Broker Liability, a Multi-Million Dollar Guessing Game, with Transportation Attorney, Nathaniel Saylor

For decades, the logistics industry operated on a relatively straightforward legal assumption: if a freight broker checked that a motor carrier was authorized to haul by the federal government, they had done their due diligence.

But following the Supreme Court’s Montgomery decision, that “Wild West” era of simple rate confirmations and hands-off onboarding is over.

In a recent episode of the More Than a Broker podcast, Spot Co-Founder, Andrew Elsener, sat down with transportation attorney, Nathaniel Saylor, to discuss the Montgomery decision, and how to survive the “coulda, woulda, shoulda” of modern negligent selection lawsuits.

Listen here and read more below.

What Was the Montgomery Case About

To understand the talk in the industry, you first have to understand federal preemption. Under a law known as the FAAAA (Federal Aviation Administration Authorization Act), individual states are legally barred from passing rules or allowing lawsuits that interfere with a broker’s rates, routes, or services.

For years, brokers referenced the FAAA. If a plaintiff tried to sue a broker for picking a carrier that got into a highway accident, attorneys could argue, “State law can’t touch this—federal law preempts it.”

The Montgomery case challenged this. The Supreme Court was asked to decide if these “negligent selection” claims against brokers were truly preempted.

The Supreme Court ruled that a negligent selection lawsuit is closely enough related to “motor vehicle safety”—which is an explicit exception to federal preemption. In plain English: Brokers can now be sued under state law for the accidents of the carriers they select.

The Crux of the Problem: What is “Reasonable Care?”

To many, the most frustrating part of this ruling is nobody knows what the rules of engagement are. As Saylor pointed out in the episode, there is no master checklist for due diligence.

“I don’t have an old law book I can pull off my shelf that says, ‘This is reasonable care when you’re selecting a motor carrier.’ The question of what is reasonable care is a question for the jury.”

Saylor points out this is vastly different compared to other industries. When people buy a commercial airline ticket, they don’t audit the FAA’s incident report database for Delta or United before walking up to the gate. They assume that if the federal government allows the plane to roll up to the terminal, it’s safe enough to fly.

Yet in freight brokerage, verifying whether a carrier is registered and authorized by the FMCSA is no longer considered a bulletproof defense.

The Reality of the “Couda, Woulda, Shoulda” Lawsuit

Because the Supreme Court kicked these cases back to state-level trial courts, brokers are now in a costly legal vacuum.

The plaintiff’s strategy in this vacuum is simple: Argue everything the broker could have done.

• Did the carrier have a minor maintenance score issue three months ago?
• Did you check every available safety metric?

It doesn’t matter if the metric had anything to do with the accident. Saylor shared a glaring example: a carrier might have terrible vehicle maintenance scores, but if the driver runs a stop sign because they fell asleep at the wheel, the brakes weren’t the issue. There is zero actual causation.

Yet, facing an emotional jury and a potential multi-million-dollar verdict, the pressure on brokers and their insurance companies to settle out of court is massive. Defending these cases can take years and hundreds of thousands of dollars in legal fees alone. For many, the certainty of a settlement is safer than rolling the dice in front of a jury.

Listen to the full podcast to learn what Saylor says could be coming next, and how brokers and the transportation industry could be impacted by these legal changes.