Montgomery v. Caribe Transport II, LLC and Its Implications

On May 14, 2026, the Supreme Court of the United States ruled on the case of Montgomery v. Caribe Transport II, LLC, 608 U.S. 219 (2026), unanimously holding that negligent-hiring claims against freight brokers are not preempted by the Federal Aviation Administration Authorization Act (FAAAA) because they fall within the statute’s safety exception.

The federal government began regulating trucking in 1935 with the Interstate Commerce Commission regulating carrier rates and services. After almost 50 years, state regulations continued to interfere with interstate trucking, so in 1995, Congress passed the FAAAA, preempting certain state regulations involving motor carriers. The FAAAA was later amended to preempt state regulations involving other players in the transportation industry, including brokers.

Sellers often hire brokers to find motor carriers to transport their goods. Brokers act as intermediaries and make money from the difference between what the seller pays and what the carrier charges. The FAAAA’s preemption provides that states are prohibited from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service” of any motor carrier or broker “with respect to the transportation of property.”

While the FAAAA’s preemption provision is broad, it contains exceptions. One exception, which was at issue in this case, is the safety exception, which provides that the preemption provision “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.”

In this case, respondents included a company, a broker, and a driver the broker matched with the company. The driver, while driving products for the company, struck petitioner, causing his severe and permanent injuries, including amputation. The petitioner sued the respondents, alleging, among other claims, that the broker negligently hired the company despite the company’s conditional safety rating and alleged deficiencies in driver qualifications, hours of service, vehicle inspection, repair and maintenance, and crash rate. The district court held that the FAAAA expressly preempted the petitioner’s negligent-hiring claim against the company, and the Seventh Circuit affirmed.

Because common law duties and standards of care form part of a state’s authority to regulate safety, and because negligent-hiring claims impose a duty of reasonable care in employing a contractor for work carrying a risk of physical harm, the key issue was whether negligent-hiring claims are claims “with respect to motor vehicles.” Finding the ordinary meaning of “with respect to” to mean “referring to,” “concerning,” or “regarding,” the Court concluded that a claim is “with respect to motor vehicles” if it concerns or regards the vehicles used in transportation.

Here, the petitioner alleged that the broker failed to exercise reasonable care when it hired a company with a subpar safety rating to transport goods by truck. Because requiring the broker to exercise reasonable care in selecting a carrier concerns the trucks used to transport the goods, the Court held that the petitioner’s negligent-hiring claim fell within the FAAAA’s safety exception.

This holding redefines “ordinary care” and state-level tort exposure. Brokers are judged by a standard of “ordinary care,” but that standard does not have a clear federal definition. Because future negligent-hiring claims will now play out under the tort laws of all 50 states, local judges, state statutes, and county juries will define a broker’s liability. This may create unpredictable outcomes.

In state-level personal injury trials, plaintiffs’ attorneys focus heavily on foreseeability. Particularly, whether the broker had access to carriers’ safety data, whether the carrier had conditional safety ratings or active violations, and whether the broker documented why they bypassed their own safety standards to assign the load.

Additionally, the Caribe decision may impact liability underwriting for freight brokers. The FAAAA preemption had acted as a risk ceiling, and now that the ceiling is gone, the commercial transportation insurance market now faces unlimited state-level tort exposure. The insurance market is shifting from paper-based compliance to closer scrutiny of brokers’ actual operations, with underwriters increasingly treating formal carrier-vetting procedures as a key rating factor. At the same time, rising defense costs and “nuclear verdicts” are driving demand for defense outside the limits and higher excess liability coverage. These trends are also affecting errors and omissions (E&O) and contingent cargo coverage, as insurers tighten underwriting standards and brokers face greater exposure when carrier selection or coverage failures lead to claims.

If you have questions about the Caribe decision or its implications, contact the qualified attorneys at Rock Fusco & Connelly, LLC.