May 13, 2025 • 42 mins
In this second segment of 2 part episode, attorney and law professor Matthew Leffler joins the hosts to unpack key legal issues in trucking. They cover non-compete agreements, broker transparency, driver safety, shipper-broker contracts, and recent cases like Werner and Wabash. Leffler shares insights on legal risks, evolving regulations, and how automation could reshape the industry—emphasizing the need for education, clear contracts, and better documentation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, ben, you got any other questions
Otherwise?
Speaker 2 (00:04):
I know.
Speaker 1 (00:08):
We got to move into this stuff that we talked about
off air beforehand, so let's goto transparency.
I don't care how long thisepisode goes, let's go to
transparency.
Speaker 2 (00:18):
This is a really interesting one and Stephen's
done a great job breaking thisstuff down the history of
transparency, why we have thisregulation.
I'll say that the two thingsthat are really important to
note right now.
This is the most important rulethat brokers should be aware of
.
If it gets finalized as it'sbeen produced by the FMCSA, what
it would mean is it would meanthat a motor carrier can request
(00:41):
records of a broker transactionand the broker would have to
provide them within two days inan electronic format.
That is very different thanwhat it is today.
Now there's a couple of caveats.
One of them is we still havewaivers of this rule 371.3.
If you're a broker and you donot have a waiver in your
contract, call the lawyer andsay tell me what language I
(01:05):
should have to make sure I canwaive these things.
But we've had two commentperiods now.
So we had one comment period onthe rule and then another one.
So the question has been veryaptly raised Will we see new
broker transparency regulations?
And my inclination is that wewill not.
I think the FMCSA does not havethe legal authority or the
(01:25):
mandate to Ben's point earlier.
They're a safety organization.
How much money a broker makeson a load has nothing to do with
safety.
It is outside theircongressional authority and they
ought not to do it.
Speaker 3 (01:36):
We also I have a question about that, matt, right
there before you go past thatbut Nate has been working with
them through the TIA form andthings where, like now, they
have the ability to enforcefines on household goods, which
is likely the step into beingable to enforce.
Speaker 1 (01:52):
Now, that's just the name of the act, the Household
Goods Consumer Protection Act,which allows it, gives
enforcement of civil penaltiesto the FMCSA.
Speaker 3 (02:02):
So they have the ability to enforce civil
penalties.
Does that change what you justsaid?
No, it doesn't.
Civil penalties to the FMCSA.
So if they have the ability toenforce civil penalties, does
that change what you just said?
Speaker 2 (02:06):
No, it doesn't.
So the first thing to thinkabout so when you violate an
FMCSA thing, the Department ofJustice is the one who goes
after you, it's not the FMCSA.
They don't have the authority.
So this authority is actuallygood, specifically on fraud and
theft and that kind of thing.
That is, we want the FMCSA tohave teeth.
We want them to be able to biteand change things.
(02:27):
The argument about brokertransparency is that one.
I think the waivers will alwaysbe in place.
I don't think we're going tohave the Congress act and say,
oh no, we don't want waiversanymore.
That's, that's very unlikely.
And number two, I don't thinkthey have the authority, if you.
I mean this is reallyadministrative law stuff, but
(02:48):
there was a case called Chevron.
It's 40 years old.
It got overturned last year ina case called Loperbright.
But what that case stands for,the proposition of, is, if the
act that Congress passes doesnot explicitly give the agency
this power, they don't have thepower.
And the FMCSA, their enablingstatute, has nothing to do with
(03:08):
how much money shippers paybrokers.
So ultimately, I think thatthis will end up dying.
Now, on a separate line oflitigation like this, actual
litigation, we have Pink Cheetahsuing TQL, your alma mater
mater, and that is stuck now inin a dc court.
Um, all the motions have beenfiled any day now and I haven't
(03:29):
checked today, but any day nowthe judge will make an order, um
, either telling pink cheetah totry it again or telling tql to
answer this.
And the whole core of thisissue is are the waivers in the
broker and carrier agreementsenforceable?
And I think that they will be.
I think TQL will win this.
I think Pink Cheetah will bestomped out of existence, but I
(03:52):
could be wrong.
Speaker 3 (03:53):
I'm very rarely wrong .
Four or five other points thatTQL's counsel put forward to
basically shut that down.
Wasn't Pink Cheetah alsoalready out of business, which
made it have less standing?
To make this claim in the firstplace is one of them you make
me so happy.
Speaker 2 (04:08):
So, like this is, this is my favorite kind of
thing to talk about.
So there are defenses that tqlput forward that are specific to
pink cheetah very, this isabout you, you as the plaintiff
and then they have defenses thatare more like if anyone else
brought this, we, we would saythese things.
So to Pink Cheetah's pointthey're not an interstate motor
carrier, they're intrastate inFlorida.
(04:29):
They don't have any offices, asfar as I know, in DC.
That was the wrong place to go.
But regardless, the contractbetween Pink Cheetah and TQL
says the only place you get tosue is Ohio.
You have to come over here,cuyahoga County.
So they had a whole bunch ofthese direct attacks against
Pink Cheetah and they had theother one saying the thing that
(04:50):
the FMCSA put forward.
It's not an order, it's anopinion letter.
It means nothing.
So I think that TQL will winthis thing and what I worry
about is that other motorcarriers will be emboldened by
this type of litigation andstart this against a whole bunch
of brokers.
So we really do want the FMCSAto be very clear that this
(05:13):
transparency thing is not goingto continue and that this waiver
is enforceable.
That's what I want to see, butwe haven't seen that yet.
Speaker 4 (05:20):
So one thing I just want to bring it back to is the
48-hour producing the recordswithin 48 hours, right, but we
know that traditionally thetransactions when the law was
written was one and now it's two.
So if they're requestingtransactions within 48 hours but
half that transaction is notdone for 30, 60, 90 days, how do
(05:44):
you produce those records?
How can you force those records?
And I don't think I've actuallyheard anyone elaborate on that
facet of the 48-hour request,regardless if it's electronic or
not.
It just might not be there forus to produce.
Speaker 2 (05:57):
I think it goes back to people just not understanding
how this stuff works, because,to your point, after the thing
is delivered, there's stillstuff going.
Was there detention?
Was there other things?
We have to factor into this,this particular load, and I
think it was this simple thingwhere the noaa was like we want
it in two days and we want it tobe immediate.
They want it to be mandatoryinitially.
(06:18):
Oh, I know their position wasnot a request being filed at all
.
You just have to produce it theminute.
And there are companies thathave access to this information,
like that could be one.
Uh, there's other places youcould get this.
So it's yeah, it's so cool,it's so interesting.
I remember.
Speaker 1 (06:32):
So that's one of the big talking points that we've
lobbied on Capitol Hill with TIAabout the last couple of years.
I remember sitting down in TimBurchett's office he's one of
the representatives fromTennessee and we were explaining
like that, not the oh, they cando this, but the mandate idea,
and he was just like what he'slike?
What kind of free market,capitalistic society do we live
(06:57):
in that it's gone to where youjust have to open your books to
anyone you do business with?
Absolutely open your books toanyone you do business with.
Absolutely so it is.
It is wildly absurd, in myopinion.
Um that that was, that was theoriginal ask is like oh, not
only can we ask for it, but youjust have to tell us what your
customer paid you it's likegoing to amazon saying how much
(07:17):
did you buy that towel rack for?
Speaker 3 (07:19):
I mean I want that towel rack.
I want the markup.
How?
Speaker 2 (07:22):
much did you?
What was your cost for it now?
Now I worked at Best Buy.
I sold televisions.
I knew my cost, but I wouldn'ttell that to the customer.
I would say I can work withinthis frame.
But you're exactly right.
There's no other industry likethis.
It is an anachronistic thingfrom the days before
deregulation, when brokers werea very small part of the
(07:43):
industry.
It's very different today, butI hope for my.
My belief is TIA is gettingbetter at communicating about
these things with people inpower.
Speaker 3 (07:53):
And that should hopefully drive us in the right
direction.
Well, how funny is that?
I never even thought of thatuntil Steven pointed that out.
But it's like most carriersdon't get you their invoice on a
load for a few days, maybe aweek later.
In fact, it delays some of ourinvoicing to our customers
because we're waiting to get thecarrier's invoice to send it to
the factoring company and it'slike, oh great, you're going to
make us send this to you in 24to 48 hours.
That means you, as a truckingcompany, got to invoice me
within the first 24 hours withall detention, every access
(08:15):
serial, and imagine theadministrative burden on all the
small carriers to have to dotheir paperwork every single day
, get all those invoices out toeven comply with the thing
they're asking for, which is theother half of the transaction.
Speaker 2 (08:27):
I think so from my.
My belief is that the finalrule will will not be made.
They are not going to produce afinal rule or they'll just say
we're going to keep it as it is.
I do not think we're going tosee anything like what the
proposed regulation is.
That proposal was underneaththe prior administration and
this administration is a littlebit more hostile to these types
(08:48):
of regulations.
We're not going back to aregulated industry.
It's not going to happen.
So I'm with you.
I think it's unrealistic tothink that two days is even
feasible.
But I think they were giving alittle carrot to the folks who
were complaining about brokersmaking 40% margin on everything
they touched.
Speaker 1 (09:05):
What else we got in the legal space here is that
your dog in the background youget she's, she's, yeah, she's
whining because the kids arehaving something to eat and
she's like this is the best dogloves to hang out in my office
and we've had plenty of episodesben can attest when, like I
don't know if it's the amazonguy that shows up, but my dog,
that 20 some pound mini goldendoodle, becomes like a savage
(09:28):
attack dog as soon as someonecomes near our property the
thing I would say the dog isvery helpful.
