Another recent court case is adding to the growing pile of legal precedents protecting brokers from any liability created from a crash involving a carrier hired by a 3PL.
In the most recent case, Echo Global Logistics was granted its request for summary judgement to be removed as a defendant from a case in the U.S. District Court for the District of South Carolina. In the Nov. 15 ruling, Judge Jacquelyn Austin granted that motion, citing the Federal Aviation Administration Authorization Act (F4A) as the basis for her decision, after Echo said the provisions of the act were the basis to exclude it from the litigation.
Echo’s involvement in the developments leading up to the fatal crash at the heart of the lawsuit was to hire carrier S&J Logistics to move a load from Conyers, Georgia, to East Greenville, Pennsylvania.
The driver of the load, Jason Gordon, picked up the freight on Jan. 3, 2022. A day later, according to the judge’s decision, Gordon “failed to stop as traffic slowed in a construction zone near Spartanburg, South Carolina, and slammed into the back of a pickup truck.”
In that pickup truck was James Fuelling. He was killed in the wreck. His wife, Angela, is the plaintiff in the case.
F4A, since its inception in 1994, has long been a feature of litigation over broker liability as well as questions of the legality of California independent contractor law AB5. Among other things, F4A blocks a state from implementing any law or regulation that could impact a trucking “price, route or service.”
The law also has been interpreted to shield brokers from liability under some, but not all, circumstances. Austin’s order notes that all of the claims by the Fuelling estate against Echo are based on South Carolina definitions of negligence in the 3PL’s hiring of S&J.
The court, in its decision, quickly backed the Echo arguments. “The plaintiff’s negligence claims are expressly preempted by the FAAAA because they fall within the preemption provision of the FAAAA,” the judge wrote.
F4A’s preemption of state activity that could impact a “price, route or service” is directed at any action that the law says is “related to” those three standards. “The phrase ‘related to’ expresses a broad preemptive purpose and embraces any state enforcement actions ‘having a connection with, or reference to’ broker services, whether directly or indirectly,” Austin wrote.
Safety exception at issue
Echo also argued that it should not come under the “safety exception” of F4A. That provision of F4A says the law does not “restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo.” It allows state action against negligent action that could be the focus of a lawsuit.
Austin’s review of the safety exception was far longer than her ruling on whether Echo was protected under F4A by a charge of negligence.
The judge reviewed three significant cases involving broker liability settled in the last few years. Only in one – Miller vs. C.H. Robinson (NASDAQ: CHRW) – did a court (the 9th U.S. Circuit Court of Appeals) ultimately hold that the broker was not protected by F4A for damages incurred in an accident involving a carrier hired by Robinson. The safety exception was a reason for its finding.
The language and finding in that decision was cited by Austin. “The court held that even though the negligence claim was ‘related to’ broker services and expressly preempted, it was saved from preemption by the safety exception,” she wrote. “In so holding, the court concluded that ‘the safety regulatory authority of a State’ encompasses common-law tort claims and that ‘negligence claims against brokers, to the extent that they arise out of motor vehicle accidents, have the requisite connection with motor vehicles’ to be included in the safety exception.’”
Past cases cited by judge
In reviewing the past cases, the judge essentially laid out a scorecard. Two cases – one involving Landstar (NASDAQ: LSTR) and the Aspen American Insurance Co., and the other involving GlobalTranz – resulted in decisions that protected the broker from liability arising from a theft (Landstar) and a death (GlobalTranz). (The Landstar case is unique because it did not involve a crash, unlike several of the other key lawsuits that raised the issue of broker liability).
But Miller vs. Robinson is out there on the books at the 9th Circuit with a more expansive interpretation of broker liability.
Without an obvious precedent in the 4th Circuit, which includes South Carolina, Austin could have chosen the Miller precedent in making her decision as to whether the safety exception protected Echo Global. But she did not.
“The court finds Ye and Aspen are most instructive on the applicability of the safety exception to state law negligent hiring claims asserted against brokers,” she wrote. From there comes a long discussion of the phrase “respect to” in the safety exception and how it applies to brokers, given that a broker is not specifically the same thing as a motor vehicle.
The judge went with the logic of “respect to” that the courts handed down in the Landstar and GlobalTranz cases. Austin said she was “narrowing construing (respect to) to save only claims that have ‘a direct relationship to’ motor vehicles.”
“Because there is no direct link between motor vehicles and Echo’s alleged negligent hiring by failing to properly screen S&J in its capacity as a transportation broker, the Court concludes the safety exception does not save (Fuelling’s) negligence claims from FAAAA preemption,” Austin wrote.
There have been two attempts to have the U.S. Supreme Court resolve the conflicting circuit court decisions. An appeal by C.H. Robinson was rejected for review in the waning days of June 2022. Earlier this year, the court also rejected review of the GlobalTranz decision, also known as the Ying Ye case, based on the name of the widow whose husband was killed in an accident with a truck hired by GlobalTranz.
Appeal will be pursued: Attorney
Liam Duffy, an attorney with Yarborough Applegate of Charleston, South Carolina, who represented Angela Fuelling, said his firm’s client does intend to appeal the decision to the 4th Circuit Court of Appeals. He added that the case against carrier S&J is going forward, adding that the company is defunct “with a history of repeated safety violations and prior crashes.”
Asked if he could foresee the Fuelling lawsuit eventually becoming the case that leads to a Supreme Court review of the issue of broker liability, Duffy was noncommittal.
“Courts across the country are divided on the issue of FAAAA preemption, and until the Supreme Court weighs in and settles the debate (whether in this case or another case), our client remains committed to pursuing justice for her husband’s preventable death,” he said in an email to FreightWaves.
Austin did not cite another recent case in her ruling: the July decision at the 11th Circuit Court of Appeals that held brokerage giant TQL was protected by F4A from legal action, focused on a fatal accident in Georgia involving a carrier named Hard to Stop, which had been hired by TQL.
In the TQL case, an appeal by plaintiff Katia Gauthier asking for an en banc hearing of the 11th Circuit was denied earlier this year. A query to Gauthier’s attorney from FreightWaves, seeking comment on whether a request for review by the Supreme Court is being contemplated, was not responded to by publication time.
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