The U.S. Supreme Court is currently weighing a high-stakes case, Montgomery v. Caribe Transport II, LLC, that could fundamentally reshape the legal landscape for the multibillion-dollar trucking and logistics industry. At the heart of the dispute is whether freight brokers can be held liable in state court for negligent hiring when a carrier they contract is involved in a serious accident.
The case follows a 2017 accident in Illinois that left plaintiff Shawn Montgomery severely injured. Montgomery sued the broker, C.H. Robinson, arguing they were negligent in selecting an unsafe motor carrier. While lower courts have largely sided with brokers, a patchwork of conflicting rulings across federal circuits has created a volatile environment for national logistics providers.
While an unlikely outcome, if the Supreme Court rules in favor of the plaintiff and against C.H. Robinson, Matt Reh, Partner and Litigation Practice Group Leader for Armstrong Teasdale noted freight brokers could potentially shy away from smaller motor carriers in favor of larger fleets, "because what the property freight brokers are going to want to see is that there are motor carriers out there who can basically offer a more sophisticated assurance that they are the right motor carrier, that they are safe in a way that's independent of what the FMCSA would be saying in the first place."
The legal battle centers on the Federal Aviation Administration Authorization Act (F4A). Brokers argue the Act preempts state-law claims to ensure uniform national standards. Conversely, plaintiffs contend the claims fall under a safety exception intended to preserve a state's right to regulate roadway safety.
Speaker 1:
Will the Supreme Court's decision on broker liability mean business as usual or a major change in trucking?
Speaker 2:
Hey everybody. Welcome back. I'm Jason Cannon. I'm a co-host is Matt Colton. As we talked in last week's 1044, the Supreme Court recently heard arguments in the case of Montgomery versus Kareem Transport, which ultimately will determine if freight brokers are on the hook for damages if a truck driver or trucking company that they hire is involved in an accident hauling freight.
Speaker 1:
The issue in the case is whether the Federal Aviation Administration Authorization Act, F4A, preempts certain common law claims asserting that freight brokers are liable for the actions of contracted motor carriers when operating on the nation's roadways.
Speaker 3:
So my name is Matt Ray. I'm an attorney at Armstrong Teesdale, and I'm based in St. Louis, Missouri. I've been working with C.H. Robinson for probably the last 20 years on any number of legal matters, but most frequently on legal matters that involve allegations of broker liability for accidents that motor carriers and their drivers get into on the nation's roadways. So I was engaged by C.H. Robinson in late 2019 to help them with the Montgomery lawsuit and have been working with them ever since on the matter. I was hired to help the company and to defend it in the trial court, which was a federal court in Southern Illinois. And after a victory there, I was also hired to represent the company in connection with the appeal of the very same case at the Federal Appellate Court, which was the Seventh Circuit Court of Appeals.
So we defended C.H. Robinson in the trial court and at the appellate court, and then provided periodic input to the company in connection with the Supreme Court briefing and the Supreme Court argument.
Speaker 2:
The Supreme Court heard oral arguments in the case on March the 4th, but what led to the case making it to the highest court in the land?
Speaker 3:
Let me just start at a very high level, which is to say that every state has its own court system, state court systems. And then there are a number of federal courts across the country as well. And sometimes lawsuits against truck drivers, motor carriers, and brokers get filed in state court. Sometimes they get filed in federal court. And what has happened is that in many cases, each jurisdiction has adopted its own set of rules or its own set of laws as it relates to those kinds of lawsuits and the claims that get asserted. And so what happened over the course of, say, the last maybe 15 or 20 years is that there's been a real patchwork of law that has developed because as you might imagine, one court in one state may rule a particular way, another court and a different state may rule in a different way.
Federal courts themselves are divided into different circuits, and sometimes one circuit has decided that the law is supposed to be a certain way, and another circuit has decided that it's a different way. So the basic gist of this is that there are a number of inconsistent laws or a number of inconsistent legal opinions that have resulted in a patchwork of kind of legal regulations or kind of a patchwork of the law across the country that has created uncertainty both for brokers and for motor carriers and truckers, as well as people who have been injured in accidents involving trucking companies. So it's this split in the circuits or this patchwork of the law that has resulted in the Supreme Court taking the case to try to bring some clarity for everybody as to what the law is and to really bring some uniformity to what it would be.
The reality is that the law sometimes moves slowly and the law sometimes evolves over time. I think it's clear to everybody that there has been this patchwork that has existed for a long time. Other brokers and other injured parties have tried to get this to the Supreme Court in the past, and the Supreme Court has not agreed to accept those cases or to weigh in at that time. But I think what has happened is there has been more and more of a split, and there has been more and more of a patchwork of the laws across the country, and the court seeing that has decided that the time was now to address this. So it's really just more the nature of the law and the evolution of the law over time that has resulted in this landing at the Supreme Court at this time.
Speaker 1:
As mentioned before, the Supreme Court justices will determine whether the F4A preempts common law when it comes to negligent hiring claims. What does that really mean?
