LITTLE ROCK, Ark. — RCX Solutions Inc., a carrier based in Little Rock, Ark., has announced that, effective March 2, it has ceased operations. Founded in 2001, RCX Solutions employed seven drivers and contracted 24 owner-operators who leased their trucks to the company. The shut-down is the latest in a string of closings and bankruptcies of small and large carriers across the U.S. over the previous 12-18 months.
As reported by FreightWaves, RCX president Randy Clifton Jr. said, “We got everyone home, and they were all taken care of [Feb. 28].” For a man whose father founded the company and whose grandfather once owned Pacific East Transportation in North Little Rock, Ark., in Clifton’s words, closing RCX Solutions was “gut-wrenching.”
“We were able to find our drivers some good homes, which was important to me because we are more like a family,” Clifton said. “Some of them are already rolling for their new companies.”
RCX Solutions’ fate took hold in 2017 when it was on the losing end of a lawsuit that awarded the plaintiff damages of $23 million. Even after an appeal that resulted in the U.S. Fifth Circuit Court of Appeals lowering the damages to $7.5 million, it was not enough to save the company.
RCX’s downfall began in early January 2015 when, according to Clifton, one of the company’s trucks broke down while transporting a load of cosmetic cases for L’Oreal. Clifton, also the owner of the freight-brokerage company Sunset Transportation, worked with Ronald Brown, an owner-operator driving under the company name About Tyme Transport Inc., to finish delivering the load. Clifton arranged for a trailer interchange with Brown, who would then haul the load to L’Oreals’ central Arkansas location.
Long before arriving in Arkansas, Brown’s tractor-trailer was involved in an accident near Refugio, Texas. The vehicle and trailer first hydroplaned before crossing the median and jackknifing. The tractor-trailer struck a pickup truck, resulting in a fire. Brown died at the scene, while the pickup’s driver sustained third-degree burns and numerous broken bones.
The surviving victim and his wife filed a lawsuit against Brown’s company and Xtra Lease, owner of the trailer. After receiving a million dollars from About Tyme Transport, the couple extended its lawsuit to RCX Solutions, the company leasing the trailer from Xtra Lease. RCX was on the losing end of the lawsuit in 2017, with the jury awarding a “nuclear verdict.” While the definition of “nuclear” is relative to the assets of a company, in RCX Solutions’ case, it was $23 million. The Court of Appeals ruled the amount as excessive and lowered it to $7.5 million.
Clifton said that even with the lowered liability amount, it was too late for RCX to survive financially. “Our insurance rates tripled,” he said. With his company paying the increased premiums for more than three years, Clifton said the economy hasn’t been strong enough to help RCX Solutions through the difficult times.
Clifton said he had hoped things would turn around for the carrier, noting that RCX’s insurance premiums would soon be lowered. When a bank refused to extend the company’s credit line, however, it signaled the end. He immediately called his drivers and contractors home, closed RCX’s doors and helped the drivers find new companies to work with.
Nuclear verdicts are increasing as an issue of concern to both freight carriers and companies that insure them. Unfortunately, for RCX Solutions, the company will no longer be in business when — and if — large liability verdicts reverse course and become less the rule and more the exception.
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.