The impact of the May Supreme Court ruling in the Montgomery v. Caribe Transport II, LLC case, which addressed whether Federal preemption under the Federal Aviation Administration Authorization Act (FAAAA) applies to negligent hiring claims involving motor carrier vehicle safety regulations for freight transportation brokers—and stated in the ruling that negligent-hiring claims against freight brokers fall within the FAAAA’s safety exception, which preserves state authority over motor vehicle safety—has subsequently received a fair amount of attention.
That was made clear in a session at the recent SMC3 Connections in Palm Beach, Fla., which included Daniel Hoff, VP, Government Affairs, Transportation Intermediaries Association (TIA), Matt Minton, VP, Carrier Experience, C.H. Robinson, and Jim Mullen, President Truckload Carriers Association (TCA).
The session examined how the Supreme Court’s decision has emphasized the need for robust carrier vetting processes, in addition to other things: the usage of multiple data points and documented vetting processes; technology integration and direct carrier relationships; potential shifts towards larger data-rich carriers; the need for regulatory changes, better data collection, potential insurance market shifts; the necessity of clear standards and public-private partnerships to enhance safety and compliance.
The impetus for the ruling stems from 2017 trucking crash, in which petitioner Shawn Montgomery sustained severe and permanent injuries after his tractor trailer was struck by a truck driven by respondent Yosniel Varela-Mojena, whom was driving a load of plastic pots through Illinois for respondent Caribe Transport II, LLC, with the shipment coordinated by C.H. Robinson. Montgomery sued several parties, including transportation broker C.H. Robinson. He claimed the broker was negligent in hiring the trucking companies because it knew or should have known, based on a carrier’s poor safety record, that they posed a significant accident risk.
Lower courts dismissed the claim, holding that it was preempted by the Federal Aviation Administration Authorization Act (FAAAA), which limits state laws affecting trucking prices, routes, or services. They also found that the FAAAA’s safety exception did not apply.
The Supreme Court reversed those decisions, ruling that negligent-hiring claims against freight brokers fall within the FAAAA’s safety exception, which preserves state authority over motor vehicle safety. Because such claims require brokers to use reasonable care when selecting carriers, they directly relate to the safety of trucks operating on public roads.
From the perspective of C.H. Robinson’s Minton, he explained that even though CHR was the “loser” in this court case, some positive developments have come out of it.
“What it has actually caused us to do is just revisit our process,” said Minton. “We’ve been working in this space for years— safety has always been a priority. When you look at the data and you look at our record of accidents, we’re very safe. We have really robust processes already. We were hoping for more of a national standard, singular standard, but we were ready for either scenario. So, based upon operating model planning, we reacted quickly to the decision, and we made some slight tweaks to our vetting processes, and we feel like we’re in really good shape. I think the one thing that is very clear now is FMCSA data alone is a singular point, and in order to have what is a reasonable case when you’re selecting carriers, you need to go above and beyond. We feel like we always have, and we’re bringing other people with us now. There are still a lot of unknowns, so we’ll see how things evolve over the next couple months.”
TIA’s Hoff explained that when industry stakeholders discuss the Montgomery ruling—and what it means for the industry—it is about what he called basic steps: reviewing your processes; making sure those processes are documented; and ensure that the process itself is followed, and then that documentation exists.
“Then look at the technology that you’re implementing and ensure that that technology matches those processes,” he said. “Are there other technology components that make sense to add on again? Do all of this with your general counsel. And then finally, build relationships with your carriers. Ensure that you have a direct relationship with your carrier and that there’s somebody at that company that you can talk to and that there’s somebody that you can engage with on a person-to-person basis. Rebuilding those connections directly to your carrier is an important way to validate some of the metrics that you’re looking at, but also ensure that there’s communication between the brokerage and carrier.
Hoff added that it’s also really important to note that the FAAAA preemption is not a valid defense for negligent carrier selection, as that was already the case in 30-plus states.
“So, if you were a broker that was moving freight through those states, you would already take that into account a lot of cases, and so again, for us, this is really about reviewing where you are, review what you have in place, and ensure that those processes and the carrier vetting criteria that you have match kind of the risk profile that you’re have, and ensure that all the documentation is in place,” he said. “I wouldn’t characterize this as a reinvention of the industry. This is really more of making sure your processes are in place, recharacterize what you’re doing, and just make sure that you continue to do all of the really great things that the industry has been doing for decades.”
For the TCA, which has some carriers with in-house brokerages as part of its membership base, Mullen noted that, safety is at the forefront of the court’s decision, with TCA firmly believing it will promote safer highways, due to the carrier vetting process.
“We do believe that to be true,” he said. “And then, secondarily—as it relates to our members’ capacity, and what does that mean to the capacity side, as it relates to our customers, our members and their customers—we believe that this will change the dynamics as it relates to the size of the carriers and those carriers that have sufficient robust staff. There’s going to be some collateral effects as they relate to which carriers have enough data, but brokers are going to feel comfortable hiring.”
