July 2009 | Commentary | Risks and Rewards

Foul Play: When Merchandise is Stolen, Who Pays?

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Q:A Philadelphia newspaper recently reported an armed heist of Sports Authority merchandise worth $500,000 from a local 3PL warehouse. According to the account, a former employee of a trucking company that delivered Sports Authority merchandise along the East Coast stole one of the company's trucks. He and two accomplices held a warehouse guard at gunpoint and took three trailerloads of merchandise from the warehouse.

One trailer was soon found empty at a nearby industrial park. A second trailer, still fully loaded, turned up in another industrial area and was returned to Sports Authority. After receiving a tip that large volumes of merchandise were being sold out of a local bar and warehouse, police recovered an additional $200,000 worth of goods that had presumably been unloaded from the first trailer. The third trailer was later found set ablaze, with the stolen company truck parked nearby.

All three suspects were arrested and are facing criminal charges. The kingpin had a prior record of unrelated thefts, and was already facing charges in Texas.

Who bears the loss in this case? The vendor? The 3PL warehouse? The trucking company?

A: The facts of this case demonstrate what can happen when sensitive information is allowed into the wrong hands. Sports Authority will probably file a claim against its own insurer, which, in turn, is likely to claim against the 3PL warehouse and the trucking company. Each claim is considered separately.

If Sports Authority had its goods insured against theft, then it would probably file a claim with its own insurer for the value of the goods that were not recovered. On payment of the claim, the insurance company would acquire Sports Authority's rights to recover against the responsible parties.

If Sports Authority did not have its goods insured, then it may assert claims directly against both the 3PL warehouse and the trucking company. In its claim against the 3PL warehouse, Sports Authority would probably allege that in leaving the fully loaded trailers in its yard, the warehouse failed to take proper steps to protect its goods. The success of this argument depends on whether it was reasonable for the warehouse to have left the goods in the trailers, rather than having them unloaded, and if its security measures were appropriate under the circumstances.

In a claim against the trucking company, Sports Authority might allege that the carrier failed to safeguard its goods against a potential theft. It is significant that the trucking company hired an employee with a prior criminal record in another state. A background check might have revealed this.

It is also significant that he was allowed to become privy to information regarding what appears to be more than one shipment of goods. He knew where the goods were being shipped, and he knew that they had not been offloaded. This indicates that the goods may have been delivered recently.

Finally, the fact that he was able to commandeer one of his employer's own trucks to perpetrate the theft demonstrates that he had relatively easy access to it. All these factors, if proven, will weigh heavily against the trucking company.

The theft of goods is often an inside job facilitated through the acquisition of sensitive internal information. Transportation providers must keep this information secure and perform background checks on the people they employ.

Have a liability question or concern? I will try to help. Please send your questions to me via e-mail at: dan.negron@thomasmiller.com

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