Transportation Law with Matt Leffler Part 2 | Episode 293

Speaker 1: 0:19

All right, ben, you got any other questions Otherwise?

Speaker 2: 0:23

I know.

Speaker 1: 0:27

We got to move into this stuff that we talked about off air beforehand, so let's go to transparency. I don't care how long this episode goes, let's go to transparency.

Speaker 2: 0:37

This is a really interesting one and Stephen's done a great job breaking this stuff down the history of transparency, why we have this regulation. I'll say that the two things that are really important to note right now. This is the most important rule that brokers should be aware of. If it gets finalized as it's been produced by the FMCSA, what it would mean is it would mean that a motor carrier can request records of a broker transaction and the broker would have to provide them within two days in an electronic format. That is very different than what it is today. Now there's a couple of caveats. One of them is we still have waivers of this rule 371.3. If you're a broker and you do not have a waiver in your contract, call the lawyer and say tell me what language I should have to make sure I can waive these things.

Speaker 2: 1:26

But we've had two comment periods now. So we had one comment period on the rule and then another one. So the question has been very aptly raised Will we see new broker transparency regulations? And my inclination is that we will not. I think the FMCSA does not have the legal authority or the mandate to Ben's point earlier. They're a safety organization. How much money a broker makes on a load has nothing to do with safety. It is outside their congressional authority and they ought not to do it.

Speaker 3: 1:55

We also I have a question about that, matt, right there before you go past that but Nate has been working with them through the TIA form and things where, like now, they have the ability to enforce fines on household goods, which is likely the step into being able to enforce.

Speaker 1: 2:11

Now, that's just the name of the act, the Household Goods Consumer Protection Act, which allows it, gives enforcement of civil penalties to the FMCSA.

Speaker 3: 2:21

So they have the ability to enforce civil penalties. Does that change what you just said? No, it doesn't. Civil penalties to the FMCSA. So if they have the ability to enforce civil penalties, does that change what you just said?

Speaker 2: 2:25

No, it doesn't. So the first thing to think about so when you violate an FMCSA thing, the Department of Justice is the one who goes after you, it's not the FMCSA. They don't have the authority. So this authority is actually good, specifically on fraud and theft and that kind of thing. That is, we want the FMCSA to have teeth. We want them to be able to bite and change things.

Speaker 2: 2:46

The argument about broker transparency is that one. I think the waivers will always be in place. I don't think we're going to have the Congress act and say, oh no, we don't want waivers anymore. That's, that's very unlikely. And number two, I don't think they have the authority, if you. I mean this is really administrative law stuff, but there was a case called Chevron. It's 40 years old. It got overturned last year in a case called Loperbright. But what that case stands for, the proposition of, is, if the act that Congress passes does not explicitly give the agency this power, they don't have the power. And the FMCSA, their enabling statute, has nothing to do with how much money shippers pay brokers. So ultimately, I think that this will end up dying.

Speaker 2: 3:32

Now, on a separate line of litigation like this, actual litigation, we have Pink Cheetah suing TQL, your alma mater mater, and that is stuck now in in a dc court. Um, all the motions have been filed any day now and I haven't checked today, but any day now the judge will make an order, um, either telling pink cheetah to try it again or telling tql to answer this. And the whole core of this issue is are the waivers in the broker and carrier agreements enforceable? And I think that they will be. I think TQL will win this. I think Pink Cheetah will be stomped out of existence, but I could be wrong.

Speaker 3: 4:12

I'm very rarely wrong. Four or five other points that TQL's counsel put forward to basically shut that down. Wasn't Pink Cheetah also already out of business, which made it have less standing? To make this claim in the first place is one of them you make me so happy.

Speaker 2: 4:27

So, like this is, this is my favorite kind of thing to talk about. So there are defenses that tql put forward that are specific to pink cheetah very, this is about you, you as the plaintiff and then they have defenses that are more like if anyone else brought this, we, we would say these things. So to Pink Cheetah's point they're not an interstate motor carrier, they're intrastate in Florida. They don't have any offices, as far as I know, in DC. That was the wrong place to go. But regardless, the contract between Pink Cheetah and TQL says the only place you get to sue is Ohio. You have to come over here, cuyahoga County.

