Texas’ trucking sector heralded the enactment of a law in 2021 as a big victory in its fight against nuclear verdicts, typified by a huge award against Werner Enterprises (NASDAQ: WERN) in the Lone Star State.
But just a few years later, the impact of the law, HB 19, is generally seen as a bust for the trucking industry’s attempts to fend off large judgments, whether or not they cross the $10 million nuclear verdict dividing line.
That disappointment has spurred a new effort to change the law that the industry believes became ineffective because of last-minute amendments added to the bill when it first passed.
A new vehicle for seeking changes in the bill has arisen in the creation of the Lone Star Economic Alliance (LSEA). Its launch was driven by Texans for Lawsuit Reform (TLR), which is not a new organization but has set up the LSEA specifically to seek tort reform through changes in HB 19, with trucking as a fulcrum in its efforts.
The individuals put forth by the LSEA to speak to the media about their efforts don’t solely include trucking executives, but they are prominent. That list included John Esparza, CEO of the Texas Trucking Association; Jerry Maldonado, chairman of the Laredo Motor Carriers Association and director of the Mexico and Laredo operations of Warren Transport; and Adam Blanchard, co-owner of Double Diamond Transport.
LSEA’s launch presentation doesn’t even mention trucking, except in the biographies of the board members with a connection to the new group.
So far, earlier changes haven’t helped
But sources close to the group, requesting anonymity, make it clear that the continued threat of nuclear verdicts in the state that were supposed to be reduced as a result of HB 19 brought trucking back into the battle as the key focus of LSEA’s efforts.
Discussions with those trucking executives, and a review of online commentary about the original attorney-written wording of HB 19, focused on the initial legislation’s “bifurcation” as the key to protecting trucking companies and other defendants from huge jury verdicts.
The bifurcation involves a concept known as the “admission rule.” It is described as a long-standing part of Texas common law, but as one attorney said, Texas judges have been ignoring it in recent years.
“It basically says that if I, as the employer, agree to accept responsibility for my employees’ actions that may have caused the injury, it is supposed to simplify the trial,” Lee Parsley, general counsel for TLR, told FreightWaves in describing the admission rule. The company being sued, in admitting that, is saying, “I’m on the hook for these damages,” Parsley said.
Admitting things helps, doesn’t hurt
While it may seem odd that such an upfront admission would be viewed by potential defendants as a positive, Parsley said it means “you don’t need to go down the rabbit hole of figuring out things like negligent hiring and negligent training. It’s supposed to simplify it so that in the trial, you’re just focused on who actually caused the accident and what the damages are at that point.”
In an online commentary about the bill after it passed, the law firm of Doyle & Seelbach quoted the key author of HB 19, State Rep. Jeff Leach, as saying it would “protect commercial vehicle operators from unjust and excessive lawsuits.”
While the interpretation of the law is complex, it boils down to the assumption that the admission rule would put a trucking company at risk for damages related to the actual injuries incurred by the plaintiff as a result of the accident that spurred the lawsuit, as long as the trucking company had made that admission.
Even if the admission is made, there still can be a second part of the trial to determine punitive damages, hence the term “bifurcation.” But under the rules of HB 19, the admission by the trucking company in the first part of the trial limits much of the discussion about its practices during the punitive portion of the trial, which would tend to limit how high the punitive damages might soar.
How would it have impacted big Werner verdict?
No discussion about nuclear verdicts in Texas gets very far without bringing in the Werner case. The truckload carrier is fighting a judgment that dates back to 2019 and was originally just under $90 million but now totals more than $100 million with interest. (The Werner case is on appeal before the state’s Supreme Court, which has accepted it for review.)
The Werner case was decided well before HB 19 passed, so the law had no impact on the course of the trial. But Doyle & Seelbach discusses how differently the case might have gone had HB 19 been in effect.
“A primary reason for the huge verdict was likely the trial court allowing plaintiffs to introduce company-wide evidence on practices spanning over a decade, including the company’s high turnover rate and extensive hiring of new and inexperienced drivers,” the law firm wrote. “If HB 19 had been in effect, the jury would likely not have heard this evidence during the first trial phase.”
Given that the crash in question in the Werner case involves a personal vehicle crossing a median and hitting a Werner truck head-on during an ice storm, Werner’s being able to invoke the admission rule would have kept some of that testimony about Werner practices out of the courtroom, according to Doyle & Seelbach. The goal of the law, according to the firm, “appears to be to limit the evidence to those violations that have some reasonable connection to the accident at issue.”
But according to the attorneys connected with the LSEA, amendments to the bill at the last minute created a “Frankenstein monster” that complicated HB 19 so much that, as Parsley said, “the defense lawyers don’t know how to use it.” As a result, he said, “they’re not using it and it hasn’t made the difference it should have.”
The goal of the LSEA, then, is to go into the Texas Legislature and remove some of those amendments that it sees as problematic. Many involve bringing federal trucking rules into the bill, and Parsley said the amendments had negatively impacted the admission rule’s elevation in HB 19.
On the other side of the divide might be the Texas Trial Lawyers Association.
Asked to comment on the LSEA’s efforts to alter HB 19, a spokesman noted that the group has not yet seen any specific legislation that would take such a step and that commenting would be “premature.”
“Regardless, we believe the safety of Texas drivers should be paramount as lawmakers are considering any proposed changes to the current law,” the spokesman said in an email to FreightWaves. “Our members routinely help Texans who have experienced horrific wrecks involving commercial vehicles. So, we look forward to working with members of the House and Senate to ensure Texas drivers are protected from bad actors who unsafely operate on our roads.”
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