Christopher J. Kane, partner and Global Trade & Transportation Team Leader at Adams & Reese. Supreme Court Ruling Raises Risks for Freight Brokers. Photo provided by Adams & Reese. NEW ORLEANS – The U.S. Supreme Court ruling in Montgomery v. Caribe Transport II, LLC on May 14 made it easier to sue freight brokers involved
Christopher J. Kane, partner and Global Trade & Transportation Team Leader at Adams & Reese. Supreme Court Ruling Raises Risks for Freight Brokers. Photo provided by Adams & Reese.
Christopher J. Kane, partner and Global Trade & Transportation Team Leader at Adams & Reese, said the unanimous ruling allows certain state-law negligence claims against freight brokers to move forward. Adams & Reese is a New Orleans-based law firm with offices throughout the South and in Washington, D.C.
Before the ruling, freight brokers, which arrange transportation between shippers and trucking companies and handle roughly one-third of freight moved in the United States, often argued that federal law shielded them from liability for selecting unsafe trucking companies.
“The Court concluded that these types of claims are allowed because they fall within a safety exception that preserves states’ authority to regulate motor vehicle safety,” said Kane. “Freight brokers can no longer rely on a broad federal preemption defense to avoid these claims. Instead, lawsuits may move forward under applicable state tort law.”
Kane said the ruling is significant because it changes how risk is allocated across the transportation chain.
“Before this decision, freight brokers often relied on the FAAAA’s federal preemption to get negligent hiring or negligent selection claims dismissed early in litigation, but the Supreme Court substantially limited that defense,” he said.
Impact on Freight Brokers
As a result, brokers may face greater legal exposure if they hire trucking companies with poor safety records.
“For freight brokers, the decision means carrier selection is no longer just a commercial or operational decision; it is now likely to be treated as a core safety function,” said Kane. “Brokers will need stronger documentation, audit trails, escalation procedures, and safety review protocols because those materials may become central evidence in negligent selection claims.”
For carriers, the decision means those with weak safety histories or unresolved compliance issues should expect closer review from brokers trying to reduce litigation exposure.
“Brokers are likely to adopt more formal, well-documented processes for evaluating trucking companies. The most defensible programs will document the broker’s review of publicly available safety data, maintain records explaining the basis for approving a carrier, and include stronger record retention, escalation protocols, and audit trails. Brokers may also increasingly rely on standardized vetting tools and established compliance systems to help mitigate risks associated with carrier selection.”
Insurance and Litigation Costs
Kane described the ruling as “an underwriting event” for insurers because it expands the circumstances under which negligent-selection lawsuits against brokers may proceed, potentially increasing insurance costs for brokers facing greater legal risk.
“The decision is also likely to put additional pressure on insurance and underwriting markets, with higher premiums and litigation-related costs expected in the near term. Smaller brokers may feel this pressure more sharply because larger brokers generally have more resources to absorb litigation defense costs,” said Kane.
He said the ruling could accelerate consolidation within the broker industry as larger firms are better positioned to manage compliance and insurance costs.
“In logistics hubs such as New Orleans, the decision is likely to increase both the number and potential value of trucking-related lawsuits. It may also lead to higher insurance costs and more stringent safety-vetting requirements across the regional transportation industry,” said Kane.
He said the insurance-related ripple effects could be significant.
“Industry experts already anticipate higher premiums for brokers and carriers, tighter underwriting standards, and more rigorous safety requirements. These changes could increase operating costs for trucking companies moving freight through major logistics corridors, with logistics firms potentially passing those costs on to shippers, the South Louisiana energy sector, and consumer goods distributors.”
Supply Chain Impacts of Supreme Court Ruling
“Although the case focuses on freight broker liability, the ruling may affect shippers as well, particularly when they are involved in carrier approval decisions, routing requirements or expedited delivery demands,” said Kane.
“Litigation and insurance costs may also flow through the broader economy, reinforcing the view that the ruling’s impact is unlikely to be limited to brokers alone,” said Kane.
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