EP 709: The Amazonization of Liability Part 1

Episode Notes

Transcript

Announcer (00:01)
Welcome to The Jury is Out, a podcast for trial attorneys who want to sharpen their skills and better serve their clients. Your co-hosts are John Simon, founder of the Simon Law Firm, Tim Cronin, personal injury trial attorney at the Simon Law Firm, and St. Louis attorney, Erich Vieth.

Tim Cronin (00:19)
you

Welcome to another episode of The Jury is Out. I’m Tim Cronin. And so two of my other podcast mates, Erich Veith and John Simon are unavailable today. So I’ve asked Johnny to join us and we are going to talk about what is kind of a hot button issue, which is corporate liability in the gig economy. And specifically as it relates to one of the biggest companies in the world, Amazon.

Johnny Simon (00:25)
I’m Johnny Simon.

ever existed.

Tim Cronin (00:50)
I have recently handled a that involved an Amazon, well, they say not an Amazon driver and Johnny currently has one. So that’s what we’re here to talk.

Johnny Simon (01:03)
the Amazonization of corporate America.

Tim Cronin (01:07)
So look, this isn’t happening. Amazon is just a perfect example of what I think is happening. And we’ve talked about this, Johnny, across all industries. It’s happening in healthcare. It’s happening. Almost everywhere, which is these massive companies are creating corporate structures to try to avoid liability for what are clearly their agents or their employees actions and yet suck up all the money.

Johnny Simon (01:35)
Corporations are doing what corporations were intended to do which is take all of the money and absorb none of the risk

Tim Cronin (01:41)
Yeah, that’s exactly what they’re trying to do. So as it relates to Amazon specifically, first of all, I want to mention there in August, 2024, there was a verdict for $16.2 million. This was not our firm against Amazon logistics in the case called Bradley, the Amazon logistics in Georgia. was the first jury trial I’m aware of where Amazon was vicariously held liable for their drivers who they claim are employed.

by individual contractors called is it’s DSPs, right?

Johnny Simon (02:15)
ESPs

are delivery service providers and I want to I believe there was one before the Georgia case that was in South Carolina that ended up with a 40 million dollar verdict. ⁓ okay. So I know of two results, one in South Carolina, one in Georgia.

Tim Cronin (02:32)
And I got, so I had a case that has, it’s no longer pending. It’s since resolved. So I won’t talk about any details. You have a case that’s currently pending. We won’t talk about the particular facts in our cases, but I got a copy of the entire file from that Bradley case in Georgia, which basically laid out everything that we now know about how this works. ⁓ so essentially Johnny, can you kind of lay out

You just took a deposition the other day. So you have all this kind of in your head. Amazon used to use like UPS, right?

Johnny Simon (03:06)
Right. So the timeline is incredible. And this isn’t going to be a show about hating on Amazon or the way they’ve developed this business because it’s really incredible. I I went to business school and I would love to see what the business schools are teaching about this kind of explosive growth. The DSP program was created by Amazon in 2018. And from 2018 until today, I believe it was in 2024 that

Tim Cronin (03:28)
2018. That’s what I thought.

Johnny Simon (03:36)
They are now bigger than the U S postal service in terms of parcel value. So you’re talking about a period of six years where this just has exploded and we all see it in our day to day lives with delivery drivers, whether they’re working, you know, quote unquote for Amazon or not in our backyards. Amazon has developed this program and the pitch from the very beginning was, you know, own your own business and.

This is all about creating jobs and all of these things that sound great and can be great. People owning their own business and employing hundreds of thousands of people.

Tim Cronin (04:16)
except they don’t really control their own business and then they’re hung out to dry on liability when an Amazon ban hits.

Johnny Simon (04:22)
And that’s the big thing. It’s not only does Amazon throw these quote unquote, you know, small businesses under the, what is it?

It them under the bus, right? When something goes wrong, but it also throws the community member that they’ve injured under the bus by taking positions that, no, even though he’s wearing our uniforms, driving our trucks with our logo, and even though we’re making the money, your course of action to be recovered from, you have the ability to recover from the small business.

Tim Cronin (04:47)
our logo on the side.

And we only require them to have a million dollars in insurance, which is all they can really afford to have. Right. And I think, so here’s the scope of it. As Johnny mentioned, they switched to this logistics network when it’s funny, cause Amazon’s legal name is Amazon logistics. And they claim that these other companies do all the logistics. These, these DSPs, these small businesses, there’s 4,400 of them.