Speaker 2: 5:04

So they had a whole bunch of these direct attacks against Pink Cheetah and they had the other one saying the thing that the FMCSA put forward. It's not an order, it's an opinion letter. It means nothing. So I think that TQL will win this thing and what I worry about is that other motor carriers will be emboldened by this type of litigation and start this against a whole bunch of brokers. So we really do want the FMCSA to be very clear that this transparency thing is not going to continue and that this waiver is enforceable. That's what I want to see, but we haven't seen that yet.

Speaker 4: 5:39

So one thing I just want to bring it back to is the 48-hour producing the records within 48 hours, right, but we know that traditionally the transactions when the law was written was one and now it's two. So if they're requesting transactions within 48 hours but half that transaction is not done for 30, 60, 90 days, how do you produce those records? How can you force those records? And I don't think I've actually heard anyone elaborate on that facet of the 48-hour request, regardless if it's electronic or not.

Speaker 4: 6:14

It just might not be there for us to produce.

Speaker 2: 6:16

I think it goes back to people just not understanding how this stuff works, because, to your point, after the thing is delivered, there's still stuff going. Was there detention? Was there other things? We have to factor into this, this particular load, and I think it was this simple thing where the noaa was like we want it in two days and we want it to be immediate. They want it to be mandatory initially. Oh, I know their position was not a request being filed at all. You just have to produce it the minute. And there are companies that have access to this information, like that could be one. Uh, there's other places you could get this. So it's yeah, it's so cool, it's so interesting. I remember.

Speaker 1: 6:52

So that's one of the big talking points that we've lobbied on Capitol Hill with TIA about the last couple of years. I remember sitting down in Tim Burchett's office he's one of the representatives from Tennessee and we were explaining like that, not the oh, they can do this, but the mandate idea, and he was just like what he's like? What kind of free market, capitalistic society do we live in that it's gone to where you just have to open your books to anyone you do business with?

Speaker 1: 7:21

Absolutely open your books to anyone you do business with. Absolutely so it is. It is wildly absurd, in my opinion. Um that that was, that was the original ask is like oh, not only can we ask for it, but you just have to tell us what your customer paid you it's like going to amazon saying how much did you buy that towel rack for?

Speaker 3: 7:38

I mean I want that towel rack. I want the markup. How?

Speaker 2: 7:41

much did you? What was your cost for it now? Now I worked at Best Buy. I sold televisions. I knew my cost, but I wouldn't tell that to the customer. I would say I can work within this frame. But you're exactly right. There's no other industry like this. It is an anachronistic thing from the days before deregulation, when brokers were a very small part of the industry. It's very different today, but I hope for my. My belief is TIA is getting better at communicating about these things with people in power.

Speaker 3: 8:12

And that should hopefully drive us in the right direction. Well, how funny is that? I never even thought of that until Steven pointed that out. But it's like most carriers don't get you their invoice on a load for a few days, maybe a week later. In fact, it delays some of our invoicing to our customers because we're waiting to get the carrier's invoice to send it to the factoring company and it's like, oh great, you're going to make us send this to you in 24 to 48 hours. That means you, as a trucking company, got to invoice me within the first 24 hours with all detention, every access serial, and imagine the administrative burden on all the small carriers to have to do their paperwork every single day, get all those invoices out to even comply with the thing they're asking for, which is the other half of the transaction.

Speaker 2: 8:46

I think so from my. My belief is that the final rule will will not be made. They are not going to produce a final rule or they'll just say we're going to keep it as it is. I do not think we're going to see anything like what the proposed regulation is. That proposal was underneath the prior administration and this administration is a little bit more hostile to these types of regulations. We're not going back to a regulated industry. It's not going to happen. So I'm with you. I think it's unrealistic to think that two days is even feasible. But I think they were giving a little carrot to the folks who were complaining about brokers making 40% margin on everything they touched.

Speaker 1: 10:15

What else we got in the legal space here is that your dog in the background you get she's, she's, yeah, she's whining because the kids are having something to eat and she's like this is the best dog loves to hang out in my office and we've had plenty of episodes ben can attest when, like I don't know if it's the amazon guy that shows up, but my dog, that 20 some pound mini golden doodle, becomes like a savage attack dog as soon as someone comes near our property the thing I would say the dog is very helpful.