Speaker 2 (09:33):
She's, she's a good mascot for what we do over here.
I'd say the one thing I'd liketo touch on I know we're getting
, I know this is a little bit ofa good conversation, but the
Werner Enterprises case, I mean,this case is really, really
important.
Have you guys been followingthis case?
Speaker 1 (09:49):
I can't speak to it.
I mean, I take it away, give it, paint the picture for us.
Speaker 2 (09:55):
This is the story of the Werner Enterprises case that
is currently on appeal beforethe Texas Supreme Court.
The story is like this it'ssnowing, a driver is operating a
commercial vehicle by wernerenterprises.
He's his company driver.
He's been driving for aboutseven days.
New driver, his trainer, isasleep in the back in the berth.
Because in our industry forfull truckload motor carriers,
(10:17):
when you have a driver, atrainee and a trainer, they
behave as if they were a teamand they are a team.
They're running different eldsand all this on different log
books.
The driver is going 10 miles orso under the posted speed limit.
Again, it is snowing, the truckdriver never loses control.
The werner truck stays in itslane and there is no issue.
However, another vehicletraveling too fast for
(10:40):
conditions in the opposite lane,opposite side of the road, is
going too fast and we knowthey're going too fast because
they lose control.
They spin out and they cross 40feet of median and within a
second or two of losing control,they collide head-on with the
truck operated by wernerenterprises.
One child is dead, one childbecomes paralyzed, no one has
(11:02):
severe brain injuries.
And the question who's at fault, who's responsible for this?
And it goes to trial and attrial it is found that the
driver for Werner was 14%responsible, 14%.
Speaker 1 (11:18):
For being there.
Speaker 2 (11:20):
Well, yeah, for driving that truck and the
driver for the passenger vehicle.
You know the one.
Speaker 1 (11:26):
That's done.
That case is over with.
Speaker 2 (11:27):
That's what they oh we're going to get much more in
depth on what happened.
The driver for the passengervehicle is also at fault 16%, 16
for the driver, 14 for Werner'sdriver.
But I'm no Jason Miller, I'm noKen Adamo, I'm not a math guy
driver.
But I'm no Jason Miller, I'm noKen Adamo, I'm not a math guy.
We're missing 70%, though 70%is Werner Enterprises.
(11:48):
Werner's hit for a liability of$100 million.
Speaker 3 (11:54):
Matt who determines those percentages?
Is that the jury or the judge?
Speaker 2 (11:58):
That is the jury.
The jury has asked thisquestion and they come back with
the determination.
Speaker 3 (12:03):
Do they provide an explanation with the percentage
or they just give the number?
Speaker 2 (12:05):
You get an understanding from this case
that Werner had internalpolicies around driving in
adverse weather and thisparticular driver didn't get a
lot of training on adverseweather.
And just again, for everyonewho's watching this, there's no
FMCSA requirement that you'retrained to drive at night or
train and driving in snow ordriving in mountains Like.
That's not the requirement,it's not the standard.
But what they basically madethe argument for was werner
(12:28):
should have shut their truckdown or they should have had
that driver going 20 miles anhour.
But ultimately werner appealsto the texas appellate court and
they say look, our guy wasgoing safe, he was going at
below the posted speed limit,never lost control, we didn't
incur into another lane and youand me cannot anticipate someone
(12:50):
incurring into our lane fromthe opposite side of the highway
.
That's absurd.
And the appellate court saidthat's a good argument.
We disagree.
And now that verdict was upheld, and because it was upheld, you
had the compounding of interest, now that $100 million is $130
million and it gets appealed tothe Texas Supreme Court.
(13:11):
So in December 3rd or December4th of 2024, they argued this
case at the Texas Supreme Court.
Any day, any day, we will knowthe outcome of this litigation,
but it will have unique andprofound impacts to motorcars
and brokers, because thisliability is going to be
(13:33):
astronomical.
Speaker 3 (13:36):
You know, what's interesting is?
It's a little bit of a tangent,but it ties back to what we
talked about earlier.
I always find it fascinatingwhen you look at the history of
why companies do things.
It's usually monetary right.
It's usually related tocapitalism.
It's usually about avoidingsomething right.
Speaker 2 (13:52):
Avoiding liability.
That's the story of theAmerican.
Speaker 3 (13:54):
We talked earlier about the fact that the FMCSA
isn't vetting drivers wellenough, right, and we talked
about the fact that, likethey're maybe not necessarily
enforcing things, that should bedone for driver standards and
safety standards.
We know they're not inspectingenough on a maintenance point of
view, right, but it would be aninteresting unintended
consequence if I think it'sunfortunate that they end up, if
(14:17):
it does go that way, bearingthe brunt of this 130 and who
knows what that is now withinterest right 150 million,
whatever that is.
But, like I could see lots oftrucking companies all of a
sudden knowing if they could beresponsible for somebody
crossing a median and oncomingtraffic and hitting their truck,
of all of a sudden going, hey,we need to be more stringent on
(14:38):
who we hire, we need to be morestringent on who we're training
and we need to be more stringenton driving speed limits, which
are all things that were thrownout from an enforcement or
regulation standpoint.
It would be an interestingunintended consequence if
trucking companies just starteddoing this to avoid these
catastrophic liabilities.
Speaker 2 (14:56):
I think you're right.
I think the motor carriers ifthis verdict in Texas is upheld
which is very strange, but ifit's upheld it will make motor
carriers far more skepticalabout putting people in bad
weather conditions.
But this idea of brokerliability is still somewhat new.
But this idea that can a brokerbe held responsible for the
(15:17):
alleged carelessness of a motorcarrier, so forget.
It's Warner, Say it's an owneroperator who's driving that
truck and they're pulling for aCH Robinson.
What would happen?
Same exact thing.
You would sue Robinson and sayyou should have known, you
shouldn't have had him out therein this weather.
And the circuits, the federalcircuits, are split about when
brokers can be held responsible.
Speaker 3 (15:39):
Isn't it more not responsible than I thought there
was like one case where brokerswere held liable and like at
least three or four where theyweren't.
Is it an even number or?
Speaker 2 (15:49):
This is, listen, what I get so excited about.
So there's the Ninth CircuitCourt of Appeals, that is the
California and Oregon andWashington, and they have been
of the opinion and their caselaw says that brokers can be
held liable for the negligenceof a motor care.
That is the Miller v C HRobinson.
Then you have the SeventhCircuit Court of Appeals and the
(16:10):
Seventh Circuit had the case ofGlobal Trans V E.
Same set of facts broker hireda motor care, motor care commits
a careless act, and both ofthem get tagged.
Seventh Circuit says no, thebroker can't be held responsible
.
And they had several cases thathave reaffirmed that same
decision.
And then on the 11th Circuit,that's Florida, they also said
(16:31):
brokers can't be heldresponsible.
But here's the issue the SupremeCourt has not weighed in and
every opportunity they have hadto weigh in, they've chosen not
to, has not weighed in and everyopportunity they have had to
weigh in, they've chosen not to.
Now remember when I talkedabout insurance, the duty to
defend and the duty to indemnifyIf you're not going to be
(16:53):
liable, you still need the dutyto defend.
You still need a lawyer tofight for you, because that
litigation is $20,000, $30,000,$40,000 a month.
So if you're a broker and evenif you're moving freight and
it's in Illinois and you're notgoing to be held responsible,
the plaintiff is still suing you, they're still coming after you
and you're still going to haveto deal with that litigation.
So I wish the Supreme Court andthis is discretionary they do
(17:15):
whatever they want to do.
This is a case that ourindustry desperately needs
because, at the end of the day,if you're a broker and your
motor carrier has some terriblething, you are going to be sued.
Maybe you win, but you aregoing to be sued.
Speaker 3 (17:29):
So I have two questions.
The first question is whatinsurance should brokers make
sure they have that covers themfor that defense?
Is that contingent cargo?
Is that general liability is?
Is that errors and omissions?
What kind of insurance shouldbrokers be talking to their
agent about of making sure theyhave this coverage to defend?
Speaker 2 (17:47):
What I recommend to my clients when we talk about
these things is you print off anarticle about this case.
You send it to your insuranceprovider and say tell me what I
should be doing differently,because I know the margins are
not strong enough in thisbusiness to support buying an
umbrella policy for $10 millionthat covers anything that goes
(18:09):
beyond your general liability orcargo or whatever, or your
contingent auto.
So I would say that that answeris going to be it depends on
the state and the jurisdictionand your own appetite for risk.
You can absolutely over-insureyourself and that is probably
not an outcome that you want tohave because, again, in law, in
litigation, I ask the.
If I'm a plaintiff attorney, Ifind out the same day that acts
(18:32):
and how much insurance you have,and that's exactly what I'm
asking for every single time.
So there's this really carefulbalancing act.
I would also want more brokersto be aware of things like the
Motor Carrier InsuranceEducation Foundation.
These are organizations thathelp you understand the trends
and forces in this business.
Ultimately, it is your ownappetite for risk.
(18:52):
These cases do not happen veryoften, but it may be the case
that it does.
You go bankrupt, make anotherbrokerage, so, like there's,
there's different ways toevaluate how you want to handle
that risk, and I don't want togive anyone advice like, oh,
this is the policy you shouldhave.
Yeah really you should have thatconversation and know what your
options are and then make thedecision that's best for your
business.
