In transportation claims, know your opponents, know yourself.
By Jim Foster
CLM’s Transportation Committee assembled its own “Avengers” team of experts to discuss what is affecting the industry. In this edition, moderator Jim Foster leads a discussion that analyzes how plaintiffs’ attorneys are pursuing trucking and transportation companies, and how to effectively parry and prevent these attacks.
Jim Foster: Do you see plaintiffs’ attorneys utilizing aggravated facts, like distracted driving, violation of hours of service, or negligent hiring and retention to exponentially drive up indemnity payments by trucking and transportation companies? Is it crucial for the trucking company, insurance carrier, third-party administrator, and defense attorney to have detailed knowledge of the federal regulations in order to combat this attack?
Jim Mero: Plaintiffs’ attorneys will utilize aggravated facts—real or created. They also use the Federal Motor Carrier Safety Regulations (FMCSR) to support their theories, although they often cherry pick the regulations they choose to use or take out of context. It is imperative that defense has a detailed knowledge of the regulations, and trucking companies must ensure that their policies and procedures aren’t contrary to the FMCSR.
Jay Enloe: We frequently encounter plaintiffs’ attorneys attempting to employ that strategy. In recent years, it seems that plaintiffs’ attorneys are focusing much more on trying to identify “aggravating” facts than on the actual facts of the underlying accident. Plaintiffs’ attorneys who focus on trucking cases are very knowledgeable about the regulations, so it’s very important for all on the defense side to know and understand the regulations. Otherwise, you run the risk of finding out from the plaintiff’s attorney that you have a problem with the case. At that point, your options for mitigating the damage are limited.
Guy Perrier: Yes, plaintiffs’ attorneys use aggravated facts on a daily basis to increase the value of their claims. To defend these actions, defense counsel need to know whether their states allows independent negligent claims against an employer if course and scope of the driver has been admitted. If not, defense counsel should move to dismiss these claims as soon as possible. If those claims are allowed, an understanding of what the FMCSR requires is a must.
Foster: In your experience, do plaintiffs’ attorneys issue detailed and exhaustive preservation-of-evidence letters immediately after a catastrophic accident occurs in order to form the basis of a spoliation-of-evidence claim? Can you give some practice pointers or best practices to respond to preservation-of-evidence letters?
Mero: More and more, plaintiffs’ attorneys are just listing everything without doing their homework. They seem to be utilizing a standard form requesting preservation of documents, some of which aren’t even applicable, especially when the incident involves an independent contractor or is a brokerage deal. We ensure that the various departments within the company are aware of what they must preserve. When they want to “red tag” a vehicle—thus taking it out of service—we advise them that they have 30 days to inspect. Of course, this depends on the severity of the accident. We may also want early defense intervention.
Enloe: We frequently receive preservation letters and work very hard to secure all evidence, so we have not had a problem with spoliation claims. On catastrophic claims, we typically engage local defense counsel immediately following the accident and coordinate our response with counsel.
Perrier: Surprisingly, plaintiffs’ attorneys do not send us preservation letters with any regularity. The more sophisticated attorneys tend to send a preservation demand on larger losses. It is best to always respond quickly and advise them that, like them, the carrier is concerned with the preservation of all evidence. Let them know defendants will act in good faith to comply with the request for a reasonable period of time and to the extent the carrier possesses such information. With respect to electronically stored data, advise that the carrier will preserve its electronic system and data in good faith and will continue to do so, subject to their requests. Objections should be made when the requests are unreasonable or extremely burdensome, such that they cannot possibly be fulfilled. The response should state that it is not an acknowledgment that any of the data is discoverable and reserve this objection.
Foster: Would you agree that trucking and transportation companies are target defendants in the courthouse? Since there have been some recent $100 million verdicts, what preparation have you found effective for company witnesses, including drivers, safety directors, and 30(b)(6) witnesses?
Mero: Trucking and transportation companies are target companies in the courthouse, and corporate companies with subsidiaries are constantly attacked in an effort to “pierce the corporate veil.” In those situations, it is key to prepare company witnesses, including drivers and safety directors, to distinguish the autonomy between the parent company and the subsidiary.
Enloe: Over the last couple of years, trucking companies have absolutely become target defendants. Every case and witness is different, but preparation really begins with a thorough investigation of all aspects of the case and the witnesses, with a goal of identifying any issue that the plaintiff may attempt to mold into an “aggravating” factor. For serious accidents, this will typically involve our defense counsel having a face-to-face meeting with the driver immediately following the accident to assess not only the accident facts, but also the overall impression that the driver will have on a jury. Then, it really comes down to defense counsel thoroughly preparing the witness in advance of the testimony.
Perrier: Yes! The best practice in Louisiana is to try and limit the independent claims of negligence against the carrier to reduce any reptile-theory tactics. Otherwise, detailed preparation of the carrier representatives is key.
Foster: Have you found that an immediate response to an accident allows the company, insurance carrier, TPA, and defense attorney to timely evaluate both the liability and damage exposure of an occurrence? Would you agree that this front-loading of an investigation allows the defense to defend the case with a proactive and consistent approach?
Mero: Our client contacts the TPA immediately, day or night, for any incident involving a third party. At a minimum, we will send out an independent adjuster, and based on the circumstance and/or severity, will often contact a defense attorney on the spot to respond to the accident location. Both have been very beneficial in the ultimate outcome of a case.
Enloe: Absolutely. The quicker you are able to identify the key facts of the case, the quicker you can formulate a strategy for managing the situation.
Perrier: Immediate response is invaluable in defending cases and limiting exposure. We find that an immediate coordinated defense effort greatly assists in preserving evidence, establishing liability defenses, and, in some cases, assists in an early and efficient resolution.
Foster: In your experience, have alleged violations of federal regulations and other aggravating factors formed the basis of an attempt by plaintiffs’ attorneys to plead punitive damages? Has witness preparation and affirmative evidence that the defendant company is a good corporate citizen concerned with safety significantly helped in the defense of both the compensatory and punitive damage claims?
Mero: Lately, I have seen the use of both federal regulations as well as the client’s safety policies as the basis to plead punitive damages. Good preparation, including having safety policies that go beyond the federal requirements, have significantly helped in the defense of punitive claims, if not in compensatory claims.
Enloe: Finding any basis for a punitive count and depicting the corporate defendant in a bad light is definitely the focus of plaintiffs’ attorneys. To counteract this, it is very important to show the positive attributes of the organization, including the commitment to safety and policy compliance.
Perrier: No. In Louisiana, punitive damages are only allowed in certain cases where the truck driver is intoxicated. This, however, does not prevent plaintiffs from attempting to use this type of evidence as an aggravating factor. Consequently, it is imperative to humanize our trucking clients and highlight all of the good that trucking companies do for the community, and how many good truckers there are. This is especially important in jury trials. K
Meet the Panel
James A. Foster is a partner at Chicago-based Cassiday Schade LLP. He leads an emergency response team for catastrophic transportation accidents and serves as co-chair of CLM’s Transportation Committee.
Jim Mero is an international claims managing consultant for Sedgwick. He has 40 years of experience in litigated liability management. He has managed claims in 39 countries, including the U.S. and Canada.
Jay Enloe is the senior director of claims and risk administration at O’Reilly Auto Parts, and has over 20 years of experience in risk management.
Guy Perrier is a founding member of Perrier & Lacoste LLC in New Orleans. He is regional and catastrophic loss counsel for a number of large motor carriers in the U.S.