Illinois court panel rules against C.H. Robinson in "vicarious liability" case

An appeals court panel in Illinois has upheld a lower court ruling that held brokerage and logistics giant C.H. Robinson Worldwide Inc. liable for damages arising from a fatal 2004 crash involving a now-defunct trucker that Robinson had hired to move a load of potatoes for a customer.

The March 30 ruling by a 3rd District Illinois Appellate Court panel is the latest setback in C.H. Robinson's efforts to avoid culpability for the incident. It also sends a strong and disturbing message to shippers and brokers that they could be held accountable for accidents involving a trucker they hire to move goods, even if they contend the trucker and driver were not employees and were hired to simply transport a shipment.

In the past, the carrier and its insurance company assumed all accident-related liability for bodily injury, property damage, and freight loss and damage.

C.H. Robinson was sued following a collision in Illinois that involved a Utah-based carrier named Toad L. Dragonfly Express. Two people were killed in the accident, and a third was seriously injured. The trucking company had a "stellar" safety record based on public information available at the time it was hired, and the driver, DeAn Henry, had an active and valid commercial driver's license at the time, according to Mike Wilken, a C.H. Robinson spokesman.

However, C.H. Robinson was named as a defendant under the "vicarious liability" doctrine that makes an employer responsible for an employee's actions when they occur within the scope of employment. In March 2009, a circuit court in Will County, Ill., found C.H. Robinson liable along with the driver and the trucker. The court awarded the plaintiffs nearly $24 million in damages. C.H. Robinson was not accused of negligence or performing any unsafe actions.

C.H. Robinson appealed the verdict, but the appellate panel ruled last week that the driver was acting as an agent of the broker at the time of the crash. As a result, the company was liable, the panel concluded.

In an statement issued today to DC Velocity, Angie Freeman, C.H. Robinson's vice president, investor relations and government affairs, said the company and its insurance carriers were "disappointed" with the panel's ruling and that they plan to "pursue legal recourse through all available means."

Freeman said the verdict "has the effect of holding us vicariously liable for the damages caused by the admitted negligence of the motor carrier and its driver. Our contract clearly defined the motor carrier as an independent contractor, and there were no claims that our selection or retention of the motor carrier was negligent."

C.H. Robinson, based in Eden Prairie, Minn., disclosed in an April 6 Securities and Exchange Commission filing that it would record a $5.9 million charge against first-quarter 2011 earnings to cover its $5 million insurance deductible and an additional $900,000 in accrued interest. The company's insurance carrier will bear the cost of any remaining damages and interest accrual charges.

In May 2005, Henry pleaded guilty to charges of falsifying her logbook and failure to reduce speed to avoid an accident, according to an April 1 article in the Naperville Sun in Illinois. She was ordered to surrender her commercial driver's license for at least two years, the article said. The trucker eventually went out of business.