Speaker 3:
So the ultimate issue is, does the FAA, which is the Federal Aviation Authorization Administration Act, does that preempt certain state law, common law causes of action? And if so, to what extent is that preemption? And just for the people who follow you and who are tuning into what you're writing about and what you're presenting here, preemption basically is the idea that a federal law should trump or should eliminate a state law. And there are certain circumstances where that can happen. And so what the broker industry is arguing, what C.H. Robinson is arguing here is that this FAA features certain language that is meant to preempt or to trump state law common law causes of action. And the allegation here in particular is that it should preempt or trump negligent hiring or negligent retention claims that are filed against brokers. The idea behind a negligent hiring or a negligent retention claim is that a broker knew or should have known that a motor carrier or the driver who worked for the motor carrier, for some reason, weren't competent or weren't capable of hauling a load or hauling loads on the nation's roadways, and that the broker ought to be held accountable or liable for that.
So at a high level, it's really, does this federal law preempt or trump state law common law causes of action?
Speaker 2:
Matt says there are a few different directions the Supreme Court could end up going when its decision comes down.
Speaker 3:
In terms of how the Supreme Court could go, I think it could say that only negligent hiring or retention claims are preempted. It could go a little bit further and say that all common law causes of action against brokers under the banner of negligence are also preempted. It could also say that nothing is preempted. So I view those as being kind of the handful of outcomes that we could see from the Supreme Court.
Speaker 1:
The FMCSA is responsible for ensuring that registered motor carriers are fit to operate. Brokers are arguing that that should remain FMCSA's duty rather than shifting that burden to brokers.
Speaker 3:
What the broker industry is saying in this case is that plaintiffs who are injured parties are trying to shift a regulatory burden from the FMCSA to the broker industry itself when the FMCSA is the authorizing body and is the best entity to be able to evaluate motor carriers and motor carrier safety in the first place. So all of that is a long way of saying that if the Supreme Court rules against C.H. Robinson and rules against the broker industry in the process, that more of that regulatory burden is going to be hoisted onto property freight brokers as opposed to the FMCSA.
Speaker 2:
Now, based on the March 4th hearing, Matt says there wasn't much indication from the justices of which way the court might be leaning in this case.
Speaker 3:
I don't have an indication on which way it might go. I will tell you that my own assessment was that it looked like there were three justices who were viewing things in a way that was more consistent with the plaintiff's position. It looked like there were three justices who were viewing it in a way that was more consistent with C.H. Robinson's position, and then there were three where it wasn't really clear. So to me, that tells me that this is a little bit hard to predict, so I don't know which way this will go at this point. The court will probably make its decision sometime between now and mid-June, so I would expect for all of us to have more clarity on this in the relatively near future.
Speaker 1:
So how would a decision in favor of the plaintiffs affect the trucking industry?
Speaker 3:
If the Supreme Court rules in favor of the plaintiff and rules against C.H. Robinson, I think what you will see is probably property freight brokers who are using larger motor carriers as opposed to engaging less often with smaller motor carriers, because what the property freight brokers are going to want to see is that there are motor carriers out there who can basically offer a more sophisticated assurance that they are the right motor carrier, that they are safe in a way that's independent of what the FMCSA would be saying in the first place. So that's kind of my big broad prediction, but I would also tell you that that's one person speculating on what the industry might look like after this potential opinion comes out.
Speaker 2:
On the flip side, if brokers score a win, Matt says, "We'll likely see business as usual." If that's how this case turns out though, will this be the end of brokers getting sued in crashes involving the carriers that they hire?
Speaker 3:
If the Supreme Court rules in favor of C.H. Robinson and rules in favor of the freight broker industry, I think you're going to have that clarity for the industry. You're going to have a lot more uniformity, a lot more predictability. So yes, I think it would probably be business as usual, but with that greater level of clarification involved. I think it depends on how far the Supreme Court goes. If it says this opinion only addresses negligent hiring and negligent retention claims, then those claims will go away, but it may be that injured people argue that a company like C.H. Robinson is still liable under a theory of vicarious liability. The idea that perhaps a property freight broker exerted some kind of control over a motor carrier or a driver such that the property freight broker kind of owned their actions or their omissions and were therefore liable for them.
So if the court only addresses negligent hiring or negligent retention claims and doesn't address anything else, I think there is still an opportunity for some plaintiffs to potentially argue that they can pursue other claims against Robinson and against property freight brokers. If the Supreme Court says that even those kinds of claims are barred, then I think that you'll see fewer claims in a dramatic way against property freight brokers. The important thing to note though is that if this case is a complete victory for C.H. Robinson and for the property freight broker industry, it doesn't mean that those who have been injured are without any kind of relief or without any kind of redress. They can still pursue claims against the truck drivers and against the trucking companies themselves.
Speaker 1:
One thing that could change that is if Congress changes the law around the F4A preemption.
Speaker 3:
In a lot of ways, the Supreme Court's decision is the final word. However, I think that regardless of the outcome, it's entirely possible that there's a legislative follow-up solution to this that changes the law, and that could be something that changes the law in favor of the property freight broker industry or in favor of injured parties. Again, the question is, is Congress capable of getting together and doing that? I feel like these days, Congress is pretty divided, and perhaps this isn't something that's capable of a legislative solution at this point, but to kind of circle back to your original question, certainly a legislative congressional solution is something that could happen regardless of what the outcome is at the Supreme Court.
Speaker 2:
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