The legal issue of broker liability just got a lot messier with an appellate court decision that reversed an earlier lower court victory for 3PL giant Total Quality Logistics (TQL).
And the outcome could open the door again for what many in the industry have long sought: a Supreme Court review to clear up inconsistency on broker liability among federal circuit courts. The circuit court split now is 2-2, with a pair having ruled against a 3PL on the question of federal law protecting broker protection from litigation, and two others having backed strong protection against brokers from lawsuits.
The U.S. Court of Appeals for the Sixth Circuit Tuesday reversed an earlier decision in Cox vs. TQL that had found TQL was not liable for its role in hiring a driver that was involved in a fatal 2019 accident. As had been the decision in several other recent cases involving broker liability, the U.S. District Court for the Southern District of Ohio in June 2024 found that the Federal Aviation Administration Authorization Act (FAAAA, also known as F4A) protected TQL as a broker from liability for its hiring of Gold Transit, the carrier involved in a fatal 2019 crash.
But that decision was reversed Tuesday by a unanimous vote of a three-judge panel of the Sixth Circuit, with particular focus on what is known as the safety exception.
The exception, which is part of F4A and ultimately led to a C.H. Robinson (NASDAQ: CHRW) defeat in 2020 on broker liability in Miller vs. Robinson, essentially says that while the F4A does offer significant legal protection against transportation providers in most circumstances by preempting state action, F4A does not completely protect them over issues of safety.
Circuits in opposition
That C.H. Robinson case was in the Ninth Circuit. The defeat of a 3PL on the circuit court level now has a companion case from the Sixth Circuit with the ruling in Cox vs. TQL.
The key cases that protected brokers came out of the Seventh and Eleventh circuits. As trucking-focused law firm Scopelitis said Wednesday in a widely-distributed email, “While there are no guarantees, the deepened circuit split increases the likelihood that the Supreme Court will take up the question should TQL decide to request Supreme Court review.”
The Court has rejected certiorari in several cases that sought Supreme Court clarity on the issue: the aforementioned Miller vs. Robinson (request for certiorari from C.H. Robinson rejected in 2022), the Ying Ye case in the Seventh Circuit involving GlobalTranz (rejection in January 2024 on appeal from Ye, whose husband was killed in a crash involving a carrier hired by GlobalTranz which was held not liable under F4A), and Gauthier vs. TQL, where Katia Gauthier asked the Supreme Court to overturn an Eleventh Circuit decision that cited F4A to protect TQL from being held for liability in a fatal crash involving Gauthier’s husband, who was killed, and a carrier hired by TQL.
To demonstrate the importance the industry has put on its desire to see the Supreme Court check in on the issue, TQL, even though it had won on the appellate level, supported Gauthier’s request for Supreme Court certiorari. But as it did with the other cases, the high court chose not to take up the issue.
Another key recent case involving broker liability was Aspen vs. Landstar (NASDAQ: LSTR). That Eleventh Circuit case involved a stolen truck. But the appellate court decision backing Landstar is viewed as another decision in the mix that might lead the Supreme Court to review the issue even though the safety exception was not part of the litigation.
F4A bars state action–referred to in the legal arguments as preemption–that could impact a “price, route or service” as well as actions that are “related to” those key provisions. Debating the meaning of “related to” has been a key part of litigation surrounding F4A.
Citing wording from an earlier precedent, the Sixth Circuit in Cox vs. TQL said the “connection to a broker’s prices, routes or services may be direct or indirect, as long as the connection is not too ‘tenuous, remote or peripheral.’”
Robert Cox, the plaintiff in the case, is the widower of Greta Cox, who was killed in the crash with Golden Transit. That carrier, according to the testimony and filings in the lower court, had a poor safety history with the Federal Motor Carrier Safety Administration. It had an “overwhelming number” of drivers that were illegally on the road, that testimony said, and the specific driver of the load that killed Greta Cox, Amarjit Singh Khaira, “was purportedly an inexperienced and unsafe driver.”
The crash occurred on interstate 40 in Oklahoma. Greta Cox, while driving with her grandson, slowed while approaching a construction zone. But Khaira did not, plowed into Greta Cox’ vehicle, and she was killed. The grandson suffered unspecified injuries.
The initial case was in federal court in Ohio because that is where TQL is based.
Discussing the safety exception, the court said that part of F4A “carves out an exemption to the preemption provision that preserves a state’s power to regulate motor vehicle safety.”
One argument the 3PL industry has made in its earlier legal forays into the question of preemption is that the safety exception applies solely to motor vehicles. Its argument is that brokers aren’t motor vehicles.
‘Respectfully diverge’
The court said it would “respectfully diverge” from earlier precedents from the Seventh and Eleventh circuits which it said had found “that for a direct connection to exist, the regulated entity must be one which directly owns or operates motor vehicles.”
“That formulation misses the mark,” the court said. “Requiring that the regulated entity directly own or operate motor vehicles would impose an additional limitation beyond what (the safety exception) requires.”
With that TQL defense undercut, the court supported Cox’ claim that TQL was required under Ohio common law to “adhere to a basic standard of care when hiring motor carriers. (Brokers) are required to conform to that standard in their hiring practices, for example, by dedicating time and resources to evaluating the safety metrics of prospective motor carriers.”
The appellate panel then elevated the safety exception to the determinative factor in its ruling.
The preemption provision of F4A does block many state laws impacting transportation providers, the court said, but the “safety exception correspondingly shields from preemption the subset of those laws that regulate motor vehicle safety, which necessarily includes certain types of common law claims,” the court said.
Outside attorney speaks
The Public Citizen interest group was an outside attorney for Gauthier in that case, though ended up on the losing side. But it was on the winning team this time around.
Adina Rosenbaum, an attorney for the Public Citizen Litigation Group that represented Cox, said the precedent set in Aspen vs. Landstar in the Eleventh Circuit, where Gauthier was decided, hurt the Gauthier case because it established precedents that were not offset by any consideration of the safety exception.
But in the Cox case, she said in an interview with FreightWaves, “we’re talking about a state requirement that’s really intended to protect people and the public from the dangers of motor vehicles. You can really see that this is about part of the state’s safety regulatory authority with respect to motor vehicles.”
An email to a TQL spokeswoman and a phone message to the company’s outside counsel had not been responded to by publication time.
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