Commentary: Sound Policy, Bad Rap on Re-brokering

Q: We’re a medium-sized brokerage that tries hard to select carriers carefully. In particular, both our contracts and our dispatch sheets strictly prohibit re-brokering and warn that we’ll refuse to pay freight charges and may impose up to $10,000 in attorney’s fees penalties if carriers re-broker without our permission. Our effort is to protect our customer and us from “vicarious liability” based on negligent carrier selection.

We recently contracted with a carrier to haul a load. Unbeknownst to us, they double-brokered the load to an owner-operator running on his own authority without our permission. This owner-operator’s safety rating is poor.

The load was picked up and delivered without incident, but we discovered the double-brokered scenario after the carrier paperwork arrived. To us, enough was enough; we’re sick and tired of carriers double-brokering our loads, particularly in light of recent court decisions holding brokers to a higher standard as well as an immeasurable liability, and we decided not to pay the carrier, citing breach of contract. (We also didn’t invoice our shipper for this load, so we weren’t enriched by this shipment.)

The carrier sued us in small-claims court. In court, the carrier admitted to brokering the load, but claimed that giving a load to an owner-operator is just like hauling it itself, because it has a hold-harmless agreement with the owner-operator. Actually, we haven’t even been able to confirm that the owner-operator has adequate insurance.

I spent the majority of my time in front of the judge explaining why it’s such an enormous deal for our company, that we don’t take disputing carrier invoices lightly, but that we had had enough of this kind of carrier behavior. I explained the level of liability surrounding negligent carrier selection, the amount of money we spend doing our due diligence, etc. I felt it important for the judge to understand that our issue is much more than a disputed freight invoice; it’s the act of double-brokering and putting our entire company in jeopardy.

The judge ruled for the carrier and got up from his chair and left the room without explanation. Any ideas on what we’re supposed to learn from this experience?

A: Yup. For openers, recognize that small-claims courts mete out a pretty rough-and-ready version of “justice” that doesn’t always exactly hew to what Shakespeare called the “nice sharp quillets of the law.”

You’re not wasting your time on all your efforts to prevent unknown (to you) carriers from hauling freight you’ve made available, which your full e-mail — I had to cut it drastically to fit on this page — made clear is your real concern. You just got a bad decision from a low-level judge who had no time or energy to invest in trying to understand your concern.

You’re partly to blame for that. There’s an old saying that the lawyer who represents himself in court has a fool for a client. How much more might this be said of the non-lawyer who attempts the same feat? Yet, because you talk about “my time in front of the judge,” it appears that’s precisely what you did. (Technically, it’s prohibited for corporations, but small-claims judges commonly look the other way if nobody raises the issue.)

As a legal nonprofessional, you focused attention on the reasons for your policy of prohibiting double-brokering by your carriers. They’re good ones, I acknowledge. But as a young journalist, I was taught to never write a story that didn’t pass the “WGAS” test — “Who Gives a ----?” Legally speaking, your presentation flunked that one.

The law doesn’t care why you did this or that; it deals with actions, not excuses. You had a contract with the carrier, and the carrier admittedly breached it. The penalties for just this kind of breach were spelled out in the contract. That should have been your only emphasis, and even in small-claims court, it might well have carried the day.

But because you dragged in all this justification by the hair and then had to admit that, after all, none of your fears materialized on this load, you made it easy for the judge to dismiss your worries and find for the carrier. Another time, don’t cheap out; hire a lawyer (and a good one) to argue for you. A loss in court such as you suffered weakens your position; a win will reinforce it.

And don’t get discouraged about your excellent policies and practices. You’re doing well; keep at it.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.
 

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