Managing risk starts at driver hiring but should never stop as long as the driver is employed. Trucking carriers face increased risk of nuclear verdicts, but managing those risks is not insurmountable, if done right and from the start.
In February 2017, Kathryn Armijo was struck and killed following a head-on collision involving a tractor-trailer on Interstate 10 just outside Las Cruces, New Mexico.
A two-week jury trial in 2019 ended with a $40.5 million award against the mega-carrier, which trained the driver through its affiliated driver-training school. The driver had been on the job for just eight days when, the court documents detail, he crossed four lanes of traffic and a concrete median before striking Armijo’s car.
The Armijo family’s attorneys submitted evidence at trial that showed the carrier “through its own inadequate operations and training programs for its student drivers … had a systematic disregard for basic safety policies and training of new drivers.”
The jury decision is just one of hundreds of “nuclear verdicts” that have been piling up against trucking carriers in recent years. An American Transportation Research Institute (ATRI) study of verdicts over $1 million showed a marked increase in recent years.
The study, Understanding the Impact of Nuclear Verdicts on the Trucking Industry, is based partially on a trucking litigation database with information on 600 cases between 2006 and 2019. The first five years of the data showed 26 cases over $1 million but nearly 300 such cases over the last five years of the time period.
A 2019 white paper published by FreightWaves detailed the cost of nuclear verdicts.
“For an industry with profit margins that average just 5%, insurance as a cost line item (now averaging 3 to 4% of revenue) doubling every few years is an enormous problem and represents a systemic risk,” the paper stated. “With the end of 2019, estimates are that trucking bankruptcies nearly quadrupled compared to 2018. Even worse, this trend is growing ad infinitum, with nuclear verdicts continuing to grow in both prominence of occurrence and absolute dollar amounts. If trucking insurance rates continue to inflate at recent levels, a significant portion of the industry may no longer be ‘going concerns’ and be at risk of going out of business. The potential negative impact of nuclear verdict