In 1953, the United States Supreme Court described motor carriers’ use of independent owner-operators who lacked adequate insurance in order to avoid financial responsibility to injured members of the public as "evils that had grown up" in the industry. American Trucking Ass’ns v. United States, 344 U.S. 298, 301 (1953). 

More recently, one court described the position taken by a motor carrier  by incredulously stating the "suggestion that it could lawfully engage in the transportation . . . without regulation by the Surface Transportation Board is just plain wrong."   Serna v. Pettey Leach Trucking, Inc., 2 Cal. Rptr. 3d 835, 845 (Cal. Ct. App. 2003). 

Another court declared that "[s]uch an application would not advance the public policy goals of the Motor Carrier Act in protecting the general public, and it would also defy common sense." Royal Indem. Co. v. Jacobsen, 863 F.Supp. 1537 (D. Utah 1994).

(Continued below)

Congress has implemented the Federal Motor Carrier Safety Regulations ("FMCSRs") which govern the operation of commercial motor carriers.  The regulations were given birth in 1935 and have evolved since that time through extensive legislation and judicial interpretation.  In order  to better appreciate the policy underlying vicarious liability of motor carriers  for any negligence attributed to truck drivers hauling their freight, it is helpful to review the history of the Federal Motor Carrier Safety Regulations (Title 49 of the Code of Federal Regulations)("FMCSRs").  "The arduous road has been often traced."  Agricultural Transportation Assoc. of Texas v. King, 349 F.2d 873 (5th Cir. 1965).

With roots extending back to the steamboat era, the federal safety regulations have influenced the American motor carrier industry since 1935.  Soon after they were enacted, however, motor carriers began taking advantage of weaknesses in the regulatory framework which permitted them to evade liability for the torts of their drivers by engaging in linguistic gymnastics.  The Rediehs Court discussed the history of the FMCSRs and the problematic practice by motor carriers of classifying drivers as "independent contractors" when it opined that,

The history of the regulations of motor carriers reveals that after the commencement of regulation in 1935, because of stringent and comprehensive rules regulating the conduct, operation, financial ability, and insurance coverage of the motor truck industry, a substantial number of carriers possessing ICC certificates began to use equipment owned and driven by truckers who had no such ICC operating authority. This use was accomplished by a variety of leases, trip leases, and by other arrangements under which owner-operator truckers carried on the operations of the carriers with operating authority. In contracting with such persons the carriers took care to constitute the lessors as independent contractors which enabled them to avoid the commission’s safety, financial, and insurance regulations that had been prescribed for equipment and drivers in order to protect the public. Many of the owner-operators without authority were itinerant truckers known as "gypsies," fly-by-night truckers with poor, unsafe equipment who had little financial ability. They may or may not have had adequate insurance. The hard core of the problem was the trip lease and its attendant evils which permitted an indifferent carrier to evade its safety and financial responsibility. (citation omitted). The practice of leasing made it difficult in accident cases to fix responsibility, and certified carriers could thus escape the consequences of the regulations and responsibility for accidents by employing irresponsible persons as independent contractors who were not financially accountable and who had no insurance or were under-insured. (citation omitted). Thousands of unregulated trucks were on the road. Rediehs Express, Inc. v. Maple, 491 N.E.2d 1006 (Ind. Ct. App. 1986)

    The Ohio Court of Appeals commented upon this issue when it opined that,

Motor carriers were able to avoid liability by taking advantage of the common-law master-servant test. Motor carriers would lease their vehicles from independent contractors, who were usually independent individuals who owned their own vehicles. Motor carriers would then structure their lease agreements so that the drivers and the trucks could not be found to be under the "control" of the lessee motor carrier. Thus, the responsibility for accidents would fall on the single, independent truck-owner rather than the deeper pockets of the motor carrier company. As a result, motor carrier companies, who were primarily in the business of hauling loads for clients by truck, were able to escape liability for virtually all motor vehicle accidents occurring in the motor carrier’s business. Cincinnati v. Haack, 708 N.E.2d 214 (Ohio Ct. App. 1997).

The Texas Court of Appeals also discussed motor carriers’ use of the term "independent contractors" when it noted that,

[d]uring the first half of the twentieth century, interstate motor carriers attempted to immunize themselves from liability for negligent drivers by leasing trucks and nominally classifying the drivers who operated the trucks as ‘independent contractors. Morris v. JTM Materials, Inc., 78 S.W.3d 28, 37-38 (Tex. Ct. App. 2003)

    The Maryland Court of Appeals opined that,

fly-by-night truckers with poor, unsafe equipment who had little financial ability. They may or may not have had adequate insurance. The hard core of the problem was the trip lease and its attendant evils which permitted an indifferent carrier to evade its safety and financial responsibility. (citation omitted). The practice of leasing made it difficult in accident cases to fix responsibility, and certified carriers could thus escape the consequences of the regulations and responsibility for accidents by employing irresponsible persons as independent contractors who were not financially accountable and who had no insurance or were under-insured. (citation omitted). Thousands of unregulated trucks were on the road. Empire Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co., 695 A.2d  624 (Md. Ct. App. 1997).

