By: Brian Schrumpf
The shipper in this lawsuit claimed $276,000 in damage to the cargo. It was alleged (as Plaintiffs’ attorneys often do) that the broker portrayed itself to be a motor carrier or freight forwarder, agreed to perform the transportation, and was responsible for the cargo damage.
Generally, brokers are not liable for cargo damage, nor for auto accidents. However, a broker can take on liability by certain conduct. One of the more common circumstances that exposes a broker to liability is when a broker portrays itself as a motor carrier. Plaintiffs’ lawyers will try to twist emails and documents to allege the broker portrayed itself as a motor carrier.
Some key evidence in this lawsuit was that the broker’s emails contained the broker’s FMCSA MC Authority number and reference to the broker’s Terms & Conditions. The Terms & Conditions, prepared by The Fuentes Firm, disclosed that the broker only arranges for transportation and does not perform the transportation.
The Judge’s Opinion contains important rationale for the decision to dismiss the broker. This is instructive for how brokers can protect themselves from liability:
“[Broker] and [Freight Forwarder] did not have a fully-specified contract, but their emails establish that [Broker]’s role was limited to brokering the shipments. No evidence indicates that [Broker] was going to do anything other than arrange the antennas’ transportation by negotiating contracts with the carriers. [Broker] did not agree to take possession of the goods or assume responsibility for the antennas arriving at their destination.”
Essentially, the Judge found that the broker acted as a broker and portrayed itself as a broker in the communications and documents involved with the shipment; the broker did not act nor portray itself as a motor carrier or freight forwarder.
In a world where Plaintiffs’ lawyers are joining brokers to both cargo claim and auto accident lawsuits more and more to try to find more pockets and deeper pockets, this recent dismissal is proof that 1) brokers can take preventive steps to get out of lawsuits, and 2) an ounce of prevention can save a lot of money later down the road. Following are some preventative steps brokers can take to protect themselves:
- Brokerage staff should have email signatures that include the following:
- “Broker Authority MC #__________.”
- Name of the brokerage company.
- A disclaimer that all services are subject to the broker’s Terms & Conditions, and ideally a weblink to the Terms & Conditions.
- Brokers should create Terms & Conditions of service that disclose the broker’s role is limited to arranging for transportation, not performing the transportation. (The Terms & Conditions should contain many other terms to protect the broker.)
- Any documents routinely sent to customers (e.g. invoices, Rate Confirmations) should include a disclaimer that the broker’s services are subject to the broker’s Terms & Conditions.
- Brokerage staff should be trained to communicate like brokers and not to make statements that could be interpreted as the broker acting or portraying itself as a motor carrier.
- For brokers with a motor carrier affiliate, separate brokerage and motor carrier operations.
While there are other steps brokers should take to protect themselves, this dismissal highlights some of the important preventive measures brokers can take to avoid liability and save money down the road.