You vs. Plaintiff's Attorneys: Protecting Your Company from Catastrophic Lawsuits

Many jurisdictions have favorable laws that allow the plaintiff to sue, and most jurisdictions also have preferred venue provisions. Generally speaking, a plaintiff can sue a defendant based on where the plaintiff lives or where the accident happened. This means that plaintiffs can sue in places that are far from your business’ home base or where you have operations.

Some of the “jurisdictional hellholes” discussed in the presentation are known for “forum shopping,” which is defined as the practice of choosing a jurisdiction that has the most favorable rules or laws for the position being advocated. Forum shopping will land a jurisdiction on the “jurisdictional hellhole” list, as they are considered jurisdictions where people file suits and cases are tried without the suits have nexus to them.

Often, a pattern is shown where a plaintiff alleges he was rear-ended by a truck while admitting to changing lanes quickly. There was no inspection performed of the claimant vehicle, and no inspection of the truck. Inspections are one of the fundamentals that need to occur from a claim’s perspective.

Another is the concept of “anchoring,” which takes place when a price is put in front of us, and we get fixated on that price. This happens frequently with claims. Because adjustors are often very busy, they sometimes call plaintiff's counsel asking for a demand price without performing the full investigation. In turn, they receive a number that doesn’t tie back to the actual damages but rather was pulled from the sky. Don’t wait for a demand; make sure your case is investigated and know the liability, the venue, and the damages sufficiently enough to say, “Plaintiff’s Counsel, we believe this case is worth $X and we’re confident in that number based on our investigation.” Don’t fall into the trap of being reactive — be proactive.

This is a common problem. Driver Qualification (DQ) Files require certain forms to be kept by the Federal Motor Carrier Safety Administration. If those forms become outdated, if too many forms were collected or if the forms were improperly completed, the rule of thumb is to be proactive and make a good faith effort to bring them into compliance. It’s acceptable to make notations in these files that as of a certain date, you are in the process of updating your DQ files and getting new forms and documents prepared. The more you tell the story, the better it will be for you in the end.

Ensuring proper compliance and safety measures are in place and practiced will help keep you out of the courtroom. However, the panel shared opinions on the level of coverage each believes is sufficient.

Jerry: Today’s requirement is $750,000 which hasn’t changed over four decades. Some regulators are suggesting limits should increase, but by extremely high numbers. Today, $750K doesn’t go as far as it did four decades ago (increase in cost of vehicles, healthcare, etc.), so this likely isn’t enough. As most carriers provide policies in $1 million increments, Jerry believes $2 million is a reasonable amount of coverage. HUB Drive Excess Liability Shield can help transportation companies secure excess coverage faster and more easily than before.

Rob: The average jury verdict in the U.S. is $3.1 million. The median jury verdict is $1.75 million. When ATRA looked at cases, they noted that 83% of verdicts fell in range of $0 - $5 million. Therefore, Rob recommends $5 million as it covers 83% of verdicts, leaving only a 16% exposure above that.

John: If a transportation company is only buying $1 million in coverage, they best listen carefully to Chris’s presentation and have a highly responsive claims organization on the job, as it will reduce the likelihood of litigation. If you hold only $1 million in coverage, set aside some money for a rainy day because there may be that that one bad case you need to settle. However, John recommends securing $2 million in coverage.

Chris: It’s important to acknowledge the outlier fleet that transports hazardous materials. These fleets are required to carry a $5 million limit (depending on the type of hazmat material, its classification and its division). However, after today’s discussion, Chris is convinced that $2 million is the lower limit to consider.