SCOTUS reshapes freight liability

The U.S. Supreme Court on May 14 unanimously held that freight brokers are not shielded by federal preemption from state-law negligent-hiring suits when a carrier they selected is later involved in a crash. In Montgomery v. Caribe Transport II, LLC, the justices said the Federal Aviation Administration Authorization Act of 1994, or FAAAA, does not bar that kind of claim because states retain safety authority “with respect to motor vehicles.” The case arose from a December 7, 2017 crash on Interstate 70 in Illinois, where Shawn Montgomery was severely injured after his stopped tractor-trailer was struck by a truck driven by Yosniel Varela-Mojena. The load was being hauled for Caribe Transport II, LLC, and the shipment had been arranged by C.H. Robinson Worldwide, a freight broker. For the freight industry, the ruling is narrower than “all shipping negligence” but broader than many brokers had argued. (supremecourt.gov) It does not create automatic liability. It removes a federal defense that brokers had used to seek dismissal of state tort claims at the outset. ### What exactly did the Supreme Court decide? Justice Amy Coney Barrett wrote that even if the FAAAA’s general preemption clause could otherwise reach Montgomery’s claim, the statute’s safety exception preserves it. (supremecourt.gov) The Court said common-law duties, including a duty of reasonable care in hiring a contractor for dangerous work, are part of a state’s safety authority. The justices framed the question as whether a negligent-hiring claim against a broker is a safety rule “with respect to motor vehicles.” They answered yes, because the claim concerns the selection of a company to operate trucks on public roads. (supremecourt.gov) ### Why was C.H. Robinson sued in the first place? Shawn Montgomery alleged that C.H. Robinson negligently hired Caribe Transport to move goods even though, he said, the carrier’s safety record should have warned against using it. (supremecourt.gov) The Supreme Court syllabus says Montgomery claimed Robinson knew, or should have known, from Caribe Transport’s safety rating that hiring it was reasonably likely to result in crashes that could injure others. The lower courts had sided with the broker. The federal district court and the Seventh Circuit held that the FAAAA expressly preempted the negligent-hiring claim and that the safety exception did not save it. The Supreme Court reversed that result and sent the case back for further proceedings. ### Does this mean brokers are now liable every time a carrier crashes? The answer is no. The ruling means plaintiffs may pursue state-law negligent-selection or negligent-hiring theories against brokers; it does not decide whether any broker was negligent on the facts of a specific case. (supremecourt.gov) Montgomery still must prove his claim under the governing state law when the case resumes below. Justice Brett Kavanaugh filed a concurrence joined by Justice Samuel Alito, according to post-decision legal analyses. (supremecourt.gov) Those summaries said the Court resolved a split among federal appeals courts, with the Seventh and Eleventh Circuits having found preemption and the Sixth and Ninth Circuits having allowed such claims. ### Why are insurers and claims teams paying attention? (supremecourt.gov) DLA Piper said the ruling eliminates a federal preemption defense that brokers had used against state tort claims tied to carrier-selection decisions. That matters for insurers because claims that might once have been dismissed earlier can now proceed deeper into discovery and trial preparation, increasing uncertainty around defense costs, indemnity exposure and reserving. That is an inference from the litigation posture described in the decision and post-ruling legal analyses. (dlapiper.com) Industry coverage has also pointed to more scrutiny of broker vetting practices, including how brokers use FMCSA safety data and internal carrier-selection procedures. J.B. Hunt executives said this week the decision had not yet affected the company, but the company also said the ruling could be a long-term positive if it pushes bad actors out of the market. ### What happens next in the courts and in the market? (dlapiper.com) Montgomery v. Caribe Transport now returns to lower court for further proceedings on the merits of Montgomery’s negligent-hiring claim. In the near term, brokers, shippers and their insurers are reviewing contracts, carrier-vetting files and litigation strategy after the Court’s May 14 opinion. (supremecourt.gov) (arkansasonline.com)