SCHRAMM v. FOSTER articles

The follow are excepts from a variety of articles written on the Schramm v. Foster litigation.
All articles are the sole property of the respective authors and/or publishing agencies. QIS makes no claims nor holds any rights to these articles. These articles are provided only as a link to resource information. The contents of these articles are the sole responsibility of the publishing entities.

Millard, Holweger, Child & Marton
How Transportation Brokers Can Avoid Liability For Personal Injury Claims by Bradford T. Child, Esq.

Recent cases demonstrate that aggressive personal injury attorneys will seek to establish broker liability for injuries where the damages exceed the trucker’s available insurance. Brokers need to be aware of this trend and take the defensive measures set forth below to avoid such claims and the adverse impact the claims have on the cost and availability of liability insurance.

The following checklist is drawn from recent cases and intended to assist transportation brokers, their insurers and attorneys in establishing policies for the selection of a motor carrier. The goal of the selection policy is (1) to avoid being named in personal injury lawsuits and (2) if sued, to have a defense to a claim of negligent hiring that allows the broker to obtain summary judgment. The general rule of law is that a broker has a duty to use reasonable care in selecting truckers ....... (more)

Logistics Management
Logistics and the Law Double Trouble (click for the complete article)
Logistics Management - 2/21/2006
By William J. Augello, Esq.

FMCSA Proposals Hurt Shippers

The U.S. Department of Transportation (DOT) and its Federal Motor Carrier Safety Administration (FMCSA) took several actions last year that reveal a concerted effort to free themselves from responsibility for everything but motor carrier safety and security.

First came a proposed rulemaking to eliminate all cargo insurance requirements for motor carriers and surface freight forwarders. The FMCSA's justification for this revolutionary proposal was that "These carriers typically have insurance well above the FMCSA limits [$5,000] because their shipper clients generally require it as a condition of doing business."

This statement reflects a lack of understanding of the real value of the BMC-32 Endorsement, the provision that makes deductibles and exclusions a nullity in a trucker's policy for the first $5,000, or for the first $10,000 of a multiple-vehicle accident.

The Schramm Decision

As if shippers, brokers, and third-party logistics companies (3PLs) did not have enough problems with truck and driver shortages today, a federal district court in Maryland has compounded these and other problems inherent in hiring truckers. The court has refused to dismiss a Motion for Summary Judgment against a broker/3PL, sending the case to a jury to determine whether or not the broker was negligent in hiring the trucker that caused an accident that seriously injured two young men.

The crux of the court's decision was that "? an employer may be held liable for negligence in selecting, instructing, or supervising ? [an independent] contractor." The court ruled that although the broker/3PL was not the carrier under federal law, "its self-proclaimed status as a 'third-party logistics company' providing 'one point of contact' service to its shipper clients is sufficient under Maryland law to require it to use reasonable care in selecting the trucker whom it maintains in its stable of carriers."

Inbound Logistics
Here Comes the Judge, There Goes Your Business (click for the complete article)
by Keith Biondo
Publisher

If you still think judicial activism doesn't impact your business, the Schramm v. Foster case should strike fear in the hearts of anyone who uses third-party logistics providers. Like the eminent domain decision, it is another case where judges ignore precedent, common law -- even common sense -- to circumvent the messy democratic process and craft a world they think is right and just.

The Schramm v. Foster case arose after a carrier hired by a 3PL was found to have caused an accident that seriously injured two young men. Lawyers for family members sued not only the carrier, but also the 3PL that hired the carrier on behalf of a shipper. Historically, only carriers had been held liable for damages they caused. But in this case, the judge allowed the trial lawyers access to the deeper pockets of the logistics services provider.

In the words of Judge Motz, the deciding judge in the Maryland District Federal Supreme Court, "This is a case in which the law may simply have to catch up with an obligation that...[the 3PL] has voluntarily assumed."

Judge, if the 3PL assumed the liability, why was it contesting the decision in court? In absence of that law -- made by lawmakers, in that messy process that balances the rights of all -- I guess judges must make their own laws for us to follow.

I am surprised the judge did not allow the lawyers to go after the truck manufacturer as well. Or the shipper who hired the 3PL who chose the trucker. Or the customer who ordered the product from the shipper who hired the 3PL who chose the trucker.

Judge Motz's activist stance is a logical extension of the idea that it's OK to get money from anyone, even if they are not directly related to the issue creating the loss. Remember the McDonald's coffee cup? If no law existed, the judge should have thrown the case back to the regulating bodies instead of making his own law.

And it gets even worse. The judge also found, incredibly, that brokers and 3PLs are responsible for safety checks for any trucker they hire, if there is no existing DOT certificate. And, the 3PL has to check every transaction (shipment) with the FMCSA Safestat database -- as if that's up to date. The 3PL involved in Schramm v. Foster runs with more than 20,000 carriers and conducts millions of transactions each year. Get out your overalls and creeper.

If this decision stands, it will create an unjust liability that will impact the use of outsourced logistics providers. This case sets a precedent where anyone in the transportation chain is liable for damages created by anyone else in the chain. Don't think trial lawyers won't jump all over this. Thanks, Judge.

All those concerned in our industry should fight this kind of judicial activism -- redistribution of wealth and blame regardless of culpability, regardless of property rights. Don't sit there and fulminate. Do what you can now to get involved or those who sit above us all, high up on a bench, will hand down decisions that continue to damage business in America.

Schindel, Farman, Lipsius, Gardiner & Rabinovich LLP
BROKER LIABILITY (click for the complete article)
Publisher

The growing sophistication of logistics operations presents the courts with the challenge of analyzing the potential liability of these entities with the limited tools set out in the existing case law. In Schramm v. Foster, 341 F. Supp.2d 536 (D. Md.), Jasper Products asked C.H. Robinson, the logistics giant, to arrange for the transportation of a load of soy milk in interstate commerce. Robinson had an ongoing contract of carriage with Groff Brother, a motor carrier. Groff dispatched its employee Foster to haul the shipment. Foster was driving in excess of the D.O.T.'s maximum driving hours and negligently contributed to an accident with a pick-up truck.

Robinson does not own transportation equipment; instead it has brokerage contracts with 20,000 licensed motor carriers. Robinson markets itself as providing "one point of contact" service to shippers. In the event of cargo damage, Robinson writes the shipper a check directly. Robinson also promises to insulate the shipper in the event of an action for bodily injury in three ways:

1) Robinson only works with carriers who have the D.O.T. required insurance coverage;
2) in the event of an accident, the carrier indemnifies both the shipper and Robinson;
3) if coverage exceeds the motor carrier's insurance limits, Robinson's insurer will pay the remainder of the loss.

The contract between Robinson and Groff insisted that Groff was an independent carrier and Groff was responsible for operating the transportation equipment and paying the salary of Foster, the driver. There was no evidence that Robinson controlled Foster's performance.

In light of these factors, the court concluded that Robinson was not vicariously liable for Foster's negligence.

Godfrey & Kahn
Recent Ruling Increases Shipper Liability (click for the complete article)
Publisher

Current Wisconsin Law
The current law in Wisconsin is that shippers are not liable for "negligent hiring" of trucking companies involved in motor vehicle accidents, barring a contractual provision otherwise. The same was true in Maryland before Schramm. But that may be changing. Wisconsin has already found brokers in other industries liable for negligent hiring and one Seventh Circuit case has recognized a negligent hiring claim against a trucking broker. The door has been opened to the possibility of increasingly burdensome background check requirements on trucking companies hired by Wisconsin shippers and, if Schramm is any indication, these obligations will be coming soon.