For decades, freight brokers have relied on federal preemption under the Federal Aviation Administration Authorization Act
(FAAAA) as a defense against many state-law negligent hiring claims. That changed on May 14, 2026, when the U.S. Supreme Court issued a unanimous decision in Montgomery v. Caribe Transport II, LLC.
The Court ruled that state-law negligent hiring claims against freight brokers are not automatically preempted by federal law when those claims involve motor vehicle safety. In practical terms, this means freight brokers may now face lawsuits alleging they failed to exercise reasonable care when selecting a motor carrier who is later involved in an accident.1
The ruling stemmed from a 2017 accident in Illinois in which a truck struck a tractor-trailer, resulting in the amputation of part of the tractor-trailer driver’s leg. That driver alleged that the freight broker should have known the carrier had a problematic safety record and should not have been selected for the shipment. The Supreme Court ultimately agreed that state courts can evaluate those allegations under state negligence law.1,2
While the decision does not automatically make brokers liable for accidents involving contracted carriers, it significantly expands the circumstances under which brokers may be sued and potentially held accountable.
A LANDMARK SUPREME COURT DECISION
The dispute centered on the FAAAA, a federal law intended to prevent states from regulating the prices, routes, and services of transportation providers. Historically, many brokers argued that negligent hiring claims were preempted because they were directly related to brokerage services.3
The Supreme Court disagreed.
Writing for a unanimous Court, Justice Amy Coney Barrett concluded that negligent hiring claims fall within the FAAAA’s “safety exception,” which preserves state authority to regulate safety with respect to motor vehicles.1,4
The Court reasoned that requiring a broker to exercise ordinary care when selecting a carrier directly concerns the trucks operating on public roadways. Because those claims relate to motor vehicle safety, they remain subject to state law.1
The ruling resolves a longstanding split among federal appellate courts and establishes a nationwide standard moving forward.5
WHY THIS MATTERS TO FREIGHT BROKERS
The transportation brokerage industry plays a critical role in the U.S. supply chain. According to the Transportation Intermediaries Association, there are approximately 28,000 licensed freight brokers operating in the United States.6
For many of these businesses, carrier vetting has traditionally focused on compliance reviews, Federal Motor Carrier Safety Administration authority verification, insurance requirements, safety ratings, and operational qualifications. While those practices remain important, the Supreme Court’s decision increases their legal significance.
Plaintiffs’ attorneys will likely place greater emphasis on questions such as:
- Did the broker review the carrier’s safety history?
- Were there prior violations or conditional safety ratings?
- Was the carrier involved in previous accidents?
- Were warning signs ignored during the selection process?
- Was the broker’s vetting process documented?
The answers to those questions may now become central elements in future litigation.5
Although the ruling specifically addresses freight brokers, its implications may extend further. Manufacturers, distributors, retailers, and other businesses with internal logistics departments often perform many of the same carrier-selection functions. Organizations that hire third-party motor carriers should review their carrier-selection procedures and documentation with the same level of diligence.
THE INSURANCE IMPLICATIONS COULD BE SIGNIFICANT
The most immediate concern for many freight brokers is liability exposure.
Historically, transportation claims often focused on the motor carrier, driver, or vehicle owner. The Supreme Court decision potentially expands the pool of defendants in catastrophic trucking accidents.7
This development may affect:
- Contingent liability programs
- E&O coverage
- General liability placements
- Excess liability structures
- Transportation-specific professional liability policies
Industry observers have also warned that brokers could face a patchwork of state-law standards rather than a single federal framework.8 Because negligence standards vary by jurisdiction, brokers operating nationally may encounter different legal expectations depending on where a claim is filed.9
Although Justice Kavanaugh’s concurrence noted that the decision should not be interpreted to mean freight brokers will routinely face liability after every accident, the ruling nevertheless creates a new layer of legal uncertainty.
The industry is already seeing the impact of this new legal landscape. Following the Supreme Court’s decision, the freight broker involved in the Montgomery case was reportedly hit with a nuclear verdict exceeding $600 million in a negligent hiring lawsuit.11 While every case is fact-specific, the verdict underscores the significant financial consequences brokers may face when plaintiffs successfully challenge their carrier-selection process.
RISK MANAGEMENT IS BECOMING A COMPETITIVE ADVANTAGE
One of the most important lessons from the decision is that risk management is no longer solely an operational function. It is becoming a key liability defense.
Freight brokers that maintain robust carrier qualification standards, documented review processes, and ongoing monitoring programs may be better positioned when claims arise. A strong risk management program should include:
- Formal carrier onboarding procedures
- Written carrier selection guidelines
- Periodic safety reviews
- Documentation retention protocols
- Regular compliance audits
As litigation evolves, freight brokers may begin evaluating transportation providers much like excess casualty underwriters evaluate auto risks. Beyond regulatory compliance, greater emphasis may be placed on factors that influence claim severity and litigation outcomes, including:
- FMCSA BASIC scores and overall safety performance
- The quality of the motor carrier’s insurance program, including carrier financial strength, policy language, exclusions, endorsements, and confirmation that power units are properly insured
- Claims handling capabilities, third-party administrator performance, and loss history
- Fleet safety programs, driver hiring practices, and technology adoption
- Whether the carrier regularly operates in plaintiff-friendly jurisdictions
- Whether higher automobile liability limits should be required before awarding freight
The reasoning is straightforward. Plaintiff attorneys increasingly look beyond negligence to identify financially viable defendants. When a motor carrier’s insurance program is insufficient to satisfy a catastrophic loss, freight brokers may become more attractive litigation targets.