Speaker 3 (19:11):
Here's the very last question I have on that and I'm
very curious Is it like there'sdifferent circuit courts and the
circuits are based on wherethey're at in the united states,
as you kind of outlined, butdon't they all operate out of
the same case law?
Like how do you have two fellow, two federal appellate courts
and different circuits operatingout of different case law?
Speaker 2 (19:31):
yes, yes, oh, I love this, okay.
So this is getting into my mylaw professor kind of stuff.
So what you have in the way ofcircuits that are split seven
versus ninth or whatever is theyhave their rules.
Their interpretation is bindingon everyone underneath them.
So if you're 7th Circuit, anystate in the 7th Circuit that is
(19:51):
binding on those lower courts,but you are only persuasive in
the other ones.
The judges in the 9th Circuitwill go that's cute, that's fun,
that's interesting.
We don't see it that way.
So they take the exact samewords of the exact same statute
and get opposite outcomes.
And what we hope is that theSupreme Court comes in and says
(20:12):
okay, I see how you guys havemade this mistake, but let me
tell you what it actually means.
So whatever the Supreme Courtsays is binding on all the
federal courts For the SeventhCircuit.
It just binds the SeventhCircuit and then all of the
lower courts within the SeventhCircuit, like the district
courts.
So that's how that kind ofworks, and the only way you get
clarity is either an act ofCongress, which may or may not
(20:34):
happen, or you have the SupremeCourt weigh in and say no.
When we say price route andservice.
We mean price, route andservice.
We don't mean this safety thingthat keeps getting tagged with
catastrophic accidents.
Speaker 3 (20:49):
So, to boil this down , if you move a lot of freight
in Oregon and California, youare more vulnerable to a
catastrophic verdict than if youoperate and move freight in
states that aren't in thatcircuit.
Speaker 2 (20:55):
Probably.
But remember, even in stateswhere you don't have that
potential liability, you'restill going to be sued for it.
Like they're not just going tobe like.
Oh yeah, the Seventh Circuitdecided that they would say let
the other side litigate againstus and knock this claim out.
Speaker 1 (21:08):
But we're going to keep going.
That's the whole.
Like, anybody can sue anybodyat any time for anything guys
followed the Wabash case.
Speaker 2 (21:20):
Can I talk about that one for a moment?
Okay, Gosh, I'm so excited forthis.
This case like Ben, if you gotfrustrated with the Werner case,
like this case is going to makeyou go like I don't like it.
So here's the story A trailermade by Wabash was involved in
an accident.
Now the trailer itself was madein 2004.
Now, in 2004, there was arequirement by NHTSA for these
rear impact guards.
(21:41):
We call them ICC bumpers.
Speaker 1 (21:43):
Oh, I know this one.
Speaker 2 (21:44):
Yeah, you know this case.
So what the rear impact guardis designed to do is prevent a
thing called an underride.
An underride is a disinfectedway of saying decapitation, and
so the rule at 2004 was that therear impact guard had to
prevent an underride at 30 milesan hour.
So if you're going 30 miles anhour, hit the back of a trailer,
(22:05):
you don't get decapitated.
Everyone wins.
But they changed that.
It became now today it's 35miles an hour.
But here's the story In 2000, Ithink, 19 again, or 2018,
something like that.
This trailer is operated, knownby GDS Express.
They are stopped and anothervehicle is going way too fast.
They're going 55 miles an hour.
(22:25):
They smash into the back of theparked trailer.
Both the driver and thepassenger die instantly with an
underride and there's a lawsuit.
I'm going to tell you that thejury did not get to know and
I'll explain why the jury didn'tget to know them.
But the first fact is that thedriver for the passenger vehicle
was drunk.
His blood alcohol content wasabove the legal limit.
(22:47):
That was withheld from the jury.
And the other piece that'sinteresting is the driver and
the passenger did not haveseatbelts on Again, withheld
from the jury.
It goes to trial and thequestion is who's at fault for
these two men dying?
And the verdict came backbecause GDS Express went
bankrupt.
They're dead and gone.
Only one left is Wabash $462million it is the largest
(23:14):
verdict against a trailermanufacturer in US history.
Nothing else even comes close,and the argument that was
advanced was that the rearimpact guard was anticipated to
prevent underrides and Wabashshould have known, or knew that
that was not going to prevent anunderride at 55 miles an hour,
which is not the requirement.
(23:35):
The requirement at the time ofmanufacture was 30 miles an hour
.
But they get this number in themost fascinating way.
First, each person in thatpassenger vehicle gets
compensatory damages.
This is the damages that payyou back for your life, and that
number is $6 million for bothpeople.
So $12 million, that is thenumber for compensating you for
(24:00):
the death of these people sothere's 450 additional punitive
yes, they get this number bysaying wabash knew for 30 years
that this rear impact guard wasnot strong enough and in fact
they chose not to use a morerobust rear impact guard and
because they did that, theysaved $15 million a year in
(24:23):
trailer manufacturing costs.
$15 million times 30 gets you$450 million.
And there you have it.
If that number, if this rearimpact guard at 55 miles an hour
, that became the law in thiscountry, there are five million
trailers and almost none of themcould sustain that impact.
Speaker 1 (24:44):
Almost none of them I was gonna say I can't imagine a
um, a guard that would be ableto prevent at that speed right?
Speaker 4 (24:53):
no, not to mention um .
Speaker 1 (24:54):
You're not wearing a seatbelt.
Speaker 2 (24:56):
I'm just curious why?
Speaker 1 (24:58):
why would that evidence not, or those facts not
be allowed to be submitted?
So?
Speaker 2 (25:04):
it's the difference of theory.
So in the Werner case we talkedabout before, it was negligence
, and negligence is a duty, abreach of the duty, causation
and damages.
If you're partially negligentyourself, you can use that to
attack the negligence you arealso careless In product
liability.
It is strict liability.
The question is, what is theanticipated use of that thing?
(25:27):
And if that is the anticipateduse and the thing that happened
is someone foreseeably smashedit at some rate, we don't need
to ask the question what was thedriver doing?
It was did they do the thingthat you thought would happen,
which is why we have the rigs?
It was a very, very creativeplaintiff attorney.
It is on appeal.
The number has beensubsequently reduced, but it is
(25:49):
um something that has gotteneverybody in this business, like
asset-based people, freakingout because it is yeah
catastrophic, catastrophic allright, what else we got here?
Speaker 1 (25:59):
we're uh, we might be setting a record for our
longest episode ever, but I haveone more case to be worth
talking about very briefly, ifyou guys are open let's hear it
it's the daimler case.
Speaker 2 (26:08):
This is another one from last year, still kind of,
but it's very similar, eerilysimilar to the werner case.
Driver is operating his truckand another vehicle has an
incursion opposite lane.
But instead of colliding, thedriver for this truck turns and
and he rolls over.
And as he rolls over he bouncesup and the cab of his truck
(26:31):
hits his head and paralyzes himfrom the neck down.
He's a quadriplegic.
They sue the company thatcrossed into his lane rightfully
so, and they settled that.
But they also sued Daimler andthe theory with the lawsuit
against Daimler was like theWabash its anticipated use.
Lawsuit against Daimler was likethe Wabash its anticipated use.
(26:51):
Daimler offered a special seatand that seat is designed, when
you roll over, to pull you downso that you don't break your
neck on the cab.
It went to trial and Daimlerwas found to be liable to the
tune of $160 million.
This optional seat would havebeen about a thousand bucks and
the argument was made that itshould not have been optional,
(27:13):
it should have been mandatory.
Again, if you are Daimler, doyou recall every truck and
upgrade the seat?
Do you litigate this?
Do you tell customers goingforward?
I'm sorry, you can't have thenormal seat, because this is
this big case we have.
This industry is under attack,it's been under attack for a
(27:33):
very long time and these casesall are little pieces of the
broader mosaic of what ishappening in this industry and
the kind of liability people arefacing.
It's bananas.
Speaker 1 (27:45):
I mean realistically, how much of this is like a law
firm seeing an opportunity tomake a shit ton of money.
Speaker 3 (27:51):
Capitalism.
Speaker 2 (27:53):
Remember what we talked about in the very
beginning of this conversationwe have not enough regulators
enforcing the existingregulations on the roads.
Today, we know this.
We know this stuff is notmaintained.
Plaintiff attorneys arestarting to understand this
business and the more they learn, the more they can figure out
(28:13):
ways to grab-.
There are loopholes everywhere.
Yeah, absolutely.
This is not new.
This is why deregulationhappened to begin with, like as
Stephen did in his article aboutbroker transparency.
The old days, it was a shipperworking with the motor carrier
and that was it.
There was no intermediaries.
Everyone had this completeunderstanding of what they were
doing, and in order to reducecost and reduce liability, you
(28:34):
had to break the industry apart,fragment it.
And now the problems that wesee are just the side effects of
the design.
It's fascinating, but yes, it'scrazy, man.
It's fun to dig into.
Speaker 4 (28:47):
So one of the things I kind of wanted you to touch on
with the wall bash, because Iwas hoping that would come up
and we discussed a little bit atthe broker carrier summit.
But it's what liabilities dobrokerages open up themselves to
when they are renting outtrailers or lease trailers or
having trailer pulls?
(29:08):
And we discussed that a littlebit.
I'll let you take it, but Ithought that was also very
fascinating.
Speaker 2 (29:12):
So brokers have learned that the way to get
contract freight is to have droptrailers.
Like that is just part of thebusiness, like I need 20 drop
trailers at Ikea and then I getthe business Okay.
