Supreme Court Rules That Brokers Can Face State Negligent-Hiring Claims Related To Motor Carrier Actions

What Transportation Brokers, Freight Forwarders, NVOCCs, and Drayage Arrangers Need to Know After Montgomery v. Caribe Transport II, LLC

Key Takeaways

• The Supreme Court unanimously held that negligent-hiring claims under state law against freight brokers are not preempted by the Federal Aviation Administration Authorization Act (FAAAA).
• Brokers should be diligent in selecting a motor carrier because brokers now face liability exposure in the even the motor carrier’s has substandard safety ratings, fails to comply with Federal Motor Carrier Safety Administration (FMCSA) safety regulations, including hiring unqualified drivers, and maintains improper cargo handling practices.
• The ruling applies broadly to any entity that selects a motor carrier — including Property Brokers, Non-Vessel Operating Common Carrier (NVOCCs), surface and ocean freight forwarders, and other intermediaries that arrange inland drayage or intermodal moves — directly and through a co-broker relationship.
• Brokers should review applicable state laws, motor carrier vetting protocols, insurance coverage for both brokers and motor carriers, and broker-carrier and co-broker contract terms.

Background

On May 14, the Supreme Court of the United States resolved a long-standing circuit split in Montgomery v. Caribe Transport II, LLC, No. 24-1238, 608 U.S. ___ (2026), a consequential ruling for every company that arranges truck transportation in the United States.

The case arose from a serious accident in Illinois: a truck driver working for Caribe Transport (a motor carrier selected by broker C.H. Robinson Worldwide, Inc.) struck petitioner Shawn Montgomery’s tractor-trailer, which was stopped on the shoulder of the road. Montgomery suffered severe, permanent injuries. When C.H. Robinson engaged Caribe Transport, the carrier held a “conditional” FMCSA safety rating, with regulatory findings of deficiencies in driver qualification, hours-of-service compliance, vehicle maintenance, and crash rate.

Montgomery sued C.H. Robinson on a negligent-hiring theory: that the broker knew, or should have known, that engaging a carrier with those safety deficiencies was reasonably likely to cause injury to others. C.H. Robinson argued that the FAAAA barred the claim entirely because it provides federal exemption of state laws “related to” the prices, routes, or services of motor carriers and brokers.

The Supreme Court disagreed. The Court held that the FAAAA’s safety exception, which preserves state authority to regulate safety “with respect to motor vehicles,” saves negligent-hiring claims from preemption because requiring a broker to exercise reasonable care in selecting a carrier “concerns” the motor vehicles that will transport the goods.

What the Ruling Means for the Transportation Industry

The ruling is relevant to a wide range of companies that arrange or coordinate over-the-road transportation as part of their operations, including property brokers and surface freight forwarders, and potentially non-vessel-operating common carriers (NVOCCs), ocean freight forwarders (OFFs), drayage providers, and motor carriers that also act as brokers. In the short term, these transportation arrangers should expect an increase in litigation, especially as the new case law develops.

Property Brokers

Property brokers with authority under 49 U.S.C. § 13904 are the most directly affected by Montgomery. Going forward, a broker that engages a motor carrier may face litigation related to cargo loss and damage and personal injury claims even when related to motor carrier actions. Property brokers that hire motor carriers that have a substandard FMCSA safety rating or other US Department of Transportation and FMCSA violations, or in circumstances that may otherwise breach due diligence duties under individual state laws such as state commercial driver’s license (CDL) laws, face potential state tort liability in the event of a cargo loss or damage claim or personal injury claim on the theory that the property brokers failed to properly hire and appropriately vet the carrier.

OFFs and NVOCCs Arranging Inland Transportation

OFFs and NVOCCs that issue through bills of lading or arrange inland drayage as part of an intermodal move occupy a functionally similar position to a property broker whenever they select a motor carrier for the inland leg. Where the NVOCC or OFF contracts directly with a trucking company for port drayage or inland delivery, the carrier-selection logic of Montgomery likely applies with equal force as to whether the OFF or NVOCC has a duty of care in selecting a broker or motor carrier.

The exposure is compounded in the intermodal context because transactions are often structured across multiple layers: The NVOCC or forwarder may engage a domestic freight broker, which in turn selects the actual motor carrier, like a co-broker. As discussed further below, that layered structure does not eliminate the liability exposure for the upstream intermediary. And OFFs and NVOCCs should maintain diligent procedures in their selection of motor carriers as well as in their use of property brokers that, in turn, select motor carriers.

