Supreme Court Rules Negligent-Hiring Claims Against Transportation Brokers in Interstate Commerce Are Not Preempted by the FAAAA

In a unanimous decision that has significant implications for the trucking industry and transportation brokers, the Court held that negligent-hiring claims brought against a transportation broker involved in interstate commerce fall within the safety exception of the Federal Aviation Administration Authorization Act ("FAAAA") and therefore are not preempted by federal law.

The FAAAA expressly preempts certain state regulations involving motor carriers and other players in the transportation industry, including brokers. The FAAAA, however, contains a few exceptions to this preemption, including one referred to as the “safety exception,” which states that the FAAAA’s preemption provision “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” The question before the Court was whether negligent-hiring claims against brokers are claims “with respect to motor vehicles,” in which case the safety exception would apply and state law would not be preempted by the FAAAA.

Interpreting the statutory text, the Court held that a claim is “with respect to motor vehicles,” and thus falls with the safety exception, if it “concerns” or “regards” the vehicles used in transportation. Applying that definition here, the Court determined that a claim asserting that a broker did not exercise ordinary care in selecting a carrier “concerns” motor vehicles because it relates to the trucks that will transport the goods.

It is worth noting, as the Court did, that the safety exception applies only to interstate rates, routes, and services, and that there is no such exception to the FAAAA’s preemption of intrastate rates, routes, and services under a different section. As a result, somewhat paradoxically, the FAAAA allows states to impose safety regulations on brokers engaged in interstate transportation, but not intrastate transportation. While the Court could not say why Congress chose not to include a safety exception under the section governing intrastate transportation, the Court stated that it was better “to live with the mystery than to rewrite the statute.”

The Court’s decision creates significant exposure for brokers in the trucking industry involved in interstate transportation. Although some brokers may have been accounting for such risks already, because the circuit courts were previously split on this question, all brokers should ensure that any policies instituted to mitigate broker-negligence claims or other safety-related claims, such as reviewing FMCSA safety ratings or out-of-service records, are implemented on a nationwide basis. And, as Justice Kavanaugh noted in his concurrence, brokers “may of course (among other possibilities) ask Congress and the President to change” the FAAAA should the Court’s interpretation prove untenable.