What the Supreme Court's Montgomery v. Caribe Transport Ruling Means for Freight Brokers & Carriers

The U.S. Supreme Court has handed down its unanimous decision in Montgomery v. Caribe Transport II, LLC. But why is this case specifically making headlines?

If you're a freight broker, this ruling directly affects your carrier vetting process and, potentially, your insurance premiums. If you're a carrier, your responsibility to operate a safe, compliant company now has a spotlight shining on it.

Background on the Transformative Case

Shawn Montgomery, a driver who lost his leg when a Mack Truck hauling plastic pots through Illinois veered off course and rear-ended his stopped vehicle, sued C.H. Robinson, among others, arguing that the broker was liable because it knew, or should have known, that Caribe Transport II, LLC was an unsafe choice to ship its goods.

Montgomery sued C.H. Robinson under a legal theory called negligent hiring, arguing that the broker had a responsibility to vet the carrier it placed on the road and failed to do so adequately.

The case wound its way through the courts with this central question: Can a freight broker be sued under state law for choosing an unsafe carrier?

Until now, most brokers were protected by a federal law called the Federal Aviation Administration Authorization Act (FAAAA). The FAAAA generally preempts state laws related to the prices, routes, or services of brokers and motor carriers. Brokers have long argued that this preemption wiped out negligent-hiring claims against them entirely.

The ruling of this case now removes that layer of protection for brokers. 

The Supreme Court's Decision: 9-0

The ruling was unanimous. Justice Amy Coney Barrett wrote the majority opinion, and Justice Brett Kavanaugh filed a concurrence (joined by Justice Samuel Alito), noting the case was "closer than the majority opinion suggested," but still agreeing with the outcome.

Here's the core of the legal reasoning, simplified:

The FAAAA does preempt many state laws, but it contains a safety exception which preserves states' authority to regulate safety "with respect to motor vehicles." The Court asked one question: Is a negligent-hiring claim against a freight broker a claim that concerns motor vehicles?

The answer was yes. When a broker selects a carrier, they are choosing the trucks that will travel on public highways. Requiring brokers to use reasonable care in making that selection concerns motor vehicle safety. Therefore, the safety exception applies, and the FAAAA's preemption shield does not protect brokers from these claims.

As Justice Barrett wrote, the holding is straightforward: a state negligent-hiring claim against a freight broker is not preempted by the FAAAA.

Why Justice Kavanaugh's Concurrence Matters

Kavanaugh acknowledged two arguments that actually favored the brokers. First, Congress set minimum insurance requirements for trucking companies but not for brokers, suggesting lawmakers may not have anticipated negligence claims against brokers for carrier selection. Second, he noted an odd asymmetry: state negligence suits are now allowed for interstate brokerage but preempted for intrastate brokerage. 

But he also explained why those arguments ultimately lose. The FAAAA was an economic deregulation statute, not a safety deregulation statute. Congress left state-level negligence suits against trucking companies fully intact. 

More importantly, there is currently no meaningful federal safety regulation of broker carrier-selection practices. The FMCSA requires brokers to use federally registered carriers, but it doesn't impose standards on how brokers vet those carriers. If preemption wiped out state law and federal law filled in nothing, brokers would operate in what Kavanaugh called "a black hole with no meaningful safety-related regulation."

What This Ruling Means for Freight Brokers

The preemption defense that many brokers have relied on is now gone. Brokers are now subject to state negligent-hiring claims in every jurisdiction where they arrange transportation.

Juries will now be allowed to ask: Did this broker exercise reasonable care when selecting the carrier that caused this accident?

That question opens the door to the discovery of:

• Carrier vetting policies and procedures
• The FMCSA safety data available to brokers at the time of selection
• Internal communications with the carrier before dispatch
• Whether brokers reviewed (or ignored) red flags like elevated crash rates, conditional safety ratings, or high out-of-service percentages

The Commercial Insurance Picture is About to Shift

The current broker surety bond requirement is $75,000. That's a financial responsibility bond, not liability insurance, and it doesn't cover tort claims. Many brokers carry some general liability coverage, but very few are positioned for the kind of verdicts that have become common in trucking litigation, where eight- and nine-figure outcomes are no longer rare.

The insurance market hasn't fully priced this exposure yet. When it does, premiums will adjust for brokers who can't demonstrate a systematic carrier vetting process. Brokers who can show documented, data-driven selection practices will be in a better position with underwriters.

Three Things Brokers Should Do Right Now

1. Build or audit your carrier vetting process. If you don't have a documented carrier selection process, build one. If you have one that just checks for active authority, it needs to go deeper. The FMCSA's SAFER system is free, public, and provides SMS BASIC percentile scores, crash rates, out-of-service rates, and inspection history. If a carrier's data shows elevated risk and you book them anyway, be prepared to explain why.

2. Start documenting. The vetting you do, the data you review, the criteria you apply — document all of it with timestamps. If a subpoena arrives years from now asking what you knew about the carrier you dispatched on a load that ended in a fatality, you want to have a paper trail to support you. An absence of records is compelling evidence in a negligent-hiring case.

3. Review your insurance coverage today. Talk to your insurance broker now. Ask whether your current policy responds to a negligent-hiring tort claim. Ask what your exposure looks like in the post-Montgomery environment. Don't wait for the industry to reprice this before you find out where you stand.

Reducing Risk & Prioritizing Compliance

The Supreme Court's message to freight brokers is a simple one: if you pick the carrier, you own that choice.

The brokers who will be most exposed are those who have no documented carrier vetting process, ignore publicly available safety data, and select carriers based purely on price or availability. The brokers who will be best positioned are those who can walk a jury through a systematic, reasonable, documented process for evaluating carrier safety and show they followed it. 

Carriers should always prioritize their compliance with FMCSA regulations, but this case places even more weight on the responsibility of running a safe, compliant operation to increase their chances of working with reputable brokers and reduce their risk of litigation. 

Foley's experts can help you navigate FMCSA compliance in a challenging legal landscape. Schedule a call with us today to discuss your risk profile and DOT compliance requirements.