So in order to get that acrossthe finish line, they've made
these ideas of power.
Only you might.
You have Freightvana, you haveUber Freight, but Robinson and
TQL also run drop trailer pools.
(29:33):
The liability they openthemselves up to is astonishing,
and it is going to be somethingthat they're going to have to
reconcile with.
One of the things that happenedto Convoy, right before they
wound down, was being involvedin a wrongful death action by a
trailer that they had leasedfrom, I think, premier Trailer
Leasing, and so as you try tobroaden your offering, you are
also increasing your liabilitythe piece.
(29:55):
I'll say that I think this isthe part that scares the big,
big, big private fleets thisidea of the anticipated use
being the smashing of the rearimpact guard.
Once it becomes clear that themotor carrier has a duty to
change it or modify it, and theydon't, their liability directly
(30:16):
increases.
So Wabash is liable becausethey made something that had
anticipated use of being smashed, but when the motor carriers
start to realize that maybe theyshould be changing these things
out.
That starts to change thependulum.
And one of the issues we talkedabout was this idea of like
side impact guards.
So you guys all see the skirton the side of trailers.
(30:36):
Those things are designed foraerodynamics.
California Air Resource Boardmade that a law and then
everyone followed suit.
But rear side impact guards arenot mandated by our government
yet and they've been talkedabout for decades.
If you get a side underridesituation and you sue the
manufacturer, that can be thenew catalyst.
It says manufacturer, you knewwhat people did and even though
(31:00):
government didn't interveneearlier, you should have
directly done it yourself andtherefore you're at fault.
So as people think abouttrailers and I I love trailers
like I obsess about 53 foot vanswith swing doors or 28 foot pup
with roll-ups.
It gave me a flatbed.
It could be a reefer.
I love trailers.
The liability is astonishingand it's amazing, and that's why
(31:21):
maintenance is so important.
You can't defer it, you have totake care of your equipment.
If you can't take care of it,you shouldn't have it.
Speaker 1 (31:33):
I fundamentally believe you can't follow best
practices.
Get out of the business, wedon't need you.
Yep, agreed, that's a wholenother conversation that Ben and
I have had about.
You know carrier vetting, butawesome.
Do we have any other legaltopics that you want to hit on
before we wrap today?
Speaker 2 (31:45):
I think that the one thing I'd like to just kind of
wrap up with is I fundamentallybelieve we are entering a new
era in transportation.
When I taught my class thisspring the stuff that I want
them to understand and this issomething that everyone in
supply chain can understand thebiggest innovation outside of
the internal combustion enginewas the use of containers
containerization and in the 50sand 60s we saw this become
(32:08):
interesting.
But we saw the longshoremenfight this viciously.
They went on strike for 140days when they had to use the
containers.
We supported the entire port,the port of Oakland, through
containerization to facilitatethe conflict with Vietnam.
Technology is a trend and aforce.
You can't stop it.
Containers drove the cost oftransportation down manifestly
(32:30):
in ways we still are amazed by.
The next big change in ourindustry was deregulation.
In 1980 and the 1990s we sawthese massive unionized
motorcars where people hadworked and could retire and buy
houses and put kids throughschool.
We saw them slowly getdismantled.
We are entering the new age,and the new age is the age of
automation.
Yes, it's happy robot.
(32:54):
Yes, it's it's, you know,different technologies and
artificial intelligence, butreally it's about autonomous
trucks.
We are about to watch Kodiak doa special purpose acquisition
company to go public in thematter of months or weeks.
You see other companies likeAurora, moving stuff without
human beings.
The FMCSA has made a SANPRIM aSupplemental Advanced Notice of
Proposed Rulemaking it's a greatlegal term around level four
(33:15):
automation remote operator.
Level five automation, which isremote assistant.
This is happening.
It won't be a question of if.
It's a question of when andwhen it happens, it will
fundamentally change thisindustry and so when the FMCSA
eventually does propose rules, Iurge every one of your audience
to look at those proposals andcomment.
(33:36):
This is your democracy, this isyour supply chain.
If you have concerns, this ishow you voice them.
I don't want people to sit backand go ah, I didn't know this
was going to happen.
I that's.
That's not an excuse.
We know what's happening, weknow where this goes and we need
to be prepared, because that isthe eventuality and that's the
(33:57):
thing I get really excited about.
And just for the last piece, Iwill betray the humans.
I am on the side of the robots,I am not on humanity's side.
I know who wins this game.
I know who wins this.
Speaker 1 (34:07):
Here's the question I have.
You know, what's wild to thinkabout is, like you know, in the
future I won't even take a guessat when it is you'll see a
lawsuit of.
You know, the self-drivingvehicle is at fault when
somebody crosses over 40 feetand hits them head on right.
(34:28):
It should have been created tosense that and stop.
You know, I can just picturethat now.
Speaker 3 (34:36):
It'll be a probability case.
Speaker 1 (34:38):
It's the Aurora driver, right, or whatever you
call your AI.
Speaker 2 (34:41):
Whoever programmed to make that decision because
that's the thing that's sofascinating is this is not about
reaction time.
They are programmed to do aspecific decision under a
certain set of factors, and somy belief is, if we have 80
percent of commercial vehiclesare safe and 20 percent are not,
I don't think you can have anautonomous vehicle.
I think the autonomous vehicleis going to be 99.9 percent
(35:02):
well-maintained at all times,because you can't have that
ambiguity that we have oncommercial vehicles today.
Speaker 3 (35:08):
Yeah, I agree.
I feel like there's going to belikely pushback, though I think
all the drivers calling theircongressmen, their senators, and
going we don't want this, we'rescared of this.
I mean, I do see, I've beenfollowing it for years I mean
this was supposed to happen inthe late teens that they thought
these were going to be out bylike 2020.
But like people are gettingmore comfortable with Waymo cars
(35:31):
driving around in San Franciscoand driverless taxis, I think
we're getting more okay with itin society.
But I think you're going to seea drastic pushback from truck
drivers and trucking companyowners that are going to lobby
the shit out of trying to put upevery roadblock they can to
slow that down.
Speaker 2 (35:47):
Okay, we're going to have to keep going.
So to build off of that, Idon't think you're wrong, but I
do think that ultimately they'renot going to be effective.
Twice now in the state ofCalifornia they have lobbied
Governor Newsom to have a billthat would mandate a safety
driver in autonomous vehiclesand twice he's vetoed it.
That's the most liberal statein this country and they are
turning their back on theTeamsters and OIDA.
(36:07):
I think what we saw with theautomation debate with the East
Coast ports, the two things thatthe longshoremen fought about
was wages and automation, andwages were solved in three days.
We have dismantled the truckingunions and the LTLs are not
going to be automated.
They're not going to care asmuch.
They're going to see automationof the rail yards with
(36:28):
autonomous spotting trucks thatwon't require a lot of
participation from outside folks.
But the longshoremen fought onautomation and they lost.
Now the newer agreement kind ofmakes it seem like they've won,
but automation is coming and ifyou tell the American consumer,
things will be cheaper andpotentially safer.
I think it's going to besomething we can't stop.
I would love to see driversunite to an extent and say we
(36:51):
don't want these things, but theestimates I've heard and read,
up to 20 to 30% of over the roadfreight could be moved by
autonomous trucks.
This is a manifestly differentbusiness and the day the FMCSA
makes those rules, you canguarantee the big motor carriers
are going to be early adoptersin reducing driver turnover.
Speaker 1 (37:11):
Oh yeah.
Speaker 2 (37:12):
Hours of service.
Oh, it's going to be sointeresting.
Speaker 1 (37:14):
Part of it too is like you have natural attrition
in any career field, Right?
So if you, if you know thatI've got this many people
probably going to retire or quitthis year, I'm going to adopt
early, like you said on.
Said on autonomy.
Speaker 2 (37:29):
you know autonomy in my fleet, so when I was at the
manifest conference a coupleyears ago, there was a really
high level person from dhltalking about their warehousing
situation and they had like 150000 workers and they'd have
about 60 percent quit every yearand they used the phrase I love
, which was we need to reduceour dependency on on labor, like
(37:50):
that's a funny way of saying weneed to fire more people
because that's what it means.
Speaker 4 (37:54):
It's, it's amazing Language.
Speaker 2 (37:56):
Language is beautiful , but yeah that that that in 10
to 15 years, this industry willlook very different than it used
to, and we are entering a newera.
It will never be the same, butwe have the chance now to
participate and have our voicesheard.
But I don't know if it'llchange anything.
Speaker 1 (38:14):
Very good, all right, great episode.
I'm going to probably splitthis up into two and send it out
.
Part one.
Part two Maybe not, I'm notsure, but it's a good one.
It's packed with a ton of stuff.
Should make for some goodcontent.
Matt LaFffler, the armchairattorney Wonderful conversation.
I learned a lot, ben.
(38:35):
I assume you come out of this alittle more educated as well.
Speaker 2 (38:39):
For sure.
Thank you, guys for letting mebe a part of this.
I really appreciate it.
Speaker 1 (38:43):
Yeah, so if folks want to get a hold of you for
any, you know, whatever reason,what's the best way for them to
reach out?
Speaker 2 (38:49):
Generally.
You can find me on LinkedIn,just Matthew Leffler.
You can find me atarmchairattorneycom.
I'm on Reddit.
Armchair, I think, underscoreattorney, it's something like
that I have no idea.
Speaker 1 (38:59):
We'll throw a couple of your contacts in the show
notes.
