One Weird Trick to Avoid Broker Liability

One Weird Trick to Avoid…

The late philosopher Norm MacDonald once observed that while it takes years of training to get a pilot’s license, it only takes a couple of minutes to steal a pilot’s jacket and hat.

The doctrine of FAAAA preemption provides another avenue for one to profit by stealing from the airline industry. By “one,” we mean freight shippers and brokers, who are in some jurisdictions able to take advantage of a quirk of federal law to win dismissal of claims arising out of motor vehicle accidents.

First, the background: the Federal Aviation Authorization Administration Act (“FAAAA”), codified at 49 U.S.C. § 14501(c)(1), prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any private motor carrier, broker, or freight forwarder with respect to the transportation of property.” So, if a shipper is sued under a theory of negligent selection or hiring as part of a personal injury claim arising out of a motor vehicle accident involving their freight, the shipper can argue that the plaintiff’s state law claims are preempted by the FAAAA because those tort claims are based on state common law relating to the service of a motor carrier “with respect to the transportation of property.” And if a claim is preempted, it is dismissed, which is a good thing for you.

Naturally, there is a catch. Under § 14501(c)(2)(A), claims based under a state “regulatory authority … with respect to motor vehicles” are not preempted. This is known as the “safety exception,” and its application has been the source of much judicial consternation.

While the federal 7th and 11th Circuits, among others, have held that the “safety exception” does not apply to tort claims (thus holding that those claims are preempted), the 9th Circuit – which covers nine western states, two territories and twenty percent of the United States’ population – held in the case Miller v. C.H. Robinson Worldwide that state common law does regulate the safety of motor vehicles and, therefore, those claims are not preempted. Consequently, an entity sued under a theory of negligent hiring, negligent selection, or vicarious liability in any jurisdiction following the 9th Circuit’s analysis (which the Supreme has so far Court declined to review) will in all likelihood be stuck in litigation for the long haul, even if the entity’s only involvement in the matter was the initial brokering of a freight load. Elsewhere, whether the exception applies to tort claims is an open question, and the last thing you want is to go through years of litigation only for an appeals court to hold that the safety exception does, in fact, apply to you. So, while we wait for either a professorial textual analysis of 49 U.S.C. § 14501(c)(1) by Justice Gorsuch and/or a poem adjacent to the subject by Justice Sotomayor, what can you as a broker or shipper do to protect yourself? Aside from refusing to send freight to California (which may be advisable for several other reasons), you’ve got a few options to consider:

Consider whether you should restrict the ability of your sub-contractors to use their own sub-contractors (a good idea in any case), and make sure your shipping agreements give you the ability to approve or deny any proposed entity in the chain of custody. Each time your freight is sub-contracted, your situation vis a vis negligent selection and/or brokering becomes more complex. Separation from a negligent entity can be a good thing, but you cannot use a ladder of transactions to willfully turn a blind eye to dangerous practices.
If you allow your sub-contractors to also find their own sub-contractors, keep track of and an eye on who ends up in the chain. Always make sure that you know each entity that is in any way responsible for your freight, and make sure that you approve of those entities. If you know that a sub-contractor is unfit for the job, make sure you intervene to keep the load out of their hands (so long as you have a contractual right to do so).
Pay attention to who shows up to take your freight. What does their truck look like? What does their record reveal? How are they handling themselves? If you find yourself concerned, don’t be afraid to send him or her home – delays are far less costly than verdicts.
Keep your equipment in order. Direct claims for negligent maintenance of brakes or negligent loading can be made against any party, regardless of whether they are a shipper or broker.
If you’d like advice on how your business can minimize the risk of shipper or broker liability, please contact Anthony Tamburro ( at (804) 377-1268 or Steve Setliff ( at (804) 377-1261.