A New York Federal Appeals Court judge has issued a landmark ruling that may open large carriers up to new liabilities and could be good news for owner operators. Judge Richard Arcara ruled that, in certain circumstances, a leasing company can be held liable for the actions of the driver, even though The Graves Amendment was thought to forbid it.
Please bear in mind that I’m not a lawyer, so there may be intricacies that I’m missing, but this is how this was explained to me. The Graves Amendment is a federal statute that protects vehicle owners from liability when the people who are renting the vehicles are involved in an accident. The statute was designed to protect large companies in the case that a single renter is involved in an accident outside of the company’s control.
In the case that Judge Arcara was ruling on however, Millis Transfer (the carrier) and Great River Leasing (the vehicle owner) are owned by the same parent company, Midwest Holding Group. This is not uncommon among large carriers who use the Graves Amendment to distance themselves legally from Owner-Operators who are leasing from the company. Judge Arcara ruled that since the Graves Amendment was intended to protect companies whose only connection to lessees is the lease agreement (like Penske and Ryder), it should not protect companies like Millis, Great River, and Midwest Holding Group.
The case in question was brought by Michael Stratton, whose wife was killed in an accident with a driver working for Millis and leasing from Great River. Stratton sued the driver, Millis, Great River, and Midwest.
Stratton’s attorney called the judge’s ruling a “landmark decision,” but it’s not certain how many carriers this ruling might affect, nor whether the ruling will be upheld by a different judge if another lawsuit were to be filed along the same lines.
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Source: overdrive
Christopher Walters says
Good ruling. These trucking companies that own a leasing company as a legal safety net,
Need to be held accountable. After all, lease drivers and
Company drivers go through the same orientation and hiring
Process. It’s one huge scam and it benifits only the company with the
Exception of a few desperate people that have no credit and no down payment to buy
A truck. Furthermore, some of Theese companies hire new students and
Force them into leasing, by telling them they have no company trucks available.
Charles Gustafson says
Good ruling! I would also like to see rules changed with companies (like Walmart) contract with or lease another carrier (Swift, CR England, whoever) and, if in the course of hauling a load, Swift gets in an incident while hauling a contracted load for Walmart, it would also affect Walmart’s CSA and safety scores. Walmart knows what the leased/contracted company’s CSA/safety record is. Why shouldn’t it affect their (Walmart’s) score and/or liabilty? (Company names are used as examples only.)
Gary says
I agree with the decision. However I totally disagree with your idea of expanding it beyond that. A customer shouldn’t be responsible for how their contractor performs business beyond requiring that the job be done for the agreed upon cost. Should a Mom and Pop be responsible for a multi state delivery food service’s accidents and failings? I think that’s silly. And Walmart shouldn’t be held accountable either in your proposed circumstance.
Thomas Mears says
Common sense Charles; if you take your thought and extend it out, you purchase something from Amazon and it gets shipped by UPS and that driver gets into an accident and kills someone then by your admission the victims family should be able to sue you because your purchase was on that truck.
Charles Gustafson says
No. I am referring specifically to companies that lease out other companies to haul their loads, especially when the leasing company has their own established fleet. The leasing company in my example isn’t like Hertz or Ryder. What if the driver involved in the Tracy Morgan incident was working for a leased company (Swift, for example). It is still Walmart’s freight that Swift is hauling. Would that then mean that Morgan would have no recourse against Walmart if it were on a Swift tractor…even more so if loaded on a Walmart trailer. It’s still a Walmart load no matter who is hauling it. I’m speaking specifically of a truck assigned to a dedicated Walmart DC/fleet.
nick says
I think this is a good ruling too. To many corporations are built to operate like this. Although I think the 2 previous posts may be mis understanding this. The driver was prabably a company driver for Millis. Millis lease’s there entire fleet from Great River Leasing. Both Great River and Millis are owned by Mid West Holding, making Millis and Great River employees Mid Wests employees.
Charlie says
This is just another angle lawyers can use to make more money. It won’t be long before the five nearest trucks to an accident can be sued.
Struggling says
I am not a lawyer either, but I was forced to learn the law after multiple wage theft I have endured and where the Illinois Department of Labor just told me: “Go away chum—you bother me.”
I will boil it down: In Illinois, in order to be deemed a LEGITIMATE leasing company, one cannot be tied to the economic interests that the lease vehicle may produce. HUH? Let me explain:
1) Penseke and Ryder 1) ask for money upfront, there ain’t no “no money down” deals to be had there 2) require a substantial deposit, some $6k, again ain’t no “no money down” deal here 3) the rate charged by them is a set amount plus a per mile amount regardless of what the vehicle makes the lessee 4) the lessess must provide the lessor proof of all insurances to cover the equipment 5) leases are not ‘cancelable’ during the term of the lease 6) these lessors will not find you freight to haul 7) the lessors care not if you park the equipment under a tree and go to sleep for seven day, so long as your account is current. Therefore, with all said and done, these companies do not essentially “control” the lessee.
At these sham “lease/purchase” agreements, you can get in for no money down, sometimes one can walk away from the lease, but try to sleep for seven days and see what the company says.
Also, there IS an economic dependence between the lessor and lessee in this Mills Case—Mills, to recoup its “no money down” offer, needs to “feed” the lessee work in order for it to get a return on investment. In other words, these “sham” lessors do in fact “control” the lessee, much as an employer would an employee, and that is how court rulings in Illinois have been ruling.