USSC Agrees to Resolve Freight Broker Preemption Issue

On Friday, the Supreme Court agreed to review Montgomery v. Caribe Transport II, LLC, a case that will determine whether freight brokers can be held liable under state negligence laws for their selection of motor carriers. Freight brokers are intermediaries that connect shippers (those needing goods transported) with carriers (those transporting goods). There is currently a circuit (and state) split on whether those claims are preempted by federal law.

The dispute is about the effect of the Federal Aviation Administration Authorization Act of 1994 (FAAAA), which preempts state regulations concerning prices, routes or services of motor carriers, brokers and freight forwarders in interstate commerce. Marc S. Blubaugh at Benesch describes the issue (from an industry standpoint):

 While courts have broadly agreed that this language preempts claims against freight brokers as a general rule, courts disagree about the meaning of one of the statutory exceptions in the FAAAA. At issue here is the meaning of the so-called “safety exception,” a savings clause that provides that the FAAAA does not “restrict the safety regulatory authority of a State with respect to motor vehicles.” Id. § 14501(c)(2)(A) (emphasis added). 

The straightforward text of the exception seems clear enough:  Under the FAAAA, states retain regulatory authority over motor vehicles, despite the otherwise broad preemption language in the statute. Stated another way, the savings clause allows states to continue to regulate the safety of motor carriers, trucks, and other vehicles operating in the state. 

Yet, the federal appellate courts are deeply divided over the meaning of this exception when it comes to freight brokers. Stretching the law’s text to its breaking point, plaintiffs’ lawyers have argued that the phrase “with respect to motor vehicles” permits states to exercise safety regulatory authority not only over motor carriers (who obviously operate motor vehicles) but also over brokers (who do not operate motor vehicles).

This case is one to watch. Thanks to Emily Brock for the tip.