Speaker 2 (39:02):
So thank you for having me, guys.
I really appreciate it.
Speaker 1 (39:04):
Yeah, Awesome Ben.
Final thoughts.
Speaker 3 (39:07):
Whether you believe you can or.
All right, ben, you got any other questions
Otherwise?
Speaker 2 (00:04):
I know.
Speaker 1 (00:08):
We got to move into this stuff that we talked about
off air beforehand, so let's goto transparency.
I don't care how long thisepisode goes, let's go to
transparency.
Speaker 2 (00:18):
This is a really interesting one and Stephen's
done a great job breaking thisstuff down the history of
transparency, why we have thisregulation.
I'll say that the two thingsthat are really important to
note right now.
This is the most important rulethat brokers should be aware of
.
If it gets finalized as it'sbeen produced by the FMCSA, what
it would mean is it would meanthat a motor carrier can request
(00:41):
records of a broker transactionand the broker would have to
provide them within two days inan electronic format.
That is very different thanwhat it is today.
Now there's a couple of caveats.
One of them is we still havewaivers of this rule 371.3.
If you're a broker and you donot have a waiver in your
contract, call the lawyer andsay tell me what language I
(01:05):
should have to make sure I canwaive these things.
But we've had two commentperiods now.
So we had one comment period onthe rule and then another one.
So the question has been veryaptly raised Will we see new
broker transparency regulations?
And my inclination is that wewill not.
I think the FMCSA does not havethe legal authority or the
(01:25):
mandate to Ben's point earlier.
They're a safety organization.
How much money a broker makeson a load has nothing to do with
safety.
It is outside theircongressional authority and they
ought not to do it.
Speaker 3 (01:36):
We also I have a question about that, matt, right
there before you go past thatbut Nate has been working with
them through the TIA form andthings where, like now, they
have the ability to enforcefines on household goods, which
is likely the step into beingable to enforce.
Speaker 1 (01:52):
Now, that's just the name of the act, the Household
Goods Consumer Protection Act,which allows it, gives
enforcement of civil penaltiesto the FMCSA.
Speaker 3 (02:02):
So they have the ability to enforce civil
penalties.
Does that change what you justsaid?
No, it doesn't.
Civil penalties to the FMCSA.
So if they have the ability toenforce civil penalties, does
that change what you just said?
Speaker 2 (02:06):
No, it doesn't.
So the first thing to thinkabout so when you violate an
FMCSA thing, the Department ofJustice is the one who goes
after you, it's not the FMCSA.
They don't have the authority.
So this authority is actuallygood, specifically on fraud and
theft and that kind of thing.
That is, we want the FMCSA tohave teeth.
We want them to be able to biteand change things.
(02:27):
The argument about brokertransparency is that one.
I think the waivers will alwaysbe in place.
I don't think we're going tohave the Congress act and say,
oh no, we don't want waiversanymore.
That's, that's very unlikely.
And number two, I don't thinkthey have the authority, if you.
I mean this is reallyadministrative law stuff, but
(02:48):
there was a case called Chevron.
It's 40 years old.
It got overturned last year ina case called Loperbright.
But what that case stands for,the proposition of, is, if the
act that Congress passes doesnot explicitly give the agency
this power, they don't have thepower.
And the FMCSA, their enablingstatute, has nothing to do with
(03:08):
how much money shippers paybrokers.
So ultimately, I think thatthis will end up dying.
Now, on a separate line oflitigation like this, actual
litigation, we have Pink Cheetahsuing TQL, your alma mater
mater, and that is stuck now inin a dc court.
Um, all the motions have beenfiled any day now and I haven't
(03:29):
checked today, but any day nowthe judge will make an order, um
, either telling pink cheetah totry it again or telling tql to
answer this.
And the whole core of thisissue is are the waivers in the
broker and carrier agreementsenforceable?
And I think that they will be.
I think TQL will win this.
I think Pink Cheetah will bestomped out of existence, but I
(03:52):
could be wrong.
Speaker 3 (03:53):
I'm very rarely wrong .
Four or five other points thatTQL's counsel put forward to
basically shut that down.
Wasn't Pink Cheetah alsoalready out of business, which
made it have less standing?
To make this claim in the firstplace is one of them you make
me so happy.
Speaker 2 (04:08):
So, like this is, this is my favorite kind of
thing to talk about.
So there are defenses that tqlput forward that are specific to
pink cheetah very, this isabout you, you as the plaintiff
and then they have defenses thatare more like if anyone else
brought this, we, we would saythese things.
So to Pink Cheetah's pointthey're not an interstate motor
carrier, they're intrastate inFlorida.
(04:29):
They don't have any offices, asfar as I know, in DC.
That was the wrong place to go.
But regardless, the contractbetween Pink Cheetah and TQL
says the only place you get tosue is Ohio.
You have to come over here,cuyahoga County.
So they had a whole bunch ofthese direct attacks against
Pink Cheetah and they had theother one saying the thing that
(04:50):
the FMCSA put forward.
It's not an order, it's anopinion letter.
It means nothing.
So I think that TQL will winthis thing and what I worry
about is that other motorcarriers will be emboldened by
this type of litigation andstart this against a whole bunch
of brokers.
So we really do want the FMCSAto be very clear that this
(05:13):
transparency thing is not goingto continue and that this waiver
is enforceable.
That's what I want to see, butwe haven't seen that yet.
Speaker 4 (05:20):
So one thing I just want to bring it back to is the
48-hour producing the recordswithin 48 hours, right, but we
know that traditionally thetransactions when the law was
written was one and now it's two.
So if they're requestingtransactions within 48 hours but
half that transaction is notdone for 30, 60, 90 days, how do
(05:44):
you produce those records?
How can you force those records?
And I don't think I've actuallyheard anyone elaborate on that
facet of the 48-hour request,regardless if it's electronic or
not.
It just might not be there forus to produce.
Speaker 2 (05:57):
I think it goes back to people just not understanding
how this stuff works, because,to your point, after the thing
is delivered, there's stillstuff going.
Was there detention?
Was there other things?
We have to factor into this,this particular load, and I
think it was this simple thingwhere the noaa was like we want
it in two days and we want it tobe immediate.
They want it to be mandatoryinitially.
(06:18):
Oh, I know their position wasnot a request being filed at all
.
You just have to produce it theminute.
And there are companies thathave access to this information,
like that could be one.
Uh, there's other places youcould get this.
So it's yeah, it's so cool,it's so interesting.
I remember.
Speaker 1 (06:32):
So that's one of the big talking points that we've
lobbied on Capitol Hill with TIAabout the last couple of years.
I remember sitting down in TimBurchett's office he's one of
the representatives fromTennessee and we were explaining
like that, not the oh, they cando this, but the mandate idea,
and he was just like what he'slike?
What kind of free market,capitalistic society do we live
(06:57):
in that it's gone to where youjust have to open your books to
anyone you do business with?
Absolutely open your books toanyone you do business with.
Absolutely so it is.
It is wildly absurd, in myopinion.
Um that that was, that was theoriginal ask is like oh, not
only can we ask for it, but youjust have to tell us what your
customer paid you it's likegoing to amazon saying how much
(07:17):
did you buy that towel rack for?
Speaker 3 (07:19):
I mean I want that towel rack.
I want the markup.
How?
Speaker 2 (07:22):
much did you?
What was your cost for it now?
Now I worked at Best Buy.
I sold televisions.
I knew my cost, but I wouldn'ttell that to the customer.
I would say I can work withinthis frame.
But you're exactly right.
There's no other industry likethis.
It is an anachronistic thingfrom the days before
deregulation, when brokers werea very small part of the
(07:43):
industry.
It's very different today, butI hope for my.
My belief is TIA is gettingbetter at communicating about
these things with people inpower.
Speaker 3 (07:53):
And that should hopefully drive us in the right
direction.
Well, how funny is that?
I never even thought of thatuntil Steven pointed that out.
But it's like most carriersdon't get you their invoice on a
load for a few days, maybe aweek later.
In fact, it delays some of ourinvoicing to our customers
because we're waiting to get thecarrier's invoice to send it to
the factoring company and it'slike, oh great, you're going to
make us send this to you in 24to 48 hours.
That means you, as a truckingcompany, got to invoice me
within the first 24 hours withall detention, every access
(08:15):
serial, and imagine theadministrative burden on all the
small carriers to have to dotheir paperwork every single day
, get all those invoices out toeven comply with the thing
they're asking for, which is theother half of the transaction.
Speaker 2 (08:27):
I think so from my.
My belief is that the finalrule will will not be made.
They are not going to produce afinal rule or they'll just say
we're going to keep it as it is.
I do not think we're going tosee anything like what the
proposed regulation is.
That proposal was underneaththe prior administration and
this administration is a littlebit more hostile to these types
(08:48):
of regulations.
We're not going back to aregulated industry.
It's not going to happen.
So I'm with you.
I think it's unrealistic tothink that two days is even
feasible.
But I think they were giving alittle carrot to the folks who
were complaining about brokersmaking 40% margin on everything
they touched.
Speaker 1 (09:05):
What else we got in the legal space here is that
your dog in the background youget she's, she's, yeah, she's
whining because the kids arehaving something to eat and
she's like this is the best dogloves to hang out in my office
and we've had plenty of episodesben can attest when, like I
don't know if it's the amazonguy that shows up, but my dog,
that 20 some pound mini goldendoodle, becomes like a savage
(09:28):
attack dog as soon as someonecomes near our property the
thing I would say the dog isvery helpful.