Drayage Arrangers

Companies that arrange drayage to or from ports, rail ramps, or container yards, whether as part of an intermodal move or as a stand-alone service, are in the same position as any other broker under the Montgomery framework when they select a drayage carrier. The fact that the transportation segment is short, port-adjacent, or characterized as “drayage” rather than long-haul trucking does not change the analysis. The FAAAA and its safety exception apply to motor carriers generally, and the Court’s holding is not limited to long-haul movements.

Practical Recommendations

In light of Montgomery, transportation arrangers should take the following steps promptly:

1. Develop Robust FMCSA Safety Rating Vetting Protocols

The carrier’s FMCSA safety rating was the centerpiece of the plaintiff’s negligent-hiring theory in Montgomery. Caribe Transport held a “conditional” rating, which is below the “satisfactory” threshold, and Caribe had specific regulatory findings on driver qualification, hours of service, maintenance, and crash rate. Reviewing and acting on FMCSA safety data is the baseline of reasonable care in carrier selection.

At a minimum, intermediaries should implement the following:

• Screen every carrier through FMCSA’s Safety Measurement System (SMS) and Licensing and Insurance portal before the first load and on a recurring basis.
• Agreements should require that motor carriers notify brokers about any changes in safety ratings, bonds, and licensing.
• Establish clear, written policies specifying which FMCSA ratings; Compliance, Safety, Accountability (CSA) BASIC scores; or out-of-service rates are disqualifying and document exceptions with written approval.
• Require carriers to maintain “satisfactory” safety ratings (or the absence of a “conditional” or “unsatisfactory” rating for carriers not yet rated) as an express condition of the carrier agreement.
• Implement automated alerts for rating changes so that a carrier that falls below acceptable thresholds is immediately flagged and suspended from your approved carrier network.
• Document all vetting decisions. Written records showing the specific data reviewed and the basis for approving a carrier will be critical evidence in defending any future negligent-hiring claims.
• For NVOCCs and OFFs using third-party domestic brokers, require contractual representations that the broker’s carrier vetting program meets specified FMCSA-based standards and audit for compliance.
• Seek a Carrier warranty in Shipper/Carrier or Broker/Carrier agreements that all drivers used in performance of the contract hold valid CDLs and meet all FMCSA qualification requirements.

A documented, systematic, and consistently applied vetting program is the foundation of that defense.

2. Review and Strengthen Insurance Coverage

Prior to Montgomery, many brokers, forwarders, and NVOCCs structured their insurance programs on the assumption that FAAAA preemption would bar negligent-hiring claims as a threshold matter. That assumption is no longer valid. Insurance programs should be reviewed immediately in light of the expanded liability exposure confirmed by the Court.

Key coverage considerations include:

• Contingent liability and broker liability policies should be reviewed to confirm they expressly cover negligent-hiring claims arising from carrier accidents. Many off-the-shelf broker liability policies have exclusions or sublimits that may leave gaps.
• Confirm with insurance professionals that policy limits are adequate to cover catastrophic and other major claims. Montgomery itself involved an amputation and permanent disabilities — the type of claim that can result in multimillion-dollar verdicts. Do not assume that only cargo loss and damage claims will be brought under the negligent-hiring theory.
• NVOCCs and OFFs should confirm that their liability coverage, or any supplemental land transport liability coverage, extends to negligent-selection claims for the inland leg of intermodal moves.
• For drayage arrangers, confirm that general liability or contingent auto liability coverage responds to claims arising from port drayage carrier selection.
• Review umbrella and excess coverage towers to ensure adequate limits above the primary layers.
• Consider whether errors and omissions coverage applies to carrier vetting failures and, if so, whether the limits and retentions are appropriate.

Note that litigation will increase, especially to start, even when a broker was diligent in its motor carrier selection. Budget planning and insurance renewals should account for increased litigation frequency and defense costs, not just indemnity exposure.

3. Include and Strengthen Indemnity Provisions in Broker-Carrier Agreements

If a broker, an OFF, or an NVOCC faces a negligent-hiring claim and the underlying accident was caused by the carrier’s negligence, the intermediary’s ability to recover from the carrier through contractual indemnity can be decisive. Broker-carrier agreements should be reviewed and updated to ensure they provide maximum contractual protection.

