Frequently, freight brokers attempt to deny subrogation claims for cargo damaged in transit on a truck by arguing that they are accorded broker status and do not have the same strict liability as a “Motor Carrier” under The Carmack Amendment.
However, a recent action by the United States Supreme Court this summer supports subrogated insurers in pursuing recovery from brokers who were traditionally not seen as likely responsible parties for cargo loss or damage.
One party in the case, C.H. Robinson, is an American Fortune 200 company, that operates, in part, as a freight broker – that is, as an intermediary that connects shippers who have goods with motor carriers to move the goods. The company’s own website describes its contractual relationships with over 63,000 transportation companies, including motor carriers, railroads, air freight, and ocean carriers.
According to the court record, in 2016, C.H. Robinson hired a motor carrier with a history of safety violations. Driving unsafely, the driver drove over the median, where the truck overturned and blocked oncoming lanes. Allen Miller, who was driving in the opposite direction, was unable to avoid the truck after it crossed into his lane, crashed into it, and was rendered a quadriplegic.
Mr. Miller sued on a state law claim of negligence, arguing that C.H. Robinson was negligent in selecting this particular carrier because the brokerage knew or should have known that the carrier operated unsafely.
In the litigation, C.H. Robinson argued that federal preemption precluded the state law negligence claim. The 9th Circuit Court of Appeals ruled against the broker in September 2020, stating that C.H. Robinson had “negligently selected an unsafe motor carrier resulting in plaintiff’s serious injuries in a motor vehicle accident.” This past June, the Supreme Court declined to hear this case, otherwise known as “denying cert”. In denying cert., the claim for negligent hiring against C.H. Robinson was allowed to proceed — i.e., that such claims are not preempted and can be decided on the merits of the case.
The practical effect of the Supreme Court’s action means that state law negligence subrogation claims can proceed when asserted against a brokerage.
In summary, individual facts and circumstances should be examined to determine whether and how motor carriers are hired by a broker. There may be subrogation potential on the claim against parties beyond the motor carrier, even against a broker.