Supreme Court faces initial gunfire in broker liability case

After years of litigation over broker liability under federal law, nearly every argument has been explored in lower courts. What sets the current situation apart is that the case of Montgomery vs. Caribe has reached the U.S. Supreme Court.

The process began this week with a filing from attorneys representing Shawn Montgomery, who survived a 2017 accident in which his legally parked truck on an Illinois highway was struck by a vehicle operated by Caribe Transport, a company described in Montgomerys brief as having a remarkably poor safety record. Montgomerys injuries required multiple surgeries, resulting in the partial loss of a leg and chronic pain.

The broker responsible for hiring Caribe Transport was C.H. Robinson (NASDAQ: CHRW). At the district court level, C.H. Robinson argued that the Federal Aviation Administration Authorization Act (F4A) of 1994 protected them from negligence claims because the laws safety exception applies to motor vehicles, and a broker does not qualify as one. Initially, the district court rejected this defense, but the Seventh Circuit later reversed that decision, citing precedent from Ye vs. GlobalTranz and removing C.H. Robinson as a defendant.

After years of the Supreme Court declining to review similar cases, Montgomerys legal team finally secured a hearing this year, giving the Court an opportunity to clarify the conflicting precedents on broker liability. Central to the case are the words: with respect to motor vehicles. The F4As safety exception states that federal law shall not restrict the safety regulatory authority of a State with respect to motor vehicles, allowing for state-level tort claims despite broader federal preemption over routes, pricing, and services.

The legal question before the Supreme Court is whether a broker can be considered with respect to motor vehicles, potentially opening the door for negligence or liability claims. Montgomerys attorneys, including former Solicitor General Paul Clement, argue that the safety exception should encompass brokers. Their brief contends that state regulatory authority extends to claims against brokers for hiring unsafe trucking companies and drivers, holding brokers accountable for resulting injuries.

The brief explains that a claim for negligent hiring is an exercise of state oversight, as it requires brokers to exercise due care in selecting carriers and imposes liability if they fail. Attorneys argue that brokers, by arranging transportation via motor vehicles, cannot separate themselves from the scope of the safety exception. They assert that C.H. Robinson and Caribe must convince the Court to interpret the F4As preemption broadly while reading the safety exception narrowly.

Two additional cases are cited extensively in the Montgomery arguments. Ye vs. GlobalTranz previously protected a broker from liability in a fatal accident case, and its precedent allowed the Seventh Circuit to dismiss C.H. Robinson from Montgomerys lawsuit. Montgomerys legal team strongly criticizes the circuits opinion, calling some findings flat wrong and others a classic non sequitur.

The other frequently cited case is Cox vs. TQL, decided by the Sixth Circuit, which found that TQL was not shielded by the safety exception. Although the Supreme Court has not yet ruled on a related certiorari request, Montgomerys attorneys reference Cox to argue that negligent broker conduct cannot be separated from motor vehicle safety claims.

One of the main points of debate is that brokers are not explicitly mentioned in the safety exception, though they appear elsewhere in the F4A. Montgomerys brief notes that the absence of specific mentions applies to all entities, including motor carriers and drivers, highlighting the flawed logic in prior rulings. According to Montgomerys attorneys, the Seventh Circuits interpretation would effectively eliminate all state-law tort claims under the safety exception.

C.H. Robinson has not commented on the Supreme Court filing. Their response is due by January 14.

Author: Jackson Miller