C.H. Robinson Sees Clarity in Montgomery Decision

“What doesn’t change, and will never change, is that safety is a core principle,” Capers said. (C.H. Robinson)

C.H. Robinson expressed optimism that a recent Supreme Court ruling in a case involving the company provides necessary clarity for freight brokers selecting carriers.

The Eden Prairie, Minn.-based third-party logistics company has been accused of negligently hiring a motor carrier involved in an accident. The resulting case, Montgomery v. Caribe Transport II, asked whether freight brokers are protected by federal law from state lawsuits over negligent-hiring claims. The Supreme Court ruled May 14 that the Federal Aviation Administration Authorization Act does not shield brokers from such claims.

“The Supreme Court’s decision in Montgomery v. Caribe gives the clarity we sought for the industry on whether freight brokers would continue to be governed by a clear, nationally consistent safety framework or a 50-state patchwork of standards,” Dorothy Capers, chief legal officer at C.H. Robinson, told Transport Topics.

The Federal Aviation Administration Authorization Act generally prevents states from regulating broker prices, routes and services. But it also contains a carve-out preserving state authority over motor vehicle safety. Federal courts had split on whether the law pre-empted negligent-hiring claims, creating the regulatory patchwork.

Shawn Montgomery brought the case after being struck by a truck operated by Caribe Transport II. His lawsuit claimed the accident resulted from negligence because the driver and carrier had a history of recent crashes. The lawsuit accused C.H. Robinson of sharing liability because it hired the carrier despite those issues.

“The answer is that in some circumstances, brokers can be held liable in state courts over trucking accidents,” Capers said. “In his concurring opinion, Justice Brett Kavanaugh said liability is not automatic.”

Kavanaugh stressed in that opinion that the decision shouldn’t be interpreted to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. Legal experts and analysts have echoed that point. Susquehanna International Group said in a report that while the ruling creates adverse ramifications for the brokerage model, the concurrence language wasn’t as harsh for brokers as the ruling’s headline outcome might suggest.

“The decision has also created a new question mark because the Supreme Court expects shippers and brokers to exercise ‘reasonable care’ in how they select carriers but did not define what that standard entails,” Capers said. “It is now up to shippers and brokers to determine how they define ‘reasonable care’ and how they apply it in their operations.”

Benesch made a similar point in a client alert that warned the court did not define what reasonable care is. But the law firm did highlight some potential clues in the concurring opinion, such as the acknowledgment that brokers may not always be in a good position to objectively assess the relative safety of different trucking companies. The brief concluded that this means freight brokers should not be held to an unattainable standard of care when evaluating carriers.

“What doesn’t change, and will never change, is that safety is a core principle,” Capers said. “That’s why our standards already exceeded legal requirements before the Montgomery decision, and why we implemented new safety measures within a week after the ruling.”

C.H. Robinson said in a notice shortly after the ruling that this very ambiguity showed the importance of getting its own standards right. The company deployed additional steps in its carrier safety and vetting processes with the aim of exceeding the standard of reasonable care. The set of carrier safety and risk criteria covers carrier authorities, federal safety ratings, auto liability coverage and an internal safety analysis, with carriers re-evaluated on a regular basis.

“The Montgomery decision affects the whole industry,” Capers said.

C.H. Robinson ranks No. 2 on the Transport Topics Top 100 list of the largest logistics companies in North America and No. 21 on the TT Top 50 list of the largest global freight companies.