The U.S. Supreme Court ruled unanimously last week that trucking and delivery companies can be held liable under state law for injuries caused by third-party contractors they hire, a landmark decision that could reshape the legal and financial foundations of the American logistics industry.
The ruling in Montgomery v. Caribe Transport II, handed down on May 14, arose from a 2017 crash on Illinois Interstate 70 in which Shawn Montgomery suffered the amputation of his leg after being rear-ended by a tractor-trailer hauling goods for Caribe Transport II, a shipment arranged by freight broker C.H. Robinson. Montgomery sued C.H. Robinson for negligent hiring, arguing the broker knew or should have known Caribe Transport had a “conditional” federal safety rating with documented deficiencies in driver qualification, hours of service, and crash rates.
Writing for the 9-0 court, Justice Amy Coney Barrett held that the Federal Aviation Administration Authorization Act — which preempts state laws “related to a price, route, or service” of motor carriers — does not shield brokers from negligent-hiring claims. Barrett found that such claims fall squarely within the FAAAA’s safety exception, which preserves state regulatory authority “with respect to motor vehicles,” according to SCOTUSblog’s analysis of the opinion.
The decision directly targets the subcontracting model used by Amazon, FedEx, and other major logistics firms. Amazon’s “Delivery Service Partner” network, for example, relies on thousands of independent contractors to handle last-mile delivery — a structure that has historically insulated the company from direct liability for accidents.
“Until now, Amazon, FedEx, and other bad employers have been able to outsource their legal obligations to third parties because of a loophole in federal law,” Teamsters General President Sean M. O’Brien said in a statement praising the ruling.
Industry reaction was sharply divided. C.H. Robinson said in a statement that it was “disappointed by the decision” but respected the ruling and remained committed to safety. The Transportation Intermediaries Association called the ruling a departure from decades of precedent, arguing that carriers — not brokers — have been responsible for complying with federal safety standards. Supply Chain 24/7 reported that TIA president Chris Burroughs warned the decision could introduce legal uncertainty across the brokerage sector.
In a concurrence, Justices Alito and Kavanaugh acknowledged that brokers “may not always (or even often) be in a good position to objectively assess the relative safety of different trucking companies,” but said that holding brokers liable for disregarding poor safety records gives them “a strong incentive to do business only with safe and reliable motor carriers.”
The ruling is expected to drive up insurance costs for freight brokers and could accelerate changes to contracting structures across the delivery and logistics sectors. Whether it also emboldens state legislators to pursue additional safety regulations targeting gig-economy delivery models remains to be seen.