Broker Liability in Trucking Accidents After MAP-21

This federal statute was implemented on October 1, 2013.

The section of the statute most important for discussion here is 49 USC §14916. Whereas, prior to passage of this statute, entities using titles such as “transportation managers,” “third party providers,” “3PLs,” or “freight forwarders” may have been able to escape broker regulations, this is no longer the case.

Under MAP 21 if an entity is not a carrier and it gets any money for doing anything related to transportation of goods it is a broker. If it is a broker then it has to register, satisfy the financial security requirements, and otherwise comply with the statute. If it does not comply

with these requirements then the statute provides that it is subject to “Civil Penalties and a Private Cause of Action:

(c) Civil Penalties and Private Cause of Action.—Any person who knowingly authorizes, consents to, or permits directly or indirectly, either alone or in conjunction with any other person, a violation of subsection (a) is liable—

(1) To the United States Government for a civil penalty in an amount not to exceed $10,000 for each violation; and

(2) To the injured party for all valid claims incurred without regard to amount.

The statute goes on to state:

(d) Liable parties—The liability for civil penalties and for claims under this section for unauthorized brokering shall apply, jointly and severally—

(1) To any corporate entity or partnership involved; and

(2) To the individual officers, directors, and principals of such entities.

Suppose a shipper/freight forwarder/carrier having no operating authority as a broker, arranges to haul a load through a common carrier. The carrier then negligently causes the death of a third party. The shipper/freight forwarder/carrier in this example, and their “officers, directors, and principals” is exposed to the risk of paying $10,000 per violation

and claims to the injured third party “without regard to amount.”

The potential scenarios for similar exposure are unlimited. For example, assume that the entity originally brokering the load has proper operating authority, but the carrier chooses to re-broker the load. There is potential exposure unless the re-brokering carrier has proper operating authority as a broker.

The pitfalls for brokers created by this statute are broad. The best defense against these dangers is extensive vetting of carriers and business partners; monitoring carriers and business partners; and updating the vetting processes on a reasonably frequent basis.