Speaker 2 (09:33):
She's, she's a good mascot for what we do over here.
I'd say the one thing I'd liketo touch on I know we're getting
, I know this is a little bit ofa good conversation, but the
Werner Enterprises case, I mean,this case is really, really
important.
Have you guys been followingthis case?
Speaker 1 (09:49):
I can't speak to it.
I mean, I take it away, give it, paint the picture for us.
Speaker 2 (09:55):
This is the story of the Werner Enterprises case that
is currently on appeal beforethe Texas Supreme Court.
The story is like this it'ssnowing, a driver is operating a
commercial vehicle by wernerenterprises.
He's his company driver.
He's been driving for aboutseven days.
New driver, his trainer, isasleep in the back in the berth.
Because in our industry forfull truckload motor carriers,
(10:17):
when you have a driver, atrainee and a trainer, they
behave as if they were a teamand they are a team.
They're running different eldsand all this on different log
books.
The driver is going 10 miles orso under the posted speed limit.
Again, it is snowing, the truckdriver never loses control.
The werner truck stays in itslane and there is no issue.
However, another vehicletraveling too fast for
(10:40):
conditions in the opposite lane,opposite side of the road, is
going too fast and we knowthey're going too fast because
they lose control.
They spin out and they cross 40feet of median and within a
second or two of losing control,they collide head-on with the
truck operated by wernerenterprises.
One child is dead, one childbecomes paralyzed, no one has
(11:02):
severe brain injuries.
And the question who's at fault, who's responsible for this?
And it goes to trial and attrial it is found that the
driver for Werner was 14%responsible, 14%.
Speaker 1 (11:18):
For being there.
Speaker 2 (11:20):
Well, yeah, for driving that truck and the
driver for the passenger vehicle.
You know the one.
Speaker 1 (11:26):
That's done.
That case is over with.
Speaker 2 (11:27):
That's what they oh we're going to get much more in
depth on what happened.
The driver for the passengervehicle is also at fault 16%, 16
for the driver, 14 for Werner'sdriver.
But I'm no Jason Miller, I'm noKen Adamo, I'm not a math guy
driver.
But I'm no Jason Miller, I'm noKen Adamo, I'm not a math guy.
We're missing 70%, though 70%is Werner Enterprises.
(11:48):
Werner's hit for a liability of$100 million.
Speaker 3 (11:54):
Matt who determines those percentages?
Is that the jury or the judge?
Speaker 2 (11:58):
That is the jury.
The jury has asked thisquestion and they come back with
the determination.
Speaker 3 (12:03):
Do they provide an explanation with the percentage
or they just give the number?
Speaker 2 (12:05):
You get an understanding from this case
that Werner had internalpolicies around driving in
adverse weather and thisparticular driver didn't get a
lot of training on adverseweather.
And just again, for everyonewho's watching this, there's no
FMCSA requirement that you'retrained to drive at night or
train and driving in snow ordriving in mountains Like.
That's not the requirement,it's not the standard.
But what they basically madethe argument for was werner
(12:28):
should have shut their truckdown or they should have had
that driver going 20 miles anhour.
But ultimately werner appealsto the texas appellate court and
they say look, our guy wasgoing safe, he was going at
below the posted speed limit,never lost control, we didn't
incur into another lane and youand me cannot anticipate someone
(12:50):
incurring into our lane fromthe opposite side of the highway
.
That's absurd.
And the appellate court saidthat's a good argument.
We disagree.
And now that verdict was upheld, and because it was upheld, you
had the compounding of interest, now that $100 million is $130
million and it gets appealed tothe Texas Supreme Court.
(13:11):
So in December 3rd or December4th of 2024, they argued this
case at the Texas Supreme Court.
Any day, any day, we will knowthe outcome of this litigation,
but it will have unique andprofound impacts to motorcars
and brokers, because thisliability is going to be
(13:33):
astronomical.
Speaker 3 (13:36):
You know, what's interesting is?
It's a little bit of a tangent,but it ties back to what we
talked about earlier.
I always find it fascinatingwhen you look at the history of
why companies do things.
It's usually monetary right.
It's usually related tocapitalism.
It's usually about avoidingsomething right.
Speaker 2 (13:52):
Avoiding liability.
That's the story of theAmerican.
Speaker 3 (13:54):
We talked earlier about the fact that the FMCSA
isn't vetting drivers wellenough, right, and we talked
about the fact that, likethey're maybe not necessarily
enforcing things, that should bedone for driver standards and
safety standards.
We know they're not inspectingenough on a maintenance point of
view, right, but it would be aninteresting unintended
consequence if I think it'sunfortunate that they end up, if
(14:17):
it does go that way, bearingthe brunt of this 130 and who
knows what that is now withinterest right 150 million,
whatever that is.
But, like I could see lots oftrucking companies all of a
sudden knowing if they could beresponsible for somebody
crossing a median and oncomingtraffic and hitting their truck,
of all of a sudden going, hey,we need to be more stringent on
(14:38):
who we hire, we need to be morestringent on who we're training
and we need to be more stringenton driving speed limits, which
are all things that were thrownout from an enforcement or
regulation standpoint.
It would be an interestingunintended consequence if
trucking companies just starteddoing this to avoid these
catastrophic liabilities.
Speaker 2 (14:56):
I think you're right.
I think the motor carriers ifthis verdict in Texas is upheld
which is very strange, but ifit's upheld it will make motor
carriers far more skepticalabout putting people in bad
weather conditions.
But this idea of brokerliability is still somewhat new.
But this idea that can a brokerbe held responsible for the
(15:17):
alleged carelessness of a motorcarrier, so forget.
It's Warner, Say it's an owneroperator who's driving that
truck and they're pulling for aCH Robinson.
What would happen?
Same exact thing.
You would sue Robinson and sayyou should have known, you
shouldn't have had him out therein this weather.
And the circuits, the federalcircuits, are split about when
brokers can be held responsible.
Speaker 3 (15:39):
Isn't it more not responsible than I thought there
was like one case where brokerswere held liable and like at
least three or four where theyweren't.
Is it an even number or?
Speaker 2 (15:49):
This is, listen, what I get so excited about.
So there's the Ninth CircuitCourt of Appeals, that is the
California and Oregon andWashington, and they have been
of the opinion and their caselaw says that brokers can be
held liable for the negligenceof a motor care.
That is the Miller v C HRobinson.
Then you have the SeventhCircuit Court of Appeals and the
(16:10):
Seventh Circuit had the case ofGlobal Trans V E.
Same set of facts broker hireda motor care, motor care commits
a careless act, and both ofthem get tagged.
Seventh Circuit says no, thebroker can't be held responsible
.
And they had several cases thathave reaffirmed that same
decision.
And then on the 11th Circuit,that's Florida, they also said
(16:31):
brokers can't be heldresponsible.
But here's the issue the SupremeCourt has not weighed in and
every opportunity they have hadto weigh in, they've chosen not
to, has not weighed in and everyopportunity they have had to
weigh in, they've chosen not to.
Now remember when I talkedabout insurance, the duty to
defend and the duty to indemnifyIf you're not going to be
(16:53):
liable, you still need the dutyto defend.
You still need a lawyer tofight for you, because that
litigation is $20,000, $30,000,$40,000 a month.
So if you're a broker and evenif you're moving freight and
it's in Illinois and you're notgoing to be held responsible,
the plaintiff is still suing you, they're still coming after you
and you're still going to haveto deal with that litigation.
So I wish the Supreme Court andthis is discretionary they do
(17:15):
whatever they want to do.
This is a case that ourindustry desperately needs
because, at the end of the day,if you're a broker and your
motor carrier has some terriblething, you are going to be sued.
Maybe you win, but you aregoing to be sued.
Speaker 3 (17:29):
So I have two questions.
The first question is whatinsurance should brokers make
sure they have that covers themfor that defense?
Is that contingent cargo?
Is that general liability is?
Is that errors and omissions?
What kind of insurance shouldbrokers be talking to their
agent about of making sure theyhave this coverage to defend?
Speaker 2 (17:47):
What I recommend to my clients when we talk about
these things is you print off anarticle about this case.
You send it to your insuranceprovider and say tell me what I
should be doing differently,because I know the margins are
not strong enough in thisbusiness to support buying an
umbrella policy for $10 millionthat covers anything that goes
(18:09):
beyond your general liability orcargo or whatever, or your
contingent auto.
So I would say that that answeris going to be it depends on
the state and the jurisdictionand your own appetite for risk.
You can absolutely over-insureyourself and that is probably
not an outcome that you want tohave because, again, in law, in
litigation, I ask the.
If I'm a plaintiff attorney, Ifind out the same day that acts
(18:32):
and how much insurance you have,and that's exactly what I'm
asking for every single time.
So there's this really carefulbalancing act.
I would also want more brokersto be aware of things like the
Motor Carrier InsuranceEducation Foundation.
These are organizations thathelp you understand the trends
and forces in this business.
Ultimately, it is your ownappetite for risk.
(18:52):
These cases do not happen veryoften, but it may be the case
that it does.
You go bankrupt, make anotherbrokerage, so, like there's,
there's different ways toevaluate how you want to handle
that risk, and I don't want togive anyone advice like, oh,
this is the policy you shouldhave.
Yeah really you should have thatconversation and know what your
options are and then make thedecision that's best for your
business.
Speaker 3 (19:11):
Here's the very last question I have on that and I'm
very curious Is it like there'sdifferent circuit courts and the
circuits are based on wherethey're at in the united states,
as you kind of outlined, butdon't they all operate out of
the same case law?
