Defending Freight Brokers From Negligent-Selection Claims Involving "Reincarnated" Carriers: What if the Motor Carrier Lived a "Satisfactory" or "Unrated" Past Life?

Defending Freight Brokers From Negligent-Selection Claims Involving “Reincarnated” Carriers: What if the Motor Carrier Lived a “Satisfactory” or “Unrated” Past Life?

Houston, Tex. (May 2025) - With the U.S. Supreme Court denying certiorari a third time in Gauthier v. Total Quality Logistics, LLC, No. 24-592, 2025 WL 76497 (U.S. Jan. 13, 2025), it appears unlikely the high court will weigh in (at least during the current term) on whether the Federal Aviation Administration Authorization Act (FAAAA) preempts negligent-hiring, negligent-selection, or negligent-brokering claims arising out of a freight broker’s selection of a motor carrier.

In numerous jurisdictions, state law requires proving a motor carrier is “irresponsible[,]” “incompetent[,]” or had “dangerous propensities” and the broker knew or should have known the carrier exhibited those deficiencies. See, e.g., Hall v. SSF, Inc., 112 Nev. 1384, 1389, 930 P.2d 94, 84 (Nev. 1996)(defendant liable for negligent hiring “when it hires [a contractor] even though [defendant] knew, or should have known, of that [contractor’s] dangerous propensities.”); see also Hemphill v. State Farm Ins. Co., 472 So.2d 320, 324 (La.App. 3 Cir. 6/26/85)(“[o]ne who hires an irresponsible independent contractor may be independently negligent.”); see also Wasson v. Stracener, 786 S.W.2d 414, 422 (Tex. App.—Texarkana 1990, writ denied)(even if one was negligent in manner of selecting an independent contractor, that would not create liability unless there was also evidence the contractor was incompetent).

At least some plaintiff attorneys have followed the strategies that Michael Jay Leizerman (partner at “The Law Firm for Truck Safety”) set forth in “Litigating Truck Accident Cases” and sought to sue brokers (as well as shippers) for negligently selecting a carrier who—the plaintiff attorneys claim—was a “chameleon” or “reincarnated” carrier. MICHAEL JAY LEIZERMAN, Litigating Truck Accident Cases § 11:10.

Mr. Leizerman defines a “chameleon carrier” as “a motor carrier that has closed down to end-run lousy safety ratings, BASIC scores, FMCSA fines, or license and operating-authority revocation and registered with a new name, clear safety record, and BASIC scores.” Id.

To a jury, the terms “chameleon” and “reincarnated” can often be misleading, confusing, and potentially inflammatory, particularly when combined with testimony from the plaintiff’s paid expert that carriers with the “characteristics” (or at least a certain number of “characteristics”) of a “chameleon” or “reincarnated” carrier are at a “higher risk” for collisions than motor carriers without such “characteristics.” Additionally, the term “chameleon” carrier seemingly fits into a plaintiff attorney’s attempt to employ “Reptile Theory” tactics to frighten the jury into a “nuclear verdict.” After all, a chameleon is a type of reptile.

The words “reincarnated” and “chameleon” seem to have different meanings. On the one hand, “reincarnated” would arguably suggest “substantial continuity” between a previous carrier and new carrier to the point where the new carrier is “merely a continuation of the other.” 49 CFR § 386.73(c). And, in at least some religious and belief systems, the idea of “reincarnation” is to become a better person—similar to what may have been an underlying theme of the movie “Groundhog Day.” https://becomingbetter.org/life-lessons-from-groundhog-day/ (last visited April 25, 2025).

On the other hand, the word “chameleon” would indicate “one that is subject to quick or frequent change especially in appearance.” https://www.merriam-webster.com/dictionary/chameleon (last visited April 25, 2025). The term “chameleon” seems inapplicable (at least based on Leizerman’s definition) in trucking cases involving a carrier that shuts down and then registers with a new name. A chameleon may change its appearance to blend in with surroundings, but it does not kill itself and then attempt to “reincarnate” itself as something better. The word “chameleon” does not exactly fit the type of motor carrier essential for the survival of negligent-selection claims, such as in Miller.

Selecting a motor carrier who, in a previous “incarnation” had an “Unsatisfactory” or even “Conditional” rating could—with the right soundbites—allow a negligent-selection claim to survive summary judgment. The FMCSA can issue four safety ratings: “Satisfactory,” “Conditional,” “Unsatisfactory,” and “Unrated.” See 49 CFR § 385.3. “Satisfactory” and “Unrated” are typically better than “Conditional” and “Unsatisfactory,” including when defending negligent-selection claims.

There are two key federal regulations that often apply when allegations the motor carrier was a “chameleon” or “reincarnated” carrier are afoot—49 CFR § 386.73 and 49 CFR § 385.1005.

Section 386.73 concerns the FMCSA’s ability to issue out-of-service orders and record-consolidation orders to motor carriers (as well as other types of entities) who operate or attempt to operate under a “new identity” to:

Avoid complying with an FMCSA order;
Avoid complying with a statutory or regulatory requirement;
Avoid paying a civil penalty;
Avoid responding to an enforcement order; or
Avoid being linked with a negative compliance history.

Under § 386.73, the FMCSA has the power to determine that a motor carrier is a “reincarnated” carrier upon consideration of numerous factors. 49 CFR § 386.73(c)(1)-(13). Some of these factors include: the previous motor carrier’s safety performance, including, among other things, safety violations and enforcement actions; whether the new motor carrier was created for the purpose of evading statutory or regulatory requirements, an FMCSA order, enforcement action, or negative compliance history; continuity of liability insurance policies or commonality of coverage under such policies; commonality of drivers and other employees; continuity or commonality of nature and scope of operations, including customers for whom transportation is provided.