   
    The Court in Graham v. Malone Freight Lines noted that,

In the past, motor carriers leased trucks and then disclaimed any responsibility when those same trucks injured members of the public. One major concern was the fact that "the use of non-owned vehicles led to public confusion as to who was financially responsible for accidents caused by those vehicles."  Graham v. Malone Freight Lines, Inc., 948 F.Supp. 1124, n.3 (D. Mass. 1996).

In hiring "independent contractors" and, thereby, escaping liability for the tortious acts committed by those drivers, the motor carrier industry created an atmosphere of danger on the public roadways because "[m]any of the owner-operators without authority were itinerant truckers known as ‘gypsies’, fly-by-night truckers with poor, unsafe equipment who had little financial ability.  They may or may not have had adequate insurance."  Rediehs Express, Inc. v. Maple, 491 N.E.2d 1006, 1010 (Ind. Ct. App. 1986).  So, drivers with little or no means to compensate the victims of catastrophic tortious conduct often were found at fault while the motor carriers that employed these drivers and, thereby placed the drivers on the road, were often able to avoid liability.  However, "[i]t is the motor carrier who has put the entire trip in motion." American Transit Lines v. Smith, 246 F.2d 86, 87 (6th Cir. 1957).  In discussing one case of evasion of motor carrier regulations, the United States Court of Appeals for the Fifth Circuit noted that "[w]hen, however, the contracts are read in the light of the construction accorded them by the parties by the actual operations under them, it is clear that the scheme as a whole is a mere subterfuge, an unpermitted evasion, not In the 1950’s, it was common practice for trucking companies to attempt to immunize themselves from liability by using independent truck drivers or by denominating the regular drivers as independent contractors.

      The United States Supreme Court ,in American Trucking Ass’ns v. United States, 344 U.S. 298, 311 (1953), expressed its discomfort with the situation when it noted that

 "[i]t is an unnatural construction of the Act which would require the Commission to sit idly by and wink at practices that lead to violations of its provisions."  The prevalence of this and other similar practices in the motor carrier industry prompted Congress to act in 1956.

 
   In 1956, Congress enacted legislation that curtailed motor carriers’ various efforts to evade responsibility.  Indeed, according to the Court, in Morris v. JTM Materials, Inc., 78 S.W.3d 28, 37-38 (Tex. Ct. App. 2003):

In order to protect the public from the tortious conduct of the often judgment-proof truck-lessor operators, Congress in 1956 amended the Interstate Common Carrier Act to require interstate motor carriers to assume full direction and control of the vehicles that they leased ‘as if they were the owners of such vehicles.’ (citation omitted). The purpose of the amendments to the Act was to ensure that interstate motor carriers would be fully responsible for the maintenance and operation of the leased equipment and the supervision of the borrowed drivers, thereby protecting the public from accidents, preventing public confusion about who was financially responsible if accidents occurred, and providing financially responsible defendants. 

    The United States Court of Appeals for the Fifth Circuit in Price v. Westmoreland, 727 F.2d 494 (5th Cir. 1984), noted that,

[i]n order to protect the public from the tortious conduct of judgment-proof operators of interstate motor carrier vehicles, Congress in 1956 amended the Interstate Common Carrier Act to require a motor carrier to assume full direction

 As a result of these amendments, motor carriers could no longer avoid liability by denominating a driver as an "independent contractor" because carriers were deemed to be in "full direction and control of the vehicles that they leased."  The rationales for the amendments, according to Congress, were many.  A Maryland  court, in Cox v. Bond Transp., Inc., 249 A.2d 579 (N.J. 1969)(citing Christian v. United States, 152 F.Supp. 561, 567 (D. Md. 1957, clearly identified the objectives as follows:

The salutary objectives…we think bear repeating. They are to insure responsibility for, and control over, the leased equipment by the lessee carrier, when the equipment is operated by the owner or employees of the owner. These are basic requirements that are inherent in the relation of the for-hire carrier to the public. When they are lacking, the chaotic conditions that preceded enactment of the Motor Carrier Act, 1935 inevitably ensue.’ This result cannot be countenanced.

