July 2020 The Roemer Report

Current Publication

Ka-BOOM! Nuclear verdicts exploding across the nation have fleets looking for liberty this 4th of July

Highway engineers had a good Idea: on long down-hill runs a truck’s brakes may fail, so let’s install emergency ramps to stop runaway trucks. Those ramps are great, and we know a few drivers who know that’s true. If only we had the same thing for the runaway, “nuclear” verdicts and sky-high damage awards now being held against trucking firms and operators.

Unfortunately, there seem to be few ramps to slow runaway verdicts and the consequences are becoming dire for the trucking industry—especially considering its impact on finding affordable truck insurance rates for operators -- and the American Transportation Research Institute (ATRI) says it has the data to prove it.

Existential and financial threat

At the end of June ATRI announced comprehensive research that confirms large verdicts against trucking fleets are increasing dramatically, both in number and in size of awards. ATRI’s says this insight is based on a newly created trucking litigation database that compiles detailed data on 600 cases between 2006 and 2019. In the first five years of the data, says ATRI, 26 verdicts awarded damages over $1 million. Over the last five years of the data, there were nearly 300 cases. Litigators are obviously working hard for that third house despite data that supports most truck collision related deaths are not caused by driver or equipment negligence.

Beyond real-world financial reality

ATRI argues that nuclear verdicts reflect real-world cost increases are shallow at best and misleading at worst and now they have the data to prove it. According to their research, from 2010 to 2018 the size of damage awards grew 51.7 % annually at the same time that standard inflation grew 1.7 % and healthcare costs grew 2.9 %. Sorry that’s just not a sustainable calculus nor is it justified considering the personal responsibilities of all drivers on the road.

Criminal negligence not withstanding just because a truck (by virtue of physics) generally causes more property damage and deaths than a comparable passenger vehicle on passenger vehicle crash in a collision encounter, and are operated by deep-pocket (allegedly) commercial interests, doesn’t justify the skewed liability being assigned to truck operators in recent verdicts.

They talked to both sides

ATRI surveyed dozens of defense and plaintiff attorneys, as well as insurance and motor carrier experts to help generate a qualitative analysis to understand and evaluate its impact on the industry. Armed with hard data and broad supporting anecdotal input, ATRI is putting the country on notice: the litigation landscape has changed and for the worse and justice is not being served.

“This issue has had a stifling impact on motor carriers and industry stakeholders – well beyond those involved in a truck crash”, said Rob Moseley, Founding Partner with Mosely Marcinak Law Group. “ATRI’s research on litigation provides important guidance on leveling the playing field between truckers and trial lawyers, both in and outside of the courtroom.”

No kidding: Verdicts increasing in both size and numbers

Clay Porter, Partner and litigator at Porter Rennie Woodard and Kendall points out that ATRI’s research does indeed demonstrate runaway verdicts are increasing in both size and numbers. “This study documents a frequency in excessive awards that, while not surprising, tells us that the trial system has gotten off track.” Porter says foundational changes are needed in the way the industry determines non-economic and punitive damages. No kidding.

The report – Understanding the Impact of Nuclear Verdicts on the Trucking Industry – is available for download on ATRI’s website.

Hope on the horizon?

FreightWaves has been reporting this issue very closely and also recognizes the surge of nuclear verdicts and their crippling effect it’s having against the trucking industry. FreightWaves finds that any relief is to be found, it will come through an intensive focus on risk management by fleets.

Speaking with Jason Palmer, the COO of SmartDrive FreightWaves wanted to understand how trucking fleets should approach risk management and, in the process, reduce the likelihood of an excessive jury award.

Claims coming from all corners

Palmer finds the claims his firm sees are not just about collisions, but also cover worker compensation and safe working practices. Because in trucking fleets,” he explains, ”there are many different categories of workers besides drivers, including people in and around the vehicle and the loading dock.” Palmer says his platform incorporates 360-degree cameras to continuously record the driving environment regardless of what is going on. This, Palmer says, “can help fleets mitigate risk.”

Palmer went on to say that one of the primary reasons for such massive verdicts is the lack of exculpatory evidence trucking companies have to counter claims, making it a “he said, she said” problem that often ends up with truck drivers and companies being blamed.

Technology is just the basis for a solution

It’s clear that Palmer and most of the industry understand the advent of technologies including sensors and cameras, fleets can now record incidents and reduce their legal risk. The technology is there, but the challenge is the implementation.

Managing risk by adopting and integrating the latest safety and information systems has been a consistent theme of the Roemer Report since its inception in 19XX. Doing it right takes an intensive organizational focus – fortunately, there is plenty of evidence that the strategy pays off and will always be a long-term winner.

Can effective risk-management strategies potentially lead to lower insurance premiums? We think so and if that helps keep trucking strong and independent, like our nation celebrating the same this 4thof July, we’ll all be better for it.