Brokers

Supreme Court rejects review in broker liability case, leaving the issue unresolved



The Supreme Court has again rejected a review of the question of broker liability in a case involving the death or injury of a person struck by a truck that was booked by a 3PL.

However, unlike the case of Miller v. C.H. Robinson, this rejection is considered a victory for the brokerage industry.

In a long list of denials of certiorari posted Monday, the court without comment said it would not review the appeal brought by Ying Ye, the widow of a man killed in 2017 in an accident in Texas. Ye’s action against Global Sunrise was brought in Illinois, where the carrier is based. Ye won her lawsuit against Global Sunrise, being awarded $10 million in April 2022 in summary judgment handed down by the federal court. 

Ye also attempted to bring freight broker GlobalTranz into the lawsuit, as it was GlobalTranz that hired Global Sunrise. But both the federal District court and an appeals court of the 7th Circuit rejected the claim, primarily by citing the Federal Aviation Administration Authorization Act (FAAAA). The FAAAA holds that a state may not take action that could impact a transportation “price, route or service.” 

Ye then appealed to the Supreme Court, which rejected her attempt Monday. 

There had been some rooting among the legal bar for the Supreme Court to take up the Ying Ye case, so as to settle the question over broker liability that remains unresolved given the Miller decision in the 9th Circuit. Not surprisingly, GlobalTranz, with a victory in hand, was not one of them. 

“Presumably, the court either determined that the circuit split was still too shallow or that the issue did not yet rise to the level of an issue of great public importance,” Marc Blubaugh, head of the transportation practice at the Benesch law firm, said in an email to FreightWaves.

The result means that there is no final settlement for now of whether a broker is liable under federal tort law for an action taken by a truck it hired. The issue is not restricted just to bodily injury; Landstar (NASDAQ: LSTR) last year won a case on appeal to the 11th circuit regarding its liability over the theft of a truck and its cargo that it had brokered, with the court finding the 3PL not liable. 

But in the Miller v. Robinson case, coming out of a 2016 accident that left Alan Miller a quadriplegic, the 9th Circuit ultimately held that C.H. Robinson (NASDAQ: CHRW) was liable for hiring the trucking company involved in the crash. The 3PL giant took the case to the Supreme Court on appeal, but like in the Ying Ye case, certiorari was denied in June 2022. (It later settled the case).

The FAAAA has a safety exemption that does allow state action for negligence “with respect to motor vehicles” even if that action has the potential to violate a “price, route or service.” 

However, that issue is tangled up with the fact that the safety exemption is tied to “motor vehicles.” Whether a brokerage can be considered a motor vehicle was a key question in the Ying Ye case; the court ultimately concluded GlobalTranz wasn’t a motor vehicle so was protected by the rest of the FAAAA.

But in the case of Miller vs. Robinson, the appeals court in the 9th Circuit ultimately held that the safety exemption should be interpreted to find C.H. Robinson liable. “The panel concluded that negligence claims against brokers, to the extent that they arise out of motor vehicle accidents, have the requisite ‘connection with’ motor vehicles,” the court wrote. “Therefore, the safety exception applied to plaintiff’s claim against C.H. Robinson.”

But the court’s certiorari denial means that federal courts not in a jurisdiction where the question of broker liability has largely been settled — like the 7th Circuit, where the Ying Ye case was tried, or the 11th, which ruled in the Landstar case — can turn to the Miller precedent from the 9th Circuit, a prospect the 3PL industry finds worrisome.

“As a result, the application of the so-called ‘safety exception’ under the FAAAA will continue to play out in lower courts — both state courts and federal courts,” Blubaugh said. “Fortunately, from the freight brokerage industry perspective, the vast majority of lower courts are now adopting the well-reasoned approach of the 7th and 11th Circuits.”

Blubaugh cited a recent state court decision that went in favor of C.H. Robinson in an action brought by parents of a man killed in an accident in Florida. The truck had been hired by C.H. Robinson. 

“The FAAAA expressly preempts plaintiffs’ claim against freight broker C.H. Robinson in this case, and the claim does not fall within the FAAAA’s safety exception,” the court in Palm Beach County wrote, citing the 7th and 11th Circuit decisions.

In that case, Landstar is also a defendant, but it was acting as a motor carrier, not as a broker, so it was not involved in the question over the FAAAA.

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