The Supreme Court just told every freight broker that they can be sued

Key Points:

• The Supreme Court ruled that the Federal Aviation Administration Authorization Act (FAAAA) does not preempt state negligent-hiring claims against freight brokers for selecting unsafe motor carriers, as such claims concern motor vehicle safety and fall under the safety exception.
• Justice Barrett's majority opinion held that brokers have a duty to exercise ordinary care in selecting carriers, meaning they must check publicly available safety data and cannot rely solely on the FAAAA to avoid liability if they choose unsafe carriers.
• Justice Kavanaugh, concurring with the majority, emphasized the lack of federal safety regulations on brokers' carrier selection and highlighted the public safety stakes, noting that brokers incentivized to choose safer carriers could reduce truck accidents and fatalities.
• The decision removes the federal preemption shield for brokers, exposing them to state tort liability nationwide, which will likely lead to a surge in negligent-hiring lawsuits and require brokers to implement documented, data-driven carrier vetting processes.
• The ruling also signals potential significant impacts on the freight broker insurance market, as brokers face increased liability risks without federally mandated insurance, prompting a need for enhanced coverage and risk management strategies.