A recent U.S. Supreme Court ruling has significantly changed the liability landscape for freight brokers, making carrier vetting an enterprise risk issue with implications for litigation, contracts, and insurance. In an article published by Bloomberg Law, Galloway Director Ryan O’Connor discusses the impact of the Court’s decision in Montgomery v. Caribe Transport II, LLC. The unanimous ruling allows negligent carrier selection claims to proceed under state law, eliminating a federal preemption defense that freight brokers have long relied upon.
With carrier-selection practices now likely to face greater scrutiny in litigation, O’Connor outlines steps that brokers and third-party logistics providers can take to strengthen their vetting and documentation. He also discusses potential ripple effects for transportation agreements, indemnification provisions and insurance coverage.
“Organizations that formalize carrier vetting into an auditable, well-documented process will be better positioned to defend those claims on the merits,” O’Connor writes.
He also notes that the Court’s reasoning could have implications beyond trucking, potentially influencing future preemption disputes in other heavily regulated industries, including aviation, pipelines, warehousing, energy and telecommunications.
Read the full article in Bloomberg Law.
