Broker urges Supreme Court to ignore negligence case

GlobalTranz, one of the largest freight brokers in the U.S., is urging the Supreme Court to decline hearing a case that deals with broker liability in crashes involving hired motor carriers.

The Supreme Court of the United States is again being presented an opportunity to weigh in on broker liability when it comes to personal injury claims. The widow of a motorcyclist killed by a carrier hired by GlobalTranz wants the high court to overturn a Seventh Circuit Court ruling absolving the broker of liability. However, in a recently submitted brief, the broker is telling the nine justices to wait this one out as well.

At the heart of the case is whether or not personal injury claims against brokers are preempted by the Federal Aviation Administration Authorization Act (F4A). Although the Seventh Circuit decided that F4A does preempt such claims, a 2020 Ninth Circuit ruling against C.H. Robinson determined it does not.

Facts of the case

The Supreme Court petition stems from a fatal crash involving a motor carrier hired by GlobalTranz.

In November 2017, GlobalTranz brokered a load to Illinois-based Global Sunrise. The load was to be transported from Illinois to Texas. The crash occurred on the frontage road of Interstate 45 in Conroe, Texas. According to the complaint, the Global Sunrise driver made an improper turn, causing him to crash into a motorcycle driven by Shawn Lin, who later died due to injuries from the crash.

Lin’s wife, Ying Ye, filed a lawsuit in March 2018 in an Illinois federal district court, naming both Global Sunrise and GlobalTranz as defendants. Ye argued that GlobalTranz was negligent in hiring an unsafe motor carrier.

In the complaint, Global Sunrise is described as a chameleon carrier. The owners, Viktorija and Aleksandras Siusinskas, previously owned two other trucking companies, both of which were shut down after multiple Federal Motor Carrier Safety Regulations violations.

Ye argued that GlobalTranz should have known about the safety concerns of Global Sunrise. Court documents reveal numerous violations in the month prior to the broker hiring the trucking company, information that is publicly available.

In May 2019, Global Sunrise’s attorney withdrew from the case. The trucking company had one month to secure new counsel, but it never did. Two years after the deadline and with no attorney obtained, the court granted Ye’s motion for default judgement, ordering Global Sunrise to pay $10 million in damages.

However, GlobalTranz was able to walk away from the case.

F4A preemption

In its motion to dismiss, GlobalTranz argued that Ye’s claims against it fall within F4A’s preemption rule.

F4A was enacted in 1994 in an attempt to address the patchwork of state regulations for motor carriers. In short, a state cannot enact a law or regulation related to the price, route or service of any motor carrier, broker or freight forwarder.

A state law is preempted by F4A if two requirements are met:

1. A state must have enacted or attempted to enforce a law
2. That law must relate to a broker’s rates, routes or services either by expressly referring to them or by having a significant economic effect on them

Although Illinois state law does not expressly reference brokers, the district court ruled that a negligent-hiring claim under state common law seeks to shape how brokers perform their services.

“… to avoid liability for a negligent hiring claim like plaintiff’s, brokers would need to examine each prospective motor carrier’s safety history and determine whether any prior issues or violations would be permissible under the common law of one or more states,” the court found. “Enforcing such a claim would have a significant economic impact on GlobalTranz’s broker services.”

GlobalTranz was granted summary judgment. An appeal was filed. In July, the Seventh Circuit affirmed the lower court’s ruling that F4A protects brokers from negligent hiring claims.

F4A safety exception

Although F4A’s preemption rule is broad, a safety exception states that the rule cannot restrict the safety regulatory authority of a state with respect to motor vehicles.

Ye argued that the exception applies in cases involving brokers’ negligent hiring. However, the Seventh Circuit and district court struck down that argument. Both courts decided that a common law negligence claim enforced against a broker is not a law that is “with respect to motor vehicles.”

In its opinion, the Seventh Circuit panel pointed out that in its safety exception, Congress left out any mention of brokers. Rather, the exception only mentions motor vehicles, which is defined as a vehicle, machine, tractor, trailer or semi-trailer. The Seventh Circuit also noted that brokers are clearly mentioned in the preemption language but left out throughout the exception section of F4A. Therefore, the court argued, Congress’ omission was intentional and should be interpreted accordingly.

Conflicting rulings

In her Supreme Court petition, Ye noted that the Seventh Circuit’s decision is in direct conflict with the Ninth Circuit’s decision in Miller v. C.H. Robinson.

In that case, the district court found that the safety exception did not apply for similar reasons. However, the Ninth Circuit overturned that ruling, finding the exception does apply.

“The panel held that in enacting the exception, Congress intended to preserve the states’ broad power over safety, a power that included the ability to regulate conduct not only through legislative and administrative enactments, but also through common law damages,” the opinion stated. “The panel further held that plaintiff’s claim also had the requisite ‘connection with’ motor vehicles because it arose out of a motor vehicle accident.”

C.H. Robinson asked the Supreme Court to hear that case. The high court ultimately decided to punt on the case, leaving the Ninth Circuit ruling intact.

C.H. Robinson ended up settling.

Consequently, there are two federal appellate court rulings on the matter of negligent hiring liability for brokers: one that states F4A protects brokers from liability and another that states the safety exception leaves them on the hook.

In her petition, Ye urged the Supreme Court to resolve the circuit split by reversing the Seventh Circuit’s ruling.

Conversely, GlobalTranz has suggested that the high court let the issue “percolate further in the lower courts.” The broker stated that only two courts of appeals have ruled on the matter and that the conflict may resolve itself without the Supreme Court’s intervention.

“Given the proliferation of cases against freight brokers, other courts of appeals will surely have the opportunity to address the question presented in the near future,” GlobalTranz said.

Public Citizen, a nonprofit consumer advocacy organization, is serving as co-counsel for Ye. It was also co-counsel in the Miller v. C.H. Robinson case. LL