Tips to Minimize Shipping Broker Liability by Paige Herring

Our featured contributor in Issue 3 of our quarterly Newsletter, Trucking Info Hub, is attorney Paige Herring, of Scott, Sullivan, Streetman & Fox, P.C. in Jackson, MS. As a general practice firm, they offer services in Business/Corporate Law, Professional Liability, Insurance Law among other areas.

In the article below, Paige shares his knowledge on Broker Liability.

Over the past ten to fifteen years, the usage of shipping brokers has grown exponentially.  This is especially true over the latter half of that period with the growth of the internet and the usage of websites which allow trucking companies (or brokers) to bid or solicit for work.  While these types of arrangements create savings and facilitate speedy communication, they can result in potential exposure. While no one can guarantee that you will never be sued, there are some steps that can be taken to reduce your exposure if you engage in brokerage services.

Most legal arguments are generally grouped into two categories, negligence and respondeat superior liability.  The negligence prong is based upon the simple fact that the broker is obligated to take reasonable steps to select a carrier who is safe, prudent and conscientious - in a word - responsible.  If a shipping broker fails to have any type of vetting process to determine the competency of the carriers it selects, then the risk of liability increases.

The respondeat superior argument is premised, in large part, upon the actions of the broker after the contract for shipping is bound. Essentially this legal theory creates liability on the part of an employer for the acts of an employee. Brokers often think that they can avoid liability for the acts of the employee of another. Normally they can, but the age of ever-present communication has intruded upon this legal bar to liability.  Some brokers require daily updates, regular telephone calls, documentation during the trip and/or monitoring of the trip.  This creates a situation for an astute attorney to argue that the broker is, in fact, the carrier, operating in the guise of a broker.  Put another way, the more you run the show, the more likely you pay the dough.

Finally, the contracts and shipping documents governing the shipment should not be neglected. Legal liabilities can often be transferred, assumed, or minimized by contractual language.  You need to insure that your role and responsibilities are clear.  For example, if you are the broker, make sure that you are not listed as the carrier on any of the shipping documents.  This may not eliminate your liability, but it reduces your profile and potentially eliminates a legal issue as to what your responsibilities were in the transaction.

In conclusion, there is no magic formula. No legal case has created a nationwide standard for avoiding broker liability. What has emerged, from a variety of cases and jurisdictions, is that to reduce your exposure as a broker, you must have a process in place to determine if a carrier is safe, responsible and reliable.  When you finally select a carrier, you have to trust that carrier to do its job. Lastly, the contractual and shipping documents need to clearly define and limit the scope of your work.

Truck Services of North America thanks Paige for his time and expertise on this subject.  If you have any questions regarding broker liability, please contact Paige Herring at 601-607-4800 or PHerring@sssf-ms.com.