US Supreme Court Holds That Brokers Can Be Held Liable Under State Negligence Laws for Hiring Unsafe Carriers
By Joseph J. Ferrini
Today the US Supreme Court unanimously ruled in Montgomery v. Caribe Transport II, LLC that the Federal Aviation Administration Authorization Act (“FAAAA”) does not protect freight brokers from state-level personal injury lawsuits. Justice Amy Coney Barrett’s opinion settled an existing circuit split, holding that although the FAAAA preempts state laws related to prices, routes, and services, it does not preempt state laws allowing negligent hiring claims to be brought against brokers. The Court held that such claims concern motor vehicle safety and thus fall within a safety exception of the FAAAA. The claims are within exercise of states’ traditional police power to regulate safety.
Impact: The ruling allows the many pending negligence claims against transportation brokers around the country to continue and now opens the door to such lawsuits in jurisdictions that had previously ruled that the FAAAA barred such claims. The ruling will have widespread impact on the freight carrier industry, leading to higher prices as brokers (and their insurers) will be forced to defend against such lawsuits going forward and will be susceptible to potential liability in a realm of cases that usually involve injury claims of significant monetary value. Cost increases will occur as brokers engage more robustly in vetting carriers in an effort to avoid susceptibility to such claims.
Joseph J. Ferrini