Speaker 2: 10:43

She's, she's a good mascot for what we do over here. I'd say the one thing I'd like to touch on I know we're getting, I know this is a little bit of a good conversation, but the Werner Enterprises case, I mean, this case is really, really important. Have you guys been following this case?

Speaker 1: 10:59

I can't speak to it. I mean, I take it away, give it, paint the picture for us.

Speaker 2: 11:05

This is the story of the Werner Enterprises case that is currently on appeal before the Texas Supreme Court. The story is like this it's snowing, a driver is operating a commercial vehicle by werner enterprises. He's his company driver. He's been driving for about seven days. New driver, his trainer, is asleep in the back in the berth. Because in our industry for full truckload motor carriers, when you have a driver, a trainee and a trainer, they behave as if they were a team and they are a team. They're running different elds and all this on different log books.

Speaker 2: 11:38

The driver is going 10 miles or so under the posted speed limit. Again, it is snowing, the truck driver never loses control. The werner truck stays in its lane and there is no issue. However, another vehicle traveling too fast for conditions in the opposite lane, opposite side of the road, is going too fast and we know they're going too fast because they lose control. They spin out and they cross 40 feet of median and within a second or two of losing control, they collide head-on with the truck operated by werner enterprises. One child is dead, one child becomes paralyzed, no one has severe brain injuries. And the question who's at fault, who's responsible for this? And it goes to trial and at trial it is found that the driver for Werner was 14% responsible, 14%.

Speaker 1: 12:28

For being there.

Speaker 2: 12:30

Well, yeah, for driving that truck and the driver for the passenger vehicle. You know the one.

Speaker 1: 12:36

That's done. That case is over with.

Speaker 2: 12:37

That's what they oh we're going to get much more in depth on what happened. The driver for the passenger vehicle is also at fault 16%, 16 for the driver, 14 for Werner's driver. But I'm no Jason Miller, I'm no Ken Adamo, I'm not a math guy driver. But I'm no Jason Miller, I'm no Ken Adamo, I'm not a math guy. We're missing 70%, though 70% is Werner Enterprises. Werner's hit for a liability of $100 million.

Speaker 3: 13:04

Matt who determines those percentages? Is that the jury or the judge?

Speaker 2: 13:08

That is the jury. The jury has asked this question and they come back with the determination.

Speaker 3: 13:13

Do they provide an explanation with the percentage or they just give the number?

Speaker 2: 13:15

You get an understanding from this case that Werner had internal policies around driving in adverse weather and this particular driver didn't get a lot of training on adverse weather. And just again, for everyone who's watching this, there's no FMCSA requirement that you're trained to drive at night or train and driving in snow or driving in mountains Like. That's not the requirement, it's not the standard. But what they basically made the argument for was werner should have shut their truck down or they should have had that driver going 20 miles an hour. But ultimately werner appeals to the texas appellate court and they say look, our guy was going safe, he was going at below the posted speed limit, never lost control, we didn't incur into another lane and you and me cannot anticipate someone incurring into our lane from the opposite side of the highway. That's absurd.

Speaker 2: 14:05

And the appellate court said that's a good argument. We disagree. And now that verdict was upheld, and because it was upheld, you had the compounding of interest, now that $100 million is $130 million and it gets appealed to the Texas Supreme Court. So in December 3rd or December 4th of 2024, they argued this case at the Texas Supreme Court. Any day, any day, we will know the outcome of this litigation, but it will have unique and profound impacts to motorcars and brokers, because this liability is going to be astronomical.

Speaker 3: 14:46

You know, what's interesting is? It's a little bit of a tangent, but it ties back to what we talked about earlier. I always find it fascinating when you look at the history of why companies do things. It's usually monetary right. It's usually related to capitalism. It's usually about avoiding something right.

Speaker 2: 15:02

Avoiding liability. That's the story of the American.

Speaker 3: 15:04

We talked earlier about the fact that the FMCSA isn't vetting drivers well enough, right, and we talked about the fact that, like they're maybe not necessarily enforcing things, that should be done for driver standards and safety standards. We know they're not inspecting enough on a maintenance point of view, right, but it would be an interesting unintended consequence if I think it's unfortunate that they end up, if it does go that way, bearing the brunt of this 130 and who knows what that is now with interest right 150 million, whatever that is.

