$5.2 million verdict
against a truck broker and driver in negligent hiring case
In a key decision against a transportation
broker for negligent selection, an Oregon jury awarded a
$5.2 million settlement, including punitive damages, to the
family of a man killed in a truck accident.
The case, Linhart v. Heyl Logistics
LLC, et al., was brought about after a truck driver
fell asleep at the wheel while under the influence of
crystal methamphetamine and slammed into another driver.
Linhart, also a truck driver, was killed while inspecting
his vehicle on the side of the road.
During litigation, the plaintiff’s
attorneys argued that Heyl Logistics did not properly
investigate the motor carrier and was liable for negligent
selection. The carrier, Washington Transportation, did not
have insurance and its operating authority was revoked for
failure to conduct drug testing on drivers, among other
violations. The plaintiffs asserted that Heyl Logistics
should have discovered these facts when hiring the carrier.
According to industry attorneys, the
case is the first time punitive damages were awarded against
the transportation broker for a negligent hiring claim.
Transportation brokers arrange to
move surface cargo domestically, but licensed motor carriers
physically move the cargo on their vehicles under their bill
of lading and have primary liability for bodily injury and
third-party property damage as well as for loss of or damage
to freight. The current case (as well as several
Sperl v. Henry et al.)
has developed into a legal trend that third-party logistics
providers or even shippers can be held liable for the acts
of motor carriers that they hire.
Several types of liability insurance
policies are available to protect brokers from claims
arising from cargo loss or damage and third-party liability
they assume when hiring truckers:
- Non-following Form Contingent
Cargo Insurance provides coverage for loss or
damage to cargo when the
motor carrier’s insurance does not pay a claim and the
motor carrier is unable to pay. Coverage is typically
triggered only in situations where the motor carrier is
- Errors & Omissions Insurance
protects the transportation broker if an error or
oversight in the course of business causes a customer to
suffer a financial loss. A transportation broker should
ideally obtain a combined policy form with Errors &
Omissions Insurance and Contingent Cargo coverage – this
is not the same as purchasing separate policies. Doing
so can create both gaps as well as overlaps in coverage.
- Contingent Automobile
Liability Insurance is also available to
protect transportation brokers when they are held liable
for death, bodily injury or third party property damage
claims as a result of the motor carrier’s negligence, as
in the case above.
Coverage may be purchased as a separate policy or, as an
endorsement (add-on) to an Errors & Omissions insurance
Avalon Risk Management specializes
in understanding the complexity of liability issues for
transportation brokers. Our Combined Transit Liability (CTL)
provides the tailored protection you need and is the only
program of its kind endorsed by the Transportation
Intermediaries Association (TIA). Cases such as the one
above can take years to resolve resulting in significant
defense costs. Our CTL program provides coverage for defense
costs and attorney fees as well as the payment of judgments
and settlement amounts you are legally obligated to pay.