Transportation Executive Summary: Eleventh Circuit Holds Negligent Brokering Claim Preempted by Federal Law
As readers of this column are aware, the issue of “negligent brokering” is a hot topic in the industry. We previously reported on a decision by the United States Court of Appeals for the Ninth Circuit which allowed such claims to proceed. However, the United States Court of Appeals for the Eleventh Circuit has recently reached a contrary conclusion. This article will summarize the Eleventh Circuit decision and will further discuss the implications of this new decision.
On April 13, 2023, the Circuit issued a decision in Aspen American Ins. Co., v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023). In this appeal, the Court examined whether the express preemption provision of the Federal Aviation Administration Authorization Act (FAAAA) bars a negligence claim against a transportation broker based on the broker’s selection of a motor carrier, and, if it does, whether the Act’s “safety exception” allowed those claims to proceed.
Tessco Technologies, Inc. hired Landstar Ranger, Inc., as a transportation broker to secure a motor carrier to transport a shipment. Landstar required that their carriers register on the Landstar website with company information which was used to verify the carrier when a shipment is dispatched to the carrier. In this case, Landstar did not follow their own carrier verification protocol and the shipment was turned over to a thief that was posing as a Landstar registered carrier and who ran off with their shipment. As a result, Tessco’s insurer, Aspen American Insurance Company, sued Landstar, and alleged that Landstar breached their duty as a transportation broker “to retain a reputable motor carrier” to transport Tessco’s shipment by “ignoring its own protocols and the information readily available in its system” and was thus negligent in its selection of the carrier.
The District Court dismissed Aspen’s negligence claims and found that the claims were expressly preempted by the FAAAA. Aspen timely appealed. The Court of Appeals ultimately affirmed the District Court decision based upon the analysis which follows.
Aspen’s first argument on appeal was that their negligence claims do not fall within the FAAAA preemption provision. The FAAAA's express preemption provision provides, in relevant part, that “States may not enact or enforce a law ... related to a price, route, or service of any motor carrier ..., broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). The relevant question for the Court was whether Aspen’s Florida negligence claims were “related to a ... service of any ... broker ... with respect to the transportation of property.”
The appellate court determined that a state law is “related to” rates, routes, or services if the law has “a connection with, or reference to” them. The statute will not bar state law claims that relate to a broker’s services “in any capacity”, only those services that are “with respect to the transportation of property.” The statute defines “transportation” to include “services related to” “the movement of ... property,” “including arranging for, receipt, delivery, elevation, transfer in transit, ... and interchange of ... property.” Id. The appellate court ultimately held that because Aspen’s negligence claims challenged Landstar’s inadequate selection of a motor carrier to transport Tessco’s shipment and these claims have a “connection with or reference to” the service of a broker with respect to the transportation of property, the FAAAA expressly preempted Aspen’s claims unless an exception applied.
Aspen’s second argument is that even if the FAAAA preempted their claim, the safety-exception within the statute shielded their negligence claims from preemption. For Aspen's claims to fall within the safety exception, (1) the negligence standard must constitute an exercise of Florida's “safety regulatory authority,” and (2) that authority must have been exercised “with respect to motor vehicles. After a review of Florida negligence laws, the appellate court agreed that Aspen’s claims satisfy the first requirement as the negligence standard sought to be enforced is “genuinely responsive to safety concerns” and is thus within Florida’s “safety regulation.”
The negligence standard must also be “with respect to motor vehicles”, and in this case, the appellate court concluded that it was not. The appellate court determined the ordinary meaning of “with respect to motor vehicles” in the context of the FAAAA’s safety exception based upon the cannons of statutory interpretation and the context of the statute. After an examination of those sources, the appellate court determined that the phrase limits the safety exception’s application to state laws that have a direct relationship to motor vehicles. The specifics of Aspen’s complaint, challenging only Landstar’s selection of the motor carrier, are not “with respect to motor vehicles” within the meaning of the safety exception. Thus, the appellate court found Aspen’s claim to be barred.
The implications of this decision are far-reaching. The decision creates a circuit-circuit split which means the case could be reviewed by the United States Supreme Court if the parties elect to present a petition for writ of certiorari to the United States Supreme Court. The parties will have 90 days to do so. Of course, the Court votes to determine whether to hear the case. Reader’s will further recall that the United States Supreme Court did not elect to hear the Ninth Circuit decision back in 2022. Thus, readers will want to continue to monitor this page for further proceedings.
For more information
Contact John F. Fatino for more information about trucking and transportation matters at 515-288-6041. Drake University Law School J.D. candidate, Taylor J. Thomas, assisted in the preparation of these materials.