In Baker v. Roberts Express, Inc., 800 F. Supp. 1571 (S.D. Ohio 1992)(citing Proctor v. Colonial Refrigerated Transp., Inc., 494 F.2d 89 (4th Cir. 1974), a federal court in Ohio noted that "the intent [of the regulations] was to make sure that licensed carriers would be responsible in fact, as well as in law, for ··· the supervision of borrowed drivers."  Additionally, in North American Van Lines, Inc. v. Emmons, 50 S.W.3d 103, 121 (Tex. Ct. App. 2001) , the Texas Court of Appeals noted that "the very purpose of Congress was to deal with motor carriers’ efforts to designate those who drove trucks for them as ‘independent contractors’ in order to immunize themselves from liability." 

In Johnson v. Pacific Intermountain Express Co., 662 S.W.2d 237 (Mo. 1983), the Missouri Supreme Court held that "[o]ne important purpose of the regulatory scheme is to protect persons who are injured in highway accidents, by increasing the likelihood that a substantial entity will be available to respond to any judgment rendered…these holdings…represent the consensus of judicial authority based on analysis of statutory policy and implementing regulations."  The regulations served to "eliminate the difficulty faced by an injured plaintiff in determining who controlled the vehicle; the purpose upon which the vehicle was embarked at the time of the accident; and the questions of agency, employee or independent contractor status, frolic and detour, and borrowed employee." 

The Indiana Court of Appeals, in Rediehs Express, Inc. v. Maple, 491 N.E.2d 1006 (Ind. Ct. App. 1986), further noted that "[t]he plaintiff encounters much difficulty in fixing responsibility, for only the carrier and his lessor really know their arrangements.  A plaintiff should not be required to bear this burden nor should he be required to settle for a financially irresponsible defendant fathered by the carrier…If the carrier has been derelict in employing an under-insured, financially irresponsible or incompetent lessor, it has only itself to blame."

The Ohio  Supreme Court in Wyckoff Trucking, Inc. v. Marsh Bros. Trucking Service, Inc., 569 N.E.2d 1049 (Ohio 1991), held that "the ‘bright-line’ guidelines set forth in the I.C.C. regulations under the majority viewpoint unmistakably fix liability for the accident instead of essentially forcing the innocent victim to sue everyone in order to redress his injuries and damages".  Another court noted that, pursuant to the FMCSRs, "so long as the public and shippers are protected, parties can allocate risks among of the regulatory scheme is to protect persons who are injured in highway accidents, by increasing the likelihood that a substantial entity will be available to respond to any judgment rendered…these holdings…represent the consensus of judicial authority based on analysis of statutory policy and implementing regulations."  The regulations served to "eliminate the difficulty faced by an injured plaintiff in determining who controlled the vehicle; the purpose upon which the vehicle was embarked at the time of the accident; and the questions of agency, employee or independent contractor status, frolic and detour, and borrowed employee."  The Rediehs Court further noted that "[t]he plaintiff encounters much difficulty in fixing responsibility, for only the carrier and his lessor really know their arrangements.  A plaintiff should not be required to bear this burden nor should he be required to settle for a financially irresponsible defendant fathered by the carrier…If the carrier has been derelict in employing an under-insured, financially irresponsible or incompetent lessor, it has only itself to blame."

 
Thus, collectively, the Federal Motor Carrier Safety Regulations work together to eliminate the “independent contractor” versus “employee” distinction in the motor carrier industry.  The United States Court of Appeals for the Seventh Circuit held that “[t]hese rules were intended to safeguard the public by preventing authorized carriers from circumventing applicable regulations by leasing the equipment and services of independent contractors exempt from federal regulation.” Hartford Ins. Co. v. Occidental Fire & Casualty Co., 908 F.2d 235 (7th Cir. 1990)(citing American Trucking Ass’ns, Inc. v. United States, 344 U.S. 298, 302-306 (1953)  In the end, the modern laws (currently 49 C.F.R. §§ 376.11, 376.12, 390.5 and 49 U.S.C. § 14102) prevent motor carriers from evading responsibility for the negligent acts of their drivers by attempting to label them as “independent contractors.”

But we still see a multitude of tricky schemes to try to avoid that responsibility and accountability.

For related topics see:
Purpose of Federal Motor Carrier Safety Regulations
Use of Fatigue-Related Federal Motor Carrier Safety Regulations
Federal regulations eliminate independent contractor defense in interstate trucking
Truck Lease May Be Inferred from Words or Conduct in Absence of Written Lease
Freight Brokers, Freight Forwarders and Forwarder-Common Carriers

(Much of this summary of the development of the law of financial responsibility of motor carriers for the negligence of truck drivers hauling their loads is the work of my colleague, Michael Kress, the Renaissance Man of Sparta, Tennessee.)