For years, if something went wrong with a load, such as an accident, injury, or damaged shipment, and a broker got named in the lawsuit, freight brokers could often get the case thrown out early. They only had to point to a federal law that said states couldn’t regulate broker “services”. Things have since changed.
On May 14, 2026, the U.S. Supreme Court handed down a unanimous decision in *Montgomery v. Caribe Transport II, LLC* that reshapes how and when a freight broker can be held liable for the carriers it hires. If you broker loads, whether that’s your whole business or a sideline to your carrier operation, this ruling changes your risk picture. In this article, we’ll cover what happened in plain terms and what you can do about it.
The distinction between a broker vs. a carrier
Before we dive into the details, it’s first important to understand the difference between a broker and a carrier, because the law treats them differently.
A carrier physically moves the freight, and under the Carmack Amendment, carriers are held strictly liable for cargo that’s lost or damaged in their care. A broker doesn’t touch the freight — a broker *arranges* transportation by connecting a shipper with a carrier. As a baseline rule, brokers have no cargo liability under Carmack at all. That protection only disappears if a court decides you were actually acting as a carrier, not a broker.
So if brokers aren’t liable under the Carmack Amendment, where does their legal risk come from? Two sources: negligence and contracts. The Montgomery decision focuses on the first — when a broker can be held liable for negligence.
How the FAAAA protected freight brokers from negligent hiring lawsuits
Back in 1994, Congress passed a law commonly known as the FAAAA (the Federal Aviation Administration Authorization Act). Buried in it is a rule that says states can’t enforce laws “related to a price, route, or service” of a broker. For years, that language was a broker’s best friend in court.
Here’s how it worked in practice: Say a broker hired a carrier, that carrier got into a serious accident, and the injured party sued the broker for negligent hiring — the claim being, “you should have known this carrier wasn’t safe and you hired them anyway.” Brokers would respond: “Choosing which carrier to hire *is* our service, and the FAAAA says states can’t regulate our services, so this claim is preempted.” Many courts agreed, and the cases got dismissed early, before they ever reached a jury.
But the FAAAA has an exception written into it — a “safety exception” that preserves a state’s power to regulate “safety with respect to motor vehicles.” For years, courts split on whether a negligent-hiring claim against a broker fit into that safety exception. That’s the question the Supreme Court finally answered.
The Supreme Court’s Montgomery decision and what it means for freight brokers
The Montgomery vs. Caribe Transport II, LLC case unfortunately came out of a tragic accident. A truck operated by the carrier, Caribe Transport, struck a parked tractor-trailer, causing Shawn Montgomery to suffer severe, permanent injuries. The broker that had arranged the shipment was C.H. Robinson, one of the largest brokers in the country. Montgomery sued C.H. Robinson for negligent hiring, arguing the broker had selected a carrier that carried a “conditional” safety rating from the FMCSA.
The Supreme Court ruled unanimously that the FAAAA does not preempt Montgomery’s negligent-hiring claim. The Court reasoned that a claim about hiring an unsafe carrier is a claim “with respect to motor vehicles,” which means it falls squarely inside the safety exception and survives.
For brokers, this now means that you can’t simply get a case thrown out. A plaintiff who claims your brokerage negligently selected an unsafe carrier can now get past the motion to dismiss and take that claim to a jury. That doesn’t mean brokers automatically lose; it means these cases will now be fought on the facts of *how you chose your carriers*, which is exactly why your vetting process suddenly matters so much more.
An important limitation: Montgomery was a personal injury case, not a cargo claim
It’s important to be precise here because the distinction can affect brokers differently depending on the type of claim. Montgomery involved a personal injury lawsuit arising from a motor vehicle accident in which someone was seriously injured. The FAAAA’s safety exception applies to claims “with respect to motor vehicles,” making a highway crash a clear example of the type of case the Supreme Court was addressing.
Whether the Court’s reasoning extends to cargo-related claims — such as cargo theft resulting from a broker hiring a carrier that later turned out to be an impersonator — remains an open question. A strong argument remains that cargo loss does not implicate public safety in the same way a highway accident does, meaning FAAAA preemption may still protect brokers in certain cargo liability cases.
Intrastate shipments (freight that never crosses state lines) are also treated differently under the law and may remain on stronger legal footing for brokers.
The key takeaway is this: Montgomery clearly allows personal injury negligent hiring claims against brokers to move forward, but how courts will apply the decision to cargo-related claims is still developing and will likely be the next major area of litigation.
A broker’s largest exposure is their contracts
Even before the Montgomery case, the single largest source of broker liability wasn’t negligence — it was the contracts brokers sign. Preemption never protected brokers from breach-of-contract claims, so if you agree to something in writing, you own it. Two provisions in particular can quietly turn your brokerage into a guarantor:
- A clause where you agree to arrange the “safe delivery” of freight and become liable if it arrives damaged — effectively strict liability with no defenses.
- A clause where the shipper acknowledges you’re not a carrier, but then requires you to pay cargo claims as if you were one.
Many shippers now push brokers to accept cargo liability as a condition of doing business. That’s a commercial reality you may not be able to avoid entirely — but it’s one you can negotiate and cap, which brings us to what you should actually do.
