On May 14, 2026, the U.S. Supreme Court ruled unanimously in Montgomery v. Caribe Transport II, LLC that state-law negligent-hiring claims against freight brokers can go forward. For years, brokers relied on federal preemption to get these cases dismissed early. For interstate shipments, that defense is now off the table.
If you arrange freight, the way you pick carriers is now part of how you manage your legal and insurance risk.
What the Court Decided
In a 9-0 decision written by Justice Amy Coney Barrett, the Court held that negligent-hiring claims against brokers fall under the safety exception of the Federal Aviation Administration Authorization Act (FAAAA). Put simply, federal law doesn’t shield brokers from claims that they carelessly hired an unsafe carrier.
Justice Brett Kavanaugh, joined by Justice Samuel Alito, wrote a concurrence. It made three points worth knowing: the safety exception may not cover purely intrastate shipments, so preemption could still apply to in-state loads; the FAAAA does not require brokers to carry minimum insurance coverage; and the ruling should not be read to mean brokers will routinely be held liable after truck crashes.
The ruling has limits. It does not create strict liability. A plaintiff still has to prove the broker used a careless or unreasonable process to select a carrier that turned out to be unsafe. That’s why your documentation matters.
Why It Matters for Brokers
The exposure is real. In July 2026, a Dallas County, Texas jury returned a $604 million verdict against C.H. Robinson, the carrier and its driver over a fatal 2021 crash in Mississippi. It was one of the first major broker verdicts since the ruling. The jury assigned the broker 23% of the fault, and C.H. Robinson is appealing. Notably, the carrier held a Satisfactory safety rating, even though regulators had flagged it for unsafe driving for more than a year before the crash. Now that the preemption defense is gone for interstate loads, expect:
- More lawsuits. Personal-injury and wrongful-death claims that used to be dismissed early can now proceed against brokers.
- Closer review of vetting. FMCSA safety records, safety ratings, and CSA BASIC percentiles and alerts will get more attention in litigation.
- Higher costs and tougher contracts. Broker premiums are likely to rise, and carriers will face stricter indemnification demands.
- Industry consolidation. Compliance pressure may favor larger operations that already have strong vetting systems.
A Five-Step Framework for Carrier Vetting
The best protection is a consistent, documented process you follow for every new carrier. Here’s a practical framework:
1. Authority. Pull the carrier’s FMCSA SAFER record using its USDOT or MC number. Its operating status should read “Authorized” for common or contract authority.
2. Identity. The legal business name and DBA should match the onboarding documents exactly, and the phone number should make sense for the physical address on file. Any mismatch should pause onboarding until it’s resolved.
3. Safety. Check the safety rating. Conditional or Unsatisfactory should be rejected (the carrier in Montgomery had a Conditional rating). Satisfactory or unrated is a minimum, not an automatic pass: also review CSA BASIC alerts, especially Unsafe Driving, Hours-of-Service Compliance and Vehicle Maintenance. Also make sure the inspection history fits the fleet size the carrier claims. A carrier claiming 20 trucks with zero inspections in two years is a warning sign of a “ghost carrier” or double brokering.
4. Insurance. Get the certificate of insurance directly from the carrier’s insurance agent, never from the carrier itself. Confirm the coverage limits meet your requirements and that your company is listed as the certificate holder.
5. Fraud. Watch for recent, clustered changes to the carrier’s phone number or email in its FMCSA registration, and to bank or payment details in your own onboarding or payment system. If operating authority was reinstated within the last 30 to 60 days, escalate the review.
Two Automatic Red Flags
These are policy choices rather than legal requirements, but we recommend treating them as automatic stops that end the review on the spot:
- Operating authority active for less than six months
- A headquarters address that’s a P.O. Box or virtual mailbox (like a UPS Store) with no verified physical yard or home address
If either one shows up, block the carrier from activation in your transportation management system.
Document Everything
Since plaintiffs have to prove your process was unreasonable, the strongest defense is proof that it wasn’t. Keep a record of every check, every decision and every rejection. A vetting protocol only protects you if you can show you actually followed it.
How Palomar Can Help
This ruling changes the risk picture for freight brokers, and your coverage should keep up. Palomar’s transportation team can review your contingent auto liability, contract terms and indemnification provisions so you’re protected before a claim lands. Contact Palomar to schedule a coverage review.
This article is for general information only and isn’t legal advice. Talk with legal counsel about your specific situation.
