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Unsafe “chameleon” trucking companies still slip through the cracks at FMCSA

In our trucking accident litigation practice in Georgia, I sometimes run across fly-by-night trucking companies with terrible safety ratings that go out of business but then reopen under another name and DOT number but with the same people and equipment. Sometimes I have a case against the old company with a terrible record. Other times I get the new company with a safety rating wiped clean.

Almost two years ago, the Federal Motor Carrier Safety Administration announced a new rule to stop this “chameleon carrier” shell game. 49 CFR 385.306 provides that if a company provides false or misleading information in the application process, the new applicant registration is subject to revocation. The application requires disclosure of related companies and individuals, and these are supposed to be scrutinized for outstanding orders to cease operations. Any new entrant registration is supposed to be linked to the history of any related old motor carrier in the FMCSA database.

That’s great if it works. However, an article on The Trucker reveals how the FMCSA is so swamped with applications that companies that should have such safety scrutiny can easily slip through the cracks, sometimes with tragic consequences.

Days before Hester Inc. – the motor carrier involved in an 11-fatality, much publicized accident in Kentucky March 26 – was scheduled to be shut down by FMCSA due to an unsatisfactory saffety rating, an existing carrier with brokerage authority, FTS Fleet Services, was granted operating authority to do business from Hester’s Fayette, Ala., facilities using much of the same equipment, the same drivers and some of the same operations personnel.

Scott Hester, president of Hester Inc., listed himself as president of FTS Fleet Services. However, despite the requirements of 49 CFR 385.306, the FMCSA never made the connection between Hester Inc. and FTS Fleet Services until questioned by a reporter. By June 10, five days after Hester Inc. had been ordered closed due to its unsatisfactory safety record, former Hester trucks and drivers were on the road as FTS Fleet Services.

The Trucker reports that where companies about to be shut down file for a new DOT number under a new name, they still can easily go undetected because of the heavy load of applications and because of a lack of information sharing between divisions at the agency.

The last time in our trucking accident practice we had a case against a “chameleon carrier,” as soon as we asked for the background records and made a demand, the insurer tendered its million dollar policy limit. The Hester / FTS example is a reminder that whenever one has a case against a newly authorized trucking company, it is prudent to do discovery about the company owners and officers, and the safety ratings of any prior companies with which they were associated. If the defendant is a chameleon carrier, the unsatisfactory safety rating of the old company should be admissible in evidence in support of a claim for punitive damages or for attorney fees due to bad faith in the transaction.

Ken Shigley, author of Georgia Law of Torts: Trial Preparation & Practice, is a board member of the Interstate Trucking Litigation Group, a Certified Civil Trial Advocate of the National Board of Trial Advocacy, he has been listed as a “Super Lawyer” (Atlanta Magazine), among the “Legal Elite” (Georgia Trend Magazine), and in the Bar Register of Preeminent Lawyers . He practices law at the Atlanta law firm of Chambers, Aholt & Rickard, and has broad experience in catastrophic personal injury, wrongful death, products liability, spinal cord injury, brain injury and burn injury cases. He is also president-elect of the State Bar of Georgia. This post is subject to our ethical disclaimer.