Supreme Court Holds Negligent Hiring Claims Against Brokers Not Preempted by FAAAA

On May 14, 2026, the US Supreme Court issued a unanimous decision in Montgomery v. Caribe Transport II, LLC, 608 U.S. ___ (2026), resolving a significant circuit split and holding that negligent hiring claims against motor carrier brokers are not pre-empted by the Federal Aviation Administration Authorization Act (“FAAAA”). The court concluded that such claims fall within the statute’s safety exception, which preserves state authority over matters “with respect to motor vehicles.” This decision materially reshapes the liability landscape for brokers and has important downstream implications for motor carriers and insurers.

Background

The case arose from a collision involving a motor carrier driver and a stopped tractor trailer. The injured plaintiff filed suit against multiple parties, including the freight broker, alleging negligent selection of the motor carrier.

Lower courts, following Seventh Circuit precedent, held that the claim was preempted by the FAAAA. The Supreme Court granted certiorari to resolve disagreement among the circuits and reversed.

Key Holding

The Supreme Court held that negligent hiring claims against motor carrier brokers fall within the FAAAA’s safety exception and therefore are not subject to preemption.

• The court interpreted the statutory phrase “with respect to motor vehicles” broadly to include claims that “concern” or “regard” motor vehicles.
• It concluded that a broker’s duty to use reasonable care in selecting a motor carrier necessarily concerns motor vehicle safety.

The court rejected arguments that this interpretation would undermine the FAAAA’s preemption provision or create statutory redundancy.

Why This Matters

The decision establishes a uniform national rule allowing negligent hiring claims against brokers to proceed under state law, eliminating a key defense that had previously resulted in early dismissal of such claims in several jurisdictions.

Practical Implications

For Motor Carrier Brokers

• Expanded Liability Exposure
  Brokers now face increased risk of state-law tort claims arising from carrier selection decisions.
• Increased Litigation
  Plaintiffs are more likely to assert negligent hiring claims that survive motions to dismiss.
• Heightened Due Diligence Expectations
  Brokers should enhance vetting processes, including review of:
  • FMCSA safety ratings
  • Crash and inspection histories
  • Insurance coverage and compliance records
• Contractual Risk Management
  Expect increased use of indemnity provisions, higher insurance requirements, and stricter carrier qualification standards.

For Motor Carriers

• Greater Scrutiny from Brokers
  Brokers will likely intensify review of carriers’ safety records and compliance profiles when making selection decisions.
• Safety as a Competitive Differentiator
  Carriers with strong safety performance and compliance histories may benefit from increased demand, while others may face reduced access to freight opportunities.
• More Stringent Contract Terms
  Carriers should anticipate:
  • Enhanced representations and warranties regarding safety and regulatory compliance
  • Expanded audit rights
  • More detailed onboarding requirements
• Increased Indemnification Exposure
  Brokers may seek broader indemnity protections, shifting financial risk to carriers in litigation involving accidents.
• Higher Insurance and Documentation Standards
  Carriers may need to maintain higher limits and provide more robust documentation to remain competitive.
• Barriers for New or Small Carriers
  Market entry may become more difficult for carriers without established safety track records.
• Litigation Spillover Risk
  Even when claims are brought against brokers, plaintiffs may focus on alleged carrier safety deficiencies, increasing reputational and litigation exposure for carriers.

For Insurance Carriers

• Expanded Coverage Exposure
  Insurers providing liability coverage to brokers (e.g., contingent auto, general liability, or errors & omissions policies) may see increased claim frequency and severity as negligent hiring claims proceed past the pleading stage.
• Coverage Litigation and Allocation Issues
  The decision may create greater disputes over which policies respond—particularly between broker liability policies and motor carrier auto policies—leading to more frequent allocation and priority-of-coverage litigation.
• Underwriting Adjustments
  Insurers may reevaluate underwriting standards for broker insureds, including:
  • Carrier vetting protocols
  • Internal safety and compliance procedures
  • Use of technology and monitoring tools
• Premium and Retention Increases
  Increased exposure may result in higher premiums, tighter terms, and increased deductibles or self-insured retentions for brokers and potentially for higher-risk carriers.
• Policy Language Revisions
  Insurers may revise exclusions, endorsements, and definitions (e.g., “auto,” “insured,” or “broker services”) to clarify or limit exposure to negligent hiring claims.
• Greater Emphasis on Risk Control Services
  Carriers may expand loss control and risk management services, encouraging insureds to adopt stronger carrier selection and safety review practices.
• Reinsurance Considerations
  Reinsurers may push for adjustments in treaty terms or pricing in response to increased exposure in the transportation and logistics sector.

Key Takeaways

• The Supreme Court has significantly narrowed the scope of FAAAA preemption as applied to broker-related claims.
• Broker carrier selection practices will face greater scrutiny, both in litigation and operationally.
• Motor carriers and insurers should expect heightened compliance expectations and risk allocation pressures across contracts and coverage structures.

Next Steps

• Brokers: Review and enhance vetting procedures, contract language, and insurance programs.
• Carriers: Evaluate safety performance, documentation, and contractual risk obligations.
• Insurers: Assess underwriting practices, policy language, and exposure assumptions for broker and transportation risks.

If you would like assistance evaluating how this decision impacts your contracts, risk profile, or insurance coverage, please contact our team.