BROKER LIABILITY AFTER MONTGOMERY V. CARIBE: NAVIGATING STATE’S “SAFETY REGULATORY AUTHORITY”
BROKER LIABILITY AFTER MONTGOMERY V. CARIBE: NAVIGATING STATE’S “SAFETY REGULATORY AUTHORITY”
By Hannah F. Atkinson
Individuals may pursue negligent hiring claims against brokers when a truck driver causes injury, a unanimous Supreme Court (the “Court”) recognized last week in Montgomery v. Caribe Trans. II, LLC. There, the plaintiff sued C.H. Robinson Worldwide, Inc., a freight broker which organized the shipment and hired the motor carrier whose driver injured the plaintiff.
The Decision
The Federal Aviation Administration Authorization Act (FAAAA) preempts state laws “related to price, route, or service” of motor carriers. 49 U.S.C. § 14501(c)(1). But a “safety exception” states that this preemption “shall not restrict the safety regulatory authority of a State with respect to motor vehicles. ” § 14501(c)(2)(A). The lower courts held that a negligent-hiring claim against a broker did not qualify for the safety exception, and that the FAAAA preempted such a claim. The Supreme Court disagreed.
First, the Court only considered whether the safety exception saved the negligent-hiring claim from preemption. Interpreting “with respect to motor vehicles” to mean a claim “regard[ing]” or “concern[ing]” transportation vehicles, the Court reasoned that selecting a carrier concerns motor vehicles and has a relationship to safety. In its unanimous decision, the Court noted that the motor carrier, Caribe, had a “conditional” safety rating by the Federal Motor Carrier Safety Administration (FMCSA), at the time C.H. Robinson hired the carrier. According to the FMCSA, a conditional safety record means a motor carrier does not have adequate safety management controls, which could result in accidents, fatigued drivers, and other risks. 49 C.F.R. § 385.5 Accordingly, the negligent-hiring claim fell within the safety exception and could proceed.
Looking Ahead
Lower courts have already begun to reverse favorable decisions for brokers in negligent-hiring cases, including the Fourth Circuit as recently as Monday. The federal appellate court issued an order to vacate the district court’s previous decision, which had granted the broker’s summary judgment motion on the negligence claims and had dismissed the broker as a defendant. The district court will now have to reconsider the plaintiff’s claim against the broker considering Montgomery.
While the Court limited its holding to a negligent-hiring claim, Montgomery’s reasoning may extend to other safety-related state-law tort theories, such as negligent retention. As lower courts interpret this decision, they may construe other tort liabilities to fall within the FAAA’s safety exception.
Further, the Court did not define “ordinary care” in the context of hiring motor carriers. As a result, this definition will default to state court interpretations, common law definitions, and may vary state-to-state. This lack of a uniform standard may result in unpredictability for brokers as they begin to face lawsuits in various states.
Practical Steps for Brokers
Given the new litigation landscape following Montgomery, brokers may want to assess their risk exposure and consider any of the following steps:
- Examine and document carrier–hiring policies. As Justice Kavanaugh’s concurrence observed, brokers can defend against suits if they “have acted reasonably and arranged transportation with reputable trucking companies.”
- In practice, at a minimum, this means reviewing publicly available data such as the FMCSA’s Safety and Fitness Electronic Records, which may include a motor carrier’s driver qualifications, crash rates, as well as inspection, repair, and maintenance of vehicles. Brokers can use two FMCSA resources: Company Safety Profiles—which provide more comprehensive, up-to-date information but requires a $20 fee per profile—and Company Snapshots, which offer more limited and less frequently updated information at no cost.
- Brokers should look for a satisfactory rating on FMCSA’s website, indicating that the motor carrier complies with safety standards.
- Further, brokers may wish to document their vetting of motor carriers to defend against potential negligent-hiring claims.
- Consider contractual protection. Brokers may consider including indemnity provisions in future carrier agreements to allocate risk for damages resulting from a driver’s conduct or revise existing agreements to account for this liability exposure.
- Evaluate insurance coverage. Following Montgomery, brokers should confirm that their insurance coverage encompasses these types of claims, as brokers may have structured their insurance around contractual and cargo damage, rather than bodily-injury litigation. As the concurrence recognized, the FAAAA does not currently require brokers to carry this insurance.
For questions or advice on Montgomery, or other transportation related matters, clients can contact members of GKG Law’s Transportation Practice Group, who have decades of combined experience navigating issues arising in the transportation sector.
