Broker liability battle heats up as courts clash coast to coast

The controversy of whether a broker is liable for a crash involving a motor carrier it hired continues to plague the federal court system, with another Supreme Court petition, appellate court ruling and pending appellate court case all happening simultaneously.

Whether or not a broker can be on the hook for negligent hiring of a trucking company that caused a crash depends on where it happened. Some federal courts have found brokers are liable, whereas others have reached the opposite conclusion.

These conflicting rulings have caused confusion in the industry. The Supreme Court has declined to address this issue three times, leaving a mix of court precedents. Now, the high court may have another chance to clarify the matter.

Meanwhile, another circuit court ruling has further deepened the divide between appellate courts. Throwing another wrench into the gears, yet another circuit court will rule on the matter.

Federal Aviation Administration Authorization Act

Central to these broker liability cases is a federal law addressing the patchwork of state regulations for motor carriers: the Federal Aviation Administration Authorization Act (F4A).

Specifically, 49 U.S.C. section14501(c) stops states from enforcing laws that relate to a motor carrier or broker’s price, route or service. If state laws directly affect these factors, the F4A invalidates them.

However, section14501(c)(2)(A) carves out an exception allowing states to regulate safety “with respect to motor vehicles.”

Circuit split

Four appellate courts have ruled on broker liability. Two courts supported brokers, while the other two ruled against them.

The Ninth Circuit ruled in September 2020 that C.H. Robinson could be liable for negligent hiring. The court noted that while the section14501(c) preemption applies, the safety exemption does too.

In April 2023, the 11th Circuit deviated from the Ninth Circuit by taking Landstar off the hook for negligent hiring. That case differed in that it involved cargo theft, not personal injury.

Soon after the Landstar case, the Seventh Circuit ruled in favor of broker GlobalTranz. That case was more similar to the C.H. Robinson case, but the Seventh Circuit reached a different conclusion.

Last July, the 11th Circuit revisited the issue of broker liability with a case involving Total Quality Logistics (TQL). The court doubled down on its previous ruling invoking the F4A preemption. TQL’s case involved a personal injury suit.

TQL wouldn’t be as lucky in the Sixth Circuit. On July 8, the Sixth Circuit aligned itself with the Ninth Circuit’s ruling, putting the safety exemption in play. Consequently, the broker must face negligent hiring claims in an Ohio district court.

Adding to the confusion, an Illinois state appellate court recently ruled against Echo Global Logistics, finding the broker must face liability claims. That creates a split among the state and federal courts within the same federal circuit.

Effectively, plaintiffs in a broker liability dispute will likely have their claims heard in courts within the Ninth and Sixth Circuits’ jurisdiction. Meanwhile, brokers can escape those same claims in the Seventh and 11th Circuits.

The losing parties in the C.H. Robinson, GlobalTranz and first TQL case all petitioned the Supreme Court. In all three cases, the high court declined to take on the issue, keeping in place a patchwork of broker liability precedent.

Round 4

C.H. Robinson is involved in another broker liability Supreme Court petition. This marks its second such request to the high court and the fourth overall.

Filed in 2019, this case is similar to previous broker liability cases. C.H. Robinson arranged a shipment with a motor carrier that caused serious injuries in a crash.

In 2021, an Illinois court initially rejected the broker’s bid to dismiss the case. Two years later, while the case was still pending, the Seventh Circuit ruled on the GlobalTranz case. Since Illinois is in the Seventh Circuit, the judge in the C.H. Robinson case followed suit and cleared the broker of all claims.

Plaintiffs in the case appealed that decision to the same court of appeals. Considering the ink on the opinion of the GlobalTranz case was barely dry, the Seventh Circuit upheld the district court’s ruling that was based on that opinion.

Now, both the plaintiffs and C.H. Robinson are asking the Supreme Court to settle the score between four conflicting circuit court rulings. The justices will not review the petition until late September.

As of Monday, July 28, no Supreme Court petition had been filed in the TQL case decided earlier this month. If one is submitted, it would make the fifth request for the high court to address broker liability.

Fifth Circuit enters the ring

Penske is involved in another broker liability case in the Fifth Circuit, setting the stage for a tiebreaker in the 2-2 circuit court split over the issue.

Although this is a personal injury case dealing with broker liability, it is more complex and multifaceted. It involves a fatal crash caused by trucking company OK Trans. But the connection to Penske is not as direct.

Penske contracted with car seat company Adient to transport a shipment to California. In the past, Penske had used its own trucks with Adient. This time, it used its brokerage arm, Penske Transportation Management (PTM) to contract with Liberty Lanes to haul the load.

Liberty Lanes then turned around and did the same thing, using its brokerage, Liberty Commercial, to hire OK Trans. The chain of events: Adient paid Penske nearly $5,300 → Penske paid Liberty Lanes $4,500 → Liberty Commercial paid OK Trans $4,200 → OK Trans hauls the load.

In the lawsuit stemming from the crash caused by OK Trans, plaintiffs claimed PTM was responsible for negligent hiring. However, a Texas district court dismissed the broker from the case, ruling F4A preempts the claims.

That decision is now on appeal in the Fifth Circuit. Whatever decision the court reaches, it will create a 3-2 circuit split. If the Supreme Court does not decide on the issue before then, the case could be the fifth or sixth petition over broker liability to reach the high court. LL