Transportation groups today are voicing “disappointment” in a U.S. Supreme Court ruling which holds that freight brokers may be held liable under varying state laws for accidents involving federally licensed motor carriers.
The move came in a unanimous opinion issued today in Montgomery v. Caribe Transport II, LLC. Specifically, the Supreme Court held a state law claim that a broker negligently selected or hired a motor carrier is not preempted by a federal deregulatory statute, according to transportation law firm Scopelitis.
That decision marks a change in logistics industry standards, since it effectively reverses the status of such claims, which were heretofore considered preempted, Scopelitis said.
In reaction, several transportation groups said the new policy will put an unfair burden on freight brokers, who lack the data required to verify that a carrier has a safe record.
For example, third party logistics (3PL) trade group Transportation Intermediaries Association (TIA) said the new policy is like asking travel agents to evaluate the safety of a given airline despite the fact that the airline has been licensed to fly by the federal government. Since brokers do not employ motor carrier drivers directly, they do not have access to the records and data required to perform the safety functions that plaintiff lawyers contend they must, TIA said.
“We are deeply disappointed with the decision as the law and legal precedent for decades has given the federal government, not states, the responsibility for setting safety standards for motor carriers. To date, carriers, not brokers, have been responsible for complying with these standards,” TIA President & CEO Chris Burroughs said in a releasePresident & CEO Chris Burroughs said in a release. “While brokers are fully committed to safety and to working with federally licensed motor carriers in good standing, the decision imposes an impossible task on brokers — effectively asking them to evaluate the safety of a given motor carrier despite having been deemed safe to operate on public roads by the federal government.”
Freight and logistics service provider C.H. Robinson had previously argued against this outcome, and had a similar reaction to today’s news. “While we are disappointed in the Court’s decision, we will continue to operate responsibly, support stronger federal enforcement, and work constructively with regulators, carriers, and customers to strengthen the national safety system and support safe, reliable transportation across the country,” Dorothy Capers, Chief Legal Officer at C.H. Robinson, said in a release. “As Justices Kavanaugh and Alito stated in the concurrence, ‘Importantly, the Court’s decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents.’”
That increased liability means that freight brokers will likely have to start paying more for insurance coverage, industry voices said.
At least one insurance broker agreed with that assessment, according to New York-based insurance firm Marsh Risk. “Yesterday’s ruling represents an important development for freight brokers and their insurers. Brokers may see increased involvement in bodily injury litigation related to carrier selection, which could lead to higher defense costs and potential indemnity exposure,” Janelle Griffith, Managing Director, Global Logistics Practice Leader, Marsh Risk, said in a statement.
“Insurers are likely to respond by adjusting capacity, attachment points, and underwriting requirements, placing greater emphasis on continuous and demonstrable carrier risk management. For Marsh clients, this means brokers with consistent, data-driven, and auditable carrier selection processes will be better positioned to maintain capacity and negotiate favorable terms, while those without such practices may face more challenges in securing coverage and competitive pricing,” Griffith said.
