What you need to know
- Negligent-hiring liability: The Supreme Court unanimously ruled that freight brokers are not shielded from state-level personal injury lawsuits.
- Safety vs. economic preemption: Justice Amy Coney Barrett's opinion clarified that the Federal Aviation Administration Authorization Act (FAAAA) only preempts state laws related to prices, routes, and services—not those concerning motor vehicle safety. Because negligent-hiring claims "concern" the vehicles on the road, they fall under the traditional police power of the states to regulate safety.
- Operational impact on brokers: The decision places a higher burden on brokers to perform due diligence when selecting carriers, as they can no longer rely on federal registration alone as a defense against negligence.
The Supreme Court on Thursday ruled that federal law does not shield transportation brokers from state-level personal injury lawsuits, a decision that likely will have sweeping implications for how freight is managed nationwide.
The 9-0 ruling in Montgomery v. Caribe Transport II, LLC allows a lawsuit to proceed against C.H. Robinson, one of the country’s largest freight brokers. The case was brought by Shawn Montgomery, who lost a leg after being struck by a truck that C.H. Robinson had contracted to move a load through Illinois.
The ruling marks an outcome far different from what many legal experts had predicted and stands in contrast with the outcome C.H. Robinson CEO Dave Bozeman predicted to investors and analysts on the company's earnings call just a few weeks ago: "The Montgomery case is a case that we expect to win," he said.
Freight brokers match shippers with more than 780,000 motor carriers operating in the United States. Montgomery’s suit alleged that C.H. Robinson should have known the carrier it hired had a "conditional" safety rating and a history of driver qualification deficiencies.
During oral arguments in March, C.H. Robinson counsel Theodore Boutrous Jr. charged that brokers are merely middlemen who do not own or operate vehicles, adding that the role of the broker is to match “federally approved carriers with shippers,” and there is no duty on the part of the broker to ensure they match a load with a safe carrier. The fault of failing to provide a safe driver, he said, lies with the fleet and the driver as brokers simply choose carriers from a federally authorized pool.
Transportation Intermediaries Association President and CEO Chris Burroughs Thursday characterized the justices' opinion as one that "imposes an impossible task on brokers—effectively asking them to evaluate the safety of a given motor carrier despite having been deemed safe to operate on public roads by the federal government. This is like asking travel agents to evaluate the safety of a given airline despite the fact that the airline has been licensed to fly by the federal government."
Writing for the Court Thursday, Justice Amy Coney Barrett rejected the industry’s argument that the Federal Aviation Administration Authorization Act (FAAAA) of 1994 preempts such claims. While the federal law prevents states from regulating the "prices, routes, and services" of the trucking industry, Barrett wrote that it specifically preserves a state's "safety regulatory authority" regarding motor vehicles.
"A claim is 'with respect to motor vehicles' if it 'concerns' the vehicles used in transportation," Barrett wrote, noting that requiring a broker to exercise reasonable care when selecting a carrier directly concerns the safety of the trucks on the road.
Carrier selection is key
"Since brokers do not employ motor carrier drivers directly, they do not have access to the records and data required to perform the safety functions that plaintiff lawyers contend they must," Burroughs contended, adding his group is working with its members to assess potential next steps to mitigate the consequences of the Supreme Court’s decision.
Trucksafe President Brandon Wiseman summarized the opinion: "If a broker hires a carrier with obvious safety red flags, it will not get a free pass under FAAAA," he said, adding that the opinion doesn’t mean brokers are automatically liable for highway accidents. "It does mean their carrier selection practices are going to matter even more in litigation," he said. "There will undoubtedly be a lot of commentary on that topic in the months to come."
For carriers, this decision also matters, Wiseman noted. "Poor safety data, conditional safety ratings, and repeated roadside issues may now have an even more direct business consequence," he said.
If brokers may see increased involvement in bodily injury litigation related to carrier selection, that could lead to higher defense costs and potential indemnity exposure.
"Insurers are likely to respond by adjusting capacity, attachment points, and underwriting requirements, placing greater emphasis on continuous and demonstrable carrier risk management," said Janelle Griffith, managing director of Marsh Risk. "This means brokers with consistent, data-driven, and auditable carrier selection processes will be better positioned to maintain capacity and negotiate favorable terms, while those without such practices may face more challenges in securing coverage and competitive pricing."
In a concurring opinion joined by Justice Samuel Alito, Justice Brett Kavanaugh acknowledged industry concerns that the ruling could lead to higher insurance costs and unpredictable litigation. However, Kavanaugh emphasized that Congress intended the 1994 law to deregulate the economics of the industry, not to create a "black hole" where brokers face no safety accountability.
The justices noted it is not obvious why Congress included a safety exception in FAAAA subset (c) but not in (b), but added "it would be even odder to say that the alleged tort—the negligent hiring of an unsafe motor carrier whose truck caused injury—is not an exercise of 'the safety regulatory authority of a State with respect to motor vehicles.'... "Better to live with the mystery than to rewrite the statute."
Thursday's decision resolves a split among federal appeals courts that had left brokers in different parts of the country subject to varying liability standards. It also reverses a decision by the 7th U.S. Circuit Court of Appeals and remands the case for further proceedings.
"Truck safety is a matter of life and death," Kavanaugh wrote, noting that nearly 5,000 people died in truck-related accidents in 2022. He added that brokers who perform "hard questions" and hire reputable carriers should still be able to successfully defend themselves in court.
