Ruling Allowing Negligence Claims Against Freight Brokers Could Create Regulatory Patchwork
In a unanimous decision, the Supreme Court ruled that states can pass laws that allow freight brokers to be sued for negligence. The ruling could harm distributors by creating a patchwork of state-specific transportation regulations, adding costs and increasing the complexity of compliance efforts.
The case, Montgomery v. Caribe Transport II, dealt with a situation where an individual, Shawn Montgomery, was severely injured when his truck was struck by a tractor-trailer on the shoulder of an Illinois highway. In a lawsuit against the driver, the carrier, and the freight broker, Montgomery argued that the broker, C.H. Robinson, had negligently hired the driver and the carrier, making C.H. Robinson liable for the injury.
Business advocacy groups, including the National Association of Wholesaler-Distributors (NAW) and the U.S. Chamber of Commerce, urged the court to rule against the lawsuit. They argued that negligent hiring claims fell within the Federal Aviation Administration Authorization Act’s (FAAAA) purview, superseding state laws. Additionally, they contended that the FAAAA’s limited safety exception did not apply because it only preserved state authority for regulations directly related to motor vehicles, and freight brokers like C.H. Robinson do not operate or maintain trucks.
The Supreme Court rejected those arguments, holding that state laws requiring brokers to exercise ordinary care in selecting a carrier were concerned with motor vehicle safety. As a result, the FAAAA did not preempt the negligent-hiring claim, and the case was sent back to the lower court for further action.
In a statement, NAW said the Supreme Court’s ruling was a “disappointing outcome for wholesale distributors and the broader supply chain community.” The association pledged to work with Congress to pursue legislative solutions that would restore the FAAAA’s federal preemption framework, which provides essential protections for businesses that depend on efficient, predictable interstate commerce.