Posted on by Ben Armistead

Update – Game Changer Case Decision- Miller versus CH Robinson- The Case Against Preemption

We just got an update on this decision from our friends at Frilot (freight brokerage industry and insurance leading claims TPA concerning the recent US Supreme Court decision not to hear this case. (It had been appealed to the US Supreme Court).

What is the upshot here?

  • The use of the defense of preemption is effectively gone in the states of Arizona, California, Idaho, Nevada, Oregon and Washington.
  • In these jurisdictions, the defense strategy will necessitate the freight broker going through discovery and adjudicating the claim relative to both vicarious liability and independent negligence statutes.
  • Intrastate moves are not applicable to this new development and there is no safety exception for intrastate moves.
  • Services can still be preempted which is applicable to cargo claims.
  • Claims outside of these states (the 9th circuit) are the same as before and the good fight continues.
  • Carrier selection by freight brokers has been and will continue to be a very big deal and will be scrutinized by courtrooms going forward.

Below was the original communication on this subject:

My friends at Frilot (Industry leading claims TPA) sent me the following:

“On Tuesday, September 29, 2020, a panel of three judges in the United States Ninth Circuit Court of Appeals issued a ruling in the case styled Miller v. C.H. Robinson Worldwide, Inc., No. 19-15981 (9th Cir. 2020), overturning the availability of preemption as a statutory defense to third party claims of freight broker negligence in personal injury cases.”

This is a big deal in that, while Preemption does not work in every jurisdiction, it has been one of the common defense strategies for defending a truck broker in personal injury claims. So defense attorneys’ first order of business is trying to get a case removed to federal court. So what is the deal with Preemption?

Per Frilot, ““Preemption” is a legal concept that is rooted in the idea that while individual States maintain a certain degree of sovereignty, the federal government has the ability to displace state laws in favor of a federal law if a single cohesive law will better serve the nation in its entirety. In the freight broker and trucking context, Congress exercised this “supremacy” power of the federal government over States in order to deregulate both industries and thereby created a set of laws at the federal level that applies to freight brokers. “

Further specific Federal Preemption Defense applicable to Freight Brokers peculiarly comes from the Federal Aviation Administration Authorization Act ( the FAAAA) which provides that:

(1) A state may not enforce a law, regulation, or provision related to a price route or service of any motor carrier, broker or freight forwarder with respect to the transportation of property

(2) BUT the Safety Authority of a state will be a matter not covered with respect to motor vehicles (this is known as the Safety Exemption).

You will note that there is both confusion and consternation concerning how freight brokers are intertwined with motor carriers in (2) above. So the issue is does Preemption work for freight brokers even with the safety exemption? The answer has been yes and no.

Well leave it to CH Robinson to again lose an important case. The 9th Circuit Court of Appeals, the highest court to review and decide on a freight broker personal injury case ( that is what Miller versus CH Robinson is where the plaintiff was left a quadriplegic by the carrier that CH Robinson hired. In a 2-1 ruling that per Frilot “The Court did not believe that Congress intended to immunize freight brokers from liability for the negligent selection of motor carriers. Further, the Court found that even if Congress intended the reach of the FAAAA to be beyond mere economics, the “safety exception” was intended to act as a safeguard that would allow States to regulate brokers through state tort law.”

Note the upshot is that a major battle has been lost- and that does not bode well for freight brokers. And while this is only one district order, this case now becomes the gold standard for cases against freight brokers.

Specifically, based on the 9th District, this case will serve as a binding precedent for the states of AZ, CA, ID, MT, NV, OR, and WA ( and a few other territories and states that are not pertinent) relative to Interstate Shipments.

So what is the impact of this case from a defense, tort and insurance perspective?

  • There will need to be a different decision in another district court. Right now the 6th circuit has one. If it rules the same, it will make the defense road that much harder.
  • As safety in carrier selection is not preempted, the bar will be raised on carrier selection and plaintiff attorneys will work harder to show negligent hiring and negligent selection- notwithstanding trying to encourage success from the broker being vicariously liable.
  • The pervasive issue of a broker acting like a carrier ( or worse being construed to be a carrier) will become a greater issue as well.
  • The Miller case supports the notion of higher loss cost ( more claims) for freight brokers and their insurance carriers.

    • So is there any good news about this decision? The answer is unfortunately no.