ORGANIZATIONS OPERATING AS BOTH MOTOR CARRIERS AND FREIGHT BROKERS FACE ADDITIONAL CHALLENGES
Transportation companies that operate as both motor carriers and freight brokers under the same organization may face increasing underwriting scrutiny. As liability exposures evolve, many primary and excess insurers are becoming more cautious about writing accounts that combine both operations within a single legal entity.
From an underwriting perspective, separating brokerage and trucking operations can help distinguish the two businesses and reduce the potential for liability to extend across both.
Organizations should work with legal counsel to evaluate strategies such as establishing separate legal entities and DOT authorities, maintaining separate insurance programs where appropriate, and creating meaningful separation of operations, assets, and liabilities.
While these measures may not eliminate liability exposure, they can help create a more defensible organizational structure as brokers, carriers, insurers, and courts continue adapting to the post-Montgomery environment.
WHAT RETAIL AGENTS SHOULD BE DISCUSSING WITH CLIENTS
Transportation agents should proactively discuss the Montgomery decision with freight broker clients and any organization responsible for selecting third-party motor carriers. That includes manufacturers, distributors, retailers, wholesalers, and businesses that manage transportation through internal logistics or shipping departments.
Although these organizations may not identify as freight brokers, they often perform the same carrier-selection functions. As negligent hiring claims continue to evolve, documenting and consistently applying carrier-selection standards has become an increasingly important part of transportation risk management.
Key questions to discuss with clients include:
- Have carrier vetting procedures been documented?
- Are safety reviews performed consistently?
- Is contingent liability coverage adequate?
- Have contracts been reviewed for indemnification language?
- Does the insured have sufficient excess liability protection?
- Are E&O policies designed to address evolving exposures?
For clients who regularly hire third-party transportation providers, retail agents should encourage conversations that extend beyond insurance coverage. Well-documented carrier-selection standards, consistent decision-making, and ongoing carrier monitoring may become increasingly important if those practices are challenged following a serious accident.
BOTTOM LINE
The Supreme Court’s decision in Montgomery v. Caribe Transport II marks one of the most significant freight broker liability developments in years. By allowing state-law negligent-hiring claims to proceed against brokers, the Court has heightened the importance of carrier selection practices, documentation, compliance procedures, and insurance program design.
While the full impact will develop over time, freight brokers should expect greater scrutiny of their risk management practices and a heightened focus on demonstrating reasonable care when selecting carriers.
CRC Specialty helps retail agents navigate these evolving transportation liability exposures through specialized transportation knowledge, deep carrier relationships, and customized insurance solutions. From contingent liability and excess placements to professional liability and complex casualty structures, CRC Specialty understands the unique risks facing freight brokers in today’s changing legal environment. Reach out today.
CONTRIBUTORS
+ Philip Cook is a Casualty Broker with CRC Specialty in Birmingham, Alabama, with more than 20 years of experience specializing in General Liability, Umbrella/Excess Liability, Excess Auto, and other specialty casualty placements for complex construction, real estate, products, and trucking risks.
+ Joe Hartigan is a Broker with CRC Group in Dallas, Texas, specializing in transportation and complex casualty risks.
+ Dan Kelleher is a Broker with CRC Group with nearly two decades of specialty insurance experience and insight into transportation and complex casualty risks.
END NOTES
1. U.S. Supreme Court, Montgomery v. Caribe Transport II, LLC, May 14, 2026. https://www.supremecourt.gov/opinions/25pdf/24-1238_1b7d.pdf
2. SCOTUSblog, Court Rules Freight Brokers Can Face Negligent Hiring Suits Under State Law, May 15, 2026. https://www.scotusblog.com/2026/05/court-rules-freight-brokers-can-face-negligent-hiring-suits-under-state-law/
3. DLA Piper, Supreme Court Rules Freight Brokers Can Be Held Liable Under State Negligence Law, May 2026. https://www.dlapiper.com/insights/publications/2026/05/supreme-court-rules-freight-brokers-can-be-held-liable-under-state-negligence-law
4. Supreme Court Opinion, Justice Barrett Opinion, Safety Exception Analysis. https://www.supremecourt.gov/opinions/25pdf/24-1238_1b7d.pdf
5. CLM Magazine, Supreme Court Expands Exposure for Freight Brokers in Negligent-Hiring Suits, May 2026. https://www.theclm.org/Magazine/articles/supreme-court-expands-exposure-for-freight-brokers-in-negligent-hiring-suits/3448
6. FreightWaves via Yahoo Finance, The Supreme Court Just Told Every Freight Broker That They Can Be Sued. https://finance.yahoo.com/economy/policy/articles/supreme-court-just-told-every-144034621.html
7. Associated Press, Supreme Court Revives Suit Against Major Logistics Company. https://apnews.com/article/
8. Supply Chain Brain, Supreme Court Ruling Reshapes Risk for Freight Brokers. https://www.supplychainbrain.com/articles/44167-supreme-court-ruling-reshapes-risk-for-freight-brokers
9. Logistics Management, Supreme Court’s Montgomery Ruling Reinforces Broker Liability Exposure. https://www.logisticsmgmt.com/article/supreme_courts_montgomery_ruling_reinforces_broker_liability_exposure_but_industry_stakeholders_see_limited_operational_change
10. CDL Life, Supreme Court Rules Freight Brokers Can Be Held Accountable for Commercial Vehicle Crashes. https://cdllife.com/2026/supreme-court-rules-that-freight-brokers-can-be-held-accountable-for-commercial-vehicle-crashes/
11. FreightWaves, C.H. Robinson Hit with Huge Nuclear Verdict in a Post-Montgomery World. https://www.freightwaves.com/news/c-h-robinson-hit-with-huge-nuclear-verdict-in-a-post-montgomery-world