Recommended contractual protections include:

• Broad indemnification clauses in which the carrier agrees to defend, indemnify, and hold harmless the broker or intermediary from any claims, losses, or liabilities arising from the carrier’s operations, including personal injury and cargo loss and damage claims brought by third parties, and including with respect to the broker/intermediary’s own alleged fault or negligence. Note that many states have anti-indemnity statutes in favor of motor carriers that may restrict or prohibit contractual indemnity and/or additional insurance protections in favor of a broker or an intermediary.
• Representations and warranties by the carrier confirming, at the time of each engagement, that the carrier holds a satisfactory FMCSA safety rating, maintains required operating authority and insurance, and is in compliance with all applicable federal and state safety regulations.
• Insurance requirements specifying minimum primary auto liability limits (typically $1 million combined single limit for property loads; higher for hazmat), naming the broker or intermediary as an additional insured (with a corresponding waiver of subrogation), and requiring certificates of insurance before dispatch.
• Provisions requiring the carrier to notify the broker immediately of any material change in FMCSA safety rating, CSA score, operating authority status, or insurance coverage.
• For drayage and intermodal arrangements, indemnity obligations expressly covering port-to-door and door-to-port segments that are not limited to line-haul movements.
• Survival clauses ensuring that indemnity and additional insurance obligations survive termination of the carrier relationship so that claims arising from historical loads remain covered.
• Indemnity provisions and insurance obligations for co-broker agreements.

Existing agreements should be audited for these provisions. Many broker-carrier agreements in use today were negotiated before Montgomery was decided and may contain indemnity language that is narrower than what the current liability environment requires. Outdated templates should be updated and re-executed with active carriers.

4. Exercise Heightened Care in Layered Intermediary Structures

The exposure created by Montgomery should be closely reviewed in transactions where an NVOCC or OFF engages a domestic freight broker, which in turn selects the actual motor carrier. In this configuration, multiple intermediaries have arguably participated in the carrier selection process and each may face liability exposure under a negligent-selection or -hiring theory depending on the facts.

Specific risks in layered structures include:

• The NVOCC or forwarder that selects the domestic broker may be found to have negligently hired an intermediary if that broker had a known pattern of engaging substandard carriers or lacked adequate vetting procedures.
• Contract terms in bills of lading that appear to disclaim responsibility for the inland carrier segment may not insulate an NVOCC or forwarder from a state tort claim if, in practice, the NVOCC or forwarder exercised meaningful control over carrier selection. But these contract terms should still be utilized.
• Foreign NVOCCs operating under Federal Maritime Commission licenses should be aware that the Montgomery holding is a matter of state tort law and applies regardless of the nationality of the intermediary or the origin of the shipment, provided the inland segment occurs in the United States.

Recommended steps for layered structures:

• Flow down FMCSA vetting requirements contractually to any domestic broker engaged by the NVOCC or forwarder and include audit rights to verify compliance.
• Require downstream brokers to carry their own broker liability insurance with sufficient limits and to name the NVOCC or forwarder as an additional insured.
• Include indemnification obligations in NVOCC-/forwarder-broker agreements that parallel the broker-carrier indemnification obligations described above.
• Review bill of lading terms and consider whether Himalaya clauses, limitation of liability provisions, or forum selection clauses adequately address state tort claims arising from inland carrier selection.
• Evaluate whether a single-layer structure, in which the NVOCC or forwarder contracts directly with a vetted carrier for the inland leg, reduces overall risk compared to the layered broker arrangement.

Looking Ahead

The Supreme Court’s statutory interpretation of the FAAAA goes into effect immediately. Legislative action to clarify or narrow the scope of broker liability is possible, but there is no indication that any such measure is imminent. Companies should plan and operate on the assumption that the current legal framework, under which negligent-hiring claims against brokers and other intermediaries survive federal preemption, will remain in place for the foreseeable future.

We expect that the case law in this area to develop and focus upon FMCSA safety ratings, so that if the motor carrier had a sufficient rating, with no licensing issues, the broker will have a defense to the negligent-hiring claim. Likewise, the causation prong of the negligent-hiring claim will also develop a standard through the case law.

Unfortunately, because these cases will develop across the country, there could be a patchwork of standards for reasonable hiring and causation that varies in different state and federal courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.