‘Nuclear verdict’ forces Arkansas carrier to cease operations after 19 years

His father, Randy Clifton Sr., started RCX  in 2001. He turned over the reins to the younger Clifton in January 2010 after suffering a heart attack.

His grandfather owned Pacific East Transportation Co. Inc. of North Little Rock, Arkansas, before selling the company in 1978.

“I’ve been around trucking all of my life; it’s all I’ve ever known,” Clifton said.

Since his decision to cease operations, Clifton said he has worked to find his seven company drivers and 24 leased owner-operators new “homes” with other carriers.

“We were able to find our drivers some good homes, which was important to me because we are more like a family,” Clifton said. “Some of them are already rolling for their new companies.”

Since 2015, RCX Solutions has been fighting a legal battle that resulted in a $23 million “nuclear verdict” in 2017,  Clifton said.

While the U.S. Circuit Court of Appeals for the Fifth Circuit lowered the amount to $7.5 million in late 2019, Clifton said RCX was unable to climb out of debt to continue operating.

“The beginning of the end”

Besides his role as president of RCX, Clifton is also a national account executive for a brokerage company called Sunset Transportation, headquartered in St. Louis, Missouri. In its role as a broker, Sunset “was responsible for choosing a motor carrier for individual L’Oreal shipments on a load-by-load basis,” according to court documents.

On January 9, 2015, Clifton said one of RCX’s trucks broke down while en route with a load of empty L’Oreal cosmetic cases. 
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Sunset had selected RCX, who did not have a contract with L’Oreal, to haul the load. After RCX experienced equipment problems, Clifton’s company contracted with an outside carrier, About Tyme Transport Inc., to haul it. Clifton said he “did a trailer interchange” with About Tyme’s owner-operator, Ronald Brown, to finish delivering the load to the customer’s facility in Little Rock. 

However, while Brown was in transit with the L’Oreal load near Refugio, Texas, his tractor-trailer hydroplaned, then crossed the median and jackknifed, striking a Dodge Ram pickup driven by Alexandro Puga, according to court documents. Both vehicles caught fire. Puga, who was 29 at the time of the crash, sustained several broken bones and third-degree burns. Brown died at the scene.

Puga and his wife, Norma, sued now-defunct About Tyme Transport and Xtra Lease. About Tyme paid the Pugas $1 million. About six months later, Clifton said the Pugas’ attorneys filed suit against his company, RCX. At the time of the fatal crash, Brown “already had an RCX trailer in his possession,” which RCX had leased from Xtra Lease, according to court filings. The court found that RCX assumed responsibility for the trailer’s operation under the lease agreement and that the bill of lading listed RCX as the carrier for the L’Oreal load.

After a week-long trial, the jury found that RCX was “using motor vehicle(s) it did not own to transport property under an arrangement with Ronald Brown.” A jury found RCX liable and awarded the Pugas around $23 million.

While the Court of Appeals found the jury award to be “excessive” and lowered it to $7.5 million, it was too late.

“After the crash, our insurance rates tripled, which we have been paying over the last couple of years. Then the economy hasn’t been strong and it’s just really taken a toll on us,” Clifton said. “The lawsuit was really the beginning of the end for us.”

Following his company’s five-year legal battle, Clifton said he was looking forward to a new start. 

“I was excited because our insurance premiums were going to be lower for the first time in four years,” Clifton told FreightWaves. “But, when we went to the bank to extend our credit line, we kind of got the stool kicked out from under us because the bank said they were unable to work with us because we still had that judgment hanging over our heads.”

Clifton said after the meeting with the bank, he made the decision to bring everybody home and close the doors.

“These nuclear verdicts are driving some insurance companies out of the market, which is making insurance capacity tight,” Clifton said. “The remaining insurance companies are going to be able to charge really high rates, which is forcing a lot of smaller trucking companies out of business because they can’t afford to pay the rates. It’s just a vicious cycle all the way around.”

Read more articles by FreightWaves’ Clarissa Hawes