Corporate shell games to avoid accountability for injuring or killing people are all too common. We see it an a variety of contexts. Today I got an email outlining how attorneys for nursing homes are directing their clients to lower their insurance coverage to $100,000 and set up an intricate network of corporate entities to protect the real estate and the owners’ assets, while leaving anyone injured in their operations high and dry.
In the trucking context, there is a long history of motor carriers using creative subterfuges to avoid financial responsibility for people harmed by trucks hauling freight for them. Between 1935 and 1956, many interstate motor carriers attempted to immunize themselves from liability for the negligence of their drivers by leasing trucks and nominally classifying the drivers who operated the trucks as “independent contractors.”
Because trip-leasing made it difficult for a member of the public injured by the operation of a leased vehicle to fix carrier responsibility, and in order to protect the public from the negligent conduct of the often judgment-proof truck-lessor operators, Congress passed a law in 1956 to require interstate motor carriers to assume full direction and control of the vehicles that they leased “as if they were the owners of such vehicles.”
The purpose of that legislation was to ensure that interstate motor carriers would be fully responsible for the maintenance and operation of the leased equipment and the supervision of the borrowed drivers, thereby protecting the public from accidents, preventing public confusion about who was financially responsible if accidents occurred, and providing financially responsible defendants. Thus, since 1956, owner-operators who are independent contractors in relation to motor carriers have been considered “statutory employees” of the carriers in relation to any injured member of the public.
Congress has unambiguously expressed its clear intent to establish minimum national standards for safety and and financial responsibility of motor carriers. The Regulations authorized by Congress unambiguously support holding a motor carrier accountable for injury to an innocent member of the traveling public.
Under the Federal Motor Carrier Safety Regulations, the definition of “motor carrier” includes “a motor carrier’s agent,” “employee” includes “an independent contractor while in the course of operating a commercial motor vehicle,” and “lease” includes a “contract or arrangement in which the owner grants the use of equipment, with or without driver. . . .” The disjunctive reference to “contract or arrangement” must have some significance other than mere redundancy. In addition, the Regulations require that “[e]very motor carrier, its officers, agents . . . shall be instructed in and comply with the rules. . . .”
While the Regulations require a written lease, until last summer there had never been a reported court decision anywhere in the United States that let a motor carrier evade liability when it informally hired an owner-operator without bothering with the formality of a lease.
However, in one of our cases in which a jury had awarded over $2.3 million to our client for a serious permanent injury, a single judge of the Georgia Court of Appeals wrote a decision that disregards or misconstrues the Federal Motor Carrier Safety Regulations and conflicts with every relevant reported decision of both federal and state courts across the nation. See Clarendon Nat. Ins. Co. v. Johnson, 293 Ga.App. 103, 666 S.E.2d 567 (2008).
Standing the law on its head, that decision provides judicial blessing for motor carriers to circumvent all responsibility for owner-operator drivers by avoiding either execution of a written lease or use of the word “lease” in an oral arrangement. The only case cited as authority for the holding was an unpublished Texas decision that has nothing to do with our case, either on the facts or on the law.
This decision enables interstate motor carriers to hire without accountability unqualified owner-operator drivers who have no motor carrier authority and no commercial driver’s license, and who make no pretense of complying with any of the Federal Motor Carrier Safety Regulations.
This decision allows violation of one of the Federal Motor Carrier Safety Regulations to exempt motor carriers from compliance with the rest of the regulations, thus enabling them to immunize themselves through semantics. In this time of economic turmoil, motor carriers are freed to roll back the clock more than half a century to the type of abuse that the 1956 adoption of the “statutory employer” rule was designed to eliminate.
Within the past few days we have filed a petition for certiorari to the Supreme Court of the United States. That is a statistical long shot, as the Supreme Court agrees to hear only a tiny percentage of even highly meritorious cases.
If this decision stands, interstate trucking companies that are inclined to evade safety and financial responsibility rules will be able to revert to the pre-1956 practice of using non-compliant, unqualified and financially incapable “independent contractor” truckers for whom the carriers would bear no responsibility to the public. All of this was pointed out the the Georgia Court of Appeals and Supreme Court, but under the circumstances I find it hard to believe that anyone other than the one judge whose name is on the decision actually read and reflected upon the briefs and the implications of the decision.
Avoiding the expense of equipment maintenance, safety management and financial responsibility required by federal law, they could undercut the cost structure of law-abiding motor carriers and owner-operators, subjecting lawful trucking operations to unfair competition from those that exploit this loophole.
As bad drives out good, if this Georgia Court of Appeals decision approving the evasion of interstate motor carrier responsibility stands, the safety of the public on highways throughout the United States will be adversely impacted.
And innocent people across the country will die because one judge of the Georgia Court of Appeals gave his blessing to an evasion of responsibility contrary to all other interstate motor carrier law in the United States.
No, I’m not attempting to argue my appeal in a blog, as if that were even possible. I’m just warning other folks around the country that they may see the same sort of evasion as motor carriers learn that this shell game fooled a state Court of Appeals.
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Georgia Truck Accident Attorney Blog