Speaker 3: 15:35

But, like I could see lots of trucking companies all of a sudden knowing if they could be responsible for somebody crossing a median and oncoming traffic and hitting their truck, of all of a sudden going, hey, we need to be more stringent on who we hire, we need to be more stringent on who we're training and we need to be more stringent on driving speed limits, which are all things that were thrown out from an enforcement or regulation standpoint. It would be an interesting unintended consequence if trucking companies just started doing this to avoid these catastrophic liabilities.

Speaker 2: 16:06

I think you're right. I think the motor carriers if this verdict in Texas is upheld which is very strange, but if it's upheld it will make motor carriers far more skeptical about putting people in bad weather conditions. But this idea of broker liability is still somewhat new. But this idea that can a broker be held responsible for the alleged carelessness of a motor carrier, so forget. It's Warner, Say it's an owner operator who's driving that truck and they're pulling for a CH Robinson. What would happen? Same exact thing. You would sue Robinson and say you should have known, you shouldn't have had him out there in this weather. And the circuits, the federal circuits, are split about when brokers can be held responsible.

Speaker 3: 16:49

Isn't it more not responsible than I thought there was like one case where brokers were held liable and like at least three or four where they weren't. Is it an even number or?

Speaker 2: 16:59

This is, listen, what I get so excited about. So there's the Ninth Circuit Court of Appeals, that is the California and Oregon and Washington, and they have been of the opinion and their case law says that brokers can be held liable for the negligence of a motor care. That is the Miller v C H Robinson. Then you have the Seventh Circuit Court of Appeals and the Seventh Circuit had the case of Global Trans V E. Same set of facts broker hired a motor care, motor care commits a careless act, and both of them get tagged. Seventh Circuit says no, the broker can't be held responsible. And they had several cases that have reaffirmed that same decision. And then on the 11th Circuit, that's Florida, they also said brokers can't be held responsible.

Speaker 2: 17:43

But here's the issue the Supreme Court has not weighed in and every opportunity they have had to weigh in, they've chosen not to, has not weighed in and every opportunity they have had to weigh in, they've chosen not to. Now remember when I talked about insurance, the duty to defend and the duty to indemnify If you're not going to be liable, you still need the duty to defend. You still need a lawyer to fight for you, because that litigation is $20,000, $30,000, $40,000 a month. So if you're a broker and even if you're moving freight and it's in Illinois and you're not going to be held responsible, the plaintiff is still suing you, they're still coming after you and you're still going to have to deal with that litigation. So I wish the Supreme Court and this is discretionary they do whatever they want to do. This is a case that our industry desperately needs because, at the end of the day, if you're a broker and your motor carrier has some terrible thing, you are going to be sued. Maybe you win, but you are going to be sued.

Speaker 3: 18:39

So I have two questions. The first question is what insurance should brokers make sure they have that covers them for that defense? Is that contingent cargo? Is that general liability is? Is that errors and omissions? What kind of insurance should brokers be talking to their agent about of making sure they have this coverage to defend?

Speaker 2: 18:57

What I recommend to my clients when we talk about these things is you print off an article about this case. You send it to your insurance provider and say tell me what I should be doing differently, because I know the margins are not strong enough in this business to support buying an umbrella policy for $10 million that covers anything that goes beyond your general liability or cargo or whatever, or your contingent auto. So I would say that that answer is going to be it depends on the state and the jurisdiction and your own appetite for risk. You can absolutely over-insure yourself and that is probably not an outcome that you want to have because, again, in law, in litigation, I ask the. If I'm a plaintiff attorney, I find out the same day that acts and how much insurance you have, and that's exactly what I'm asking for every single time. So there's this really careful balancing act.

Speaker 2: 19:49

I would also want more brokers to be aware of things like the Motor Carrier Insurance Education Foundation. These are organizations that help you understand the trends and forces in this business. Ultimately, it is your own appetite for risk. These cases do not happen very often, but it may be the case that it does. You go bankrupt, make another brokerage, so, like there's, there's different ways to evaluate how you want to handle that risk, and I don't want to give anyone advice like, oh, this is the policy you should have.

Speaker 2: 20:15

Yeah really you should have that conversation and know what your options are and then make the decision that's best for your business.

Speaker 3: 20:21

Here's the very last question I have on that and I'm very curious Is it like there's different circuit courts and the circuits are based on where they're at in the united states, as you kind of outlined, but don't they all operate out of the same case law? Like how do you have two fellow, two federal appellate courts and different circuits operating out of different case law?

