For Attorneys: Cases Against Private Motor Carriers
The vast majority of the claims we handle as truck crash attorneys involve “for-hire” motor carriers who are hauling persons or property in commerce. When you encounter a claim against a private motor carrier there are additional considerations and strategies that must be considered in order to reach a successful outcome for your client.
With the fallout of the global pandemic still affecting the transportation industry, more and more businesses, especially retailers, started forming their own trucking companies over the past three years. Rising shipping costs, logistics issues, and reliability led to businesses assessing whether owning their own trucking company could solve the problems our supply chain sees today.1
The increase in private motor carriers means we will see more cases involving these types of carriers. How will seeing more private motor carriers on the road impact our cases? Should our strategy and approach to such cases change? Ultimately, cases against private motor carriers can provide more opportunities for showing lack of compliance with Federal Motor Carrier Safety Regulations, because private motor carriers often focus more on their primary business rather than having safe trucking practices.
This article will address the following:
- How to Identify a private motor carrier.
- The legal standards that apply to private motor carriers.
- Discovering the underlying story of the business.
- Addressing claims against private motor carriers who are playing a corporate shell game.
What Is a Private Motor Carrier?
Before knowing how to handle cases against private motor carriers, we have to know one when we see one. The Federal Motor Carrier Safety Regulations define a private motor carrier as: “a person who provides transportation of property or passengers, by commercial motor vehicle, and is not a for-hire motor carrier:’2
“A private motor carrier transports its own cargo, usually as a part of a business that produces, uses, sells, and/or buys the cargo that is being hauled. A private motor carrier usually transports its own goods and is required to have a USDOT number but does not need operating authority (MC number):”3
Private motor carriers might include construction companies hauling heavy equipment, garbage companies, landscaping companies, and other businesses where the primary objective is a business other than hauling property.
What Legal Standards Do We Apply in Cases Against Private Motor Carriers?
In cases involving private motor carriers, we should treat them like other motor carriers with the understanding they are in the business of something besides transportation. This means some private motor carriers will be less acquainted with the Federal Motor Carrier Safety Regulations and industry standards for safe trucking. Here are some strategy tips for handling cases against private motor carriers.
- Confirm the defendant is a motor carrier despite having a focus besides transportation. This can be done during corporate representative deposition testimony, and we need to establish the company has a requirement to comply with the law as a motor carrier.
- Confirm the Federal Motor Carrier Safety Regulations apply to the defendant. Importantly, the private motor carrier classification does not absolve the company from adhering to Federal Motor Carrier Safety Regulations. 49 CFR § 390.3(a) states: “The rules in subchapter B of this chapter are applicable to all employers, employees, and commercial motor vehicles that transport property or passengers in interstate commerce” (emphasis added). Subchapter B includes regulations parts 350-399 including: 379 – Preservation of Records; 382 – Drug and Alcohol Testing; 383 – CDL Standards; 387 – Financial Responsibility; 390 – General Applicability; 391 – Driver Qualification; 392 – Driving a CMV; 393 – Parts and Accessories; 395 – HOS; and 396 – Inspection, Repair, Maintenance. So, all of the Federal Motor Carrier Safety Regulations that we typically use as “rules of the road” still apply in cases against private motor carriers.4
- Show the primary business of the private motor carrier trumped compliance with the FMCSRs. Despite the applicability of the FMCSRs, many private motor carriers fall short of compliance with these regulations. Past studies indicate private motor carriers have higher crash rates per vehicle than for-hire motor carriers.5
You will often hear from private motor carriers during their deposition that they are just a small mom-and-pop shop, and therefore, they do not have the time, money, or resources to comply with the FMSCRs. This is ridiculous. Do not let them get away with this “defense:” If they choose to make money by becoming a motor carrier, then they have to follow the rules.
Past studies indicate private motor carriers have higher crash rates per vehicle than for-hire motor carriers. If you have any questions regarding private motor carrier claims, contact Fried Golberg at (877) 591-1801 to discuss a case.
Establish a Theme of Profits Over Safety
In order to discover the underlying story of the business, you need to follow the money. Most private motor carriers are businesses that make money not by hauling property or passengers for others but through some other means. They are a landscaping company or a product manufacturer or an insulation installation company or one of countless other examples.
These companies make their money from their main business, and they are sophisticated in that business. In order to save money, they decided to register as a motor carrier to haul their own goods or property so they would not have to pay someone else to do it for them. When they made that choice, they made a promise to the FMCSA and the motoring public that they would be a compliant motor carrier. This is a topic that you should explore at the deposition of the company.
Addressing the Challenge of a Corporate Shell Game Involving a Private Motor Carrier
You may run into a situation where the private motor carrier and/or their insurance company will attempt to avoid financial responsibility by using more than one corporate entity under which to operate their business. You must remember that if there is a commercial motor vehicle on the road hauling property, then there must be a motor carrier under whose authority that person is operating regardless of who is the technical employer of that driver under state law.
You may run into a situation where a company is registered as a private motor carrier but that corporate entity has no employees and no property. Typically, a second company owns the truck and is the employer of the driver. You may also run into the situation where there are 3 corporate entities: (1) the private motor carrier (with no employees or trucks); (2) the owner of the truck; and (3) the employer of the driver. Regardless, when the driver gets in a wreck, the motor carrier claims that the driver was not an employee of the motor carrier, and therefore, they are not legally responsible for their negligence.
