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Property Brokers Beware

by | Jan 12, 2024 | Supply Chain Distribution Law |

In logistics and transportation of goods by motor carriers, a licensed Broker can act as a middleman by arranging the transport on behalf of shippers pursuant to an agreement between it and the carrier. That agreement must be carefully drafted according to a recent Illinois Appellate Court decision in Cornejo v. Dakota Lines, Inc. 2023 Il App (l~t) 220633.

In the Dakota Lines case, case, Dakota, a motor carrier had entered into an agreement with a broker, Alliance Shippers. Dakota’s driver had a devastating accident and the jury awarded a judgment in the amount of $18,150.50 plus prejudgment interest in the amount of $486,161.20. Alliance appealed the judgment.

The Appellate Court held that Alliance was not vicariously liable for the driver’s negligence because neither the driver nor Dakota acted as agent for Alliance Shippers. The Court found the following were of great importance in reaching its decision:

  1. Alliance did not pay Dakota’s drivers and withhold taxes from drivers’ pay;
  2. Dakota hired, trained and fired its drivers and paid them and withheld taxes from their pay.
  3. Alliance did not dispatch or speak to drivers or control their routes.
  4. Alliance did not hire, train, or fire drivers.
  5. Nor did Alliance furnish the drivers with tools, tractors, trailers equipment, nor did used by the drivers.
  6. Alliance and Dakota adhered to the terms of their agreement, which provided that Dakota had full control over its personnel and would perform services under the agreement as an “independent contractor”.
  7. The Court found that Alliance and Dakota did not have an exclusive working relationship. Alliance was free to engage the services of other motor carriers and Dakota was likewise free to transport cargo for other brokers, and Dakota was not Alliance’s primary carrier. While this is not an exhaustive examination of the Court’s reasoning, it behooves Brokers to be very careful of what they agree to with carriers in order to help avoid a Court ruling that the carrier and driver are acting as agents of the broker.

Published for clients and friends as a source of information and current developments in the law. The material contained herein is not to be construed as legal advice or opinion. More information may be obtained by contacting Mr. Weiss at 847-979-9970. © 2024 Steven C. Weiss. All rights reserved.