Freight brokers in the United States are preparing for a potentially pivotal Supreme Court ruling that could redefine liability exposure across the sector, as concern builds around the Montgomery v. Caribe case.
The issue dominated discussions in the background at the Transportation Intermediaries Association’s annual Capital Ideas Conference in Scottsdale, Arizona, where industry leaders described the case as one of the most pressing challenges facing the brokerage community.
TIA chair Lynn Gravely, chief executive of NT Logistics, told attendees that the industry must prepare now rather than wait for the decision. In his words, Montgomery is a “tomorrow” problem — one that could quickly become very real if the court narrows federal protections for brokers.
At the heart of the case is the Federal Aviation Administration Authorization Act of 1994, known as F4A, which limits state action affecting the price, route or service of transportation providers. The dispute centres on whether the law’s so-called safety exception — which allows state action “with respect to motor vehicles” — can also be used to bring claims against brokers.
The case stems from an accident in which a truck driver was seriously injured after being struck by a Caribe Transport II vehicle while on the roadside. The injured party sued C.H. Robinson, the broker that had arranged the shipment. The Seventh Circuit ultimately removed C.H. Robinson from the case, ruling that the safety exception did not apply to brokerages and that brokers remained protected by federal preemption under the “price, route or service” clause.
That legal split among circuit courts is what led the Supreme Court to take up the issue.
Gravely warned that if the court weakens those protections, risk levels would rise across the industry, insurance would become more expensive and every carrier selection decision could carry the threat of litigation in jurisdictions applying different standards.
Marc Blubaugh, external counsel for TIA, said a ruling in favour of brokers would effectively remove one of the most difficult claims facing the industry — the allegation that a broker was negligent in selecting a carrier. It would not end all litigation, he said, but it would restore a measure of certainty around one of the brokerage industry’s core activities.
If the ruling goes the other way, however, he warned that personal injury claims against brokerages could expand significantly. Insurance underwriters would also need to reassess the nature of the risk they are taking on if federal preemption no longer provides a reliable defence.
Blubaugh added that, whichever way the ruling goes, the losing side is likely to push Congress to amend F4A and clarify the law in its favour.
Beyond the court case, Gravely said the industry is also grappling with freight fraud in the present and artificial intelligence as the next major strategic issue. Cargo theft and fraud, he said, are already hitting brokerages directly through claims, write-offs, operational disruption and damage to trust with shippers.
On AI, his message was clear: adopt it. He urged brokers to use technology to handle transactions, while leaving people to focus on judgement, relationships and problem-solving when things go wrong.
