The Supreme Court Just Stripped Brokers of Their Biggest Legal Shield

The freight brokerage industry has operated for decades under a legal assumption that is now gone.

On May 14, the U.S. Supreme Court ruled unanimously in Montgomery v. Caribe Transport II, LLC that state-law negligent-hiring claims against freight brokers are not preempted by the Federal Aviation Administration Authorization Act (FAAAA). The 9-0 decision, authored by Justice Amy Coney Barrett, resolved a longstanding split among federal circuit courts and eliminated the preemption defense that brokers had used for years to defeat tort claims arising from carrier selection decisions.

The implications of this case are immediate and far-reaching for brokers. The ruling does not impose automatic liability, but it opens the door for plaintiffs to challenge how brokers vet and select carriers in state courts nationwide. And according to Josh Lovan, Industry Business Advisor at J. J. Keller & Associates, Inc., the significance of this moment is difficult to overstate.

“For brokers, this is everything,” Lovan said. “One of the biggest changes that’s occurred in transportation in the last two decades. It fundamentally shapes how freight is going to be moved.”

The shield is gone

For years, brokers relied on the FAAAA’s broad preemption of state laws related to prices, routes, and services as a blanket defense against negligent hiring claims. That legal posture often stopped cases cold before they reached a jury. The Montgomery decision turns on the FAAAA’s safety exception, which was a carve-out preserving state authority to regulate safety with respect to motor vehicles. The Court held that negligent-hiring claims fall squarely within that exception.

Justice Brett Kavanaugh, in a concurrence joined by Justice Samuel Alito, acknowledged the ruling could increase insurance costs for brokers but stressed that the FAAAA was an economic deregulation statute, not a safety deregulation statute. He also pushed back on fears that the decision would bury brokers in litigation, writing that brokers who select reputable carriers “should be able to successfully defend against state tort suits.”

But the key word there is “defend.” Brokers can no longer sidestep the question entirely. They now have to demonstrate that their carrier selection was reasonable, and that means documentation, consistency, and verifiable safety criteria.

“Brokerage has exploded in recent years, and this ruling is pulling the shield away from many brokers who have gotten away with negligence,” Lovan said.

The ruling doesn’t prescribe a specific federal standard for what constitutes reasonable care in carrier selection. Instead, that question will be answered by state courts, creating what several industry groups have warned could become a patchwork of varying requirements across jurisdictions.

What it does make clear is that basic vetting, such as confirming a carrier has active authority and insurance on file, is no longer sufficient.

“J. J. Keller’s Carrier Risk Review Service is validating that the carrier has an active USDOT number, the right operating authority, the right insurance forms filed with FMCSA, MCS-90, and a satisfactory rating,” Lovan said. 

Brokers must now approach carrier selection as a question of defensibility, not just availability. “The question is no longer just ‘Who can I use to move this?’” said Lovan. “The question is, ‘Can I defend this carrier if an incident occurs?’ Conventionally, a lot of brokers cut corners to fill trucks, but now you have the responsibility to defend the carrier.”

That shift echoes what legal analysts have said about the ruling’s practical effect. Ron Leibman, a partner at McCarter & English who represents brokers, told Trucking Dive that the decision is straightforward in its scope: “A state law negligent claim can be brought against you. You can defend it. That is all the court said.” But defending it requires a paper trail, a process, and a standard applied consistently across every load.

A documentation problem becomes a litigation problem

Lovan identified three operational shifts brokers need to make immediately in response to the ruling.

“First, elevate carrier vetting to a defensible standard,” he said. “The Court made it clear that brokers have a duty to exercise reasonable care when selecting carriers, and that decision can now be challenged in court. Reviewing authority and insurance is no longer enough. Brokers need to consistently evaluate safety ratings, inspection history, and patterns in violations such as driver qualification, hours of service, and maintenance.”

“Second, document every carrier selection decision,” Lovan continued. “The biggest shift from this ruling is not just liability exposure — it is the need to prove your process. The legal defense is no longer based on preemption, but on whether the broker acted reasonably in selecting the carrier. That means brokers need a consistent, repeatable vetting process with clear records of what was reviewed, what risks were identified, and why a carrier was approved. In a post-incident environment, the file matters just as much as the decision itself.”

“Third, standardize and enforce your safety criteria across the network,” Lovan said. “This ruling will push brokers to tighten their networks and apply more consistent thresholds for carrier approval. If standards are inconsistent or loosely applied, that creates exposure. Brokers need clear policies for what is acceptable, what requires escalation, and what disqualifies a carrier, and those policies need to be followed every time.”

That last point matters in a legal environment where plaintiff attorneys will scrutinize not just what a broker did in a single transaction, but whether the broker’s broader practices reflect a pattern of due diligence or a pattern of cutting corners.

The data gap makes this harder

One of the most significant complications underlying the ruling is the state of federal safety data itself. According to FMCSA data, roughly 90% of active interstate motor carriers do not have a formal safety rating. The agency’s compliance review process (the mechanism through which carriers receive satisfactory, conditional, or unsatisfactory ratings) has reached only a fraction of the industry due to limited staffing and resources.

Brokers often rely on carriers who often don’t have a safety rating, Lovan said, because otherwise it would be difficult to compete in moving freight.

