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Logistics and the Law: CSA/SMS—Shippers, take action!

The implementation of the FMCSA’s Safety Measurement System (SMS) has the unintended effect of increasing shippers’ exposure to vicarious liability for highway accidents. Our transportation law expert explains how this came to be and calls on the industry to come together to support a legislative solution.
By Brent Wm. Primus, J.D., Contributing Editor
February 01, 2012

Solving the problem
While the result of the litigation is certainly a step in the right direction, in my opinion it does not solve the problem. At the time that the litigation was commenced, 57 percent of the ranked motor carriers had a BASICs score(s) that would result in at least one “alert.”

Even though this is now replaced by the yellow triangle containing an exclamation mark, has anything really changed?

Shippers are now in a “damned if they do, damned if they don’t” situation. Suppose a shipper only checks a carrier’s safety rating to see if it is “satisfactory,” does not check the BASICs scores, and uses a carrier that has one or more yellow triangles containing an exclamation mark (formerly known as an “alert”). If there were then a highway accident, such a reliance on the FMCSA’s disclaimer would be portrayed by a plaintiff’s lawyer as a cold-hearted disregard for the safety of persons on the highway. 

On the other hand, if they do look at the BASICs scores, I have yet to see any explanation of how to interpret them. Those that say it’s very important for shippers to check a carrier’s score do not state or describe any definitive, non-subjective criteria as to when or when not to use a carrier. 

It may be an easy decision if a carrier has two or three scores in the 90th percentile and thus two or three yellow triangles. But what if there is only one yellow triangle, which 57 percent of the carriers have? Is it really feasible that we place 43 percent of the county’s motor carriers out of service? 

In my opinion there is only one solution that will solve this problem—a federal law that would prohibit the use of the FMSCA data in lawsuits arising out of highway accidents. One sentence will do the job: No part of the FMCSA’s Safety Measurement System data may be admitted into evidence or used in a civil action for damages relating to a highway accident. While at first blush this may seem extreme, there is very good precedent for it.

The National Transportation Safety Board is the public agency charged with investigating accidents.

The purpose of these investigations are to determine the cause of the accident and thus to hopefully avoid similar accidents in the future. In order to ensure the full cooperation of everyone involved in the investigation, the results of the investigation are by statute inadmissible as evidence in a civil lawsuit.

Until Congress acts
As of this time I am unaware of any contract provisions or procedures for carrier selection that would provide absolute protection, or “a safe harbor,” for shippers to avoid exposure to vicarious liability for accidents on the highway. 

In a perfect world, the most prudent course for a shipper would be to only knowingly use carriers that have a “Satisfactory” safety rating. However, it must also be kept in mind that when a shipper requires a carrier to have a “Satisfactory” safety rating, then the shipper should also have in place internal systems to monitor the carrier’s status. 

This is because a shipper does not want to be in the position that C.H. Robinson found itself in during the Schramm litigation where the judge noted that C.H. Robinson’s contract required the carrier to have a “Satisfactory” safety rating, however the trucking company involved in that accident was in fact “Unrated.”

The judge in Schramm thought that this could provide evidence for a jury to conclude that C.H. Robinson was aware of the importance of having a “Satisfactory” safety rating, but then didn’t enforce its own requirement.

Further compounding the dilemma for shippers is the fact that of the 190,000 active motor carriers approximately 105,000 of them are “Unrated.” The reason a licensed motor carrier may be “Unrated” is usually because the FMCSA has not yet had time to conduct an initial safety review for that company. However, many shippers must use, at least on occasion, unrated carriers to meet capacity needs.

A final consideration is that even with the most prudent process in place for carrier selection, accidents will happen. Where there are serious injuries or deaths it’s likely that the shipper will be included in any ensuing litigation. Accordingly, the shipper’s final bulwark to avoid a catastrophic economic loss is to have an appropriate liability policy in place. 

There is a debate within the insurance industry as to whether the appropriate insurance for vicarious liability for accidents on the highway is “hired & non-owned automobile liability” insurance or “contingent automobile public liability” insurance. 

Ultimately it’s not the name of the policy that determines the coverage, but the terms of the policy. Accordingly, a thorough understanding of the policy terms is necessary to make sure that the policy would indeed provide coverage for vicarious liability for highway accidents.

Call to action
One element of establishing that someone is negligent is to prove that they failed to follow an industry standard. But here there is no true standard to follow; and thus, it’s virtually impossible for shippers to defend themselves in court even when they’re trying their best to only use carriers that they believe to be safe operators.

“The intended purpose of CSA is to provide the FMCSA with a more efficient mechanism to identify carriers for possible intervention,” says Raymond A. Selvaggio, general counsel of the Transportation & Logistics Council. “Using CSA as a sword against shippers and brokers in personal injury litigation runs counter to this purpose. This essentially makes shippers and brokers de facto policemen of the industry, rather than the FMCSA and the various state regulatory bodies that are tasked with this job. The proposed legislation is something that is needed and well warranted.”

To conclude, the unintended effect of CSA/SMS on the issue of vicarious liability affects everyone who hires or uses motor carriers—shippers, carriers, brokers, freight forwarders, and intermodal companies hiring dray operators. Shippers, carriers, and others may differ on other issues, however, on this occasion they are called to come together and act as one.

About the Author

Brent Wm. Primus, J.D.
Contributing Editor

Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. He is the author of Motor Carrier Contracts Annotated and co-author of U.S. Domestic Terms of Sale and Incoterms 2010. He also was the Editor of Freight Claims in Plain English, 4th Edition, and is a frequent contributor to Logistics Management. He can be reached at .(JavaScript must be enabled to view this email address).

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