Statutory Employer Decision

On August 4, 2026, the U.S. Court of Appeals for the Fifth Circuit held that a primary shipping entity can be held vicariously liable as a statutory employer for the driver negligence of a subcontractor motor carrier. In Crane v. Penske Transp. Management, LLC., (5th Cir. Aug. 4, 2026), the Court held:

This appeal concerns whether a motor carrier that outsourced a shipping job to a second carrier, which then outsourced it to a third carrier, can be held liable for the negligence of the driver hired by the third carrier.
The district court held that it could not as a matter of law. We disagree, so we REVERSE.

The underlying facts involved a horrific wreck that resulted in the death of another motorist when the Defendant Driver crossed into oncoming traffic. The Shipper (Adient) hired Penske Logistics to transport goods. Penske did not own the truck the Defendant Driver was driving. Penske also did not hire the Defendant Driver. Instead, Penske was hired by Adient, and then outsourced the job to another motor carrier – Liberty Lane – through their affiliate broker, Penske Transportation Management. Liberty Lane then had its affiliate broker hire a third motor carrier – OK Trans. OK Trans supplied the truck and hired the Defendant Driver.

Plaintiff alleged that Penske was vicariously liable for the Defendant Driver’s negligence, and that Penske Transportation Management was negligent in hiring Liberty Lane to transport the shipment. The Penske defendants moved for summary judgment, which the district court granted.

The reviewing court cited 49 CFR 376.22 for the proposition that since Penske was a carrier, it was required to take “control and responsibility for operation of the equipment.” The Court reasoned: “Since Penske – a carrier – employed Liberty Lane – a carrier that leased the truck at issue from OK Trans – to ship the good, their arrangement falls under 49 CFR 376.22.” As a result, the Defendant Driver was a statutory employee of Penske.

The Fifth Circuit further reversed the District Court finding as to preemption of the negligent hiring claims against Penske Transportation Management due to the Montgomery case being issued while the case was on appeal.

Bottom line: In trucking litigation, there is often more than one responsible party for the negligence of a truck driver. It is important to hire a lawyer that understands trucking litigation. Good lawyers solve the puzzle and figure out who all of the responsible parties are so that there is a chance at obtaining reasonable compensation. Fly by night trucking companies often carry only $750,000 in insurance. Larger companies double broker loads to try to avoid liability while making a profit on the difference between what they are paid by the shipper versus what they pay the motor carrier and driver that ultimately transports the load. All the while, the shipper often has no idea that a unsafe motor carrier and/or driver is who is actually transporting the load. Again, it is crucial to hire a lawyer that understands the complexities of trucking litigation.

This article is for informational purposes only and discusses a decision from the United States Court of Appeals for the Fifth Circuit. While the decision is not binding on Tennessee courts, it illustrates important principles that frequently arise in commercial trucking litigation nationwide.

Author: Patrick A. Cruise