ATRI report details trends in trucking litigation

Matt Cole:
The trends of trucking litigation, how often are fleets sued and how many cases make it through a trial to a verdict?

Jason Cannon:
Hey everybody. Welcome back. I'm Jason Cannon and my co-host is Matt Cole. The American Transportation Research Institute is back with another report. This time it's an in- depth forensic analysis of trucking litigation. ATRI's latest research look to estimate the total number of trucking tort cases in state and federal courts evaluate the trends in litigation circumstances and tactics and provide expert perspectives on the latest legal developments affecting trucking.

Matt Cole:
The research available for download at ATRI's website goes into great detail on those areas and more related to trucking litigation. For this week's 10-44, we're checking in with ATRI's Alex Leslie to hit some of the highlights of the research.

Alex Leslie:
Well, as with all ATRI research, it begins with our research advisory committee. And as usually the case with our research advisory committee, they're really listening to the industry. These are folks from across all different fleets, drivers, folks in insurance and litigation. And they've seen, of course, all these big ticket payouts. And they've also seen that in ATRI's top industry issue survey that we do every year, this issue of litigation has become one of the biggest issues, frankly. In the industry, it was voted number two this year. It was voted a research priority before that, but really the goal of this study was to do two things. One was to get that broad view of what is the state of play? What's the scope of litigation and what do those time trends look like? And then the second idea was to then dig in a bit deeper and to understand, okay, what are some of the factors that actually impact the sort of mechanism of litigation, the strategy, the different asks and all those different elements that it's the ways that the plaintiffs are beating us, frankly, but the things that from the outside we might not be as familiar with.

Of course, the attorneys are living and breathing this stuff.

Jason Cannon:
Now to understand the impact of trucking litigation, it's important to know how much trucking companies are really targeted with lawsuits.

Alex Leslie:
It's hard to get good data on this because for one thing, a case that settles, there just might not be a lot of public information about it. And then some states collect, some don't. So this was a big part of us sort of coming up with a method to actually figure out how many of these darn cases happen every year. And we estimated that about 13,000 tractor trailer tort cases occurred in state courts. In 2022 was the year we used just based on the availability of data, but it's obviously a huge number. We estimate probably about 500 of those concluded by trial. And that's of course the state side. There's then the federal court side as well, which is sort of another important piece of the equation for actually litigating these cases. In general, the trucking industry fares better in federal court than in state court.

There's a few different reasons for that. Federal judges are appointed rather than elected. The juries are larger. So there's a few extra steps that help prevent bias from entering the courtroom. Cases go to trial twice as often as state courts as opposed to federal. And then what we found in our data is that actually the final award payment was over a million dollars more in state courts as opposed to federal courts. So there's a really big issue there. And part of the issue is that plaintiffs do whatever they can to try to keep these cases in state courts. There's a few different ways that defendants have to prove that their case should go to federal court. Has to meet a minimum threshold for how much the case is worth. The defendants, all of them, the driver, whatever companies are involved, have to be all from different states to make it a federal issue.

There are all different ways that plaintiffs can sort of manipulate these though. So we estimate that as many as 147 cases in just one year ought to have gone to federal, and instead we're stuck in state courts.That's over a hundred million dollars that the trucking industry spent in excess payouts than what it probably should have if those cases had gone to the fairer federal courts.

Matt Cole:
While only a fraction of all cases against trucking companies make it to court, much less end on a verdict, there's a good reason for that for trucking companies and their insurers. It's often cheaper to settle.

Alex Leslie:
The vast majority of those cases, they're going to settle. And again, a lot of those are going to be the smaller award amounts, ones where it's maybe a more conventional or typical case. This dollar amounts in question might be small. So a lot of times the insurers will push to settle a case if it's smaller just to prevent any possible explosion of it. And of course, also it's expensive to take a case to court and plaintiffs can make it especially expensive. They can have a painful discovery process going through all of your records, all of your telematics data, all of your policies. They can depose a bunch of employees at a trucking company. So in a lot of cases, especially again with those smaller cases, settling is a way to avoid some of the additional pain of time and money. Even frankly, in cases where a trucking company might say, "Look, I could get a better financial outcome if I take this to court, but I know it's going to be a headache for the next two years, so instead I'm just going to settle it now."

