September 28, 2023

Broker dodges liability in $18M verdict, had no ‘control’ over carrier


In a case with strong parallels to C.H. Robinson vs. Miller and the case known simply as Ye, an Illinois appellate court has removed a 3PL from a more than $18 million decision against a carrier whose truck struck a teenager in 2016.

The Appellate Court for the 1st District of Illinois removed 3PL Alliance Shippers from the verdict handed down in the case of Francine Cornejo vs. Dakota Lines (the carrier), Gordon Lewis (the driver) and Alliance. Cornejo is the mother of Gustavo Cornejo, a minor at the time who was with his father on the side of the road in Sauk Village, Illinois, when he was struck by a truck driven by Lewis, who was hauling auto parts for Dakota Lines. Gustavo Cornejo suffered significant injuries.

In December 2021, a jury ruled against Dakota, Lewis and Alliance and awarded Francine Cornejo, on behalf of her son, $18,150,750.

Alliance appealed the verdict, arguing that as the 3PL that booked Dakota, it could not be held liable.

As a case in state court, Alliance could not invoke the Federal Aviation Administration Authorization Act that C.H. Robinson (NASDAQ: CHRW) in the Miller case, GlobalTranz in the Ye case and Landstar (NASDAQ: LSTR) in the stolen cargo case involving “a guy named James” had cited in federal courts. They had argued that the act’s trucking provisions protected the 3PLs from liability in cases involving theft and injuries. C.H. Robinson did not prevail in its argument; GlobalTranz and Landstar ultimately did.

The inconsistency in the decisions raises the possibility that the U.S. Supreme Court will be asked to review the cases, which the court already chose not to do in an attempt by C.H. Robinson.

The decision in the Alliance case was handed down by a unanimous three-judge panel Wednesday.

Alliance argues that the trial court erred by refusing to grant Alliance a judgment “n.o.v.,” because Alliance was not vicariously liable for Lewis’ negligence “since neither Lewis nor Dakota were Alliance’s agents,” the panel wrote. “We agree.”

An online definition of n.o.v. is “notwithstanding the verdict.” It is further defined as “reversal of a jury’s verdict by the trial judge when the judge believes there was no factual basis for the verdict or it was contrary to law.”

The appeals panel, citing precedent, said an n.o.v. judgment is handed down in “limited cases where all the evidence, when viewed in the light most favorable to the opponent, so overwhelmingly favors the movant [party making the motion] that no contrary verdict based on that evidence could ever stand.”

Much of the panel’s decision was driven by its conclusion about the control that 3PL Alliance had over carrier Dakota, and by extension its driver, Lewis. The question, it said, is whether Lewis and Dakota were “agents” of Alliance or an independent contractor.

The evidence in the Cornejo case “overwhelmingly favors Alliance by showing, as a matter of law, that Lewis and Dakota were not agents of Alliance” and had proved it so thoroughly that “no contrary verdict based on that evidence can stand” — language similar to the precedent the court had cited. If the decision is that they were agents of Alliance, the outcome would be different, the court implied.

The panel checked off numerous facts about the relationship between Dakota and Alliance to support its argument. “Alliance did not pay Dakota’s drivers and withhold taxes from their pay; hire, train or fire the drivers; dispatch or speak to the drivers; control the drivers’ routes or provide them with tools, equipment, or materials; or own the tractors or trailers the drivers used,” it wrote. “It is undisputed that Dakota and Alliance adhered to the terms of their agreement, which provided that Dakota had full control over its personnel and would perform services as an independent contractor. Moreover, Dakota and Alliance did not have an exclusive relationship; Dakota was free to haul freight for other brokers and was not Alliance’s primary carrier. Dakota hired, trained and fired its drivers; paid them; and withheld taxes from their paychecks.”

Marc Blubaugh, a partner with the Benesch law firm who has written and spoken about the Robinson case and others, told FreightWaves in an email that the Alliance decision was significant.

“Recall that the primary theories of liability pursued by plaintiffs against brokers are: (1) a negligence claim based on the decision to use/hire the specific motor carrier and (2) a vicarious liability claim based on the amount of ‘control’ being exercised by the broker over the motor carrier and its driver,” Blubaugh wrote, noting that the “control” question is what attorneys for Cornejo pursued against Alliance.

“The more court decisions like this that illustrate what an insufficient degree of control looks like, the better the environment becomes for brokers across the country,” he said. 

The panel noted that the plaintiff’s expert witness, Professor Carl Berkowitz, argued that there was control and cited several contract provisions between Dakota and Alliance, which had a long-standing relationship.

But the court rejected those claims, saying that what Lewis — the driver — did had “no bearing on the issues [Cornejo] asked Berkowitz to review concerning control, and Berkowitz did not analyze the relationship between Lewis and Alliance in forming his position.”

The court did cite the testimony of Gary Blom, a vice president at Dakota, who testified that Dakota was an independent contractor for Alliance and was “not Alliance’s agent for any purpose.” Dakota was free to work with other brokers, and its drivers were not instructed by Alliance on how to handle the shipments, Blom testified.

The verdicts against Dakota and Lewis were not impacted by the appellate court decision. They were not parties to the appeal. 

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The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.

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