Finding More Money in Truck Wrecks – The Statutory Employee Doctrine
Time and time again, victims in 18-wheeler wrecks are getting hit by drivers with minimum limits. Typically, that means the 18-wheeler only has an insurance policy of either $1,000,000.00 or $750,000.00 with no assets to speak of. Most attorneys would simply take that disclosure at face value, without doing the necessary legwork to see if more parties or policies can be found liable. For catastrophically injured clients, that simply is not good enough.
At CVPA, we have found a niche of taking these minimum polices and transforming them into larger cases by finding other parties and policies that have been hidden from the clients and from other attorneys. One of the methods we look at is bringing in additional parties under the Statutory Employee Doctrine.
Under this doctrine, if there are additional brokers, truckers, or even a separate trailer company involved in the wreck, then they could be found liable for the actions of the truck driver. This in turn can cause a maxed out $1 Million dollar case, into a 2, 3, or even 10-million-dollar case, depending on the other parties involved.
- Statutory Employee Doctrine
The Federal Motor Carrier Safety Regulations (FMCSR) creates a statutory employee relationship between the employees of the owner-lessors and the lessee-carriers because interstate motor carriers have both a legal right and duty to control leased vehicles operated for their benefit. The principle holds that a motor carrier is vicariously liable for injuries resulting from a driver’s negligent operation of the truck, when three factors are present:
- the carrier does not own the vehicle;
- the carrier operates the vehicle under an “arrangement” with the owner to provide transportation subject to federal regulations; and
- the carrier does not literally employ the driver.
The 1956 Amendment to the Interstate Commerce Commission Act granted the ICC authority to require a certified interstate carrier who leases equipment to enter into a written lease 49 C.F.R. 376.11-.12(c)(1) (2004). The Secretary may require a motor carrier providing transportation subject to jurisdiction under Subchapter 1 of Chapter 135 that uses motor vehicles not owned by it to transfer property under an arrangement with another party to… have control of and be responsible for operation those motor vehicles in compliance with the requirement as prescribed by the by the Secretary on safety of operation and equipment, and with other applicable law as if the motor vehicles were owned by the motor carrier 49 U.S.C. § 14102(a)(4) (2005). The lease shall provide that the authorized carrier-lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease. The lease shall further provide the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease 49 C.F.R. § 376.12(c)(1) (2004).
- The Barbour Elements: Barbour Trucking Co. v. State, 758 S.W.2d 684 (Tex. App.–Austin 1988, writ denied).
Although the Barbour court concluded that the State had not demonstrated vicarious liability, it adopted a test to determine statutory employment:
- the carrier does not own the vehicle,
- the carrier operated the vehicle under an arrangement with the owner to provide transportation subject to federal regulations, and
- the carrier does not literally employ the driver.
In Barbour, the State sued a truck driver and his employer Jefferson for destruction of a bridge overpass. The State sued a second motor carrier Barbour, asserting that the federal regulations made Barbour vicariously liable for the driver even though they did not employ him.
On appeal, the court discussed two factors that were essential to the “statutory employee” principle, and were undisputed in the case: (1) Barbour did not own the motor truck driven by the defendant-driver; and (2) Barbour did not literally employ the defendant-driver. Thus, to establish Barbour’s liability on the “statutory employee” principle, the State was required only to establish the requisite third factor: that Barbour was operating the truck to provide transportation subject to the Commission’s jurisdiction.
In analyzing a similar set of facts, the Omega court found no FMCSA statutory employment relationship existed between Barbour and the defendant-driver where evidence of possession and control were lacking.In reaching this holding, the court reasoned that the word “operated”, as used in the second Barbour element, “connotes control and possession”. Without control and possession, there is no FMCSA liability.
Based on specific language in the master interchange agreement – “pursuant to” – the court found that Jefferson (the defendant-driver’s employee) operated the truck “pursuant to” the agreement. The BarbourCourt pointed to the fact that the master interchange agreement permitted, but did not require, the parties to interchange and lease vehicles “from time to time, as the need” arose. Therefore, when the fact of Jefferson’s operation of the truck was coupled with the other established facts that Jefferson owned the truck and employed the driver, the only reasonable inference is that Jefferson, on the particular trip in issue, operated its own truck in its own carriage and for its own account.
