Federal Jury Awards CRST $15.5 million after ruling Swift intentionally interfered with driver employment contracts
Transportation companies are in constant competition to hire and retain a limited pool of qualified drivers. With low supply and high demand, it may be tempting to ignore new hires’ prior employment contracts and restrictive covenants—but the recent $15.5 million federal jury verdict in CRST Expedited, Inc. v. Swift Transportation Co. should make transportation companies think twice.
CRST Expedited, Inc. (“CRST”) brought suit against Swift Transportation Co. (“Swift”) accusing Swift of poaching over 250 of CRST’s drivers who were in active employment contracts with CRST. On July 22, 2019, a federal jury in the U.S. District Court for the Northern District of Iowa ordered Swift to pay a total of $15,500,000 to CRST—$3 million for intentional interference with CRST’s driver contracts, $7.5 million dollars for unjust enrichment, and $5 million in punitive damages.
CRST created a “Driver Training Program” which allowed individuals to become licensed truck drivers through satisfying all the applicable state and federal regulations. As the Driver Training Program required significant investment of time, expense, and manpower upfront, CRST required each driver trainee to enter into an employment contract in which the driver agreed to a ten-month employment term with CRST. Should the driver separate from CRST prior to the completion of the ten-month term, the driver was prohibited from directly or indirectly providing truck driving services to any CRST competitor in the United States.
The plaintiff argued Swift “intentionally and improperly interfered with CRST’s Employment Contracts.” The jury agreed. It found that Swift specifically targeted drivers who had recently completed CRST’s Driver Training Program. When Swift requested employment verification from CRST pursuant to DOT regulations, CRST verified the driver’s employment and also notified Swift that the driver was currently under contract with CRST. Despite this notification, Swift moved forward in hiring at least 250 of CRST’s drivers. By recruiting CRST’s drivers, Swift avoided the cost of training drivers while directly benefiting at CRST’s expense. The jury found that not only did Swift intentionally and improperly interfere with CRST’s driver contracts, but that it did so with willful and wanton disregard for the rights of CRST, thus resulting in millions in punitive damages.
What does this mean for you?
- Don’t ignore employment contracts. Ask potential applicants whether they are currently bound by any employment contracts. Request to view copies of those contracts to determine whether your company could be held liable for interference with the contract.
- If your company has a Driver Training Program, ensure you have a strong employment contract to protect your investment. Do not let other companies benefit at your expense. Determine driver training cost and how long it will take for you to obtain a return on your investment. Require drivers to sign an employment contract that protects these interests.