CEO and founder of HNI, Mike Natalizio, has developed and improved risk management solutions for transportation companies and organizations since 1985. Natalizio is the founder of The Risk Clarity Formula™, a tool used by HNI to help their customers identify risk susceptibility, create and help implement the solutions to these risks in order for executives to grow their business, expand their wealth, and reach their goals for the future.
ERIC J. EMERSON
Litigation. Mere mention of the word can cause anxiety and fear. For most folks, litigation provokes thoughts of extreme verdicts, compromise settlements, steep legal fees, intrusive discovery, courtroom hijinks, uncomfortable testimony, lost productivity, and a conclusion that is rarely satisfactory.
Unfortunately, many of those perceptions are true.
Litigation is more popular than ever, and businesses are caught in the bull’s-eye. In the transportation sector, attorneys continue to become more creative in crafting new theories of liability against motor carriers, brokers, private fleets, and shippers in the search of more lucrative awards.
Always Waiting for Missteps
Many of these legal theories are designed to maximize monetary recovery or penalties based upon perceived (and often actual) missteps by the corporate defendant. It is easy to imagine how an otherwise simple rear-ender by a motor carrier with no readily apparent injuries suddenly can become an extravagant claim under bad operational facts.
For example, let's say:
1.) The driver had exceeded his hours of service and had no medical card.
2.) A pre-trip was not performed or was incomplete.
3.) The tank-trailer was outside inspection.
4.) The 3PL broker had placed the shipment with an unsatisfactory carrier.
In most instances, failure to follow existing rules, regulations, and internal corporate procedures will increase the damage value of a claim.
Nevertheless, the threat of litigation may offer a risk management opportunity. Consider putting your operations through The Litigation Test before taking action.
Conducting The Litigation Test
Ask the question, “How is this going to play in a trial?”
- For example, before terminating an employee, pull the personnel records, check the regulations and SOPs, and evaluate how that decision would look before an EEOC investigator.
- Before brokering a load, check the motor carrier’s credentials and past performance and determine whether a juror may view the carrier as posing an unreasonable risk.
- Before publishing heated or controversial e-mail or corporate memoranda, evaluate how those documents would be perceived in the event they were produced in the discovery process.
- Before beginning a hauling (or shipping) campaign, ask whether there is a signed contract in place that can be presented in court to demonstrate limitations on risk and obligations.
- Before hiring a driver, determine whether he or she meets all internal corporate, state, and federal safety requirements; if not, ask yourself whether hiring this driver would increase liability exposure in the event of an accident.
Civil litigation and agency enforcement proceedings frequently focus on a company’s operations and identify weaknesses. Strict risk management practices guard against this risk by enhancing the decision-making process and improving corporate fundamentals.
Consider utilizing The Litigation Test as a tool in your discussions and operations. It will not eliminate the threat of litigation, but it may help you make the next right decision.
Eric J. Emerson is Chair of the Tressler LLP Transportation Law Group. Tressler LLP provides corporate counsel, risk management, and litigation services to motor carriers, freight managers, private fleets, and transportation insurers. Contact: email@example.com; office: 312-627-4010; mobile: 312-758-4301.