Small fleets *can* win in court

Small- and mid-sized fleets have a lot on their plates, and legal risks don’t always top the list... until something goes wrong. Small businesses don't always have the same depth of internal claims and legal resources that large national fleets have, but that doesn't mean they can't improve their claims management practices. 

We caught up with Pamela Bracher, Deputy General Counsel for the American Trucking Associations, to discuss the common legal pitfalls small motor carriers fall into, plus the broader state of nuclear verdicts and tort reform across the industry and country.

-Bianca Prieto, editor

What do you see as the biggest legal pitfall or misstep that small to medium-sized trucking firms make, and how can they avoid it?

From the perspective of defending litigation that might come after a vehicle crash, it is the trucking company’s procedures and routines that will be scrutinized by plaintiff’s counsel. Prior to my work with the American Trucking Associations, I spent almost 20 years in in-house legal roles at two large trucking companies. My in-house practice focused on defending those trucking companies and their drivers in tort litigation. Through that experience, I found some common denominators of large settlement and verdict dollar amounts. 

First, trucking companies need to be aware of their forward-facing documents (e.g. driver handbooks and internal guidelines) and what they publish on their websites or social media platforms about their company.  Plaintiff attorneys will endeavor to use your own guidelines and procedures—or how you describe your company’s culture, mission and values publicly—to create a black-and-white rule of negligence for the jury. If you don’t follow “your own rule” then it is automatically negligence, they will argue to a jury. This leads me to my second “pitfall or misstep”—consistency, or rather inconsistency. Don’t let exceptions eat the rules. For example, if your company has hiring guidelines, know those guidelines and consistently adhere to those guidelines.

What's different about claims and legal services in large fleets vs. small ones? Are smaller trucking companies at any inherent advantage or disadvantage?

Larger trucking companies often have in-house legal staff and in-house claims examiners who typically self-handle their accident claims, have a choice of defense counsel and can control decisions to settle or proceed to trial (or at least have a seat at the table with their excess insurance carriers for those discussions). Large trucking companies also typically have either high deductibles or self-insured retentions on their insurance policies. And some large trucking companies may be self-insured. 

Smaller trucking companies do not have the in-house legal and claims staff to self-handle their accident claims, do not have a choice of defense counsel, and often are not part of the decision whether to settle or go to trial, once the value of the claim exceeds their deductible. I believe that this can put a smaller trucking company at a disadvantage.

What's one claims management practice that you would advise trucking leaders at smaller fleets to adopt?  

My perception is that sometimes smaller fleets are not in partnership with their insurance companies, meaning that they do not understand or know the insurance companies’ claims handling philosophy or understand why reserves are being set at the amounts reflected on loss runs. I think it is important for smaller fleets to build a partnership with their insurance carriers, and I think one step towards building that partnership is having claims review meetings on a regular basis, be it quarterly or biannually.

At a claims review meeting, you will discuss a selection of your accident claims with your insurance carrier, for the purpose of understanding the risk exposure, the reserves that have been set and the defense strategy.  Coupled with that, though, smaller fleets should consider hiring a dedicated staff member to serve as the in-house claims manager to coordinate with the insurance company. Managing claims should not be just one job responsibility, among many, for someone from the fleet’s safety or human resources teams.

Do nuclear verdicts present a threat to small and medium trucking businesses? Are there solutions, both broadly in the industry and that individual companies can make?

I must admit that I am not a fan of the term “nuclear verdicts” because it is, quite simply, alarmist language, and it misdirects the focus away from the fact that defendants can win trials (and they do). We don’t hear about the defense wins, and there are many, because a defense win may not have the same eye-catching headline for the news media and even more so, an attorney billboard. 

An adverse, outsized verdict is a threat to all corporate defendants, including trucking companies, regardless of fleet size – small, medium or large.  The potential harm rests in the impact on settlement negotiations and the filing of future litigation. The threat of a so-called “nuclear verdict,” or the fear that trials cannot be won, drives up settlement values and may coerce a trucking company and its insurance carrier into higher settlement amounts. And news headlines and attorney billboards that tout stunningly large verdict amounts serve as an anchor that not only influences potential jurors at a trial, but also influences a person involved in a collision with a truck to have an unrealistic expectation about their potential injury claim and to incentivize that person to file a lawsuit.

 Are you pleased with the progress of tort reform across the country, or what more needs to be done?

Tort reform is a long game, but, yes, I am pleased with the progress. Since the ATA launched our lawsuit abuse reform efforts in 2020, 15 states have enacted reforms. When tort reform legislation is introduced, it offers an opportunity to educate lawmakers and the public about the need for reform and the impact of the current unbalanced tort law on the court system. These conversations, even if the bill doesn’t pass in the session in which it is first introduced, are invaluable to shining a spotlight on certain tactics used by some in the plaintiff trial bar to engineer settlements or verdicts that are disproportionate to the alleged harm or untethered from actual causation for the accident.

Tort reform, though, is not the silver bullet. Because judges interpret the laws, it is important to understand how your state elects or appoints state court judges. No state selects judges in the same way, but there are commonalities across state lines. In some states, judges are elected, rather than appointed. Judicial neutrality is an important component of our system; a judge must be unbiased and not be influenced by outside forces. A major disadvantage to the judicial election process is the need to campaign, and campaigns cost money. Campaign contributions to judicial elections can undermine judicial neutrality. When state judges act more like politicians, they can lose their neutrality and independence. And opponent attack advertising can distort the record of a sitting judge and threaten public confidence in the court system. 

Interview by Shefali Kapadia

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The Inside Lane is curated and written by Shefali Kapadia and edited by Bianca Prieto.