Section 385.1005 prohibits two or more carriers from using “common ownership, common management, common control, or common familial relationship to enable any or all such motor carriers to avoid compliance, or mask or otherwise conceal non-compliance, or a history of non-compliance, with statutory or regulatory requirements[.]” Section 385.1007 allows the FMCSA to suspend or revoke the authority of one or more carriers the FMCSA determines to have “reincarnated” to “avoid regulatory compliance or mask or otherwise conceal regulatory noncompliance.”

Plaintiff attorneys have had some success in arguing the negligent hiring of “chameleon” carriers, such as in Miller v. Costco Wholesale Corp., Case No. 3:17-cv-00408-MMD-CLB, 2022 WL 526140, at *1 (D. Nev. Feb. 22, 2022). In Miller, the U.S. District of Nevada (Judge Miranda Du) denied the freight broker’s motion for summary judgment on the plaintiff’s remaining negligent-hiring claim. Notably, Judge Du had previously granted the freight broker’s motion for judgment on the pleadings, holding the Federal Aviation Administration Authorization Act (FAAAA) preempted the plaintiff’s negligent-hiring claims. As many may already be aware, a split panel on the U.S. Court of Appeals for the Ninth Circuit reversed Judge Du and held the “safety exception” to FAAAA—at 49 U.S.C. § 14501(c)(2)—rescued negligent-hiring claims from preemption. Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1031 (9th Cir. 2020).

In denying the broker’s motion for summary judgment on the negligent-hiring claim, Judge Du was “persuaded that a reasonable juror could find that several ‘red flags’ should have triggered [the broker] to further investigate RT.” 2022 WL 526140, at * 3. RT was the motor carrier involved in the Miller accident. The Miller plaintiff argued RT was the “chameleon carrier” of Rhea Trans, and the broker “ignored serious red flags that RT was a chameleon carrier and unfit for the job[.]” Id. at *2. The FMCSA had permanently revoked Rhea Trans’s operating authority “several times” and Rhea Trans never reinstated the registration. Id. at *3 and n. 8. Mr. Ronel Singh, the RT driver in the Miller accident, had owned Rhea Trans. Id. RT was registered under Mr. Kuwar Singh, who shared the same last name and was Ronel’s father. Id. at *4. Plus, RT and Rhea Trans had the same phone numbers and e-mail addresses in the broker’s database—the Miller broker had a previous contract with Rhea Trans. Id. Judge Du did not define a “chameleon carrier” and there was no evidence the FMCSA had determined RT was a “chameleon carrier.” Nevertheless, Judge Du held there was sufficient evidence to create an issue of fact to challenge the broker’s assertion that there was “no evidence” the broker knew RT was a “chameleon carrier.”

A common denominator in Miller, § 386.73, and § 385.1005 is the creation of a new motor carrier when the previous motor carrier was seeking to avoid regulatory compliance. But what happens when the new motor carrier was formed for a legitimate business reason, or the previous motor carrier had demonstrated adequate safety controls? Is it negligent to hire a “reincarnated” carrier whose alleged predecessor had a “Satisfactory” safety rating? Or was “Unrated” but with demonstrated reliability? In many jurisdictions, proof of a previous collision is not proof a motor carrier is incompetent. And just because there is a collision (even one involving serious injury), does not automatically mean an Out of Service Order or Imminent Hazard Order will follow. A “Satisfactory” or “Unrated” rating could mean there is no need for further “reincarnation” as the previous motor carrier had already reached “nirvana” but changed up operations for legitimate business reasons. Cf. N.L.R.B. v. New England Web, Inc., 309 F.2d 696 (1st Cir. 1962)(court held company shut down plant for legitimate business reason of “in financial distress” and not to avoid obligations under the National Labor Relations Act).

Claiming a motor carrier is the “reincarnation” of a previous motor carrier essentially claims the original motor carrier and “reincarnated” motor carrier are one and the same. This strategy seemingly contradicts the presumption in various jurisdictions that two separate corporate entities are indeed distinct entities. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex. 2002); see also Franklin Cap. Funding, LLC v. Austin Bus. Fin., LLC, 676 F.Supp.3d 515, 526 (E.D. Mich. 2023)(applying Michigan law)(“separate business structures are not ‘fictions’; instead, there is a presumption that the corporate form will be respected.”) There are certainly circumstances in which a new motor carrier may form in place of a previous one for legitimate business reasons, rather than to avoid regulatory obligations or an FMCSA order. See New England Web, supra.

Simply shutting down operations to reopen under a new name, without more, should not automatically earn the label of “reincarnated carrier” or “chameleon carrier.” If the new carrier was not doing any “end-run” of something significantly negative, such as hefty FMCSA fines, license revocation, or an “Unsatisfactory” rating, the plaintiff’s argument based on the “proverbial chameleon” should fade away like the actual chameleon apparently does after it dies. https://www.chameleonforums.com/threads/how-do-i-know-when-my-cham-is-dead.146095/ (last visited April 25, 2025).

Motions in limine, jury definitions, jury charges, and pre-trial motions should all be vehicles to achieve this goal. And, should a trial court allow for use of the terms (such as when a carrier shut down despite a “satisfactory” rating and then formed a new for purely economic reasons), then an appeal may be appropriate. Of course, this may change should the U.S. Supreme Court ever take up the issue of FAAAA preemption. Perhaps the fourth time’s a charm?