As most of you are aware, on May 16, 2026, the U.S. Supreme Court issued its decision in Montgomery v. Caribe Transport II, holding that the Federal Aviation Administration Authorization Act (F4A), does not preempt state law negligent selection claims against transportation brokers.
Background
Every day, transportation brokers arrange motor carriage on behalf of their shipper clients. This function is, in fact, central to the service that brokers offer. Unfortunately, from time to time, a motor carrier that a broker engages is involved in a traffic accident. When the carrier is thought to be at fault, plaintiffs will occasionally sue the broker (and even the shipper) in state court in addition to the motor carrier. This is often done to access sources of compensation (“deep pockets”) beyond the carrier’s insurance limits and assets. Commonly, plaintiffs allege that the broker’s negligent selection of the motor carrier was a factor in the accident. Brokers have been involved in these types of suits for years, and most procure insurance coverage to protect themselves.
Before Montgomery
Before the Supreme Court’s Montgomery decision, brokers would often defend themselves by asserting F4A pre-emption in jurisdictions that recognized it (not all did). This would sometimes result in the broker’s early dismissal from the case on a motion to dismiss. It’s important to understand that this was procedural and often allowed the broker and their counsel to avoid arguing the facts of the case.
After Montgomery
In light of the Montgomery decision, the F4A pre-emption argument is no longer available to brokers anywhere in the U.S. This does not mean that brokers will be automatically liable when they are sued. Plaintiffs will still need to prove each element of a tort claim. The key is whether a broker exercised “reasonable care”. Unfortunately, the Supreme Court did not define what “reasonable care” is for brokers. As such, it will be up to the state courts to do so. What the Montgomery decision does mean is that negligent selection claims will be much more likely to proceed to discovery and trial. At the very least, this will significantly increase defense costs. At worst, it could result in more pressure to settle claims at higher amounts, and the prospect of higher judgments. There is also the possibility that more suits will be filed against brokers and shippers, particularly in jurisdictions that previously upheld F4A.
Plaintiffs’ Allegations
When suits are filed, plaintiffs will often characterize the broker as a gatekeeper in the carrier selection process. They will seek access to your carrier vetting files and internal communications. They will attempt to paint brokers as putting speed and profit above safety (cheapest carrier always wins or internal emails focusing on speed/cost). They will likely allege negligent selection for failing to scrutinize available data on safety ratings, inspections, crashes, and authority history. They will likely also employ alternate theories of responsibility, alleging that:
What You Can Do:
Carrier Vetting
Vetting is now more important than ever. Brokers need a consistent, written, and repeatable process for onboarding and monitoring carriers. You should have a protocol in place to fully train and audit your staff to ensure they consistently follow the process. Not only should the process itself be reduced to writing, but there should also be a written paper trail proving that each carrier was properly onboarded and monitored according to the process. If it was not documented, the assumption will be that it was not done. Each broker needs to decide exactly what components and procedures should be a part of their vetting process. They should consult with a competent transportation attorney when creating, reviewing, or updating their vetting procedures. The process should be revisited regularly. This may take on added importance if your organization is growing quickly or you rely heavily on the spot market where the volume of vetting makes the process more demanding.
Contracts
It is important to review your transportation contracts (broker-shipper, broker-carrier, etc.) with your transportation attorney. Contracts that imply control or operational direction or paint brokers as carriers can dramatically increase exposure. Provisions indemnifying shippers can measurably increase costs, particularly legal defense costs. Even one or two small words in a contract can, unfortunately, have a big impact. This is especially true with shipper-provided contracts. It is vital to carefully review these agreements and confirm that they accurately identify your authority as a freight broker, rather than mislabeling your role as a motor carrier or using ambiguous terms like Logistics Service Provider (LSP). Here again, the services of a competent transportation attorney are crucial.
Finally, contractual language should be revisited and updated on a regular basis. This will help ensure that modifications necessitated by industry change are incorporated and that requirements that have been imposed on the broker by their shippers are passed along to carriers. For example, in recent months, some brokers have added language to their broker-carrier contracts requiring that a carrier only utilize drivers who possess a valid license and can communicate in basic English.
Insurance
It is important to work with an insurance professional experienced in domestic third-party logistics exposures. Avoid making coverage assumptions based on the name of a policy, endorsement, or coverage section. Third-Party Liability, Freight Broker Liability, and Contingent Auto Liability are commonly used names for coverage that brokers purchase to address this exposure. Policy forms are not standardized, and policies of the same name frequently provide significantly different coverage. Reading the policy language, conditions, and exclusions is the only way to determine the quality of protection. Now more than ever, it is important to read your policy or any policy that you consider purchasing. It is crucially important that claims alleging negligent selection be covered, as well as claims brought under alternative theories.
Conclusion
While this ruling removes a long-debated federal defense, it does not fundamentally change the core risk management principles that well-run brokerages already follow. Strong documentation, consistent processes, and appropriate insurance have always been essential—and are now more critical than ever. We encourage you to take a measured approach to this change. Thoughtful review with your attorney and disciplined execution will put you in the strongest position moving forward.
If you would like to discuss how this ruling may impact your specific insurance program, our team is here to help. Email us at letsconnect@avalonrisk.com.