Q: We recently gave a shipment to a 3PL (broker) we use regularly. The broker then gave the shipment to a particular carrier.
Despite a prohibition against in both our 3PL’s contract with us and the carrier’s with that broker, the carrier rebrokered the shipment with another broker, and that broker chose a second carrier to actually handle the freight.
We subsequently paid our 3PL, and the 3PL paid the carrier it hired. Somewhere further down the line, however, the process broke down, and the carrier that performed the transportation never got paid.
Now that carrier has engaged a lawyer, and the lawyer has sicced a collection agency on us (I think the lawyer and the collection agency are affiliated). The collection agency is hounding us for the unpaid freight charges, contending that our 3PL is our agent even though our contract states the 3PL is acting as an independent agent.
My feeling is that we don’t owe this carrier because we’ve already paid the party we hired — the 3PL. But am I right about this?
A: It’s not so much whether you’re right as whether the carrier can maintain its case in court if matters ever got that far, and I have to think it has not the chance of the proverbial snowball in the traditional warm place.
This pass-off of your shipment isn’t even Tinker to Evers to Chance, the legendary Chicago Cubs baseball double-play combination. It’s Tinker to Evers to Chance to Smith to Jones, which is way too many relays.
It doesn’t even matter whether your 3PL was or wasn’t your legal agent, not really. Your contract with the 3PL specifying its status as an independent contractor is worth something, but it’s a long way from conclusive proof. A court would look well beyond the contract to determine whether the 3PL was in fact acting as your agent, and if other elements seemed to suggest it wouldn’t be swayed by the contradictory language in the signed agreement.
But if the second carrier, the carrier that actually hauled the load, is going to rely on the agency theory, it must be able to trace agency relationships all the way back from that carrier to you. And that just isn’t going to happen.
Baseball lore says Joe Tinker and Johnny Evers, the shortstop and second baseman immortalized in newspaperman Franklin Pierce Adams’ brief poem, didn’t even speak to each other off the field for about five years. Neither could reasonably be regarded as agent of the other. And first baseman Frank Chance wasn’t either one’s best buddy, either, so the same there.
And when you bring in the unknowns Smith and Jones, you can see how it gets plain silly even on the baseball field. Just imagine how much sillier it’s going to sound if the carrier tries to make that argument in court.
To support its proclaimed thesis, the carrier would have to show that the broker that hired it (Smith in our hypothetical, the carrier itself being Jones) was an agent of the carrier that engaged it; that broker was an agent of the first carrier (Chance) who turned the load over to it; the carrier was an agent of your 3PL; and the 3PL was your (Tinker’s) agent.
Now, if it could in fact prove all this stuff, then you’d owe it the money. A principal is legally responsible for its agent’s actions, and that tracks all the way down the line to the agent’s agent, the agent’s agent’s agent, the agent’s agent’s agent’s agent ... Well, you get the picture. Each one is in principle respecting its own agent, and the line of responsibility can go on indefinitely.
One break in the chain, however, destroys it. And the likelihood of the carrier being able to prove all these agency relationships in court is so unlikely, it isn’t even worth considering, so I won’t (consider it, that is).
I’d suggest you try explaining all this to the collection agency that’s bugging you, but I know quite well that collection agency representatives are carefully trained to understand only two words in the English language — “I’ll pay” — and to disregard anything and everything else as meaningless noise. That includes, by the way, polite refusals as well.
So simply tell the collection folks to take a hike. Then ignore them. Lawyer or no lawyer, taking you to court would just be swinging wildly at a ball in the dirt.
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.