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By: Kingshuk K. Roy
Was a principal-agent relationship established between a freight broker and the driver of the trucking company it contracted to haul a load? This was the question put before the First District Appellate Court in Cornejo v. Dakota Lines, Inc., 2023 IL App (1st) 220633. The court’s answer reversed an $18 million judgment in Cook County against a broker.
The plaintiff brought a negligence action on behalf of her son against the truck driver, the trucking company that employed the driver, Dakota Lines, Inc. (“Dakota”), and the shipping broker, Alliance Shippers, Inc. (“Alliance”). Alliance contracted with Dakota to transport automotive parts on behalf of Alliance’s shipping client. The minor was seriously injured when he was struck by the truck while standing near his family’s vehicle on the shoulder of a highway.
A jury found the driver, Dakota, and Alliance to be liable to the plaintiff and awarded $18,150,750. It also answered a special interrogatory affirming the driver was an agent of Alliance. On appeal, Alliance argued that Dakota and the driver were independent contractors.
The key issue in the case is whether the trucking company and its driver were independent contractors or agents of Alliance. As a principal, Alliance would be vicariously liable for the conduct of its agent but not for the conduct of an independent contractor. The difference is defined by the level of control over the manner of work performance. An independent contractor is not under the control of the person for whom it works. Courts consider the facts and circumstances of each case to determine whether there is a right to control the manner of doing the work along with the following factors:
(1) Right to hire;
(2) Right to discharge;
(3) The manner of direction of the servant;
(4) Right to terminate the relationship; and
(5) The character of the supervision of the work done.
In reviewing these factors, the Cornejo court found that the evidence “overwhelmingly favored” Alliance, noting:
Alliance did not pay Dakota’s drivers and withhold taxes from their pay; hire, train or fire the drivers; dispatch or speak to the drivers; control the drivers’ routes or provide them with tools, equipment, or materials; or own the tractors or trailers the drivers used. It is undisputed that Dakota and Alliance adhered to the terms of their agreement, which provided that Dakota had full control over its personnel and would perform services as an independent contractor. Moreover, Dakota and Alliance did not have an exclusive relationship; Dakota was free to haul freight for other brokers and was not Alliance’s primary carrier. Dakota hired, trained, and fired its drivers; paid them; and withheld taxes from their paychecks.
The plaintiff was unable to point to any facts showing the requisite degree of control over the work performed – hauling loads – required under Illinois law to establish an agency relationship. It was not enough that Dakota was required to maintain a minimum number of empty trailers, add Alliance as an additional insured, or maintain seal integrity, freight bills, and cargo security. Even the requirement by Alliance for Dakota to check in multiple times a day on delivery times or Alliance’s right to charge Dakota for untimely or damaged loads did not demonstrate Alliance’s control over how Dakota hauled the load.
The Cornejo court distinguished the recent line of cases that had expanded vicarious liability for brokers. In Sperl v. CH Robinson, 408 Ill. App. 3d 1051, 946 N.E.2d 463 (Ill. App. Ct. 2011), the broker directly hired, paid, and dispatched the driver and implemented an “impossible fine-enforced schedule” on drivers. The Powell v. Dean Foods Co., 2013 IL App (1st) 082513-B finding against the shipper was based on the exclusive hauling relationship between Dean Foods Co. and the motor carrier and the requirement that the Dean Foods Co. logo be placed on trucks and the driver’s clothing. The broker in McHale v. Kiswani Trucking, Inc., 2015 IL App (1st) 132625 was liable because of the “conflicting” testimony about the broker’s control over drivers, including dictating routes of travel. In contrast, Alliance was not involved with Dakota’s driver to this extent. There is a difference between Alliance specifying the result it wanted Dakota to accomplish and dictating the manner in which the work of hauling the containers would be performed. The court explained, “At best, Alliance’s requirements on Dakota were indicative of Alliance controlling the result or matters ancillary to the work to be performed.”
The court’s detailed analysis provides brokers with some guidance on the line between a motor carrier’s status as an independent contractor and agent. According to the reasoning in Cornejo, there is a distinction between controlling ancillary matters and controlling the work of transporting the load. This sensible approach where the focus is on the control over the driver’s behind-the-wheel conduct places a limit on the expanding scope of vicarious liability against brokers and shippers that began with Sperl v. CH Robinson in 2011. The only other post-Sperl limitation on broker liability was in Brettman v. M&G Brokerage, Inc., 2019 IL App (2d) 180236, where this office successfully argued that a broker’s duty ends after the load is delivered.
The decisions in Cornejo and Brettman will assist brokers and shippers, at least in some instances, of resolving vicariously liability claims before trial. This is an important development because jurors have been consistently deciding this issue against brokers. (e.g., Sperl $23.8 million award; Powell $20.2 million awards; McHale $8 million award)