Like how do you have two fellow, two federal appellate courts
and different circuits operatingout of different case law?
Speaker 2 (19:31):
yes, yes, oh, I love this, okay.
So this is getting into my mylaw professor kind of stuff.
So what you have in the way ofcircuits that are split seven
versus ninth or whatever is theyhave their rules.
Their interpretation is bindingon everyone underneath them.
So if you're 7th Circuit, anystate in the 7th Circuit that is
(19:51):
binding on those lower courts,but you are only persuasive in
the other ones.
The judges in the 9th Circuitwill go that's cute, that's fun,
that's interesting.
We don't see it that way.
So they take the exact samewords of the exact same statute
and get opposite outcomes.
And what we hope is that theSupreme Court comes in and says
(20:12):
okay, I see how you guys havemade this mistake, but let me
tell you what it actually means.
So whatever the Supreme Courtsays is binding on all the
federal courts For the SeventhCircuit.
It just binds the SeventhCircuit and then all of the
lower courts within the SeventhCircuit, like the district
courts.
So that's how that kind ofworks, and the only way you get
clarity is either an act ofCongress, which may or may not
(20:34):
happen, or you have the SupremeCourt weigh in and say no.
When we say price route andservice.
We mean price, route andservice.
We don't mean this safety thingthat keeps getting tagged with
catastrophic accidents.
Speaker 3 (20:49):
So, to boil this down , if you move a lot of freight
in Oregon and California, youare more vulnerable to a
catastrophic verdict than if youoperate and move freight in
states that aren't in thatcircuit.
Speaker 2 (20:55):
Probably.
But remember, even in stateswhere you don't have that
potential liability, you'restill going to be sued for it.
Like they're not just going tobe like.
Oh yeah, the Seventh Circuitdecided that they would say let
the other side litigate againstus and knock this claim out.
Speaker 1 (21:08):
But we're going to keep going.
That's the whole.
Like, anybody can sue anybodyat any time for anything guys
followed the Wabash case.
Speaker 2 (21:20):
Can I talk about that one for a moment?
Okay, Gosh, I'm so excited forthis.
This case like Ben, if you gotfrustrated with the Werner case,
like this case is going to makeyou go like I don't like it.
So here's the story A trailermade by Wabash was involved in
an accident.
Now the trailer itself was madein 2004.
Now, in 2004, there was arequirement by NHTSA for these
rear impact guards.
(21:41):
We call them ICC bumpers.
Speaker 1 (21:43):
Oh, I know this one.
Speaker 2 (21:44):
Yeah, you know this case.
So what the rear impact guardis designed to do is prevent a
thing called an underride.
An underride is a disinfectedway of saying decapitation, and
so the rule at 2004 was that therear impact guard had to
prevent an underride at 30 milesan hour.
So if you're going 30 miles anhour, hit the back of a trailer,
(22:05):
you don't get decapitated.
Everyone wins.
But they changed that.
It became now today it's 35miles an hour.
But here's the story In 2000, Ithink, 19 again, or 2018,
something like that.
This trailer is operated, knownby GDS Express.
They are stopped and anothervehicle is going way too fast.
They're going 55 miles an hour.
(22:25):
They smash into the back of theparked trailer.
Both the driver and thepassenger die instantly with an
underride and there's a lawsuit.
I'm going to tell you that thejury did not get to know and
I'll explain why the jury didn'tget to know them.
But the first fact is that thedriver for the passenger vehicle
was drunk.
His blood alcohol content wasabove the legal limit.
(22:47):
That was withheld from the jury.
And the other piece that'sinteresting is the driver and
the passenger did not haveseatbelts on Again, withheld
from the jury.
It goes to trial and thequestion is who's at fault for
these two men dying?
And the verdict came backbecause GDS Express went
bankrupt.
They're dead and gone.
Only one left is Wabash $462million it is the largest
(23:14):
verdict against a trailermanufacturer in US history.
Nothing else even comes close,and the argument that was
advanced was that the rearimpact guard was anticipated to
prevent underrides and Wabashshould have known, or knew that
that was not going to prevent anunderride at 55 miles an hour,
which is not the requirement.
(23:35):
The requirement at the time ofmanufacture was 30 miles an hour
.
But they get this number in themost fascinating way.
First, each person in thatpassenger vehicle gets
compensatory damages.
This is the damages that payyou back for your life, and that
number is $6 million for bothpeople.
So $12 million, that is thenumber for compensating you for
(24:00):
the death of these people sothere's 450 additional punitive
yes, they get this number bysaying wabash knew for 30 years
that this rear impact guard wasnot strong enough and in fact
they chose not to use a morerobust rear impact guard and
because they did that, theysaved $15 million a year in
(24:23):
trailer manufacturing costs.
$15 million times 30 gets you$450 million.
And there you have it.
If that number, if this rearimpact guard at 55 miles an hour
, that became the law in thiscountry, there are five million
trailers and almost none of themcould sustain that impact.
Speaker 1 (24:44):
Almost none of them I was gonna say I can't imagine a
um, a guard that would be ableto prevent at that speed right?
Speaker 4 (24:53):
no, not to mention um .
Speaker 1 (24:54):
You're not wearing a seatbelt.
Speaker 2 (24:56):
I'm just curious why?
Speaker 1 (24:58):
why would that evidence not, or those facts not
be allowed to be submitted?
So?
Speaker 2 (25:04):
it's the difference of theory.
So in the Werner case we talkedabout before, it was negligence
, and negligence is a duty, abreach of the duty, causation
and damages.
If you're partially negligentyourself, you can use that to
attack the negligence you arealso careless In product
liability.
It is strict liability.
The question is, what is theanticipated use of that thing?
(25:27):
And if that is the anticipateduse and the thing that happened
is someone foreseeably smashedit at some rate, we don't need
to ask the question what was thedriver doing?
It was did they do the thingthat you thought would happen,
which is why we have the rigs?
It was a very, very creativeplaintiff attorney.
It is on appeal.
The number has beensubsequently reduced, but it is
(25:49):
um something that has gotteneverybody in this business, like
asset-based people, freakingout because it is yeah
catastrophic, catastrophic allright, what else we got here?
Speaker 1 (25:59):
we're uh, we might be setting a record for our
longest episode ever, but I haveone more case to be worth
talking about very briefly, ifyou guys are open let's hear it
it's the daimler case.
Speaker 2 (26:08):
This is another one from last year, still kind of,
but it's very similar, eerilysimilar to the werner case.
Driver is operating his truckand another vehicle has an
incursion opposite lane.
But instead of colliding, thedriver for this truck turns and
and he rolls over.
And as he rolls over he bouncesup and the cab of his truck
(26:31):
hits his head and paralyzes himfrom the neck down.
He's a quadriplegic.
They sue the company thatcrossed into his lane rightfully
so, and they settled that.
But they also sued Daimler andthe theory with the lawsuit
against Daimler was like theWabash its anticipated use.
Lawsuit against Daimler was likethe Wabash its anticipated use.
(26:51):
Daimler offered a special seatand that seat is designed, when
you roll over, to pull you downso that you don't break your
neck on the cab.
It went to trial and Daimlerwas found to be liable to the
tune of $160 million.
This optional seat would havebeen about a thousand bucks and
the argument was made that itshould not have been optional,
(27:13):
it should have been mandatory.
Again, if you are Daimler, doyou recall every truck and
upgrade the seat?
Do you litigate this?
Do you tell customers goingforward?
I'm sorry, you can't have thenormal seat, because this is
this big case we have.
This industry is under attack,it's been under attack for a
(27:33):
very long time and these casesall are little pieces of the
broader mosaic of what ishappening in this industry and
the kind of liability people arefacing.
It's bananas.
Speaker 1 (27:45):
I mean realistically, how much of this is like a law
firm seeing an opportunity tomake a shit ton of money.
Speaker 3 (27:51):
Capitalism.
Speaker 2 (27:53):
Remember what we talked about in the very
beginning of this conversationwe have not enough regulators
enforcing the existingregulations on the roads.
Today, we know this.
We know this stuff is notmaintained.
Plaintiff attorneys arestarting to understand this
business and the more they learn, the more they can figure out
(28:13):
ways to grab-.
There are loopholes everywhere.
Yeah, absolutely.
This is not new.
This is why deregulationhappened to begin with, like as
Stephen did in his article aboutbroker transparency.
The old days, it was a shipperworking with the motor carrier
and that was it.
There was no intermediaries.
Everyone had this completeunderstanding of what they were
doing, and in order to reducecost and reduce liability, you
(28:34):
had to break the industry apart,fragment it.
And now the problems that wesee are just the side effects of
the design.
It's fascinating, but yes, it'scrazy, man.
It's fun to dig into.
Speaker 4 (28:47):
So one of the things I kind of wanted you to touch on
with the wall bash, because Iwas hoping that would come up
and we discussed a little bit atthe broker carrier summit.
But it's what liabilities dobrokerages open up themselves to
when they are renting outtrailers or lease trailers or
having trailer pulls?
(29:08):
And we discussed that a littlebit.
I'll let you take it, but Ithought that was also very
fascinating.
Speaker 2 (29:12):
So brokers have learned that the way to get
contract freight is to have droptrailers.
Like that is just part of thebusiness, like I need 20 drop
trailers at Ikea and then I getthe business Okay.
So in order to get that acrossthe finish line, they've made
these ideas of power.
Only you might.
You have Freightvana, you haveUber Freight, but Robinson and
TQL also run drop trailer pools.
