Firms expect more legal action from Brazil’s lorry driver strike

  • Brazil
  • 06/14/2018
  • Latin Lawyer

Latin America’s biggest economy is slowly accelerating again after a lorry drivers’ strike brought the country to an abrupt halt, but the legal consequences may just be beginning, say local lawyers.

Organised through WhatsApp groups with no centralised leadership, the massive one-week strike late last month took many by surprise. This was especially true of the Brazilian government, which struggled to identify the people leading the protests. It also left law firms dealing with a surge in client demand as companies fought to stay operational.

During the crisis, Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados filed more than 100 legal requests to lift blockades that had resulted in queues for petrol, cancelled flights and missed deliveries. Oil and gas distributor and Mattos Filho client Raízen filed 53 requests, ultimately obtaining 38 judicial orders demanding strikers halt their blockade of various corporate distribution points. Another client, Ultragaz, which distributes liquefied petroleum gas, filed 50 requests and obtained 39 injunctions. Both companies were advised by a 40-strong Mattos Filho task-force spread across São Paulo, Brasília nad Rio de Janeiro, whch included partners Fabio Ozi, Maricí Giannico and Luiz Gustavo Bezerra. The team coordinated with legal officials, the police and the army to enforce the judicial orders. “In a matter of hours we drafted the standard requests and established groups to target each of the country’s regions…, all coordinated from our crisis room,” says Ozi.

The striking drivers often refused to obey the court orders, but Ozi says a three-pronged approach involving the police, the government and the law was necessary. “We were aware it all depended on a comprehensive negotiation handled by the government, but the companies needed to take their legal measures. As soon as we had the injunctions we requested support to make sure they were enforced,” he explains.

Latin Lawyer identified several other firms that were busy advising clients during the strike. At Machado Meyer Advogados, 12 partners were involved. Litigation partner Gláucia Coelho says one of the biggest difficulties was identifying who was legally liable for the blockades. This was because the movement did not have a centralised structure or leading representative. Coelho adds that it was difficult to assess if their legal measures could be enforced, because the strikes were so strong and all-encompassing. Machado Meyer was unable to disclose the names of its clients.

Even after the blockades finished, the package of measures granted as concessions to the drivers by the government generated complaints in bulk, bringing more legal work as companies tried to assess how they would be affected. In particular, a presidential order imposing minimum freight prices enraged producers who rely on lorries to distribute their goods. They complained that the minimum prices enforced by the government unfairly increased the cost of moving their goods.

Coelho says companies which have contracts for freight are more likely to be safe from the prices alterations, but those which hire logistics companies according to demand may struggle to indentify which freight prices apply. Matters were complicated further yesterday when lorry driver unions rejected the minimum freight prices and presented a new proposal without publishing its content.

Still, Coelho believes this problem will eventually be settled through new legislation, which she expects to emerge from the negotiations between the government, the lorry drivers and the companies which rely on the service.

Other legal issues may just be emerging. Guilherme Rizzo do Amaral, a partner at Souto Correa Advogados who helped a client secure an injunction against a blockade outside the Port of Santos, expects a surge in lawsuits seeking compensation from the strike. “Big construction projects were delayed,” he says. “Imagine when this gets to an arbitration clause and the parties discuss who was responsible for this delay.”

And these delays have hit a wide range of entities, ranging from businesses and consumers that didn’t get their products on time to hospitals which missed medicine deliveries or factories which produce perishable products. “Those are consequences of the strikes yet to be felt,” says Amaral. “A big wave is approaching.”

Ozi is also concerned about the coming legal battles. “This will overload the judiciary again with lawsuits,” he says. “As always, the legal system will have to find a solution, but this generates a lot of insecurity in the short-term for the business environment.”

Events are continue to unfold apace. Yesterday, the Supreme Court demanded a detailed explanation from the government for the new freight prices regulations. The court is currently analysing a class action lawsuit brought by industry associations which rely on road transport to move their products. They argue the government’s executive order hurts the market economy.

For now, the blockades have stopped, but this contentious environment in Brazil is keeping the legal community on its toes. The Temer administration, which is already deeply unpopular, may even be forced to take measures to see off another round of blockades. “This strike has put the government against the wall,” notes Ozi.

Souto Correa’s Amaral takes a similar position. “The situation is likely to get worse at least until the elections,” he says.

https://latinlawyer.com/article/1170550/firms-expect-more-legal-action-from-brazil%E2%80%99s-lorry-driver-strike?gator_td=A%2bnF%2bKjQwLb%2f7UB0stSF45%2fHAPvb0u1ITen5p%2b4Tq5MC2dslYQa%2bj9%2bnng7Hd3hfSLDdtQnI1%2b1e2R6UvYEVBc66mqm4AvehCUGr0%2bar5QZyavCBo9BiRDh4RvP0uOMpRXAx%2bp8mt%2f7FjvE3SPR7n2xKDMUKWBCXV6b9YDJQY6kvPjatmzFT2CeZ4vARSSv7oN8rgWBaLIW%2f9yGcmGecrojyfkN%2fPlC2jw2%2buK%2fRpwFoxL33gCk5IzgBFoZ3IX2p