The court held that in the absence of any other evidence, it would be irrational to infer that Barbour had leased the truck “pursuant to” the master interchange agreement when the evidence did not show that the prerequisite to such a lease had been satisfied as the agreement itself demanded.
We had a case where there was no written “lease” between the Defendant driver and Trailer company. However, through additional discovery, we found at least two written agreements between the parties and a separate broker. Key documents to look at are the Trailer Interchange Agreement and a Carrier Rate Confirmation.
- As The Lessee of the Trailer, the Trailer Company Could be a “Statutory Employer” of Trucker as Defined by the FMCSR.
The FMCSR broadly defines an employer, in relevant part, as “any person engaged in a business affecting interstate commerce who owns or leases a commercial motor vehicle in connection with that business, or assigns employees to operate it…” In other words, the phrase “owns or leases” means an employer is someone who either owns a commercial motor vehicle or leases a commercial motor vehicle.
In our case, the trailer company figured out they were on the hook. First, the Trailer Company did not own the vehicle that the Trucker was operating.
The second requirement is that the lessee-carrier (the Trailer Company) operates the vehicle under an “arrangement” with the lessor-owner (the Broker), to provide transportation subject to the Commission’s jurisdiction. Here, the Trailer Company and the Broker entered an arrangement for a different driver to haul the load, which was then passed over to the Trucker who sped through a red light. When the arrangement was first entered, the Trailer Company was a motor carrier and authorized to transport this cargo and accepted responsibility to ship the freight under its motor carrier authority. This likely satisfies the second requirement under Barbour.
The third requirement is that the Trailer Company did not literally employ the driver. In our case, Trucker was his own employee. Therefore, this would create a would create a statutory relationship between the Trucker and the Trailer Company.
- Morris v. JTM Materials, Inc., 78 S.W.3d 28, 37 (Tex. App.—Fort Worth 2002, no pet.).
In Morris, a man brought suit against a carrier after he was injured by a man driving a commercial motor vehicle but while the driver was not performing work in furtherance of the carrier’s business.
The vehicle was driven by an independent contractor, the defendant-driver. The vehicle being driven was owned by Hammer Trucking, Inc. Several months before the accident, Hammer Trucking (lessor-owner) and JTM Materials (lessee-carrier), Inc. had entered into an equipment lease agreement under which JTM leased the tractor-trailer from Hammer Trucking. Hammer Trucking used the tractor-trailer exclusively for JTM. The plaintiff sued JTM (lessee-carrier) contending the defendant-driver was the statutory employee of JTM, an interstate motor carrier, and therefore JTM was vicariously liable as a matter of law for the defendant-driver’s negligence.
On appeal, the primary issue the court discussed was whether a licensed motor carrier who leases equipment from an unregulated owner for the transportation of goods is vicariously liable as a matter of law for the negligence of the equipment driver. First, the Morris, the court concluded that the driver’s status as a statutory employee was not determined by whether he was performing work or not for the employer when the accident occurred. Second, the court held that even if JTM (the lessee) was not an interstate motor carrier, there is some evidence in the record that JTM contractually retained control over the supervision and operation of the leased equipment, thereby giving rise to a duty to third parties injured by negligent use of the equipment.
As more and more of these smaller trucking operations are being used, attorneys will need to do additional investigation into other parties and policies to obtain the max amount for their client. CVPA has generated a successful track record of finding additional money when all hope is lost. Attorneys need to dig deep into the load documents in order to find these additional parties, and conduct discovery properly to spread the liability. At CvPA, we always work toward getting our clients the best possible outcome, no matter what the problems might be.
 Section 390.5 of the Code of Federal Regulations; Mata v. Andrews Transport, Inc., 900 S.W.2d 363, 366 (Tex. App.–Houston [14th Dist.] 1995, no pet.).
 See Omega Contracting, Inc. v. Torres, 191 S.W.3d at 849.
 49 C.F.R. § 390.5.
 Barbour, 758 S.W.2d at 688.
 Morris, 78 S.W.3d at 35-37.
 Id. at 37-44.