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January 2 2023

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106 Journal of Commerce | J anuar y 2, 2023 Logistics IN PERSPECTIVE ANNUAL REVIEW & OUTLOOK 2023 Ryan Schreiber The industry should prepare itself for more suits like Miller, and for plaintiffs' attorneys to look for the deepest pockets possible to satisfy judgments. A changing liability regime the levels of coverage demanded by shippers is also limited. Of course, contracts do not ensure compliance. Insurance is for the benefit of the insured, and individual policies may not provide adequate protection, despite the headline limits. The burden of ensuring com- pliance is high and could create additional liability. Not everyone can be held to account; there must be some grounds to create this liability. Negligent carrier selection is just one of many standards to consider. Companies can also be found to have "vicarious liability" for the actions of an independent contractor. Many shipper contracts create burdens on their vendors in selec- tion, such as mandating certain screening requirements. Auditing and questioning uncovers knowl- edge. In Miller, for example, C.H. Robinson's compliance process meant the company knew — or should have known — the carrier selected was a bad choice. All of this should shape selec- tion of vendors, including how bleeding-edge technology like autonomous safety systems will come into play. Could those be a sell- ing point for fleets in the future as mitigation of risk to shippers? They likely should. Today, the market is defined by fragmentation, and many shippers intentionally limit the amount of freight available to their largest pro- viders to maintain price flexibility. In the absence of tort reform, might this change as the liability regime continues to move further toward greater liability and higher verdicts? I would argue that it should. JOC Ryan B. Schreiber is vice president of industry and growth at Metafora. Contact him at ryan-schreiber/. by federal law — more specifically, the Federal Aviation Administration Authorization Act (FAAA). A lower court ruled that Miller's claim could go forward, and by not hearing the case, SCOTUS essen- tially agreed that the FAAA does not preempt state law claims. This SCOTUS has proven itself to be business-friendly, likely meaning that hope for preemption, thereby limiting liability, took a large blow. More broadly, this signals that the court is not going to save the day for the transportation industry with respect to so-called nuclear verdicts. As such, the industry should pre- pare itself for more suits like Miller, and for plaintiff 's attorneys to look for the deepest pockets possible — potentially including cargo owners — to satisfy judgments. Typically, companies attempt to insulate themselves from liability through contracts that clearly des- ignate another party as responsible for damages. This is common in the supply chain space; carriers and logistics service providers are often required to indemnify shippers in the event of liability such as was incurred in Miller. That protection for a shipper extends only among the contracted parties, however. This means an injured party could recover damages from a shipper — provided there's a basis for liability — if a transpor- tation provider cannot satisfy an indemnity obligation. The challenge in mitigating risk is complicated by the particulars of the transportation industry. Fragmenta- tion is one issue. Ultimately, many of the folks coordinating transporta- tion — such as trucking operators or brokers — work for relatively small companies. For many, their finan- cial ability to weather a lawsuit is limited, and their ability to maintain IN LOOKING AHEAD to 2022, I wrote about how the future of supply chains requires flexibility and how integra- tions will be the key to unlocking that power. Anecdotally, we've seen the beginning of this, as we've seen a move toward reshoring or near- shoring operations where possible and an increased demand for connect- edness, both as a central key element of selection in changing systems and in connecting existing systems. This year, I want to talk about liability. In July, the Supreme Court of the United States (SCOTUS) declined to hear the case Miller v. C.H. Robinson Worldwide to little fanfare, perhaps understandably. Who focuses on non-events? However, as we look ahead to 2023, the implications of this non- decision could be massive. The sky isn't falling, but it's imperative that shippers and third-party logistics providers strategically review how vendor selection impacts their exposure to liability in light of this outcome. In this case, freight broker C.H. Robinson hired a carrier to haul a load, and there was an on-road collision resulting in a personal injury claim. The injured party, Allen Miller, sued C.H. Robinson under state law, claiming that C.H. Rob- inson was negligent in its selection of the carrier. C.H. Robinson argued that such a claim was preempted

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