Speaker 2: 20:41

yes, yes, oh, I love this, okay. So this is getting into my my law professor kind of stuff. So what you have in the way of circuits that are split seven versus ninth or whatever is they have their rules. Their interpretation is binding on everyone underneath them. So if you're 7th Circuit, any state in the 7th Circuit that is binding on those lower courts, but you are only persuasive in the other ones. The judges in the 9th Circuit will go that's cute, that's fun, that's interesting.

Speaker 2: 22:29

We don't see it that way. So they take the exact same words of the exact same statute and get opposite outcomes. And what we hope is that the Supreme Court comes in and says okay, I see how you guys have made this mistake, but let me tell you what it actually means. So whatever the Supreme Court says is binding on all the federal courts For the Seventh Circuit. It just binds the Seventh Circuit and then all of the lower courts within the Seventh Circuit, like the district courts. So that's how that kind of works, and the only way you get clarity is either an act of Congress, which may or may not happen, or you have the Supreme Court weigh in and say no. When we say price route and service. We mean price, route and service. We don't mean this safety thing that keeps getting tagged with catastrophic accidents.

Speaker 3: 23:16

So, to boil this down, if you move a lot of freight in Oregon and California, you are more vulnerable to a catastrophic verdict than if you operate and move freight in states that aren't in that circuit.

Speaker 2: 23:23

Probably. But remember, even in states where you don't have that potential liability, you're still going to be sued for it. Like they're not just going to be like. Oh yeah, the Seventh Circuit decided that they would say let the other side litigate against us and knock this claim out.

Speaker 1: 23:35

But we're going to keep going. That's the whole. Like, anybody can sue anybody at any time for anything guys followed the Wabash case.

Speaker 2: 23:48

Can I talk about that one for a moment? Okay, Gosh, I'm so excited for this. This case like Ben, if you got frustrated with the Werner case, like this case is going to make you go like I don't like it. So here's the story A trailer made by Wabash was involved in an accident. Now the trailer itself was made in 2004. Now, in 2004, there was a requirement by NHTSA for these rear impact guards. We call them ICC bumpers.

Speaker 1: 24:11

Oh, I know this one.

Speaker 2: 24:12

Yeah, you know this case. So what the rear impact guard is designed to do is prevent a thing called an underride. An underride is a disinfected way of saying decapitation, and so the rule at 2004 was that the rear impact guard had to prevent an underride at 30 miles an hour. So if you're going 30 miles an hour, hit the back of a trailer, you don't get decapitated. Everyone wins. But they changed that. It became now today it's 35 miles an hour. But here's the story In 2000, I think, 19 again, or 2018, something like that.

Speaker 2: 24:44

This trailer is operated, known by GDS Express. They are stopped and another vehicle is going way too fast. They're going 55 miles an hour. They smash into the back of the parked trailer. Both the driver and the passenger die instantly with an underride and there's a lawsuit. I'm going to tell you that the jury did not get to know and I'll explain why the jury didn't get to know them. But the first fact is that the driver for the passenger vehicle was drunk. His blood alcohol content was above the legal limit. That was withheld from the jury. And the other piece that's interesting is the driver and the passenger did not have seatbelts on Again, withheld from the jury.

Speaker 2: 25:25

It goes to trial and the question is who's at fault for these two men dying? And the verdict came back because GDS Express went bankrupt. They're dead and gone. Only one left is Wabash $462 million it is the largest verdict against a trailer manufacturer in US history. Nothing else even comes close, and the argument that was advanced was that the rear impact guard was anticipated to prevent underrides and Wabash should have known, or knew that that was not going to prevent an underride at 55 miles an hour, which is not the requirement. The requirement at the time of manufacture was 30 miles an hour. But they get this number in the most fascinating way. First, each person in that passenger vehicle gets compensatory damages. This is the damages that pay you back for your life, and that number is $6 million for both people.

Speaker 2: 26:23

So $12 million, that is the number for compensating you for the death of these people so there's 450 additional punitive yes, they get this number by saying wabash knew for 30 years that this rear impact guard was not strong enough and in fact they chose not to use a more robust rear impact guard and because they did that, they saved $15 million a year in trailer manufacturing costs. $15 million times 30 gets you $450 million. And there you have it. If that number, if this rear impact guard at 55 miles an hour, that became the law in this country, there are five million trailers and almost none of them could sustain that impact.