Actionable next steps to protect your brokering business
1. Build a documented carrier-vetting process and actually follow it
After Montgomery, the question in a negligent-hiring case will be whether you exercised reasonable care in selecting your carrier. The best evidence that you did is a written, consistent vetting process you can show a jury. Decide what you check, write it down, and follow the same steps on every load. A defensible process beats a good memory every time.
2. Check FMCSA safety data before you assign a load
The carrier in Montgomery had a “conditional” rating, a warning sign. Make FMCSA safety checks a standard part of onboarding and load assignment. A useful benchmark is the FMCSA’s own “high risk carrier” definition: for non-passenger carriers, that’s two or more BASIC scores at or above the 90th percentile for two consecutive months with no FMCSA investigation in the previous 18 months. (FMCSA updates this definition from time to time, so confirm the current standard.) Flag carriers that hit that threshold, and document how you handle them.
3. Guard against carrier impersonation and cargo theft
Fraudulent carriers impersonating legitimate ones are a fast-growing threat, and they feed directly into negligence claims. Verify carrier identity — confirm the MC/DOT number matches the entity you’re actually dealing with, watch for recently changed contact information, and be skeptical of carriers that don’t check out. (For more on how these scams work, see our post on phishing and how to keep your business safe.)
4. Negotiate your contracts, especially the cargo-liability language
You have more leverage here than you might think. When a shipper wants you to accept cargo liability:
- Push for the shipper to look to the carrier first for cargo claims.
- Always negotiate a limitation of liability, typically matching the carrier’s limit (for example, $100,000 or $250,000 per load), so a single claim can’t be open-ended.
- Keep cargo liability in its own dedicated section of the contract, and expressly exclude cargo claims from the general indemnity provision — cross-reference the cargo section so the two don’t overlap and stack.
- Watch for “safe delivery” and “liable for all cargo loss” language, and red-line it before you sign.
- Have your attorney review the contracts you’re being asked to sign. The cost of a legal read is tiny next to the cost of an uncapped cargo claim.
5. Mind your bill of lading
Shippers frequently drop the broker’s name into the carrier field on the bill of lading, often just because they don’t know the carrier yet. Case law says that alone doesn’t make you a carrier — but why give a plaintiff the argument? Best practice is to include contract language stating that if the broker’s name appears on the bill of lading, it’s for the convenience of the parties only and does not make the broker a carrier.
6. Keep your public-facing language consistent
Courts look at how you hold yourself out to the world when deciding whether you acted as a broker or a carrier. Your website, emails, and marketing should consistently say you arrange transportation and not that you perform it. Avoid phrases like “we have X trucks.” If your company holds both broker and carrier authority, make it explicit in writing which role applies to each transaction.
7. Review your insurance program
This is the step that ties it all together. The Montgomery landscape makes it more important than ever to confirm your coverage actually matches your exposure. That can include contingent cargo coverage, contingent auto liability, and broker/errors & omissions coverage for the professional decisions your team makes every day. If you’re not certain what your current program covers — or whether it responds to a negligent-selection claim — that’s exactly the kind of gap our team at Sentinel can help you find.
The main takeaway
The Montgomery case didn’t make brokers automatically liable for every carrier’s mistake. What it did was remove the early “get out of the lawsuit” card brokers used to play, which means the way you select and document your carriers, write your contracts, and structure your insurance now carries real weight. Brokers who tighten these things up will be in a far stronger position than those who assume the old shield still holds.
Your trusted insurance partner
The legal ground under freight brokers is shifting, and the right coverage is a moving target. The Sentinel team has been insuring the transportation industry for over three decades, so if you want a partner who understands both the freight side and the fine print, you’re in the right place. Give us a call at (470) 524-4884 to review your broker liability exposure and make sure your coverage keeps pace with the law.
FAQs
Does the Montgomery ruling mean my brokerage is now automatically liable when a carrier I hired causes an accident?
No. The ruling doesn’t make brokers automatically liable — it removes the federal preemption defense that used to get negligent-hiring claims dismissed early. A plaintiff still has to prove you were negligent in selecting the carrier. That’s why a documented, consistently followed vetting process is now your best protection.
Does Montgomery apply to cargo claims, or just injury claims?
Montgomery was a personal-injury case, and its reasoning most clearly applies to injury-based negligent-hiring claims. Whether it extends to cargo claims (like theft by an impersonating carrier) is still unsettled, and there’s a strong argument that cargo loss doesn’t trigger the FAAAA’s “safety” exception the way a highway injury does. Intrastate loads generally sit on stronger footing for brokers as well.
What’s the difference between a broker and a carrier, legally?
A carrier physically transports the freight and is strictly liable for cargo under the Carmack Amendment. A broker only arranges transportation and has no Carmack cargo liability — unless a court finds the broker actually acted as a carrier by accepting responsibility for ensuring delivery. Keeping that line clear in your contracts, bills of lading, and marketing is critical.
What’s the single most important thing I can do right now?
Two things, really: put a written carrier-vetting process in place and follow it on every load, and get your contracts reviewed so you’re not accepting uncapped cargo liability. Together they address the two biggest sources of broker exposure — negligence and contract. From there, make sure your insurance program is built to respond.
Sources: Montgomery v. Caribe Transport II, LLC, No. 24-1238 (U.S. May 14, 2026), Supreme Court opinion; SCOTUSblog case coverage; FreightWaves reporting; and the FMCSA “high risk carrier” definition, as reported by Commercial Carrier Journal. This post is provided for general educational purposes and is not legal advice.
