Penske faces opposition from victim’s estate in bid for broader appellate review

Both sides have now presented their arguments in a closely watched federal appeals case involving companies within the Penske network, as the Fifth Circuit weighs whether to reconsider its earlier ruling before a full panel of judges. The dispute carries potentially far-reaching implications for liability rules affecting freight brokers and motor carriers across the trucking industry.

Last week, the plaintiffs associated with the estate of Lyndon Dean Meyer filed a brief opposing Penske’s request for an en banc rehearing. Meyer died in the collision at the centre of the dispute, in which the Penske companies had already suffered a setback at the appellate level. The filing followed the companies’ unsuccessful attempt to preserve a favourable ruling previously obtained from the U.S. District Court for the Southern District of Texas, which had ruled in their favour on the liability question.

The Fifth Circuit subsequently overturned that decision, prompting Penske to ask the wider appellate court to reconsider the case. The dispute is now drawing considerable attention because its outcome could influence how responsibility is assigned when freight passes through several intermediaries before reaching the carrier that ultimately transports it.

Meyer was killed instantly on December 26, 2018, when a truck struck his vehicle on Highway 202 in Bee County, Texas. The county lies roughly between San Antonio and Corpus Christi. The truck had entered the transportation chain through an arrangement initially involving a Penske company.

The point in dispute was who was in control of the truck.

In the case of Crane v. Liberty Lane, the question is whether a motor carrier can be held legally liable for the acts of a driver when more than one company is involved in the transportation arrangement.

The contractual chain for the shipment started when car-seat maker Adient hired Penske Logistics to move its goods. That work was handed off to Penske Logistics’ brokerage arm, Penske Transportation Management (PTM), which coordinated Liberty Lane to haul the freight. Liberty Lane sold the shipment to OK Trans, whose driver Satnam Singh Lehal was involved in the fatal collision with Meyer.

Penske said it did not know about the second brokerage transaction between Liberty Lane and OK Trans. But the double brokering is not the primary legal problem. Penske’s references to the arrangement are largely relevant to its position that it was not directly involved in the fatal accident and did not know that OK Trans was carrying the shipment.

The legal landscape has also changed since the U.S. Supreme Court’s decision in the Montgomery case, which removed a potential line of defense for PTM. With that option blocked, the decision that has especially angered parts of the trucking industry concerns Penske Logistics, the motor carrier at the start of the transportation chain.

The Fifth Circuit found Penske Logistics liable for the actions of Lehal, the OK Trans driver who collided with Meyer’s vehicle. The judgment raises the issue of whether a company can be held vicariously liable where it did not directly select or directly control the driver in question.

The ruling sets a troubling precedent, Penske says

Penske Logistics and PTM, in their en banc petition for rehearing, noted that their original contractual arrangement was with PTM, which then brokered the shipment to Liberty Lane.

The companies also referred to earlier findings by the district court. Specifically, they referred to the lower court’s statement that it had not found any cases that imposed statutory-employer liability without an arrangement between the motor carrier and the owner or driver of the vehicle.

Penske claimed that the appellate court created a new interpretation of trucking law by holding it vicariously liable as the statutory employer of a truck owner-operator that it did not control and with which it had no arrangement, communication or knowledge of existence.

For Penske, this interpretation extends the reach of statutory-employer liability beyond the immediate relationships typically envisioned by the underlying legal framework. The companies are therefore seeking a wider judicial review of the decision, stating that the ruling needs to be re-assessed considering its potential ramifications for freight transportation arrangements.

Plaintiffs say liability still exists in indirect arrangements

The Plaintiffs for the estate-related claims disagree with Penske’s interpretation, and argue the Fifth Circuit applied the law correctly.

They are opposing the petition for rehearing, saying that Penske Logistics did have a relationship with the truck operator, but it was indirect, through its subsidiary brokerage and another motor carrier.

The plaintiffs contend that the legal analysis is the same whether the arrangement is direct or indirect. They contend that neither the statutory language nor the applicable regulatory scheme requires the relationship to be direct in order for liability to attach.

49 U.S.C. § 14102 and 49 C.F.R. §§ 376.11 through 376.12 and 376.22. Provisions of this sort are to be found in the legal framework for motor carriers who use vehicles not their own for carrying property in arrangements with others. The plaintiffs cite these rules in support of the proposition that a motor carrier may be vicariously liable, sometimes called statutory-employer liability, for the negligence of a driver.

The plaintiffs also argue that Penske could and should have complied with the applicable statutory and regulatory requirements by securing a compliant lease for the truck and by exercising the requisite control and supervision over the vehicle and its driver.

They say Penske’s lack of knowledge of what the driver was doing doesn’t get the team owner off the hook. Instead, the brief argues, if Penske didn’t know what a driver was doing on its behalf, it was because the company “did not fulfilll its statutory and regulatory obligations.”

The plaintiffs argued that the Fifth Circuit’s decision was consistent with the language of the law and the regulations. They say these rules were designed to specifically stop the kind of abuse they think Penske’s position would allow to continue.

On that basis, the estate representatives argue that the case does not warrant en banc rehearing.

Statutory employment remains central to the case

The plaintiffs returned to the same principle elsewhere in their filing, emphasising that the right of control established by federal statutes and regulations creates a statutory-employment relationship.

Under their interpretation, this relationship makes a motor carrier vicariously liable for a driver’s negligence even when the driver operates as an independent contractor.

That position directly challenges Penske’s contention that the absence of a direct contractual relationship, communication or actual control should prevent liability. The dispute therefore extends beyond the circumstances of Meyer’s death to a broader question about the legal obligations of carriers participating in complex freight arrangements.

For brokers, carriers and logistics providers, the outcome could affect how contractual relationships are structured and how responsibility is assessed when transportation is subcontracted through several parties.

Penske backed by trucking industry organizations

Penske’s effort has also found backing from organizations representing the trucking industry and companies defending against industry claims.

The Truckload Carriers Association and the American Trucking Associations filed an amicus curiae brief in support of the petition. The Trucking Industry Defense Association filed a brief of its own.

The Trucking Industry Defense Association said in its submission that it was an international organization with more than 1,900 members. The membership includes motor carriers, transportation logistics companies, insurers of motor carriers, third party claims administrators and legal counsel.

The submissions expand the fight to the industry-wide level, with trucking groups worried about the potential consequences of the Fifth Circuit’s decision.

Now the Fifth Circuit must decide whether the case merits an en banc rehearing, with plaintiffs opposing further review and industry groups siding with Penske. The question is whether Penske Logistics can be held liable for the negligence of a driver with whom it had an indirect transportation relationship, despite its contention that it neither controlled nor knew the driver who caused the fatal crash.