Two recent U.S. Supreme Court decisions may affect freight brokers, final-mile delivery companies, motor carriers, and businesses that use independent contractors.
The first decision increases potential liability for companies that select outside carriers. The second may make some arbitration agreements with local drivers harder to enforce under federal law.
These rulings do not create automatic liability or eliminate arbitration, but they do require members to review their current practices.
Montgomery v. Caribe Transport II, LLC
What Happened
C.H. Robinson selected Caribe Transport to move a shipment. After a serious accident, the injured driver claimed the broker should not have selected Caribe because of concerns about its safety record.
Lower courts dismissed the claim under the Federal Aviation Administration Authorization Act, or FAAAA. On May 14, 2026, the Supreme Court reversed that decision.
What the Court Decided
The Court ruled that the FAAAA does not automatically block a state-law negligent-selection claim against a freight broker when motor-vehicle safety is involved.
The Court did not find C.H. Robinson negligent. It simply allowed the case to continue so a lower court can decide whether the broker acted reasonably.
Why This Matters
Members that broker, subcontract, or assign work to outside carriers may face greater scrutiny after an accident.
A court may examine:
- What the company knew about the carrier
- What safety information was available
- Whether the carrier was properly vetted
- Whether concerns were documented and addressed
- Whether the company followed its own procedures
The insurance impact is still developing, but members should expect closer review of brokerage practices and coverage.
What Members Should Do
Strengthen carrier vetting. Review operating authority, insurance, safety ratings, out-of-service data, crash history, and other warning signs.
Document each decision. Keep records showing what was reviewed, who approved the carrier, and why.
Use the same process every time. Do not skip vetting because a shipment is urgent or capacity is limited.
Monitor approved carriers. Recheck authority, insurance, and safety information regularly.
Review contracts and insurance. Ask counsel and insurance professionals whether current agreements and policies address negligent selection, broker liability, contingent auto exposure, Sand defense costs.
Train staff. Anyone selecting or dispatching outside carriers should understand the company’s process.
More information:
Flowers Foods, Inc. v. Brock
What Happened
A Colorado distributor delivered Flowers Foods products only within Colorado, but the products had originally come from outside the state.
When the distributor brought wage-related claims, Flowers Foods tried to require arbitration under the Federal Arbitration Act, or FAA.
On May 28, 2026, the Supreme Court ruled that a local driver may still qualify for the FAA’s transportation-worker exemption even if the driver never crosses state lines.
What the Court Decided
A worker may be exempt from the FAA when the work is a direct and necessary part of moving goods through interstate commerce.
In simple terms, a local final-mile driver may still be treated as an interstate transportation worker when delivering goods that are continuing an interstate journey.
The ruling does not make all arbitration agreements invalid. It means the FAA may not always be available to enforce them. State arbitration law may still apply, depending on the contract and jurisdiction.
Why This Matters
Many CLDA members use arbitration agreements with drivers, owner-operators, route operators, and independent contractors.
If those agreements rely only on the FAA, companies may have difficulty forcing certain disputes into arbitration. Wage, classification, contract, and other claims may instead proceed in court.
The Court left several questions unanswered, including when an interstate journey ends and how the ruling applies to contracts between two business entities.
What Members Should Do
Review arbitration clauses. Have transportation and employment counsel review agreements with drivers and contractors.
Do not rely only on the FAA. Ask whether the agreement should also rely on applicable state arbitration law.
Add fallback language. Agreements should explain what happens if the FAA does not apply.
Review the real working relationship. Courts will look at what the worker actually does, not just whether the contract calls the person an independent contractor or business owner.
Document how goods move. Keep records showing where goods originate, how long they are stored, whether ownership changes, and where the delivery journey ends.
Review business-to-business arrangements. Contracting with a legitimate LLC or corporation may strengthen the commercial nature of the relationship, but the business must be real and independently operated. An LLC on paper alone is not enough.
Use personal guarantees carefully. These may provide added protection in some business-to-business contracts, but they should be reviewed and drafted by counsel.
More information:
What Members Should Do Now
Members should promptly review:
- Carrier vetting and monitoring procedures
- Broker and contractor agreements
- Arbitration clauses and state-law fallback provisions
- Insurance coverage for brokerage and contractor-related claims
- Documentation of carrier approvals and contractor relationships
- Staff training for onboarding, dispatch, and compliance
CLDA will continue monitoring these cases and sharing updates as courts and insurers respond.
This communication is for general informational purposes and does not constitute legal, insurance, tax, or employment advice. Members should consult qualified professionals regarding their own operations.
CLDA Advocacy Fund
These decisions are a reminder that legal and regulatory changes can quickly affect how our members operate, manage risk, and protect their businesses. CLDA’s advocacy work helps ensure the final-mile industry has a strong, informed voice with lawmakers, regulators, and the courts.
Your support makes that work possible. Please consider making a contribution to the CLDA Advocacy Fund so we can continue monitoring critical developments, educating members, and advancing policies that support a strong and competitive delivery industry.