It is the motor carrier who is insured (as they are required to be under the FMCSRs). It is for this reason that insurance companies employ this defense. It is their attempt to avoid financial liability and instead pin the blame on a separate corporate entity who does not have insurance. There are several ways to combat this corporate shell game.
Your first line of defense is the FMCSRs themselves. The definition of an employee under the FMCSRs includes “an independent contractor while in the course of operating a commercial vehicle:’6 Additionally, the regulations require a written lease in order for a motor carrier to operate a vehicle it does not own.7 The lease must “provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease:’8
This conclusively establishes that in the situation where a private motor carrier is operating a vehicle it does not own being operated by a driver it does not employ, it is still legally responsible for the operation of that vehicle under the FMCSRs.
When you encounter this type of situation, always make sure you request a copy of all leases in discovery. Typically, private motor carriers use forms they get from industry sources such as JJ Keller. This can help you find useful language to defeat their defenses. Below is an excerpt from a lease that included a signature line for the “Carrier Responsible for Safety.” This made it difficult for that same carrier to say they were not responsible for the safety of the vehicle being operated under their authority at the time of the crash.
The second way to attack this type of defense is to establish traditional control under the doctrine of respondeat superior through written discovery and depositions. Oftentimes, the driver will have no idea that he is technically employed by another corporate entity and will testify that the motor carrier is his employer.
The third way to address this defense is to explore facts to support a claim of joint venture/alter ego. You should obtain copies of all corporate filings with the Secretary of State for the state of incorporation for the company, including the articles of incorporation. Often, you will find that the same person or persons own all involved companies. You are looking for evidence to show that the separate corporate entities are nothing more than a poor attempt to turn one company into two or three companies simply to avoid liability.
Private motor carriers can be identified fairly easily, and we will likely see more and more cases involving these types of entities. While there are some differences between private and for-hire motor carriers, most of the legal standards we apply to for-hire motor carriers also apply to private motor carriers.
While private motor carrier cases might present issues with corporate shell games, we can hold private motor carriers accountable for any unsafe practices by following the money and establishing a theme of profits over safety.
Contact a Lawyer at Fried Goldberg
Private motor carrier claims can be complex and may involve several nuanced legal issues. However, they can carry with them the same types of serious injuries and violations as any motor carrier claim.
If anyone you know has been injured by a private motor carrier and they need legal representation, contact us for a free, no-obligation consultation. We have extensive experience handling motor carrier claims of all types.
About Attorney Brian Mohs
Brian Mohs is an attorney at Fried Goldberg, LLC who has represented individuals in Georgia and across the country and has helped obtain over $700 million in total recovery for his clients. Brian has acted as trial counsel in four jury trials and one federal bench trial; all of which resulted in verdicts in favor of his clients. Brian understands how insurance companies evaluate claims from his six years as a defense attorney and uses his knowledge to maximize results for his clients.
Brian is Board Certified by the NBTA in Truck Accident Law. Brian has been awarded a Martindale-Hubbel/ Peer Review Rating of AV Preeminent, which is the highest possible rating in both legal ability and ethical standards. He has also been voted as a Super Lawyers Rising Star for six straight years (2015 – 2020); an honor that is reserved for the top 2.5% of eligible attorneys.
About Attorney Briant G. Mildenhall
Briant G. Mildenhall is an attorney at Fried Goldberg LLC who represents individuals and families in catastrophic injury and wrongful death cases against corporations and insurance companies. Prior to joining Fried Goldberg, Briant was a partner at a firm specializing in plaintiff personal injury cases. He worked at his prior firm ten years and gained experience trying and litigating trucking cases, motor vehicle collision cases, and premises liability cases.
Before that, Briant worked for several years at a firm handling defense of trucking and premises liability cases. He has first-hand knowledge of how insurance companies evaluate claims and uses this insider knowledge to help his injured clients.
Briant is Board Certified by the NBTA in Truck Accident Law. He was awarded a Martindale- Hubbell Peer Review Rating of AV Preeminent, the highest possible rating in both legal ability and ethical standards. He was also named one of the Top 100 attorneys in Georgia and one of the top 40 lawyers under the age of 40 by The National Trial Lawyers Association. He was named multiple times to the lists of Legal Elite by Georgia Trend Magazine and Rising Stars by Super Lawyers. Briant has a 10.0/10.0 Superb rating on AVVO.
1 See, e.g., https://www.freightwaves.com/news/supply-chain-crisis-drives-more-retailers-to-buy-logistics-and-trucking-firms.
2 49 C.F.R. § 390.5.
3 https:// ask.fmcsa.dot.govIapp/answers/detaiI/a_i d/247 ~/what-is-a-private-motor-carrier%3F
4 Note that private motor carriers involved in intrastate operations will be subject to state trucking regulations, and most states have adopted some version of regulations close to the Federal Motor Carrier Safety Regulations. However, some states treat private motor carriers differently, such as not adhering to the statutory employer doctrine. See, e.g., Hill Bros Chemical Co. v. Superior Court (2004) 123 Cal.App.4th 1001.
5 Mark Lepofsky, et al., Potential Applicability of Financial Responsibility Requirements to Private Motor Carriers – Final Report, FMCSA, March 2006, available here: https://rosap.ntl.bts.gov/view/dot/ 53
6 49 C.F.R. § 390.5
7 49 C.F.R. §376.11
8 49 C.F.R. § 376.12
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