Johnny Simon (05:24)
4400

Tim Cronin (05:25)
And I think that encompass over 400,000 drivers. They do nothing but deliver Amazon packages, the ones I’ve encountered. They’re not allowed to deliver and don’t deliver any other company’s packages.

Johnny Simon (05:36)
So that has been contested publicly in response to a letter to the Senate that, I think it’s Senator Murphy, I don’t know what state he’s from, but he sent a letter in 2024 to the CEO of Amazon kind of asking particular questions. And in the response, the DSP, in response, Amazon sent to the Senate a detailed letter where they claimed that, they’re able to deliver any company’s package.

Tim Cronin (06:05)
That’s not the answers I’ve gotten from those DSPs.

Johnny Simon (06:08)
That

is not what we’ve been provided on.

Tim Cronin (06:11)
No, I mean, they are. Yeah. Because Amazon is explicitly making sure that their packages get delivered.

Johnny Simon (06:13)
and not the reality of

Let’s just say if you’re not delivering Amazon packages as a DSP, you won’t be a DSP very long.

Tim Cronin (06:27)
Yeah, correct. And they have the ability to complete their contract and the company not exist. So I think by and large, they do nothing but deliver Amazon packages and only Amazon packages. As Johnny mentioned, they use vans owned by Amazon by and large. I think you have an incidence where for overflow, they’re using like a U-Haul, which is interesting.

Johnny Simon (06:48)
providing a DSP with so much business that they can’t get the vehicles to deliver the package.

Tim Cronin (06:52)
But mostly they’re using and have to use Amazon vans, usually the electric ones. They display Amazon’s logo, which implicates logo liability that we’ll talk about in some states. They all wear Amazon uniforms. They perform their jobs pursuant to Amazon policies. They all have to carry around an Amazon device with Amazon software on it on every route that dictates the entirety of their day, right?

Johnny Simon (07:18)
minute by minute, monitoring them in the process. Yeah. In real time.

Tim Cronin (07:23)
Those totally independent DSPs operate out of a distribution center owned by Amazon with other DSPs sometimes out of the same facility and where there isn’t, don’t they have like a business coach they keep up? Like an Amazon employee business coach. I’m not sure I understand what they do. So you got into the.

Johnny Simon (07:44)
Well, they make sure that they’re doing Amazon’s work, right? And so to become a DSP, and this is all online, to become a DSP, there’s a lengthy application process, credit check history, interviews, and then training, where you actually are trained, you’re assigned a business coach and you’re trained how to be an effective Amazon DSP. And you get to learn the inner workings of all of their systems.

⁓ You know the vehicles the specs the day-to-day how to hire employees how to train your employees how to write your employee manuals

Tim Cronin (08:19)
mean, their employee manuals are just verbatim. The Amazon passed down employee manuals.

Johnny Simon (08:24)
Yeah, it’s all the same. it’s kind of like a subsidy, know, and that’s how Amazon categorizes it. It’s like we’re just helping them. Yeah. Right. Start to…

Tim Cronin (08:34)
their

own business.

Johnny Simon (08:38)
So like

we don’t own the vans, but the DSPs get the vans at the prices they get them and are able to because Amazon negotiates.

Tim Cronin (08:45)
and mine, Amazon owned.

Johnny Simon (08:48)
⁓ interesting.

Tim Cronin (08:49)
And the DSPs usually lease them.

Johnny Simon (08:53)
I think that’s a federal requirement in some cases where they have to have a lease on the vehicle.

Tim Cronin (09:00)
They also dictate correctly if I’m wrong. I think if I remember correctly, they even dictate exactly how the van has to be loaded each day. So like, which packages go all the way to the.

Johnny Simon (09:14)
They do this and it’s called the all in all out procedure where you know the DSPs don’t have to touch any of the packages except the physical act of loading them on the bus or the van in some cases. Yeah

Tim Cronin (09:27)
And Amazon gets them delivered with tractor trailers to the distribution centers before the Sene.

Johnny Simon (09:31)
So

you’re a DSP, you’re getting there and you’re all loaded up. And then the Amazon yard manager goes, all right, you guys are loaded up. You guys can all leave and they all leave at the exact same time.

Tim Cronin (09:41)
they assign which DSP driver is going to take which route and assign their route.

