Werner Enterprise’s stock price fell Monday, a day after it was freed from the potential burden of one of the biggest nuclear verdicts in history.
But given that the Werner (NASDAQ: WERN) exposure to a verdict of more than $100 million was just $10 million due to its insurance coverage–as the company had said several times and reiterated in an SEC filing after the Texas Supreme Court overturned a pair of earlier court decisions that had gone against the truckload carrier–the decline of 1.16%, even while broader market indexes were higher, was not surprising.
While there will be an outward impact on the company’s balance sheet from the end of the litigation that went back more than seven years, the financial steps to be taken will simply just reverse charges and credits already made by the company previously in anticipation of a large payout.
The facts of the lawsuit were never in dispute: a car driven by Trey Salinas and ferrying the Blake family heading eastbound on interstate 20 near Odessa, Texas in wintry weather amidst reports of cars sliding out of control lost control, blasted across the grass median and into the westbound truck driven by Werner driver Sharif Ali. Ali was in training and his trainer was in the sleeper berth.
One member of the Blake family–a child–was killed, another child was left a quadriplegic and two other Blakes suffered serious injuries.
The Blakes won their almost $90 million verdict in 2008. Werner appealed and the Blakes won again on the appellate level in May 2023. Werner appealed to the Texas Supreme Court and won on Friday.
Interest had been accumulating on the initial verdict. The final amount at stake was more than $100 million.
The state’s highest court dismissed the case; it was not sent back to the lower court for further deliberations.
Remembering the Blakes
In its prepared statement released Friday, Werner president and chief legal officer Nathan Meisgeier said the company “(has) not and will not lose sight of the tragic loss the Blake family suffered because of this accident. Our continued thoughts and prayers are with the Blake family.”
In a report to clients, the transportation research team at Bank of America Merrill Lynch headed by Ken Hoexter described the court decision as a “long overdue win” and one that was “good for Werner, good for trucking.:”
“We believe this is an important win for Werner and the trucking/broader transportation industry,” the analysts wrote. “The Texas Supreme Court ruled that the sole cause was the sudden, unexpected hurling of the victim’s vehicle into incoming highway traffic, for which Werner and its driver bore no responsibility.”
BOA: Case started a trend
Bank of America Merrill Lynch saw the case as having established a precedent in the trial bar that continues to this day. “The 2018 decision began to set a trend of truck company exposure to landmark verdicts that continues to loom over the industry,” the analysts said.
“We believe this is an important win for Werner and the trucking/broader transportation industry,” the analysts wrote. “The Texas Supreme Court ruled that the sole cause was the sudden, unexpected hurling of the victim’s vehicle into incoming highway traffic, for which Werner and its driver bore no responsibility.”
Bank of America Merrill Lynch also saw the case as having established a precedent in the trucking trial bar that continues to this day. “The 2018 decision began to set a trend of truck company exposure to landmark verdicts that continues to loom over the industry,” the analysts said.
In Werner’s prepared statement, Meisgeier called the verdict a “long-awaited win for Werner.”
“After seven years navigating the appellate process, we are thankful the Texas Supreme Court reached the same conclusion as law enforcement – that the Werner drivers and our company did nothing wrong,” he said. “A different outcome would have had far-reaching implications beyond the transportation industry.”
The court decision did not fully exonerate Werner; the Salinas’ truck going out of control was not the “sole cause,” as the Bank of America Merrill Lynch report suggests.
At one point the judges’ decision says “We can assume sufficient evidence that Ali’s speed–and even his presence on the icy road at all–was negligent under these weather conditions.”
Being on that road, the court decision said, was a “but for” cause of the injuries.
However, “but for” isn’t enough, the court said. The “proximate cause” of the collision was Salinas sliding across the median, the court said.
Speeding might have avoided a crash
It added another perspective. The criticism from the Blakes was that Ali was traveling too fast given the weather. As a result, his truck was at a location that resulted in the Salinas’ pickup truck slamming into him.
But what if he was going faster? “Surely, as the plaintiffs urge, if Ali had been driving more slowly, Salinas would not have collided with him,” the judges’ decision said. “Just as surely, however, if Ali had been driving 100 miles per hour, Salinas would not have collided with him. Had either driver been driving much slower or faster, this accident would not have happened as it did.”
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