Speaker 1: 27:11

Almost none of them I was gonna say I can't imagine a um, a guard that would be able to prevent at that speed right?

Speaker 4: 27:21

no, not to mention um.

Speaker 1: 27:22

You're not wearing a seatbelt.

Speaker 2: 27:24

I'm just curious why?

Speaker 1: 27:26

why would that evidence not, or those facts not be allowed to be submitted? So?

Speaker 2: 27:31

it's the difference of theory. So in the Werner case we talked about before, it was negligence, and negligence is a duty, a breach of the duty, causation and damages. If you're partially negligent yourself, you can use that to attack the negligence you are also careless In product liability. It is strict liability. The question is, what is the anticipated use of that thing? And if that is the anticipated use and the thing that happened is someone foreseeably smashed it at some rate, we don't need to ask the question what was the driver doing? It was did they do the thing that you thought would happen, which is why we have the rigs? It was a very, very creative plaintiff attorney. It is on appeal. The number has been subsequently reduced, but it is um something that has gotten everybody in this business, like asset-based people, freaking out because it is yeah catastrophic, catastrophic all right, what else we got here?

Speaker 1: 28:26

we're uh, we might be setting a record for our longest episode ever, but I have one more case to be worth talking about very briefly, if you guys are open let's hear it it's the daimler case.

Speaker 2: 28:36

This is another one from last year, still kind of, but it's very similar, eerily similar to the werner case. Driver is operating his truck and another vehicle has an incursion opposite lane. But instead of colliding, the driver for this truck turns and and he rolls over. And as he rolls over he bounces up and the cab of his truck hits his head and paralyzes him from the neck down. He's a quadriplegic. They sue the company that crossed into his lane rightfully so, and they settled that. But they also sued Daimler and the theory with the lawsuit against Daimler was like the Wabash its anticipated use.

Speaker 2: 29:16

Lawsuit against Daimler was like the Wabash its anticipated use. Daimler offered a special seat and that seat is designed, when you roll over, to pull you down so that you don't break your neck on the cab. It went to trial and Daimler was found to be liable to the tune of $160 million. This optional seat would have been about a thousand bucks and the argument was made that it should not have been optional, it should have been mandatory. Again, if you are Daimler, do you recall every truck and upgrade the seat? Do you litigate this? Do you tell customers going forward? I'm sorry, you can't have the normal seat, because this is this big case we have. This industry is under attack, it's been under attack for a very long time and these cases all are little pieces of the broader mosaic of what is happening in this industry and the kind of liability people are facing. It's bananas.

Speaker 1: 30:13

I mean realistically, how much of this is like a law firm seeing an opportunity to make a shit ton of money.

Speaker 3: 30:19

Capitalism.

Speaker 2: 30:21

Remember what we talked about in the very beginning of this conversation we have not enough regulators enforcing the existing regulations on the roads. Today, we know this. We know this stuff is not maintained. Plaintiff attorneys are starting to understand this business and the more they learn, the more they can figure out ways to grab-. There are loopholes everywhere. Yeah, absolutely. This is not new. This is why deregulation happened to begin with, like as Stephen did in his article about broker transparency. The old days, it was a shipper working with the motor carrier and that was it. There was no intermediaries. Everyone had this complete understanding of what they were doing, and in order to reduce cost and reduce liability, you had to break the industry apart, fragment it. And now the problems that we see are just the side effects of the design. It's fascinating, but yes, it's crazy, man. It's fun to dig into.

Speaker 4: 31:15

So one of the things I kind of wanted you to touch on with the wall bash, because I was hoping that would come up and we discussed a little bit at the broker carrier summit. But it's what liabilities do brokerages open up themselves to when they are renting out trailers or lease trailers or having trailer pulls? And we discussed that a little bit. I'll let you take it, but I thought that was also very fascinating.

Speaker 2: 31:40

So brokers have learned that the way to get contract freight is to have drop trailers. Like that is just part of the business, like I need 20 drop trailers at Ikea and then I get the business Okay. So in order to get that across the finish line, they've made these ideas of power. Only you might. You have Freightvana, you have Uber Freight, but Robinson and TQL also run drop trailer pools. The liability they open themselves up to is astonishing, and it is going to be something that they're going to have to reconcile with.