That reality now makes the broker’s own vetting process all the more critical. When the federal rating system covers only a sliver of the carrier population, the burden of identifying risk shifts to the party making the selection decision. Lovan pointed to Caribe Transport’s documented deficiencies (the kind of red flags visible in publicly available data) as the type of signal brokers must now actively screen for.

“A lot of carriers with a conditional rating simply haven’t gone through an audit,” Lovan said. “This lawsuit indicated things that motor carriers should take an interest in. DQ files and hours of service violations are two of the most often cited during an FMCSA audit. You can’t just select who’s next up and who’s cheapest.”

Chameleon carriers, public scrutiny, and the proliferation problem

The ruling arrives at a moment of heightened public awareness around carrier safety. In April, CBS News’ 60 Minutes aired an eight-month investigation into chameleon carriers, trucking companies that accumulate safety violations, shut down, and reopen under new names with clean records. The investigation revealed that carriers connected to one network alone had logged nearly 15,000 safety violations and 500 accidents in just two years, according to Department of Transportation data. Chameleon carriers are four times more likely to be involved in severe crashes.

These types of mainstream stories, according to Lovan, are a sign that the conversation around carrier safety has moved well beyond the industry press. “The general public is watching this,” he said.

Lovan also flagged a broader structural concern: “The barrier to entry is lower for brokers, so there are many new entrants,” he said. “There’s been a surge in the brokerage world, and we’ve seen an increase in the unsafe carriers that brokers are using.”

The brokerage industry has expanded rapidly in recent years, with approximately 28,000 freight brokers now arranging about a third of all U.S. freight shipments. The combination of lower barriers to entry, fragmented safety data, and the speed at which loads are tendered has created an environment where vetting can become an afterthought. That’s precisely the kind of environment that the Montgomery ruling now exposes to legal risk.

“A lot of brokers do have a good vetting process, but you have to have a consistent program in documentation,” Lovan said. “They have to demonstrate why they selected a carrier and demonstrate the threshold for what criteria they’re using.”

Where plaintiff attorneys will focus

The litigation exposure created by the ruling is not distributed evenly. In states without meaningful caps on noneconomic damages (including states like New York, Pennsylvania, and Illinois, where constitutional provisions or court decisions have blocked or limited tort reform), plaintiff attorneys will find the most favorable conditions for pursuing high-value claims.

According to ATRI’s 2025 forensic analysis of trucking litigation, the national median total award in trucking tort cases was $1.3 million, and the numbers escalate sharply from there. The median nuclear verdict reached $36 million in 2022, roughly 50% higher than in 2013, and the share of verdicts exceeding $50 million rose by 6.4 percentage points over that span.

Cases involving hours-of-service violations or a history of driver violations resulted in plaintiff verdicts 100% of the time in ATRI’s dataset, and these are the exact categories of deficiency cited in the Montgomery case.

“That’s how you end up with a $50 million judgment,” Lovan said. “Those states [without tort reform] and those cases are where plaintiff attorneys will focus their efforts. Plaintiff attorneys across the country have taken note.”

The decision will drive up the number of legal cases going forward. Industry analysts indicate that the ruling will push volumes toward compliant capacity while driving non-compliant carriers out, further tightening supply-and-demand dynamics in favor of carriers with strong safety records.

Building a defensible process

The Montgomery ruling is framed primarily as a broker liability case, but its downstream effects reach carriers directly. Brokers will prioritize carriers with clean inspection histories, documented compliance programs, and stable safety metrics. Carriers with poor CSA scores or unresolved deficiencies face the real prospect of being shut out of broker freight.

“This will affect the supply chain in a positive way,” Lovan said. “It will force unsafe carriers who rely on brokers to get their safety metrics in order. A lot of these carriers should be eliminated before they get a load.”

CSA scores remain in a company portal for two years and carry a severity rating. “Creating a culture of safety takes time,” Lovan said. “Begin today. Eighteen months down the road, you can be a compliant carrier.”

J.J. Keller’s Carrier Risk Review Service provides a structured evaluation of carrier safety risk using publicly available DOT data, including USDOT and MC numbers, operating authority, insurance coverage, FMCSA safety ratings, Inspection Selection System scores, and CSA BASIC scores. Clients receive a detailed report with a four-tiered risk rating for carriers: low, elevated, high or extreme.

“Following this ruling, it’s not enough for companies to simply check a carrier’s authority or confirm registration,” said Dustin Kufahl, Vice President of Consulting and Training Services at J. J. Keller, in a company statement. “They need to be able to demonstrate that they exercised reasonable care when selecting a carrier, and that means thoroughly evaluating safety data and documenting their decision-making methodology.”

The window to act is narrowing for brokers who still rely on informal judgment and inconsistent screening. The preemption defense is gone. Plaintiff attorneys are mobilized. The question every broker will face after a serious incident is no longer whether federal law shields them from liability, but whether their records can prove they made a reasonable decision.

“Carriers have to have a system that validates who they select to move their freight,” Lovan said. “Brokers that have a poor vetting process are not going to be able to wait. They’re going to have to start vetting carriers immediately.”

For more information about J. J. Keller’s Carrier Risk Review Service, visit JJKellerConsulting.com/riskreview or call 844-803-0172.