(29:33):
The liability they openthemselves up to is astonishing,
and it is going to be somethingthat they're going to have to
reconcile with.
One of the things that happenedto Convoy, right before they
wound down, was being involvedin a wrongful death action by a
trailer that they had leasedfrom, I think, premier Trailer
Leasing, and so as you try tobroaden your offering, you are
also increasing your liabilitythe piece.
(29:55):
I'll say that I think this isthe part that scares the big,
big, big private fleets thisidea of the anticipated use
being the smashing of the rearimpact guard.
Once it becomes clear that themotor carrier has a duty to
change it or modify it, and theydon't, their liability directly
(30:16):
increases.
So Wabash is liable becausethey made something that had
anticipated use of being smashed, but when the motor carriers
start to realize that maybe theyshould be changing these things
out.
That starts to change thependulum.
And one of the issues we talkedabout was this idea of like
side impact guards.
So you guys all see the skirton the side of trailers.
(30:36):
Those things are designed foraerodynamics.
California Air Resource Boardmade that a law and then
everyone followed suit.
But rear side impact guards arenot mandated by our government
yet and they've been talkedabout for decades.
If you get a side underridesituation and you sue the
manufacturer, that can be thenew catalyst.
It says manufacturer, you knewwhat people did and even though
(31:00):
government didn't interveneearlier, you should have
directly done it yourself andtherefore you're at fault.
So as people think abouttrailers and I I love trailers
like I obsess about 53 foot vanswith swing doors or 28 foot pup
with roll-ups.
It gave me a flatbed.
It could be a reefer.
I love trailers.
The liability is astonishingand it's amazing, and that's why
(31:21):
maintenance is so important.
You can't defer it, you have totake care of your equipment.
If you can't take care of it,you shouldn't have it.
Speaker 1 (31:33):
I fundamentally believe you can't follow best
practices.
Get out of the business, wedon't need you.
Yep, agreed, that's a wholenother conversation that Ben and
I have had about.
You know carrier vetting, butawesome.
Do we have any other legaltopics that you want to hit on
before we wrap today?
Speaker 2 (31:45):
I think that the one thing I'd like to just kind of
wrap up with is I fundamentallybelieve we are entering a new
era in transportation.
When I taught my class thisspring the stuff that I want
them to understand and this issomething that everyone in
supply chain can understand thebiggest innovation outside of
the internal combustion enginewas the use of containers
containerization and in the 50sand 60s we saw this become
(32:08):
interesting.
But we saw the longshoremenfight this viciously.
They went on strike for 140days when they had to use the
containers.
We supported the entire port,the port of Oakland, through
containerization to facilitatethe conflict with Vietnam.
Technology is a trend and aforce.
You can't stop it.
Containers drove the cost oftransportation down manifestly
(32:30):
in ways we still are amazed by.
The next big change in ourindustry was deregulation.
In 1980 and the 1990s we sawthese massive unionized
motorcars where people hadworked and could retire and buy
houses and put kids throughschool.
We saw them slowly getdismantled.
We are entering the new age,and the new age is the age of
automation.
Yes, it's happy robot.
(32:54):
Yes, it's it's, you know,different technologies and
artificial intelligence, butreally it's about autonomous
trucks.
We are about to watch Kodiak doa special purpose acquisition
company to go public in thematter of months or weeks.
You see other companies likeAurora, moving stuff without
human beings.
The FMCSA has made a SANPRIM aSupplemental Advanced Notice of
Proposed Rulemaking it's a greatlegal term around level four
(33:15):
automation remote operator.
Level five automation, which isremote assistant.
This is happening.
It won't be a question of if.
It's a question of when andwhen it happens, it will
fundamentally change thisindustry and so when the FMCSA
eventually does propose rules, Iurge every one of your audience
to look at those proposals andcomment.
(33:36):
This is your democracy, this isyour supply chain.
If you have concerns, this ishow you voice them.
I don't want people to sit backand go ah, I didn't know this
was going to happen.
I that's.
That's not an excuse.
We know what's happening, weknow where this goes and we need
to be prepared, because that isthe eventuality and that's the
(33:57):
thing I get really excited about.
And just for the last piece, Iwill betray the humans.
I am on the side of the robots,I am not on humanity's side.
I know who wins this game.
I know who wins this.
Speaker 1 (34:07):
Here's the question I have.
You know, what's wild to thinkabout is, like you know, in the
future I won't even take a guessat when it is you'll see a
lawsuit of.
You know, the self-drivingvehicle is at fault when
somebody crosses over 40 feetand hits them head on right.
(34:28):
It should have been created tosense that and stop.
You know, I can just picturethat now.
Speaker 3 (34:36):
It'll be a probability case.
Speaker 1 (34:38):
It's the Aurora driver, right, or whatever you
call your AI.
Speaker 2 (34:41):
Whoever programmed to make that decision because
that's the thing that's sofascinating is this is not about
reaction time.
They are programmed to do aspecific decision under a
certain set of factors, and somy belief is, if we have 80
percent of commercial vehiclesare safe and 20 percent are not,
I don't think you can have anautonomous vehicle.
I think the autonomous vehicleis going to be 99.9 percent
(35:02):
well-maintained at all times,because you can't have that
ambiguity that we have oncommercial vehicles today.
Speaker 3 (35:08):
Yeah, I agree.
I feel like there's going to belikely pushback, though I think
all the drivers calling theircongressmen, their senators, and
going we don't want this, we'rescared of this.
I mean, I do see, I've beenfollowing it for years I mean
this was supposed to happen inthe late teens that they thought
these were going to be out bylike 2020.
But like people are gettingmore comfortable with Waymo cars
(35:31):
driving around in San Franciscoand driverless taxis, I think
we're getting more okay with itin society.
But I think you're going to seea drastic pushback from truck
drivers and trucking companyowners that are going to lobby
the shit out of trying to put upevery roadblock they can to
slow that down.
Speaker 2 (35:47):
Okay, we're going to have to keep going.
So to build off of that, Idon't think you're wrong, but I
do think that ultimately they'renot going to be effective.
Twice now in the state ofCalifornia they have lobbied
Governor Newsom to have a billthat would mandate a safety
driver in autonomous vehiclesand twice he's vetoed it.
That's the most liberal statein this country and they are
turning their back on theTeamsters and OIDA.
(36:07):
I think what we saw with theautomation debate with the East
Coast ports, the two things thatthe longshoremen fought about
was wages and automation, andwages were solved in three days.
We have dismantled the truckingunions and the LTLs are not
going to be automated.
They're not going to care asmuch.
They're going to see automationof the rail yards with
(36:28):
autonomous spotting trucks thatwon't require a lot of
participation from outside folks.
But the longshoremen fought onautomation and they lost.
Now the newer agreement kind ofmakes it seem like they've won,
but automation is coming and ifyou tell the American consumer,
things will be cheaper andpotentially safer.
I think it's going to besomething we can't stop.
I would love to see driversunite to an extent and say we
(36:51):
don't want these things, but theestimates I've heard and read,
up to 20 to 30% of over the roadfreight could be moved by
autonomous trucks.
This is a manifestly differentbusiness and the day the FMCSA
makes those rules, you canguarantee the big motor carriers
are going to be early adoptersin reducing driver turnover.
Speaker 1 (37:11):
Oh yeah.
Speaker 2 (37:12):
Hours of service.
Oh, it's going to be sointeresting.
Speaker 1 (37:14):
Part of it too is like you have natural attrition
in any career field, Right?
So if you, if you know thatI've got this many people
probably going to retire or quitthis year, I'm going to adopt
early, like you said on.
Said on autonomy.
Speaker 2 (37:29):
you know autonomy in my fleet, so when I was at the
manifest conference a coupleyears ago, there was a really
high level person from dhltalking about their warehousing
situation and they had like 150000 workers and they'd have
about 60 percent quit every yearand they used the phrase I love
, which was we need to reduceour dependency on on labor, like
(37:50):
that's a funny way of saying weneed to fire more people
because that's what it means.
Speaker 4 (37:54):
It's, it's amazing Language.
Speaker 2 (37:56):
Language is beautiful , but yeah that that that in 10
to 15 years, this industry willlook very different than it used
to, and we are entering a newera.
It will never be the same, butwe have the chance now to
participate and have our voicesheard.
But I don't know if it'llchange anything.
Speaker 1 (38:14):
Very good, all right, great episode.
I'm going to probably splitthis up into two and send it out
.
Part one.
Part two Maybe not, I'm notsure, but it's a good one.
It's packed with a ton of stuff.
Should make for some goodcontent.
Matt LaFffler, the armchairattorney Wonderful conversation.
I learned a lot, ben.
(38:35):
I assume you come out of this alittle more educated as well.
Speaker 2 (38:39):
For sure.
Thank you, guys for letting mebe a part of this.
I really appreciate it.
Speaker 1 (38:43):
Yeah, so if folks want to get a hold of you for
any, you know, whatever reason,what's the best way for them to
reach out?
Speaker 2 (38:49):
Generally.
You can find me on LinkedIn,just Matthew Leffler.
You can find me atarmchairattorneycom.
I'm on Reddit.
Armchair, I think, underscoreattorney, it's something like
that I have no idea.
Speaker 1 (38:59):
We'll throw a couple of your contacts in the show
notes.
Speaker 2 (39:02):
So thank you for having me, guys.
I really appreciate it.
Speaker 1 (39:04):
Yeah, Awesome Ben.
Final thoughts.
Speaker 3 (39:07):
Whether you believe you can or.
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