Supreme Court to consider whether freight brokers can be held liable for negligent hiring

In Montgomery v. Caribe Transport II, to be argued on Wednesday, March 4, the court will consider whether a federal law initially designed to deal with state trucking regulations supersedes state common-law claims holding freight brokers liable for negligently selecting dangerous motor carriers or drivers. That may not sound particularly fascinating, but the issue before the court, which involves the scope of the Federal Aviation Administration Authorization Act of 1994, could have broad liability implications for transportation logistics and the freight broker industry.

The underlying dispute stems from an Illinois highway collision that occurred on Interstate 70 on Dec. 7, 2017. Shawn Montgomery, a truck driver from Missouri, had pulled his 2015 Mack truck onto the westbound shoulder due to a mechanical issue. As he stood outside inspecting the vehicle, Yosniel Varela-Mojena, driving a 1995 Freightliner tractor-trailer westbound at high speed, allegedly veered off the roadway and rear-ended Montgomery’s truck. Montgomery suffered severe injuries, leading to the amputation of his leg and permanent disfigurement.  

Varela-Mojena was employed by Caribe Transport II, an Indiana-based interstate motor carrier. The tractor was owned by Caribe II, while the trailer was leased by Caribe Transport, LLC, a related Florida entity. The shipment, a load of plastic pots from Ohio destined for Arkansas and Texas, was arranged by freight broker C.H. Robinson Worldwide, Inc., and its affiliates, under a carrier agreement with Caribe II.

In the district court, Montgomery brought state-based negligence claims against Varela-Mojena, Caribe II (the tractor owner), Caribe I (which leased the trailer), and Robinson (the freight broker). Robinson moved to dismiss the negligent-hiring counts against it, arguing that Montgomery’s state claims were preempted under the FAAAA’s Section 14501(c)(1), which bars state laws “related to a price, route, or service” of brokers “with respect to the transportation of property.” The district court held that while the negligent-hiring claims related to broker services, they fell within the safety exception of Section 14501(c)(2)(A), which preserves “safety regulatory authority of a State with respect to motor vehicles.”

On appeal, the U.S. Court of Appeals for the 7th Circuit reversed on the basis that “the FAAAA preempts state law claims that a freight broker negligently hired a motor carrier.”

Before the court, Montgomery contends that, contrary to the (seemingly) 7th Circuit’s categorical holding, Section 14501(c)(1) does not supersede his claims, which fall under the safety exception. Effectively, he argues the law targets economic regulations like tariffs, not safety-focused tort claims. Indeed, according to Montgomery, the safety exception was included for just that reason: through it, Congress sought to preserve “longstanding state regulatory authority” “with respect to motor vehicles.” And “[w]hen a state requires a broker to exercise due care in hiring a person who will ‘provid[e] motor vehicle transportation for compensation’ … that exercise of state regulatory authority necessarily occurs ‘with respect to motor vehicles.’”

Montgomery also criticizes a broad understanding of preemption as sweeping away recourse for victims, as well as potentially providing an incentive for brokers to hire risky carriers for profit.

In their brief, the other side counters that “[s]tate-law tort claims, like negligent-selection claims, against brokers are expressly preempted under the plain text of Section 14501(c)(1)” and that the safety exception does not apply here. According to them, this is pure textualism: the safety exception “covers only those state laws with a direct connection to motor vehicles.” Brokers do not possess or operate such vehicles, and “[s]tates have never had authority to impose personal injury liability on brokers.”

As for Montgomery’s claims regarding the practical effect of a ruling against him, those may not be used to get around the text of the statute and “redefine the responsibilities of federally licensed brokers under the guise of motor vehicle safety,” they contend.

The federal government – which filed a “friend of the court” brief – agrees. It argues that the the text requires a “direct connection” with vehicles, and “a state common-law requirement that a broker must exercise due care in selecting a motor carrier does not ‘concern’ motor vehicles.” U.S. Solicitor General D. John Sauer acknowledges that this is a 180-degree pivot from the United States’ prior stance, but he explains that “[f]ollowing the change in Administration, additional intragovernmental consultation and deliberation, and further percolation of the issue in the courts of appeals, the United States has reconsidered that view.”

As for how this will shake out, it is always hard to predict how the court will approach federal preemption, perhaps made even more difficult by the government’s admitted change in position. But, at oral argument, I would expect lots of questions on what does and does not constitute a “direct connection to motor vehicles” and some potentially creative hypotheticals along the way.