Johnny Simon (09:50)
And they do it based on affinity with the route. So the driver’s not lost, the driver’s not spinning their wheels, looking where to go. It’s an affinity based thing. they’re like, oh, this driver has done this. So he’s familiar with this. we do it on an affinity basis. Why this all matters and why this control matters is because American law just generally this principle of agency, right? And maybe we’ll get into it later, but the idea is that

You know, the principal is liable for the acts of their agent. And, you know, Amazon has taken that and tried to turn it on its head.

Tim Cronin (10:28)
where they completely control the entire portion of their business where they could have liability from, mean, they have 400,000 drivers out there driving around, there’s gonna be accidents. Eliminate their liability.

Johnny Simon (10:39)
And I think of it in this. ⁓

mean, it’s who’s to say, so like interstate trucking, right? So interstate trucking went through this where we had owner-operators, right? In the 60s and 70s, where the big trucking carriers were saying, no, the person who was operating our truck was an independent owner and therefore were not vicariously liable for their conduct.

federal law flipped that on its head and said, no, if they’re doing the work for you, are their statutory employee. But that does not exist on a local delivery level.

Tim Cronin (11:18)
which is why Amazon DSPs have, they have a limited geographic region.

Johnny Simon (11:23)
So they’re not govern, even though Amazon requires them to register what the federal motor carrier safety DOT number, but they are not, you know, they assert that they’re not their statutory employees. And I think, you know, that is the rub. It’s like they’re, trying to walk this line. I know we don’t have enough control over them. They’re their own business. They hire their own employees. They train their employees. don’t, just give them a baseline of what they can do and give them some assistance, but

Tim Cronin (11:30)
DOT numbers, right.

Johnny Simon (11:53)
Beside that, like one of the questions that I was running into was like, well, if your business is 100 % dominated by Amazon business and Amazon decides that your driver for whatever reason can’t drive for them, they have the right to fire them or terminate them. And the answer I’ve been getting is no, they could always continue to work for us.

And if that’s their sole job, what are they going to go mop the floor?

Tim Cronin (12:20)
Do you deliver anything else? No. Right. So they have the ability to fire up. I mean, what it comes down to is I think in my case, I asked a question of a corporate representative of the DSP, you know, who conveniently is their lawyers who I think can be dictated by Amazon also are saying, no, we’re vicariously liable. Amazon is not. And there’s very obvious like

I’ll use the word collusion, but there’s every very obvious cooperation between the Amazon lawyers and the DSPs and these to try to get them to help say, no, it’s all on us. Yeah. Which isn’t obviously in the best interest for the small business owner who only has a million dollars of insurance.

Johnny Simon (13:06)
who’s invested probably their life savings into building their DSP.

Tim Cronin (13:11)
And being told by Amazon that we’re going to help you grow a small business and be successful and really they’re using them. It’s, it’s troubling. So you usually, once you lay all this out with high level employees, like dispatchers or a corporate rep or the owner of a DSP, I think I ended up asking a question after laying out a bunch of facts, which, which I’m going to, I’ll, I’ll kind of summarize before I got there.

Can you think of any aspect of your operation core operations that Amazon does not have complete control of? The answer was no, nothing I could think of because they’re not on their not straight. mean, Amazon trains the dispatchers and drivers through online platforms and in-person training and tests, right? Like online, they have to complete mandatory Amazon training and Amazon comes and does training and test the drivers.

The DSPs are required to follow Amazon’s operational standards. All of it revolves around Amazon technology that is given and programmed by the DSPs. And then they train the drivers on them and they have to use every aspect of their job with.

Johnny Simon (14:22)
So there’s a couple of things. There’s one is the DSP portal, which is the interface, the computer screen that the DSP owner is looking at every day that gives them the like screenshot of their business. Right. And that is a Amazon tool created by Amazon. And then there’s a second device called a rabbit where you actually can, we’ve all seen this where the Amazon driver is taking a picture of the package it’s delivered.

So taking a picture, recording it, and that’s all data that’s not going to the DSP. I’m just going to Amazon.

Tim Cronin (14:56)
It just goes to Amazon.

