11th Circuit Rules Negligence Claim Against Broker Preempted, Creating Circuit Split

• Jurisdiction: United States,Federal
• Law Firm: Holland & Knight
• Subject Matter: Litigation, Mediation & Arbitration, Transport, Rail, Road & Cycling, Personal Injury, Professional Negligence
• Author: Mr Jameson B. Rice, William Byrne and Kristine Orozco Little
• Published date: 10 May 2023

Freight brokers are often sued for negligence when there is cargo damage or personal injury involving a motor carrier hired by the broker. Personal injury claims in particular can involve damages in the tens and hundreds of millions of dollars, which represents a substantial risk for brokers. However, brokers often contend that these claims are preempted. The U.S. Court of Appeals for the Eleventh Circuit recently held in Aspen Amer. Ins. Co. v. Landstar Ranger, Inc., No. 22-10740 (11th Cir. April 13, 2022), that the Federal Aviation Administration Authorization Act (FAAA) preempts such negligence claims, reaching the opposite conclusion of the U.S. Court of Appeals for the Ninth Circuit.

In Aspen Amer., Landstar, the broker, engaged a carrier to haul a load for its shipper customer but was alleged to have dispatched the load to a fraudster who stole the goods. The shipper's insurance carrier brought a negligence claim against Landstar in the U.S. District Court for the Middle District of Florida. The Court held that the claim was preempted by the FAAA, which the Eleventh Circuit affirmed.

The FAAA expressly preempts state-law claims "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. Section 14501(c)(1). There is, however, a "safety exception" that states that preemption "shall not restrict the safety regulatory authority of a State with respect to motor vehicles." 49 USC Section 14501(c)(2)(A).

The Eleventh Circuit held that the negligence claim was related to the service of a broker and, therefore, the FAAA applies. It held further that the safety exception did not apply to the broker because there must be a direct relationship between the state law and "motor vehicles" for the safety exception to apply, and there was no such direct relationship between the law as applied to the broker and motor vehicles. The Court gave three reasons to support its conclusion:

1. The U.S. Supreme Court determined in Dan's City Used Cars, Inc. v Pelkey, 569 U.S. 251 (2013), that the phrase "with respect to the transportation of property" in the FAAA "massively limits" the scope of the FAAA. The Court determined that a similar level of restriction should similarly limit "with respect to motor vehicles."
2. Every claim involving the price, route or service of a broker is indirectly related to a motor vehicle. If this indirect connection were sufficient to satisfy the connection...