Full Court Press: Why Your Fleet’s Safety Record Just Became a Broker Issue

The Supreme Court’s ruling on Montgomery v. Caribe Transport II, LLC appears to throw open the door for the plaintiff bar to go after freight brokers. What does this mean for fleets?

Answering this question begins with looking at the key focal point of the Court’s decision – safety.

The Ruling

Despite its name, the Federal Aviation Administration Authorization Act (F4A) also applies to overland freight brokers and carriers. F4A prevents states from enacting or enforcing laws that could hamper interstate commerce with limited exceptions. One of these exceptions is when “issues of safety” are involved.

At the risk of oversimplifying, the Court ruled that federal law does not shield freight brokers from state lawsuits claiming they negligently hired unsafe motor carriers. In this case, the allegation is that C.H. Robinson knew or should have known that the motor carrier it selected had safety issues, including a conditional safety rating and deficiencies related to driver qualification, hours of service, and crash rating. As a result, despite the fact that C.H. Robinson was not directly involved in the accident that injured Mr. Montgomery, the broker may now face liability if the claim is ultimately proven.

Broad Implications

While the ultimate impact will hinge on how future cases play out, the ruling clearly has broad implications. Freight brokers are likely to place more attention on the safety records of the carriers they hire.

Certainly, public sources, such as FMCSA data will underpin much of what brokers will look at to evaluate carriers. It would also seem reasonable to expect that many brokers will develop supplemental evaluation tools. Either way, it is safe to assume that things like hiring practices, driver records, maintenance programs, and violations history will receive significantly greater scrutiny than before. With a recent 60 Minutes episode also putting the topic of ELD manipulation in the public domain, provider quality is apt to get attention as well.

All of this will be much easier for larger carriers to tackle than smaller ones that do not have the same depth of operational and management capabilities. If you are a smaller operator, here are a few suggestions that might help you:

Start Now

Don’t wait for brokers to begin asking you for more detail. Take the time to assess what you have in place and get moving on addressing any gaps.

Insurance Isn’t Just for Accidents

Your insurance agent or broker should have resources that can help you to assess your current state of play. Often, they will have tools to help you install and maintain new protocols. Insurance companies also often have resources. Your agent or broker can help you run down what might be available from the insurer that writes your current policy. Many insurers will also post tips and tools on their websites. Pro tip, look in the Risk Management / Risk Control / Loss Control sections of insurers that focus on transportation.

Quality Matters

We mentioned the ELD issue above. All ELD providers do have to be approved by the FMCSA. However, it seems reasonable that the “name brands” will carry more weight in brokers’ evaluations than a lesser known they may have to investigate. You will likely also find it productive to look at any of your other providers with a critical lens, considering 1) whether they are performing up to your expectations, and 2) how their quality and performance might be perceived by brokers.

Safety

We talked about safety at the beginning of this post, and we will close with it as well. Obviously, safety was central to the Court’s decision, and it will be central to how brokers evaluate you as well. If your firm is light on a safety culture, now is the time to beef things up and ensure that safe operation is an organization-wide priority from the top down. A high-quality telematics services provider should be able to offer guidance on how a safe operating track record can best be documented and presented and make it easy for brokers to say “yes”.