Brokers

Broker liability case turned down by SCOTUS

The U.S. Supreme Court has declined to hear a case that deals with whether brokers can be held liable for crashes involving motor carriers they hired, leaving a patchwork of federal court precedent on the issue.

On Monday, Jan. 8, the U.S. Supreme Court denied Ying Ye’s petition to hear her case against GlobalTranz. Ye asked the high court to find the broker liable for a truck crash that killed her husband.

By opting not to hear the case, the Supreme Court leaves intact a Seventh Circuit ruling that finds the Federal Aviation Administration Authorization Act (F4A) protects brokers from being held liable for negligence in claims involving motor carriers they hired.

This is the second time the Supreme Court declined to rule on a case dealing with broker liability.

A similar case, Miller v. C.H. Robinson, was brought before the Ninth Circuit Court of Appeals. In that case, Allen Miller claimed that the broker was liable for a crash that left him severely injured. C.H. Robinson also relied on F4A in its defense. However, in 2020, the Ninth Circuit ruled in favor of Miller, a major loss for brokers.

Consequently, there are two conflicting rulings regarding broker liability. Brokers facing lawsuits filed in the Seventh Circuit’s jurisdiction (Illinois, Indiana and Wisconsin) are likely to escape negligence claims. On the other hand, similar claims in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington state can leave brokers on the hook.

Cases in other jurisdictions can draw from either case, leaving uncertainty in similar lawsuits filed in the future.

Brokers protected by F4A

In the case recently denied by the Supreme Court, the Seventh Circuit found that GlobalTranz cannot be held liable for a crash based on F4A’s preemption rule.

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 Illinois 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.”

As a result, the broker was granted summary judgment.

Brokers exempt from F4A protection

In the case of Miller v. C.H. Robinson, the Ninth Circuit found that an exemption within F4A applies to brokers, leaving them open to negligence claims.

Specifically, F4A has a safety exception, which states the rule cannot restrict the safety regulatory authority of a state with respect to motor vehicles.

The district court granted C.H. Robinson’s bid to dismiss, stating Miller’s claim “sets out to reshape the level of service a broker must provide in selecting a motor carrier to transport property.” The lower court stated that in order to avoid negligence liability, a broker would have to inspect each motor carrier’s background.

“Such additional inspection would result in state law being used to, at least indirectly, regulate the provision of broker services by creating a standard of best practices,” the district court ruled.

The Ninth Circuit agreed that Miller’s claim was “related to” C.H. Robinson’s broker services. However, the panel ruled that the district court erred in finding that the safety exception did not 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.” LL

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