The transportation industry has long relied on federal preemption as a powerful defense against certain state-law claims targeting freight brokers. That landscape changed dramatically with the United States Supreme Court’s recent decision in Montgomery v. Caribe Transport II, LLC. In a unanimous ruling, the Court opened the door for plaintiffs to pursue negligent hiring and negligent selection claims against transportation brokers, a development that is expected to reshape litigation strategy, carrier-vetting practices, and risk management throughout the logistics sector.
The case arose from a serious tractor-trailer accident involving a motor carrier selected by a freight broker. The injured plaintiff alleged that the broker failed to exercise reasonable care in selecting the carrier. The central legal question before the Court was whether such claims are barred by the Federal Aviation Administration Authorization Act (FAAAA), which broadly preempts state laws related to a broker’s prices, routes, and services.
For years, many brokers successfully relied on FAAAA preemption to obtain dismissal of negligent hiring and negligent selection claims. Several federal appellate courts had concluded that these claims were sufficiently related to broker services and therefore could not proceed under state law. The Supreme Court’s decision resolves that debate. The Court held that claims alleging a broker negligently selected a motor carrier fall within the statute’s safety exception and therefore are not preempted. As a result, brokers may now face state-law negligence claims arising from their carrier-selection decisions. This ruling effectively eliminates a defense that had previously provided substantial protection in many jurisdictions.
The decision is particularly significant because it settles a longstanding split among federal courts and overturns precedent that had favored brokers in several circuits. Going forward, plaintiffs will likely be more aggressive in pursuing claims against brokers following serious accidents involving motor carriers. Industry observers widely expect an increase in litigation, discovery demands, and scrutiny of broker carrier-selection practices.
Importantly, the ruling does not impose automatic liability on brokers. Plaintiffs must still establish the traditional elements of negligence, including that the broker failed to exercise reasonable care and that the alleged failure caused the injuries at issue. The Court’s concurring opinion emphasized that brokers who engage in reasonable carrier-vetting practices and work with reputable carriers should be well-positioned to defend these claims successfully. The focus in future litigation will therefore shift from preemption to the adequacy of a broker’s vetting, documentation, monitoring, and decision-making processes.
Notwithstanding, the decision will undoubtedly be perceived by plaintiffs’ attorneys as an invitation to pursue negligent hiring and negligent selection claims against brokers, even in situations where there is little or no evidence that the broker acted unreasonably when selecting a carrier. Brokers should anticipate increased defense costs, greater operational disruption, and a heightened risk that juries or courts may scrutinize carrier-selection decisions with the benefit of hindsight. In addition, because carrier-vetting and carrier-management practices are likely to receive greater attention during litigation, brokers may face increased exposure to arguments concerning agency relationships and vicarious liability.
In this new environment, the most effective protections remain consistent and well-documented vetting procedures, strong contractual protections, comprehensive training, and insurance coverage that aligns with actual business practices. Brokers that proactively strengthen these areas will be better positioned to defend against claims and demonstrate that they exercised reasonable care in selecting and managing motor carriers.
Brokers should begin by carefully reviewing their carrier-vetting policies and identifying the objective criteria they will rely upon to demonstrate reasonable care. Those criteria should be documented in writing and applied consistently. As part of this review, brokers should determine whether they will use carriers with conditional safety ratings and, if so, under what circumstances.
Equally important is documenting the carrier-selection process. When a broker deviates from established criteria because of operational demands, such as an urgent shipment, the reasons for the deviation and any additional safeguards implemented should be clearly recorded.
Brokers should also implement robust evidence-preservation procedures. Bills of lading, proof-of-delivery documents, photographs, seal records, temperature logs, incident reports, and other relevant records should be collected and retained to support future defense efforts.
Insurance verification should be tailored to the risks associated with the shipment. Brokers should confirm that motor carriers maintain adequate automobile liability coverage, cargo coverage appropriate for the commodity being transported, reefer or temperature-control endorsements where necessary, and any additional insured protections required by contract.
Carrier-management procedures should also be reevaluated and formalized. Verification processes should include confirmation of MC and USDOT information, validation of email domains and telephone numbers, review of W-9 and EIN information, scrutiny of banking changes, and direct verification of certificates of insurance through insurers or trusted third-party platforms.
Standard operating procedures should be aligned with both transportation safety risks and product-specific risks. For temperature-sensitive shipments, this may include requirements concerning pre-cooling, set-point verification, temperature monitoring devices, and cargo-handling procedures. For theft-sensitive freight, brokers should consider secure parking requirements and restricted-stop protocols.
Training and auditing are equally critical. Personnel should be trained to identify fraud indicators, follow vetting procedures, document exceptions, respond appropriately to claims, and take immediate action when incidents occur. Regular audits should be conducted to confirm compliance with company policies.
Insurance strategies should be reassessed in light of the increased litigation risk. Brokers should evaluate broker liability and errors and omissions coverage, contingent automobile liability coverage, cyber and fraud endorsements, and claims-handling procedures to ensure adequate protection.
Finally, contracts should be reviewed and updated to include appropriate risk-allocation provisions. Depending on applicable law, this may include indemnification language, prompt incident reporting requirements, cooperation obligations, restrictions on unauthorized subcontracting, compliance with temperature-control and security protocols, GPS or ELD requirements for high-risk shipments, and carefully selected forum and choice-of-law provisions.
In the wake of Montgomery, the transportation industry faces a materially expanded litigation landscape in which freight brokers, logistics intermediaries, and their insurers may face increased scrutiny over carrier-selection practices and safety oversight. As courts begin applying the Supreme Court’s decision across varying factual and jurisdictional settings, early legal evaluation and coordinated claims strategy will be increasingly important. Matthiesen, Wickert & Lehrer, S.C. handles cargo and transportation claims in all 50 states and brings substantial experience in the evolving intersection of federal transportation law, FMCSA regulatory compliance, and broker liability exposure. From catastrophic trucking losses involving broker-arranged carriers to complex disputes concerning negligent selection and non-carrier liability theories, the firm understands the operational, regulatory, and litigation challenges now confronting the transportation industry. Because this area of law remains highly fact-sensitive and continues to develop in real time, the legal distinctions drawn at the outset of a case can significantly affect liability exposure, defense strategy, and ultimate recovery outcomes.
If you have questions regarding this new ruling and how it might affect you, contact Lance Jones at ljones@mwl-law.com. Early involvement can preserve evidence and clarify strategy.
