October has brought a run of developments that matter to Factors, Brokers, and Carriers. A Texas court upheld a $604 million verdict against a major Broker. Two of the largest Brokers are fighting a novel RICO suit. And bankruptcy courts are letting struggling Carriers keep factoring after they file.
A $604 million verdict stands against C.H. Robinson
On October 16, a Dallas County judge upheld the $604 million jury verdict against C.H. Robinson in Lipe v. Lupus Superior and added about $107 million in prejudgment interest. The jury found the driver was under C.H. Robinson’s control, which made the Broker vicariously liable for the crash. It is the first major Broker judgment since the Supreme Court’s Montgomery decision, and C.H. Robinson has said it will appeal. For Brokers, the message is that how much control you exercise over a load can matter as much as which authority you hold.
The Fifth Circuit reconsiders double-brokering liability
The full Fifth Circuit is rehearing Crane v. Penske. In August, a three-judge panel held that the originating Carrier can be the “statutory employer” of a driver two steps down a double-brokered chain. Briefing is complete, and trucking industry groups have filed amicus briefs supporting Penske. A decision could reshape liability up and down the subcontracting chain.
Carriers sue C.H. Robinson and TQL under RICO
In Stevens Trucking v. C.H. Robinson and TQL (E.D. Tex.), six Carriers allege that the Brokers knowingly use “chameleon carriers” to undercut legitimate rates. On October 19, TQL moved to dismiss. It argues the Carriers can’t show the direct injury RICO requires, that FMCSA and ELD violations aren’t RICO predicate acts, and that the Lanham Act claims fail. TQL also relies on the forum clause in its broker-carrier agreement, which points to Clermont County, Ohio. C.H. Robinson’s answer is due November 30. Watch this case to see whether forum clauses in broker-carrier agreements hold up.
Factoring keeps Carriers moving through bankruptcy
Three Subchapter V trucking cases now ask bankruptcy courts to approve factoring after the filing:
- Globemaster Inc. (Bankr. N.D. Ill.), a 51-truck Carrier whose prepetition Factor is Saint John Capital. The court has granted interim relief, and the factoring and cash-collateral hearing is set for October 27.
- Xoco Transport (Bankr. S.D. Tex.), which is factoring with RTS Financial. An interim order approved factoring, granted adequate protection, and lifted the stay as needed. The court entered further orders after its October 16 hearing.
- Truckload, LLC (Bankr. M.D. Fla.), which filed an emergency motion on October 19 to approve factoring effective as of the petition date. It was set to be heard on October 21.
For Factors, these cases share three practical lessons. Know whether your agreement will be treated as a true sale or a loan. Make sure your UCC-1 is filed in the client’s state of organization. And be ready to negotiate replacement liens and adequate protection in the first two weeks of a case, not at plan confirmation. Subchapter V moves fast.
Capacity keeps tightening
FMCSA continues to crack down on CDL schools and Carrier fraud. In the week of October 12, 1,064 operating authorities went inactive and 2,101 Carriers lost liability insurance coverage. Another 153 Carriers changed their phone, email, and address on the same day, a common sign of identity theft. FMCSA has also shut down about 10,000 CDL school sites and is seeking emergency authority to screen “chameleon” schools that re-register under new names. Factors should keep verifying Carrier identity before funding.
This article is for general information only and is not legal advice. For guidance on a specific matter, contact Jencks Law, P.C.
