By Michael Caney, Chief Commercial Officer, Highway

For years, freight brokers have told shippers that their carrier network is trusted. Many could not produce a record of what that trust was actually based on. This spring, a unanimous Supreme Court ruling put that gap in front of juries.

Montgomery v. Caribe Transport II removed the federal preemption defense brokers had relied on in courts across the country. In a 9-0 decision issued May 14, the Court held that state-law negligent-hiring claims against brokers fall within the safety exception of the Federal Aviation Administration Authorization Act of 1994 and are not preempted. Plaintiffs can hold brokers to a standard of care in carrier selection, just as motor carriers must operate under a standard of care in their operations.

The cost showed up quickly. In July, a Dallas County jury returned a nine-figure verdict against a major broker over a 2021 crash involving a carrier that plaintiffs alleged had been flagged by federal safety alerts for unsafe driving and hours-of-service violations for more than a year. The carrier held a “Satisfactory” rating from the FMCSA at the time. That rating reflects the carrier’s most recent compliance review, and it can stay the same for years while roadside inspection and violation records keep building up. The rating and the underlying safety data can (and frequently do) diverge, and a broker who checks only the rating is checking the wrong thing. The broker has said it will appeal and has described the award as advisory pending post-trial proceedings.

Justice Brett Kavanaugh’s concurring opinion in Montgomery spelled out the gap: there is no meaningful federal safety regulation of how brokers select carriers. The FMCSA requires brokers to confirm a carrier is registered. It imposes no further standard on the decision itself. Kavanaugh wrote that it is “doubtful that Congress … would allow brokers to operate in a black hole with no meaningful safety-related regulation.”

The instinct after a ruling like this is to reach for a legal fix: better contracts, more insurance, a revised indemnification clause. That instinct misses what actually changed. The ruling confirmed that an existing duty, ordinary care in hiring, applies to brokers.

The FMCSA’s SAFER system, crash records, and roadside inspection and violation history are public and free. The liability question is whether a broker can show, after the fact, that it considered the relevant information available to it, including that free public data, and made a defensible call. Ratings won’t settle that. More than 90% of active interstate carriers have no FMCSA safety rating at all. A documented process for evaluating the data that does exist is what closes the gap.

The same failure shows up in this year’s fraud numbers. Highway’s Q2 Freight Fraud Index found that communication-based attacks, including compromised inboxes, spoofed emails, account takeovers and impersonation calls, accounted for half of all classified fraud vectors in Q2, up from 42.7% in Q1. The movement is away from fabricated identities and toward exploiting trust that already exists and was never verified. Liability exposure is following the same pattern. The brokers most exposed are the ones without a process that can tell a sound carrier from a risky one.

What holds up under scrutiny in litigation looks specific. Check safety data before dispatch as well as at onboarding, and repeat the check as conditions change. Timestamp what was reviewed and the decision made from it. Store it somewhere a subpoena three years from now can actually find it.

Carrier standing can change mid-relationship. An ownership change, a new safety alert or a lapsed authority should each trigger a fresh review. The tools to do this already exist across the industry. What’s been missing is the discipline to use them as a matter of course.

The logic of the ruling travels with the act of selecting a carrier rather than with the license type. 3PLs, freight forwarders and digital freight platforms that select carriers while holding access to public safety data face the same question brokers do.

Brokers now face “new and escalating insurance expenses,” and TA Dedicated’s mid-year market review says the Montgomery ruling “changes how risk gets priced and distributed across the freight market.” That repricing is likely to show up in premiums well before most cases reach a courtroom. It arrives as Q4 brings peak-season volume, with plaintiffs now holding a clear path to bring negligent-hiring claims against brokers.

The ruling doesn’t require brokers to be perfect. Kavanaugh noted that brokers who perform due diligence and hire reputable carriers should still be able to defend themselves. What it requires is an answer to one question under oath: What did you know, what should you have known, and when did you know it? For many brokers, the data was there. What’s missing is a record that anyone looked. That gap is far cheaper to close as a process question than as a jury question.

Michael Caney is Chief Commercial Officer at Highway, where he leads sales, marketing, customer success and partnerships. He has spent his career building and scaling freight brokerages and supply chain technology companies.