C.H. Robinson Worldwide, Inc. Deutsche Bank’s Chicago Industrials Summit

Richa, good to see you. Happy to be here. Thanks for having us. Let's jump into that. We obviously gave some color on our recent quarterly earnings call, but I'll just double-click, and Damon can jump in as well. First and foremost, as we stated before, we totally feel like this was a case in a local jurisdiction within Dallas that was certainly made more on emotion than fact. We strongly believe the facts in this case are one that are on our side, and obviously our insurance carriers thought the same thing as they had appellate attorneys in the proceedings. Plaintiff's bar's requests were unreasonable to settle in a case like this, particularly when the facts were so strong on our side.

We just feel on appeal within Texas, and that has a history of showing this, that when the facts are presented per law, that this will eventually be ruled in our favor. I have to strongly believe that nuclear verdicts are not going to be the norm. But I would say that we are making a call on here in various vectors. From an investment perspective, I would say, this doesn't change C.H. Robinson's strategy and what we're doing. We've had a docket. We've always had a docket. We've managed that docket extremely well for over two decades, and you can go back or look at 8-Ks and things of that nature. 98% of cases never see a courtroom. They get settled out in doing that. You look at the amount of freight that we broker, 37 million shipments, as you know, per year.

We have tens of cases that we deal with. Do I think that the reaction to the industry, not just C.H. Robinson, is a bit overdone? I do think that it's certainly a bit overdone on here. This case, advisory verdict will go in. Ultimately, the judge will put a final verdict in the next 30 to 90 days. When that happens, our appeal process will immediately appeal. Then the pre-file motions and things like that will happen before the judge has to make a final determination. When that determination is made and filed, we'll file an appeal, and then that process starts, and that can be a series of 18 months, 2 years, and then it can go to the Texas Supreme Court as well. You're talking about this could be 5 to 7 years in doing that.

It doesn't stop the fact of who we are, how we've managed it, how we manage inflationary costs. We do it. We do it all the time when it comes to insurance costs. We feel really good about that. I'll make this last point that this is not about C.H. Robinson. This is a bigger issue. This is really about commerce as well. Multiple vectors happening, but you have to look at commerce. If nuclear verdicts are going to be the norm, then there are a number of the industry that will really have an issue, and we'll have an issue moving commerce within the country because 30% of commerce is moved by brokers. 500,000 truckers have 1 to 10 trucks and are small owner-operators. They get their movement through brokers, and that's 500,000 out of the 600,000 that are around.

This is a bigger issue. We are pushing for a standard through the Department of Transportation and FMCSA. That standard of reasonable care. We're also driving the legislation. We want Congress to act when it comes to accountability and the legislation around this issue as well, or else we will have a commerce issue. That's how we look at this. A bit overdone on stock reactions within that. C.H. Robinson is solid. You see that from our last results, and hopefully, we'll get into that. We've built a moat, and we've built a system that we think wins at the low and certainly wins at the high. We don't think that a case like this, when it comes to any type of insurance, inflationary cost is an issue for us. We've proven that we absorb all of that.

I'll just put a bow on what Dave said. Two things. We think the stock reaction is, one, it's hinting that nuclear verdicts will become the norm. We don't believe that's likely. Number two is, I think it's assuming that we won't prevail on appeal, which we feel highly likely we will prevail on appeal, right? We think, as Dave mentioned, stock price reaction is overdone. We've certainly been active buyers of our stock, and continue to be, and certainly believe that this has become an attractive entry point for investment.

Yeah, for two reasons. One, plaintiffs' attorneys, you can always do. We cannot stop a lawsuit per se. Right? You bring a lawsuit in a particular jurisdiction, and that can happen at a local level. No one, no matter who they are, can really stop some type of lawsuits. They happen. They happen all the time in various industries in doing that. But proving that fact set all the way through the court system, I think you kind of see what happens over time. And we think in this case, that certainly will happen when the facts are presented to the appellate courts. It will clearly show some things that really show that C.H. Robinson is not at fault and certainly was not negligent in this, in the way we went about transacting this load. Those facts are clear, and so we feel really good about that.

We do not think that that will be a nuclear verdict. If it is, if for some reason we see and that is the norm, then that is a bigger issue. I would go so far as to say the company that really kind of stands up and has the wherewithal to do that, you need someone with an investment-grade balance sheet, that has the scale, that has the monetary means to do that, and that company is us, to be able to stand through something like this. We are just calling on a broader look at all of transportation that this is a bigger commerce issue. We will be fine either way, but this is a commerce issue, and I do not think that there will be an appetite to have commerce slow down and have increased costs, less service, and that impact.

I just do not think that we would stand for that.

Yeah. I would just add, look, as Dave mentioned, the vast majority of cases that are litigated, they settle. The plaintiffs want to settle, the defendants want to settle. Very difficult to settle cases with this type of expectation, of a nuclear verdict. So we just don't believe that is the norm. And in fact, history has shown in most industries that is not the norm. We think, in fact, even in this case, if you read what the plaintiffs' attorneys have published post the verdict, they've always wanted to settle this case. They didn't want it to go to a jury verdict. So we believe history will be proven right, that this is a unique outcome, and that ultimately the history that shows the vast majority of cases become settled at reasonable amounts will be the norm.