The US Supreme Court ruled late Thursday morning that freight brokers can face state-law negligent hiring claims when they hire unsafe trucking firms that later cause crashes.
FreightWaves founder Craig Fuller responded to the ruling on X, saying,
OMG, this is the most pivotal moment in trucking history since Deregulation. It could be an extinction event for 30-50% of all freight brokers.
In other words, this decision will raise liability costs across the freight industry but could force out unsafe trucking firms, some of which have hired illegals.
The case, Shawn Montgomery v. Caribe Transport II, US, No. 24-1238, centers on C.H. Robinson, which arranged a shipment carried by Caribe Transport II. The carrier's driver struck Shawn Montgomery's tractor-trailer in Illinois, causing severe and permanent injuries. Montgomery alleged that C.H. Robinson should have known Caribe posed safety risks given its poor federal safety rating.
Justice Amy Coney Barrett, writing for the High Court, said the Federal Aviation Administration Authorization Act does not shield brokers from such claims because states retain authority over safety "with respect to motor vehicles." The ruling reverses the Seventh Circuit and sends the case back for further proceedings.
Justice Brett Kavanaugh, joined by Justice Samuel Alito, said the case was close but agreed that Congress did not intend to leave brokers in a "black hole" with no meaningful safety accountability. He also acknowledged that the ruling could lead to higher litigation, insurance, and due diligence costs, which may ultimately raise shipping costs.
The Trump administration urged the justices to rule against Montgomery's claim, saying that allowing liability for freight brokers under state tort law would create regulatory nightmares for the nation's freight transport industry.
Bloomberg litigation analyst Holly Froum noted:
CH Robinson, Landstar, JB Hunt Dealt Costly Supreme Court Ruling
Trucking brokers including CH Robinson, Landstar along with companies with transportation brokering operations like JB Hunt, Werner Enterprises and others were dealt a setback by the US Supreme Court's May 14 ruling allowing states to impose personal-injury liability for trucking accidents. A majority of the justices found that state law negligent hiring claims could continue and weren't preempted by federal law, as we expected they would.
Shares of C.H. Robinson and Landstar fell after the ruling, while JB Hunt moved higher.
Trucking advocacy group American Truckers United stated on X, "A bomb has dropped on the criminal freight brokers!"