Truck leasing companies not protected from driver actions, court says

James Jaillet & Kevin Jones | August 27, 2014
Penske is not involved in the case at question. However, the Graves Amendment was designed to protect companies like Penske and Ryder in their leasing operations. The statute is the legal question in the Stratton case.

Penske is not involved in the case at question. However, the Graves Amendment was designed to protect companies like Penske and Ryder in their leasing operations. The statute is the legal question in the Stratton case.

A federal appeals court in New York this week ruled this month that carriers who lease trucks to drivers can be held liable for the actions of those drivers and are not protected by the Graves Amendment.

The ruling’s impact for other carriers, however, seems minimal, said American Trucking Associations’ Senior VP and General Counsel Prasad Sharma. But the group is delving further into the legal implications of the case, Sharma said.

Further, the court did not rule on the merits or claims of either the plaintiff or the defendant, but solely answered the legal question involving the Graves Amendment.

Judge Richard Arcara in the Western District of New York made the ruling Aug. 1 in a case brought by Michael Stratton, whose wife was killed in a crash in 2009 involving a truck owned by Great River Leasing but leased to driver Thomas Wallace.

Related

California’s high court rules carrier misclassified drivers as independent contractors

Drivers signed on as independent contractors for the Long Beach, Calif.-based Pac Anchor Transportation were misclassified as contractors and should have instead been classified as ...

Stratton sued Wallace, Millis Transfer (for whom Wallace was employed) and Great River Leasing. He also sued Midwest Holding Group, who owns both Great River and Millis.

Great River and Midwest had argued they were protected from liability by the Graves Amendment, a federal statute that protects vehicle owners from the actions of those who lease their vehicles. Arcara, however, ruled otherwise, saying the Graves Amendment does not hold up in the Stratton case, as the companies involved are affiliates of one another.

The Graves Amendment, Arcara wrote, is designed to protect companies whose only connection to lessees is at simple lease agreement.

Great River, Millis and Midwest are connected by more than that, Arcara says, thus voiding Graves’ applicability.

Arcara ruled the case sent back to Magistrate Judge Schroeder to hear the case itself.

Related

CSA’s Fallout: ‘Play the game’ to get out of the lockup

How the team at Old Time Express turned the lock open out of 'safety jail,' reversing its Conditional rating and winning back business.

The plaintiff’s attorneys labeled the case a “landmark decision,” but that may be a bit of a stretch, Sharma says.

His “first blush” impression is that the ruling will not likely have a large impact on most motor carrier operations.

Essentially, few carriers likely are structured around the liability protections of the Graves Amendment, which is designed for leasing operations such as Penske and Ryder.

Typically, an owner-operator who is leased to a carrier operates under the carrier’s authority and is already considered to be an affiliate.

“It’s hard to envision situations where this going to be a big issue for trucking companies,” Sharma said.

  • Hellbent706

    The Graves Amendment is designed to protect companies whose only connection to lessees is a simple lease agreement. Sounds like that would cover us all until you read that an owner-operator who is leased to a carrier operates under the carrier’s authority and is already considered to be an affiliate. The word “affiliate” voids the amendment and denies you from protection. It seems the Graves Amendment was specifically and methodically designed to Not protect any carrier other than rental truck company’s like Penske and Ryder which is less than 0.01% of the entire industry. It must be nice to be able to lobby for a law that gives you immunity while everyone else get fed to the wolves. I guess in this case the needs of the few truly does outweigh the needs of the many.

  • M.j. Zuzich

    Except if your company(that makes widgets) leases a truck from Penske or Ryder to be operated by your company with your company’s driver in the service of its’ business. THEN, the Graves Amendment is fully operational -as intended.

  • Colton Hayes

    It would only be “opetational” toward you a the widget manufacturer. Not toward Penske or Ryder, as they are affiliated with the manufacturing, aka they have no intetest or connection or involvement with the product being transported.

  • Colton Hayes

    Exactly, it was created to protect vehicle leasing companies from liability against misdeeds committed by persons who lease their vehicles for their own personal use,. Persons defined as not employees of or contracted “by” the leasing company.
    Sounds to me like the “companies” involved here were/are engaged in “employment and tax fraud” attempting to “claim” drivers were independent contractors. I’d be looking much deeper onto that operation if I were an official at the IRS.

  • M.j. Zuzich

    The Graves Amendment is / was only meant to shield a truck leasing company from the actions of their corporate clients and the corporate client’s employees’ actions. This is not a shield of liability from any sub- standard equipment maintainance issues or equipment defects in the vehicles provided by the Lessor to their customers.

  • Mind Games

    America, what used to be land of the free home of the brave now land of the corporate sheeple home of the cowardly backstabbing lawmakers.

  • John Scott

    These companies used this loophole to create a sub company within their trucking business that they thought would insulate them from liability. Another reason to hate company supported leasing programs.
    Its good that these types of leases are being exposed for what they are. A glorified way to suck drivers into paying for what ends up being a company driver who pays for their truck and has reduced the liability to the trucking company.

OverdriveOnline.com strives to maintain an open forum for reader opinions. Click here to read our comment policy.