Ninth Circuit Decision Leaves Third-Party Logistics Providers Exposed In Uncertain World Of F4A Preemption

• Published date: 30 May 2022
• Subject Matter: Transport, Aviation, Marine/ Shipping
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Ms Julie E. Maurer, Joseph Baratta and Jerica Peters

(May 2022) - A recent decision out of the Ninth Circuit in Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020) aims to impose enormous costs on the transportation industry, including freight brokers. Indeed, these are the very costs that Congress sought to avoid in enacting the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. ' 14501(c)(1) (the F4A). Although this decision currently is appealed to the U.S. Supreme Court, the Ninth Circuit's decision has the potential to stymie statutory limits of liability and open the floodgates of litigation to the transportation industry and, most notably, freight brokers.

The Ninth Circuit's decision in Miller significantly undermines the protection afforded by the F4A by subjecting the transportation industry to the vagaries of state tort law. This resulting uncertainty will not only impose tremendous costs on American consumers, but it also has the effect of imposing a state-by-state "duty of care" on brokers beyond that which is required by federal regulations. Permitting negligence claims under the guise of safety regulation completely upends the purpose of the F4A (uniformity) and further complicates the role of brokers in arranging for motor carriers to move freight.

Specifically, in 1994 Congress enacted the F4A to prevent a patchwork of state and local requirements from burdening the trucking industry. See 49 U.S.C. 14501, et seq. An important feature of the F4A allows for preemption of state laws "related to a price, route, or service of any . . . broker," unless one of the F4A's exceptions applies. See 49 U.S.C. 14501(c)(1). One of those exceptions is the "safety exception," which provides that the preemption provision does not "restrict" the "safety regulatory authority of a State with respect to motor vehicles." See 49 U.S.C. 14501(c)(2)(A)

With the emergence of third-party logistics providers in the industry'specifically brokers who search for spot quotes and efficiently survey the vast motor carrier market to obtain the most efficient transportation rates the market can provide'came an additional arena of potential claims in cargo damage litigation. Seeing an opportunity to circumvent the F4A preemption afforded to brokers, the plaintiffs' bar argued that common law torts, such as negligent hiring, relate to safety and are, therefore, an exception to F4A preemption. While the U.S. Supreme Court clarified in Ours Garage that "safety regulatory authority" refers to...