What the Carrier Choice Ruling Means for Employers

May 14, 2026: The U.S. Supreme Court ruled 9-0 in Montgomery v. Caribe Transport II, LLC, holding that the FAAAA does not bar negligent-hiring claims against freight brokers and signaling broader exposure for 3PLs and other parties involved in carrier selection.

This ruling removes the federal preemption shield that protected freight brokers and 3PLs from state tort liability. Here's what every transportation business needs to know, and do, right now.

 

What Just Happened and Why It Matters

On May 14, 2026, the United States Supreme Court issued a major decision for the freight and logistics industry. In a 9-0 unanimous ruling in Montgomery v. Caribe Transport II, LLC, the Court rejected the federal preemption defense that freight brokers and third-party logistics providers (3PLs) have relied on for decades. That defense had helped protect them from state tort liability, meaning claims under state law that one party caused harm to another.

The case stemmed from a crash involving Caribe Transport II, a carrier selected by C.H. Robinson. The plaintiff sued the driver, the carrier, and the broker. He alleged that C.H. Robinson had negligently hired Caribe Transport despite publicly available Federal Motor Carrier Safety Administration (FMCSA) data showing the carrier had a "conditional" safety rating, driver qualification deficiencies, maintenance failures, and a history of multiple crashes in a short span of time.

Lower courts threw out the claim under the Federal Aviation Administration Authorization Act of 1994 (FAAAA), which broadly preempts state laws "related to a price, route, or service" of motor carriers and brokers. However, the Supreme Court unanimously reversed those rulings, concluding that the negligent-hiring claim is tied to safety and falls within the law’s safety exception.

The Legal Core: The Safety Exception Takes Center Stage

At the center of the Court’s reasoning is the FAAAA’s safety exception, which preserves a state’s authority over motor vehicle safety. In other words, while federal law limits some state-level claims and regulations, it does not block states from addressing issues tied to roadway safety.

The Court found that negligent hiring directly relates to vehicle safety, so those claims are not barred by federal law.

Justice Amy Coney Barrett said the answer was straightforward: a negligent-hiring claim against a broker concerns the motor vehicles that will be operating on public roads, so it falls within the exception. In a concurrence, Justice Kavanaugh reinforced the broader point, explaining that the FAAAA was meant to deregulate economics, not remove accountability for motor vehicle safety.

Who Is Affected? It’s Broader Than You Think

Although the case specifically involved a freight broker, its reasoning reaches further.

Any party involved in selecting a carrier could face similar scrutiny, including:

• Freight brokers
• 3PLs
• Freight forwarders
• Digital freight platforms
• Shippers or others involved in carrier selection
• Any entity in the supply chain that chooses carriers and has access to FMCSA public data

If your organization chooses carriers and has access to public safety information, this ruling matters to you.

The Insurance Gap: Why Your Current Coverage May Not Be Enough

Businesses must reassess their risk exposure immediately, as this decision creates exposure that many organizations may not be insured for. 

Most freight brokers carry some form of general liability and contingent cargo coverage. Few carry enough excess liability to respond to a severe bodily injury verdict tied to negligent-hiring litigation. The current federal surety bond requirement for freight brokers under 49 U.S.C. §13906 is $75,000. However, that bond is not liability coverage for bodily injury claims. In addition, many GL, E&O, or umbrella programs may not adequately respond to this type of litigation.

Now is the time to review your insurance structure, limits, and exclusions with your advisor. Businesses with clear, documented vetting processes will be in a stronger position with underwriters and claims defense.

What You Need to Do Right Now: A Risk Management Roadmap

Audit and Document Your Carrier Vetting Process

Make sure your process is clear, consistent, and documented. At a minimum, review FMCSA safety data, authority status, safety ratings, and other obvious red flags before assigning loads.

Review Your Insurance Coverage Immediately

Confirm whether your GL, E&O, umbrella, and excess coverage would respond to a negligent-hiring claim in the current litigation environment. Do not assume current policies are enough.

Review Broker-Carrier Agreements

Revisit indemnification language and carrier representations around safety, compliance, driver qualifications, and maintenance.

Engage Your Leadership Team on Litigation Readiness

If a claim happens, your vetting records, policies, and internal communications may all be discoverable. Leadership should understand what exists today and where the gaps are.

Evaluate Carrier Relationships Proactively

Carriers with known safety concerns now create more than operational risk. They can also create direct litigation exposure. Reassess who is in your network.

The Broader Picture: Safety, Accountability, and What Comes Next

It is important to understand what this ruling does, and does not, mean. It does not mean every broker or 3PL will be liable when a crash occurs. The standard is still ordinary care, not perfection.

What changed is that the federal shield is gone for safety-based negligent-hiring claims. Juries may now look closely at what safety information was available and what steps were taken before a carrier was selected.

The legal landscape has changed, and businesses involved in carrier selection should respond quickly. Those that adapt by building real carrier vetting processes, reviewing their coverage, and engaging proactively with risk advisors will be in a much stronger position to defend their decisions, strengthen their risk posture, and operate with more confidence in this new environment.