Speaker 2: 32:08

One of the things that happened to Convoy, right before they wound down, was being involved in a wrongful death action by a trailer that they had leased from, I think, premier Trailer Leasing, and so as you try to broaden your offering, you are also increasing your liability the piece. I'll say that I think this is the part that scares the big, big, big private fleets this idea of the anticipated use being the smashing of the rear impact guard. Once it becomes clear that the motor carrier has a duty to change it or modify it, and they don't, their liability directly increases. So Wabash is liable because they made something that had anticipated use of being smashed, but when the motor carriers start to realize that maybe they should be changing these things out. That starts to change the pendulum. And one of the issues we talked about was this idea of like side impact guards. So you guys all see the skirt on the side of trailers. Those things are designed for aerodynamics. California Air Resource Board made that a law and then everyone followed suit. But rear side impact guards are not mandated by our government yet and they've been talked about for decades.

Speaker 2: 33:17

If you get a side underride situation and you sue the manufacturer, that can be the new catalyst. It says manufacturer, you knew what people did and even though government didn't intervene earlier, you should have directly done it yourself and therefore you're at fault. So as people think about trailers and I I love trailers like I obsess about 53 foot vans with swing doors or 28 foot pup with roll-ups. It gave me a flatbed. It could be a reefer. I love trailers. The liability is astonishing and it's amazing, and that's why maintenance is so important. You can't defer it, you have to take care of your equipment. If you can't take care of it, you shouldn't have it.

Speaker 1: 34:00

I fundamentally believe you can't follow best practices. Get out of the business, we don't need you. Yep, agreed, that's a whole nother conversation that Ben and I have had about. You know carrier vetting, but awesome. Do we have any other legal topics that you want to hit on before we wrap today?

Speaker 2: 34:13

I think that the one thing I'd like to just kind of wrap up with is I fundamentally believe we are entering a new era in transportation. When I taught my class this spring the stuff that I want them to understand and this is something that everyone in supply chain can understand the biggest innovation outside of the internal combustion engine was the use of containers containerization and in the 50s and 60s we saw this become interesting. But we saw the longshoremen fight this viciously. They went on strike for 140 days when they had to use the containers. We supported the entire port, the port of Oakland, through containerization to facilitate the conflict with Vietnam.

Speaker 2: 34:51

Technology is a trend and a force. You can't stop it. Containers drove the cost of transportation down manifestly in ways we still are amazed by. The next big change in our industry was deregulation. In 1980 and the 1990s we saw these massive unionized motorcars where people had worked and could retire and buy houses and put kids through school. We saw them slowly get dismantled. We are entering the new age, and the new age is the age of automation. Yes, it's happy robot. Yes, it's it's, you know, different technologies and artificial intelligence, but really it's about autonomous trucks. We are about to watch Kodiak do a special purpose acquisition company to go public in the matter of months or weeks. You see other companies like Aurora, moving stuff without human beings.

Speaker 2: 35:35

The FMCSA has made a SANPRIM a Supplemental Advanced Notice of Proposed Rulemaking it's a great legal term around level four automation remote operator. Level five automation, which is remote assistant. This is happening. It won't be a question of if. It's a question of when and when it happens, it will fundamentally change this industry and so when the FMCSA eventually does propose rules, I urge every one of your audience to look at those proposals and comment. This is your democracy, this is your supply chain. If you have concerns, this is how you voice them. I don't want people to sit back and go ah, I didn't know this was going to happen. I that's. That's not an excuse. We know what's happening, we know where this goes and we need to be prepared, because that is the eventuality and that's the thing I get really excited about. And just for the last piece, I will betray the humans. I am on the side of the robots, I am not on humanity's side. I know who wins this game. I know who wins this.

Speaker 1: 36:35

Here's the question I have. You know, what's wild to think about is, like you know, in the future I won't even take a guess at when it is you'll see a lawsuit of. You know, the self-driving vehicle is at fault when somebody crosses over 40 feet and hits them head on right. It should have been created to sense that and stop. You know, I can just picture that now.

Speaker 3: 37:03

It'll be a probability case.

Speaker 1: 37:06

It's the Aurora driver, right, or whatever you call your AI.

