Trucking Litigation – An Accident Waiting to Happen

A grim picture faced trucking companies at the recent Transpor- tation Seminar hosted by Kingsway General Insurance Co., as speakers told of the multi-million dollar awards being paid out by truckers and their insurers in the courts. “Judgment awards are escalating at a phenomenal rate in the U.S. and Canada,” says Linda Paccanaro, assistant vice president of claims for Kingsway. A critical trucking accident can lead to high claims costs: $25,000 for towing, $65,000 for environmental or other spill clean-up, and $50,000 in cargo losses, at a minimum, she notes. On top of this is millions of dollars in bodily injury payouts, namely, a brain injury can easily cost $3 million in Canada and $8 million in the U.S., she explains.

Many trucking companies are ill-prepared for such events. While jury verdicts in the U.S. easily reach US$10 million, many Canadian trucking companies carry $9 million policy limits, points out Tom Oliver, a lawyer with Alabama-based Carr Allison Pugh Howard Oliver & Sisson. Apply to this, the rule of ten, comments Sue MacNeil, president of Driver Competency Assessment Protocols. This means for every fatal accident there are 10 serious accidents, 100 reportable accidents and 1,000 unreported accidents.

LAG TIME

In Canada, there is a five to 10 year lag time for litigation trends from the U.S. to make their way north of the border, observes Paul Iacono, founder of York Street Dispute Resolution Group Inc. “Our juris prudence is much more conservative, but it is deteriorating.” The high dollar-value trucking claims are “just surfacing” in Canada, he notes. Iacono says he tells amazed U.S. lawyers that this country has seen its first seven-figure punitive damages award against a truck driver in the last three years, a situation commonplace in the U.S.

Oliver sees the Association of Trial Lawyers of America (ATLA) becoming active in Canada and bringing with it an American style of litigation. Events in the U.S. provide Canadian insurers with a “crystal ball” that cannot be ignored, says Iacono.

Cases in the U.S. are being made on many grounds, explains Oliver. This includes negligent/wanton operation by the driver, negligent/wanton entrustment on the part of the company, vicarious liability of the company for the driver and “spoliation” of evidence.

Compensatory damages are being sought for property damage, personal injury (including medical costs, lost wages and mental anguish claims), and death claims including loss of future wages in many of the states.

And, the current trend in the U.S. goes well beyond seeking compensatory damages from the driver. “Everybody wants to go after the trucking company for how they hire, how they train, how they supervise (i.e. entrustment). And everybody is going after punitive damages,” explains John Pion, a lawyer with Pennsylvania-based Dickie McCamey & Chilcote. Punitive damages will often be three- to eight-times the amount of compensatory damages, notes Oliver.

At issue in entrustment cases is the company’s hiring, training and supervising policies.

In fact, the training and supervision of drivers must be linked, stresses MacNeil. Too often the “corporate mandate and the corporate philosophy are at odds”. For example, the company promotes safe driving, but operates on a “just-in-time” (JIT) delivery system which requires drivers to hurry. “You always want to make sure your current practice is your best practice and your best practice is reflected in your training.” It does no good, for example, to train drivers to do pre-trip inspections and then have a dispatcher tell the driver not to bother because they are behind schedule, she adds.

Along with entrustment-based claims, spoliation of evidence cases are on the rise, speakers note. Regardless of what state, or what the accident circumstances are, “these personal injury lawyers are operating off the same boiler plate requests for information”, notes Pion. Plaintiffs’ lawyers will make pages-long requests for information of every possible sort, and if the defense fails to provide this information it will be touted as an attempt to cover something up. “Five years ago, defense counsel in Canada would not have concerned themselves with this [spoliation of evidence],” says Iacono. Now, he sees the tactic creeping into commercial cases, particularly with calls for tighter corporate governance, and he therefore expects it will soon surface in trucking cases.

ACCIDENT SCENE

The key to combating spoliation suits, speakers agree, is getting to accident scenes early and doing thorough investigation. For example, with the introduction of electronic control module (ECM) data in trucks, this information needs to be downloaded immediately, even if its contents may work against the defendant. “You’d rather have the full story as early as possible than to have a doubt [about what caused the accident],” stresses Pion.

In the same vein, drivers are encouraged to take information at the accident scene, such as photographs and witness names, although they should never give statements themselves, unless required by law. The “team” should be involved as early as possible, including adjusters, lawyers and experts.

One of the key reasons, beyond evidence preservation, for being early on the scene is to quickly assess the insured’s exposure and determine if a settlement is the most expeditious response. Regardless of liability, insurers have to weigh the cost of settling versus the cost of a drawn out court battle. “Sometimes by settling early we can keep loss payments within that $1 million to $3 million policy limit,” explains Paccanaro. As well, “if you’re quick off the draw, you can beat the lawyers”, and deal directly with the accident victims, she adds. The speakers also note that, the longer the process is drawn out, the more time plaintiffs’ lawyers have to “dig up dirt” on the trucking company.

While the decision to settle has to be in the best interest of the insured, it is ultimately the contractual right of the insurer to dictate a settlement, Pion says. The insurer has to look at potential bad faith elements, either from the defendant alleging the insurer did not settling a reasonable claim, or from the insured who may be exposed to a costly trial if a settlement is not reached.

Furthermore, insureds must decide if it is in their best interests to provide a defense for the driver if criminal charges are laid. On one hand, the trucking company and its insurer have no control over the driver or their lawyer in a criminal case. On the other hand, in the U.S., a criminal conviction against the driver amounts to an automatic loss in a civil case. While Canadian courts have thus far not allowed criminal convictions to be admitted at civil trial, Iacono believes the courts are on the threshold of doing so.