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Supreme Court ruling boosts liability risk for freight brokers
After a Texas jury recommendation of $604 million in damages, brokers have been reshaping carrier networks and some insurance costs have risen, hitting listed brokers including CH Robinson.
A US Supreme Court decision in May has increased liability risk for freight brokers, potentially exposing them to lawsuits when a driver for a contracted carrier is involved in a collision, while the exact boundaries of broker responsibility remain unclear, according to Insurance Journal.
The shift is already having financial consequences across the about $16 billion freight brokerage industry. Brokers are shrinking carrier networks, insurance premiums are rising for some firms, and investors have cut the value of publicly traded brokers as they weigh the new legal risk.
Last month, a jury in Texas recommended $604 million in damages against CH Robinson Worldwide and two other defendants, a case that offered a window into how costly the post-ruling environment could be. CH Robinson shares have fallen nearly 30% since the company disclosed the jury recommendation, and peers including Landstar System and RXO have also declined.
The Texas case involved a fiery pileup in 2021 in Mississippi after an 18-wheeler slammed into stopped traffic, killing the driver and three other people. The plaintiffs argued CH Robinson exercised enough control over the shipment to be responsible and did not take reasonable steps to ensure safe transport, including in carrier selection, while CH Robinson said it strongly disagrees with the verdict and is pursuing an appeal.