Speaker 2: 37:09

Whoever programmed to make that decision because that's the thing that's so fascinating is this is not about reaction time. They are programmed to do a specific decision under a certain set of factors, and so my belief is, if we have 80 percent of commercial vehicles are safe and 20 percent are not, I don't think you can have an autonomous vehicle. I think the autonomous vehicle is going to be 99.9 percent well-maintained at all times, because you can't have that ambiguity that we have on commercial vehicles today.

Speaker 3: 37:36

Yeah, I agree. I feel like there's going to be likely pushback, though I think all the drivers calling their congressmen, their senators, and going we don't want this, we're scared of this. I mean, I do see, I've been following it for years I mean this was supposed to happen in the late teens that they thought these were going to be out by like 2020. But like people are getting more comfortable with Waymo cars driving around in San Francisco and driverless taxis, I think we're getting more okay with it in society. But I think you're going to see a drastic pushback from truck drivers and trucking company owners that are going to lobby the shit out of trying to put up every roadblock they can to slow that down.

Speaker 2: 38:14

Okay, we're going to have to keep going. So to build off of that, I don't think you're wrong, but I do think that ultimately they're not going to be effective. Twice now in the state of California they have lobbied Governor Newsom to have a bill that would mandate a safety driver in autonomous vehicles and twice he's vetoed it. That's the most liberal state in this country and they are turning their back on the Teamsters and OIDA.

Speaker 2: 38:35

I think what we saw with the automation debate with the East Coast ports, the two things that the longshoremen fought about was wages and automation, and wages were solved in three days. We have dismantled the trucking unions and the LTLs are not going to be automated. They're not going to care as much. They're going to see automation of the rail yards with autonomous spotting trucks that won't require a lot of participation from outside folks. But the longshoremen fought on automation and they lost. Now the newer agreement kind of makes it seem like they've won, but automation is coming and if you tell the American consumer, things will be cheaper and potentially safer. I think it's going to be something we can't stop. I would love to see drivers unite to an extent and say we don't want these things, but the estimates I've heard and read, up to 20 to 30% of over the road freight could be moved by autonomous trucks. This is a manifestly different business and the day the FMCSA makes those rules, you can guarantee the big motor carriers are going to be early adopters in reducing driver turnover.

Speaker 1: 39:39

Oh yeah.

Speaker 2: 39:40

Hours of service. Oh, it's going to be so interesting.

Speaker 1: 39:42

Part of it too is like you have natural attrition in any career field, Right? So if you, if you know that I've got this many people probably going to retire or quit this year, I'm going to adopt early, like you said on. Said on autonomy.

Speaker 2: 39:57

you know autonomy in my fleet, so when I was at the manifest conference a couple years ago, there was a really high level person from dhl talking about their warehousing situation and they had like 150 000 workers and they'd have about 60 percent quit every year and they used the phrase I love, which was we need to reduce our dependency on on labor, like that's a funny way of saying we need to fire more people because that's what it means.

Speaker 4: 40:22

It's, it's amazing Language.

Speaker 2: 40:24

Language is beautiful, but yeah that that that in 10 to 15 years, this industry will look very different than it used to, and we are entering a new era. It will never be the same, but we have the chance now to participate and have our voices heard. But I don't know if it'll change anything.

Speaker 1: 40:42

Very good, all right, great episode. I'm going to probably split this up into two and send it out. Part one. Part two Maybe not, I'm not sure, but it's a good one. It's packed with a ton of stuff. Should make for some good content. Matt LaFffler, the armchair attorney Wonderful conversation. I learned a lot, ben. I assume you come out of this a little more educated as well.

Speaker 2: 41:07

For sure. Thank you, guys for letting me be a part of this. I really appreciate it.

Speaker 1: 41:11

Yeah, so if folks want to get a hold of you for any, you know, whatever reason, what's the best way for them to reach out?

Speaker 2: 41:17

Generally. You can find me on LinkedIn, just Matthew Leffler. You can find me at armchairattorneycom. I'm on Reddit. Armchair, I think, underscore attorney, it's something like that I have no idea.

Speaker 1: 41:27

We'll throw a couple of your contacts in the show notes.

Speaker 2: 41:30

So thank you for having me, guys. I really appreciate it.

Speaker 1: 41:32

Yeah, Awesome Ben. Final thoughts.

Speaker 3: 41:35

Whether you believe you can or.