Heather Devine, a lawyer with Alexander Holburn-Beaudin and Lang, understands the legal risks trucking operations can face in a courtroom. But the underlying threats can also evolve from one year to the next.
Here are trucking-related legal challenges that she has identified for the year to come:
Mobile app liability
Several liability concerns arise when drivers use mobile apps for messaging, route updates, and navigation. Devine asked a crowd at an annual meeting of the Private Motor Truck Council of Canada (PMTC) if they’re communicating directly with drivers, whether to provide ongoing updates or specific directions. “How are they not distracted?” she said of those moments. The solution there is to eliminate such messages, and to use “bar messaging” to block the devices when vehicles are moving. “You need to figure out how are you going to communicate with that driver on the road,” Devine said.
Independent contractors vs. employees
Truck fleets are not the only businesses to misclassify employees as independent contractors – a process in trucking that is often referred to as Driver Inc. Pizza Hut is now facing a $150 million class action lawsuit over the matter. Amazon delivery drivers, Instacart full-service shoppers, and UberEats drivers are all involved in $200-million+ claims as well. “It can be an expensive problem,” she said.
Telematics and data management policies
Telematics devices introduce ever-expanding data streams, but Devine warned there are risks of having too much data. “What do you do with it?” she asked. A formal telematics data management policy can determine how the data is stored, protected, and used. This should address data collection, storage and security, retention, sharing, and usage alike. When working with ELDs, she also recommended deleting contract lines that give suppliers ownership over the data. “You then advise them they will work with you to manage the access to data when necessary to remain compliant,” she said. One way to increase a fleet’s value is to monetize data, Devine added, stressing that cybersecurity and privacy concerns will still need to be considered in such cases. “It’s something that you create that can be stolen.”
Electronic bills of lading
“When you’re in litigation, having electronic bills of lading in a province that doesn’t have electronic bills of lading is difficult,” Devine said. “Just think about the stress on your driver and the potential of liability.” If the electronic documents are adopted, she stressed they should transmittable, printable, and recordable by everyone involved. “It should contain an audit trail,” she added.
Mergers and acquisitions
U.S. investors are attracted to Canadian fleets because the operations are often seen to be safer than their American counterparts. But there are limits. Planned mergers and acquisitions are governed by rules including the Canada Transportation Act, Competition Act, and public interest issues, she said. TFI International, for example, had a recent acquisition denied. “There are certain laws that may affect your growth.”
The rise of electric vehicles
As Canada announces plans to support zero-emission vehicles, Devine warned there could be legal implications if the devices under-perform in cold weather. “How does it potentially affect you for liability? They may not be as reliable and they may affect your delivery,” she said. Contracts will need to reflect that possibility.
Jury verdicts valued at more than US$10 million are a “great concern” across the border, Devine said. “They are disconcerting, and they are increasing.” The good news for carriers which remain in Canada is that “non-pecuniary” damages have been capped since a Supreme Court of Canada decision in 1978. Adjusted for inflation, the current cap is around $400,000. One strategy for protecting against such losses is to separate rolling assets from any other business assets, because plaintiffs might turn to corporations once available insurance is maxed out. “You can at least ensure that your liability is limited,” Devine said.
Inflation and volatile markets
Today’s transportation markets are affected by factors as diverse as the war in Ukraine, Covid, and now soaring fuel and shipping prices. “Is a fixed-price contract with more predictability for the shipper better for your business?” she asked. Another option might be a floating price reimbursement model that shifts more of the risk onto the broker. But Devine said a better option might be a hybrid that shares the risk of volatile fuel prices, including mechanisms to adjust prices based on fuel costs. Even an email chain can offer proof of this in the absence of a formal contract. It will show that both parties are considering the increasing costs, complete with details about when the contract will be terminated or suspended.
Force majeure termination clauses
“Even in court appearances, companies are making commitments, and it seems as if in this current environment it’s acceptable to break that commitment,” Devine said, referring to underlying situations such as the onset of the pandemic. “Ask yourself the question: What do I do if my supplier, if the party doing a task, lets me down,” she said. “Can you terminate that contract and go elsewhere?” Most written contracts have a 30-day termination clause. “It literally gives you that period of time to change your agreement and find someone else,” she added. “You also have to be careful in that can happen to you … You want to take a look and see if someone will do that to you in 30 days.”