Supreme Court Widens Suits Against Freight Brokers, Strengthens Courts’ Role in Disputes

Key Points:

• The U.S. Supreme Court issued two unanimous rulings impacting the shipping and employment sectors, affirming that the Federal Aviation Administration Authorization Act (FAAAA) does not preempt state negligent-hiring claims against freight brokers and that federal courts can enforce arbitration awards after a stay is granted.
• In Montgomery v. Caribe Transport II, LLC, the court ruled that the safety exception in the FAAAA allows negligent-hiring claims against freight brokers to proceed, potentially increasing brokers' involvement in bodily injury litigation and affecting insurance practices.
• In Jules v. Andre Balazs Properties, the court held that federal courts maintain jurisdiction to confirm or vacate arbitration awards after staying proceedings under the Federal Arbitration Act, clarifying arbitration enforcement procedures.
• The Transportation Intermediaries Association criticized the Montgomery ruling, arguing it imposes unrealistic safety oversight duties on brokers without adequate data or authority, while Justice Kavanaugh's concurrence emphasized that brokers should generally be able to defend against such claims if they act reasonably.
• These decisions reflect a significant shift in legal responsibilities for freight brokers and clarify federal court authority in arbitration matters, with broad implications for industry liability and dispute resolution.