After years of conflicting circuit court decisions and the dozens of briefs that went along with those cases, the written arguments filed in the broker liability case of Montgomery vs. Caribe are being put in front of a new audience: the nine justices of the U.S. Supreme Court.
3PL giant C.H. Robinson is the respondent in the Supreme Court appeal by truck driver Shawn Montgomery, struck and injured by a truck driven by Caribe Transportation in December 2017, a company that FMCSA reports as active with just one power unit.
C.H. Robinson hired Caribe, and both were sued by Montgomery after he was struck. The broker claimed victory in both the U.S. district court for the southern district of Illinois and the Seventh Circuit on appeal as both jurisdictions ruled that federal law prohibited C.H. Robinson from being held negligent in the hiring of Caribe.
With that decision in conflict with other circuits, the Supreme Court granted certiorari in the case. C.H. Robinson (NASDAQ: LSTR) on Wednesday filed its brief responding to the arguments made by Montgomery, and it trods on familiar ground. Montgomery and his backers already have filed.
The legal question in broker liability has always been whether the safety exemption of the Federal Aviation Administration Authorization Act (F4A) opens the door to brokers being held liable or negligent for an incident that occurs with a truck that a 3PL hired. Although the part of F4A in question is called the safety exemption, the extent of its reach also has come up in non-safety litigation; the Aspen vs. Landstar case involved a stolen truck and the exemption was held to protect Landstar (NASDAQ: LSTAR).
The first part of F4A blocks state action that could affect a transportation “route, price or service.” The second part of F4A allows state action–like a negligence suit–if it involves safety.
Circle your calendar: March 4
C.H. Robinson’s brief sets the stage for March 4 oral arguments before the Supreme Court that will presumably focus heavily on the meaning of key phrases in the F4A.
The core argument is what the exemption means when it says it covers the safety authority of a state “with respect to motor vehicles.”
Circuit court decisions that have found brokerages liable have concluded that “with respect to motor vehicles” includes the brokerages that hired the motor vehicle. Conflicting circuits disagree, as the Seventh Circuit did in Montgomery.
“Every textual feature of (the safety exemption) confirms that its limited scope covers only those state laws with a direct connection to motor vehicles,” the C.H. Robinson brief says. “(Montgomery’s) claims lack that nexus.”
Different liabililty bond requirements
One argument the C.H. Robinson brief spends a significant amount of focus on the different insurance requirements for motor carriers and brokers.
Motor carriers, the brief argues, are required by federal law to maintain a certain level of liability insurance to cover injuries to individuals. The brief notes that a similar requirement is on the books for airlines as well, drawing a parallel in transportation regulation.
But C.H. Robinson argues there is no such liability bond requirement for brokers. The brief says that omission suggests Congress never anticipated brokers to be held liable. If Congress wanted brokers to be in position for a negligence finding, the argument goes, it would have set a minimum insurance requirement.
“It is implausible that Congress would have intended for brokers to be held liable for personal injuries, yet merely ‘hoped’ they would be able to satisfy judgments,” the C.H. Robinson brief argues. “That is especially so given that Congress enacted a measure to guarantee that motor carriers could pay such claims. The only plausible inference is that Congress never intended brokers to be liable for personal injury claims at all.”
One of the final arguments in the brief is that if Congress desires to have the safety exemption clearly allow brokers to be held negligent, it can do so with a change in the law itself to make that clear. The ambiguity around the term “with respect to motor vehicles” can then be clarified.
“Stakeholders can urge Congress to reexamine its judgment that economic gains from low entry barriers outweigh competing safety concerns,” C.H. Robinson writes. “And they can lobby states to exercise their authority to modify the minimum insurance amounts for motor carriers.”
That $750,000 minimum has never been changed since trucking was deregulated as part of the Motor Carrier Act of 1980. Some individual states, like New Jersey, have increased it on their own.
The “answer” to the concerns of Montgomery and those backing him with amicus briefs “is not a 50-state patchwork of regulation-by-jury-verdict, geared toward compensation first and regulation second,” the C.H. Robinson brief says. “Congress already balanced the relevant competing economic and safety objectives and determined that while states may regulate with respect to motor vehicles, they may not regulate commercial determinations, such as which carrier a broker or shipper selects to carry the shipper’s cargo. Respecting that boundary gives effect both to Congress’s deregulatory goals and its commitment to safety.”
Another argument that appears in the C.H. Robinson brief is that brokers are mentioned in other parts of the F4A, but not in the safety exemption.
For example, a separate section of the F4A, according to the brief, “preempts state laws related to intrastate rates, routes or services of brokers and freight forwarders.”
But Montgomery’s argument, the brief says, “does not explain why Congress would save tort claims against brokers arranging interstate–but not instrastate–movements.”
Throughout Title 49, which is the prevailing federal law on transportation, “Congress regulates motor carriers with respect to safety without mentioning brokers,” the C.H. Robinson brief says.
While most of the brief focuses on legal questions and various definitions, it also does turn at one point to the practical impact of what would happen if “the enforcement of claims like (Montgomery’s)” lost their current legal ambiguity should he prevail at the Supreme Court.
If that occurs, “it will cause brokers and shippers to select carriers using procedures dictated by a patchwork of state standards and obligations,” the brief says. “These standards will inhibit federal licensed carriers from offering their services and securing customers for those services.”
It will also create “barriers to market entry for motor carriers.”
There are new lawyers involved in the case now that it is before the high court. The C.H. Robinson brief now includes the contributions of Theodore J. Boutrous, a partner with Gibson Dunn & Crutcher who has argued several cases before the Supreme Court.
The C.H. Robinson team, besides its usual counsel, also has had Warren Dean and Kathleen Kraft of the Washington firm of Thompson Coburn on its team throughout the process.
The Montgomery team, since it first requested certiorari, added former U.S. Solicitor General Paul Clement to its team. Clement held that role under George W. Bush.
As of Thursday, there had only been one amicus brief filed in support of C.H. Robinson: American Honda Motor. More are expected, including the Transportation Intermediaries Association. A link to the full docket can be found here.
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