Today, the United States Supreme Court released its decision in Montgomery v. Caribe Transport II, LLC, et al., unanimously holding that the Federal Aviation Administration Authorization Act of 1994 (the “FAA Authorization Act”), which generally preempts state regulation of freight trucking services, does not restrict state negligence lawsuits against freight brokers who hire unsafe trucking carriers to transport their clients' freight.

The underlying case stems from an accident in Illinois where a driver for Caribe Transport II, LLC, a freight trucking company, veered off the road and collided with the plaintiff's stopped tractor-trailer, causing severe and permanent injuries. The plaintiff sued the driver and the trucking company, as is typical. But, critically, the plaintiff also brought suit against C.H. Robinson Worldwide, Inc., the freight broker that coordinated the shipment, alleging that C.H. Robinson negligently hired the driver and the trucking company. As reflected in the Court’s opinion, at the time C.H. Robinson hired Caribe Transport II, the trucking company had a “conditional” safety rating from the Federal Motor Carrier Safety Administration, which allegedly found deficiencies “'with respect to qualification of drivers,' ‘hours of service of drivers,’ ‘inspection, repair and maintenance,’ ‘recordable crash rate,’ and more."

The Court acknowledged that the FAA Authorization Act contains a broad preemption provision that “prohibits States from ‘enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service’ of any motor carrier or broker ‘with respect to the transportation of property.’” Slip Opinion at 2 (quoting 49 U.S.C. §14501(c)(1).)  However, the Court determined that negligent hiring claims against freight brokers fell within the statute's safety exception, which carves out “the safety regulatory authority of a State with respect to motor vehicles” from the FAA Authorization Act's restrictions. Id. at 6; 49 U.S.C. §14501(c)(2)(A). In doing so, the Court cleared the way for plaintiffs nationwide to bring State law negligent hiring claims, among other potential theories, against freight brokers. 

Montgomery is a watershed decision that will open the door for plaintiffs injured in truck accidents to sue freight brokers directly, significantly increasing brokers' litigation exposure and liability risk. The facts that may ultimately give rise to broker liability for negligent hiring will vary from state to state and depend on the circumstances of each case. But freight brokers should prepare for a potential wave of claims as plaintiffs' lawyers seek to tap new pockets to help fund trucking accident judgments and settlements, which can be significant, especially in cases with severe injuries. In particular, brokers should take stock of how their client and transportation agreements are structured, assess their risk management and vetting practices, evaluate their insurance coverage, and consider retaining experienced counsel to help develop a unified risk management and litigation strategy.