The Supreme Court is set to resolve a long-standing legal debate over broker liability. SCOTUS will decide whether freight brokers can be held responsible for crashes involving motor carriers they hire.
In some parts of the country, a broker may be held liable for negligent hiring if a motor carrier it contracted with is involved in a crash. In other parts, the broker is off the hook.
The patchwork of court rulings has left stakeholders on both sides of the debate urging the Supreme Court to settle the dispute. Without explanation, the high court has punted on the issue three separate times.
C.H. Robinson was involved in the first major broker liability case. In 2020, the Ninth Circuit ruled in Miller v. C.H. Robinson that the broker could be held liable for negligent selection. Three years later, the Seventh Circuit ruled in favor of broker GlobalTranz, creating a circuit split. Last July, the 11th Circuit aligned with the Seventh Circuit by taking Total Quality Logistics (TQL) off the hook.
The losing party in all three of those broker liability cases asked the Supreme Court to weigh in. All three of those requests were denied.
Typically, the winning party in a circuit court case urges the Supreme Court to reject the losing party’s petition. Why risk the victory? This was true for the first two lawsuits involving C.H. Robinson and GlobalTranz.
By the time plaintiffs in the TQL case filed their Supreme Court petition, all stakeholders were expressing frustration and concerns over the uncertainty caused by the circuit splits.
In pursuit of any resolution, TQL asked the court to grant the petition despite having won the case.
Since then, two more broker liability cases have reached the Supreme Court. TQL is fighting against a loss in the Sixth Circuit. C.H. Robinson is defending a win in the Seventh Circuit. Like TQL’s first bite at the apple, C.H. Robinson urged the Supreme Court to affirm the appellate court’s decision.
Finally, the Supreme Court will settle the score on broker liability. On Friday, Oct. 3, the court agreed to hear C.H. Robinson’s case.
At the core of these broker liability cases is the Federal Aviation Administration Authorization Act (F4A). This act addresses the patchwork of state regulations for motor carriers. 49 U.S.C. §14501(c) prevents states from enforcing laws affecting a motor carrier or broker’s price, route or service. If state laws impact these areas, F4A invalidates them.
All circuit courts agree that broker liability falls within F4A’s preemptive scope. However, §14501(c)(2)(A) carves out an exception allowing states to regulate safety “with respect to motor vehicles.”
Therein lies the debate: Does the safety exception apply to negligent selection actions against brokers?
“The question is important. Under the Seventh and Eleventh Circuits’ holdings, a broker who knowingly selects a dangerous motor carrier or driver is immune from civil liability,” Shawn Montgomery states in his petition. “No matter how dangerous the carrier or driver is, and no matter if the broker has actual knowledge of the danger, negligent-selection claims against brokers cannot proceed in the Seventh and Eleventh Circuits.”
Montgomery argues that the Seventh Circuit was wrong when it determined that the phrase “with respect to motor vehicles” in the safety exception requires a “direct link” to motor vehicles. Even if correct, a broker’s negligence proximately causing a truck crash is a direct link to motor vehicles.
On the other hand, C.H. Robinson argues that brokers have an indirect link to motor carriers. Essentially, they arrange transportation but do not actually drive or own the trucks.
Additionally, C.H. Robinson claims that allowing negligent-selection disputes against brokers will give states new authority to regulate interstate commerce by allowing them to set minimum fitness standards for motor carriers through tort law.
Although such a ruling would eliminate the circuit split, it would effectively create a patchwork of state negligence laws to navigate. That is exactly what F4A shielded against.
“State-imposed barriers to the selection of motor carriers, and therefore their entry into the market, clearly undermine one of the central goals of deregulation,” C.H. Robinson states in its brief.
As of Monday, Oct. 6, the Supreme Court had not decided on TQL’s petition. Oral arguments for C.H. Robinson’s case will be scheduled at a later date. LL
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