Jason Cannon:
There are times though where it's more beneficial for a defendant trucking company to see the case through to a trial.

Alex Leslie: 
The question of when to settle and whether to settle, it's one of the biggest strategic decisions involved in litigation. So there's countless variables involved, but what we found is that in cases with awards of five million or more, settlements were lower than verdicts. But in cases with awards under one million, settlements were actually higher than verdicts. So settlements higher on the lower end, but lower on the higher end. Another factor that we found too is that actually as time passes between the incident and the conclusion of its case, that there's increasingly less difference between a settlement and an award. So the benefits of settling diminish, in other words, your settlements are probably going to be better earlier on, but then the farther you get away from a crash, at that point, especially if you've already invested time and money in defending a case, generally the data says it's better to stick with that course and continue through to the end of the trial.

Matt Cole:
The monetary threshold for a case to be eligible for federal court, which is typically more favorable for trucking companies is only $75,000, but plaintiffs use several tactics to keep cases from meeting other criteria for federal court eligibility.

Alex Leslie:
It's just the defendants have to be diversity of citizenship. But to that point, the plaintiff might bring in another defendant. It may be that they try to bring in a leasing company if there were a truck leasing company involved. If you've got one trucking company that has another entity that manages, I don't know, there's a bunch of different ways you can structure corporately, of course. But any way that a plaintiff can bring in another entity that doubles up on a state, then they're going to try to do that. And even though, like you say, that $75,000 threshold to get to federal, it's so low. You'd think that it would always be the case, but plaintiffs can simply not say what the amount in question is until it's too late for the defense to file for removal to federal court. So there are all these little ways procedurally that plaintiffs can really prevent those cases from getting to federal.

Jason Cannon:
ATRI's report also looked at trends over the last decade for trucking litigation, including the number of cases, verdict amounts, and more.

Alex Leslie: 
We saw that the number of cases went up and increased by a annual rate of about 3.7% on average. There's some fluctuations in there year to year. The important thing to remember about litigation data is that it's highly volatile. There's differences year to year. What are the cases looking like? So there are some obviously factors involved, but in general, that overall rate was about 3.7% annual increase. Again, over 10 years, that's 37%. So it's going up faster than the rate of crashes increasing by a little bit. And of course, it's always worth reminding that usually in a crash, more often than not, by far, of course it's the passenger vehicles rather than the professional drivers of a truck that are actually at fault. We found that the upper half of awards were increasing at an annual rate of 5.7%. So again, over a 10-year period, 57% increase.

We focused on, again, it's for those of you who look with numbers a lot, upper quartiles, what that just means is that's the middle of the upper half. So we've used that as an approach because it's not like every single case that is brought against a trucking company is egregious. What we're really looking at here is those upper half are the ones that are really dangerous to the industry and the ones that are often excessive. It's not that the trucking industry is against making folks whole if they have been injured in a crash where a truck driver was indeed at fault. But when we're really looking at the problem cases, which are going to be those upper 50% ones, those are the ones that, again, we've seen go up by 5.7% per year. And again, just as another note, there's a kind of year to year, these numbers do fluctuate a bit.

So if you're looking at the graph, you'll see actually, well, 2023 went down a little bit compared to the last couple years, but the thing to notice here is that the number for 2023 is still well above any of the numbers essentially pre 2019. So again, year to year, you can see fluctuations in these numbers of cases or award sizes, but it's important to look at that historical trend line where it's trending across all of those years on average.

Jason Cannon:
Be sure to tune back in next week for part two on ATRI's extensive litigation report detailing what fleets are accused of doing or not doing that leads to verdicts, advice for fleets to avoid or mitigate litigation and more. 

That's it for this week's 10-44. You can read more on ccjdigital.com. While you're there, sign up for our newsletter and stay up to date on the latest in trucking industry news and trends. If you have any questions or feedback, please let us know in the comments below. Don't forget to subscribe and hit the bell for notifications so you can catch us again next week.