly licensed and possessed adequate insurance foreclosed any possible need to separately inquire about Europa’s drivers and accident history.”)
[i] The term “broker” is defined ion 49 U.S.C. §13102(2) as follows:
“Broker. The term “broker” means a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.”
[ii] 341 F.Supp.2d 536 (D. Maryland 2004)
[iii] Maryland law recognizes that an employer may be held liable for negligence in “selecting, instructing, or supervising … [an independent] contractor.” Id. at 551.
[iv] FN4. As Robinson points out, a caution page appears before the SafeStat information is accessed. This caution reads as follows:
Because of State data variations, FMCSA cautions those who seek to use the SafeStat data analysis system in ways not intended by FMCSA. Please be aware that use of SafeStat for purposes other than identifying and prioritizing carriers for FMCSA and state safety improvement and enforcement programs may produce unintended results and not be suitable for certain uses.”
[v] 49 U.S.C. §14501(c) is the Interstate Commerce Commission Termination Act of 1994’s version of the Airline Deregulation Act, 49 U.S.C. § 41713(b)(1), (“ADA”) preemption of state laws related to the prices, routes or services of motor carriers, brokers and forwarders.
[vi] Miller v. C.H. Robinson Worldwide, Inc., 2020 U.S. App. LEXIS 30751 (“Miller”).
[vii] See for example Morales v. Trans World Airlines Inc. (1992) 504 U.S. 374, 112 S. Ct. 2031, 119 L. Ed. 2d 157.
[viii] See for example, Rodriguez v. RWA Trucking, Inc. (2013) 219 Cal. App. 4th 692; 2013 Cal. App. LEXIS 726.
[ix] Air Transport Association of America v. City & County of San Francisco (9th Cir. 2003) 266 F.3d 1064.
[x] Id. See also, Albillo v. Intermodal Container Services, Inc. (2003) 114 Cal.App.4th 190, 8 Cal. Rptr. 3d 350.
[xi]See for example, ASARCO LLC v. England Logistics (D. Ariz. 2014) 71 F. Supp. 3d 990, 1006, arguing that the ICCTA preempts state-law negligence claims because they have an effect on the rates carriers charge. But also see, Factory Mutual Ins. Co. v. One Source Logistics, LLC (C.D. Cal., May 5, 2017) 2017 WL 2608867, at *5–*7), explains cogently why the ICCTA does not preempt ordinary, state law claims for general negligence.
[xiii] Schramm, supra note ii, at 551, et seq. See also, The T. Le v. Total Quality Logistics 431 P.3d 366 (Okla. Civ. App. 2018). But compare, CGU Intern. Ins. PLC v. Keystone Lines 2004 W.L. 1047982 N.D. Cal. 20034) ( “having verified that Europa was duly licensed and possessed adequate insurance foreclosed any possible need to separately inquire about Europa’s drivers and accident history.”)