They, all their operations revolve around Amazon’s technology in other words, like, it’s mandated. They, as we said, they set and assign the routes every day, including the packages to be delivered on each route, what driver takes each route, how those packages get loaded on the van, the exact route to take. The drivers have to, in many cases, deliver a completely unreasonable number of packages before they can be done, which

Is what results in rushing and high accident rates. They use the Amazon devices they’re given each day, which complaints it’s Amazon software that manages every aspect and moment of their jobs. Amazon tracks them on their routes at every second, right. And receives telematics information about the driving conduct. And through those devices, the drivers can contact Amazon for support while on route for any number of reasons.

And as you pointed out, they practically have the ability to completely fire the drive.

Johnny Simon (15:58)
You know, one of the things that I thought was pretty cool is this concept of a rescue driver. Yeah. So if for whatever reason, the driver on the route has a medical emergency or has to take off for the day, those packages still get delivered ⁓ and those packages get delivered. Maybe not by the DSP, but by another DSP. You driver who sent as a rescue driver and they use the telematics.

Tim Cronin (16:15)
They have to be.

Amazon finds a recipe.

Johnny Simon (16:27)
to route them and show them exactly where they go. it’s very seamless. Look, this is the most efficient delivery system. It works great. Known to man.

Tim Cronin (16:36)
It’s funny. They can deliver a package around the world in less than 48 hours, but they can’t answer discovery within 30.

Johnny Simon (16:43)
Right within 30 days, right? So and I think a big fight that you know, we have as lawyers in these cases is You know we anyone who handles trucking cases knows that trucking cases are not the same thing as a car crash case, right? There’s a whole body of regulation and you look at what it takes to be a CDL driver of which these drivers many of them are not most of them most of them are not they don’t have to be but what does that practically mean that practically means that

The training and oversight is only imposed by what the community will impose on Amazon. It’s not a baseline set of federal laws that they have to have a certain number of training hours. They have to have a certain number of like a road test. They have to have, you know, a qualification file that is updated every so long.

Tim Cronin (17:34)
Yeah. And you know, in that, that raises one issue. The, when conducting background checks on drivers, those DSPs are required to use a company dictated by Amazon. Well, like one of two, think. And Amazon establishes the screening criteria and threshold requirement for hiring those drivers. And the DSPs are prohibited from hiring anybody who doesn’t meet those standards. And

Then Amazon trains all the drivers through a combination of online courses, in-person classes, testing and driving assessments. So why are we laying all of this out? Because if you have a case where somebody got injured by an Amazon vehicle or driver, you are going to encounter them saying, don’t employ the driver. The DSP does. And they’re going to say, we only have a million dollars of insurance. And if you get a judgment bigger than that, we’ll just declare bankruptcy and start a new DSP.

just take the money and that’s not getting justice for your client. And so we want everybody to be aware that it’s really, really important that you don’t just accept that at face value. And we’ll look, I would be happy to work on any one of these cases as a partner anywhere in the country. Cause we have figured out how all this works.

Johnny Simon (18:48)
Well, it’s what’s it what’s at stake, right? Is this model is either going to result in people in your community or yourself or your clients being injured and getting compensation or not, because the only party that is able to give someone full compensation and the right case, not not every case is going to be more than a million bucks. No, aren’t you know, but this affects the most egregiously injured.

Tim Cronin (19:11)
lot of them.

Johnny Simon (19:16)
The people who are injured most egregiously and what’s at stake is all of these drivers not being able to get compensation because of this legal issue. And I think the employment thing is interesting because the law isn’t that you can have one employer.

Tim Cronin (19:35)
You can have dual dual agency. In most states, I don’t know if that’s true in everyone, but it’s true in Missouri. It’s true in Illinois. was true in Georgia.

Johnny Simon (19:37)
You can have you can have double employers.

But it’s just, it’s a question of control and it’s a question of agency and

Tim Cronin (19:50)
I mean, the hallmark of agency is the right to control Amazon exercises and complete and utter control.

Johnny Simon (19:56)
I mean, to the amount of times the driver has to take breaks. I can’t I mean, to answer your question, I can’t think of an aspect of a DSP’s business that Amazon does not control. Yeah.

Tim Cronin (20:08)
They will cease to exist if they don’t do what they say. mean, it’s that simple. All right, we’re going to pause for a minute here and we’re going to come back next time to keep talking about the corporate liability in the gig economy. And we’ve been using Amazon as a specific example. We’ll come back for the next session. Until then, I’m Tim Cronin. Thank you for joining us for the Juries Out. We’ll see you next time.

Johnny Simon (20:27)
I’m Johnny Simon.

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