U.S. Supreme Court Rules Freight Brokers Can Face Negligent Selection Lawsuits

In a significant blow to the trucking and freight brokerage industry, the United States Supreme Court’s decision in Montgomery v. Caribe Transport II, LLC held that negligent hiring claims against freight brokers are not preempted by the Federal Aviation Administration Authorization Act (“FAAAA”). The Court unanimously concluded that the FAAAA’s “safety exception” preserves a state’s authority to regulate motor vehicle safety, including through common-law negligence claims arising from trucking accidents.

In practical terms, freight brokers may now face increased exposure when selecting motor carriers, even though brokers do not own the equipment, employ the driver, maintain the vehicle, enforce hours-of-service rules, or directly control the carrier’s day-to-day safety practices. The Federal Motor Carrier Safety Administration (“FMCSA”) remains responsible for federal safety oversight of commercial carriers, but the Court’s ruling places additional practical pressure on brokers to vet motor carriers before tendering loads.

Justice Kavanaugh, joined by Justice Alito, concurred while recognizing the difficult position brokers may face, noting that federal law does not require brokers to take substantial steps to ensure they select safe trucking companies and that carriers are generally in the best position to monitor their own trucks and drivers. Still, the Court held that state-law negligent hiring claims fall within the FAAAA’s safety exception and may proceed.

Although Justice Kavanaugh cautioned that the decision should not be read to mean brokers will routinely face liability after trucking accidents, the ruling will almost certainly invite more claims against brokers and increase litigation, insurance, and compliance costs across the freight industry.

Should you have any questions, please feel free to contact Heather Ragone hragone@gvlaw.com or Bryan Schwartz bschwartz@gvlaw.com to discuss further.