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A year of intensive discovery paid off when a Michigan trucking company agreed to pay $18 million to the families of three victims killed in a tragic highway accident.

The settlement came shortly after a federal jury in Missouri returned a $15 million verdict in late April. Deliberations on punitives were underway when the trucking company agreed to settle the case.

Lead plaintiffs' counsel Kenneth McClain, a partner at Humphrey, Farrington & McClain in Independence, Mo., said the outcome should encourage other plaintiffs' lawyers to aggressively pursue truck accident liability claims.

"It's important for plaintiffs' lawyers to recognize that there are significant sources of income to these entities other than the insurance," he said. "In the trucking industry, a practice has developed of splitting up different functions of one company so they can claim the assets of the entire enterprise are not at risk because of a fatality.

"They divide every department into a separate company," McClain explained. "So, you've got a separate company that qualifies the drivers, a separate company that monitors their logs, a separate company that leases the tractors and trailers, and a separate company that leases the drivers."

During the trial, McClain told jurors that half a dozen corporate defendants named in the wrongful death suit were all subsidiaries or affiliates of CenTra, a Warren, Mich. holding company.

"It's just ridiculous," said McClain. "They're only separate companies to avoid liability. In the meantime, they pass all the profits up to the parent company."

Asleep at the wheel

The accident occurred on an interstate highway in Missouri in June 2006 when George Albright Jr. allegedly fell asleep at the wheel. The tractor trailer he was driving slammed into the rear of a car driven by Beverly Garrett, a local municipal union official. Garrett and three female relatives – all on their way to a wedding – were killed in the crash.

The three-week trial involved wrongful death claims filed by Garrett's children on behalf of Garrett, their grandmother and an aunt. A separate trial is expected to be held this fall on claims filed by the husband of Garrett's niece, who also died in the crash.

Albright is facing four counts of second-degree involuntary manslaughter.

In an unusual move, the judge in the civil trial entered a default judgment against one of CenTra's subsidiaries called Central Transport. And an executive from another subsidiary, Pro Logistics, conceded liability during the trial.

So the issue wasn't liability. Instead, the challenge for the plaintiffs' lawyers was to ensure the families of the victims received significant compensation.

McClain said his firm was determined to pierce the corporate veil that was intended to shield the parent company in this case from liability.

"We were willing to look at this an entire enterprise and demonstrate it was all one enterprise," McCain said.

During his closing, McClain told jurors that the defendants had sought to have the case tried in Jefferson City, Mo. in an effort to reduce the size of the verdict.

"I said, 'They don't think you'll award money like they do in the big city. But they've misjudged the situation. You value life most of all. You value family most of all. And what you've had here was the loss of entire generations of a family that tied its roots together."

Defense lawyers did not return phone calls seeking comment.

Piercing the corporate veil

Co-plaintiffs' counsel Daniel Thomas undertook aggressive discovery to unmask CenTra as the alter-ego of its various subsidiaries and affiliates.

Over the course of a year, he took almost 60 depositions, inspected four corporate headquarters and conducted computer forensic examinations of dozens of company computers.

Missing log books and a truck satellite tracking device compounded discovery challenges. The judge allowed the jury to receive spoliation instructions so it could consider the missing evidence, which suggested the driver lied about having slept for 10 hours before getting behind the wheel prior to the accident.

But the most critical piece of evidence for the jury, Thomas said, was "hearing from the very beginning how these companies were interrelated and the way they were set up and the way they operated."
Concepts such as "veil piercing" and "alter ego" typically are used in bankruptcy cases when attorneys are trying to find assets that have been shifted from one company to another to avoid liability.

"But in this case, it was the shell game that was actually part of the whole reason the accident happened," Thomas said. "That's why we did it on the front end, and not the back end.

"CenTra had tried so hard to fragment its trucking operation to avoid liability that the left hand didn't know what the right hand was doing," he continued. "This truck driver had a horrendous history, and never should have been hired in the first place."

The driver, who had a history of heart attack and stroke, had been rejected by one of CenTra's subsidiaries because of his health problems, but landed a job with one of CenTra's other firms.

Albright was on a variety of medications, including Valium, at the time of the accident, McClain said. During the trial, he told jurors that CenTra failed to properly screen its drivers and ensure they received sufficient rest.
Jurors deliberated for about six hours before finding CenTra and three subsidiaries liable for negligence and awarding $15 million in compensatory damages. Two days later, the companies agreed to settle the case for $18 million.

Plaintiffs' attorneys: Kenneth B. McClain and Daniel A. Thomas of Humphrey, Farrington, McClain in Independence, Mo.

Defense attorneys: Robert Adams of Shook, Hardy and Bacon in Kansas City, Mo.; R. Lawrence Ward of Shughart Thomson & Kilroy in Kansas City, Mo.; Robert Horn of Horn Aylward & Bandy in Kansas City, Mo.; and Louis J. Leonatti of Leonatti & Baker in Mexico, Mo.

The case: Garrett v. Centra, April 23, 2008; U.S. District Court for the Western District of Missouri, Judge Nanette Laughrey.