04 Mar, 2024
1 min read

Court Rules Insurer Can’t Sue Broker in Fraudulent Carrier Case

GlobalTranz Enterprises Inc.

[Stay on top of transportation news: Get TTNews in your inbox.]

In a victory for freight brokers, a federal appeals court has ruled that an insurance company may not pursue a claim against a transportation broker after that broker unknowingly hired a fraudulent motor carrier who vanished with a shipper’s load.

The decision this month by the Miami-based US Court of Appeals for the 11th Circuit rejected an argument by an insurance company that a federal exemption provision of the Federal Aviation Administration Authorization Act allows Florida negligence claims against a transportation broker based on the broker’s selection of a motor carrier.

“The decision was really good news for the brokerage industry, for sure,” said Chris Burroughsvice president of government affairs for the Transportation Intermediaries Association. “The court found that [broker] Landstar Ranger Inc. was not negligent in their selection based on the FAAAA.”

Burroughs noted, however, that the 11th Circuit’s ruling created a split after the US Court of Appeals for the 9th Circuit ruled that freight broker CH Robinson Worldwide Inc. could be sued in a similar case involving an accident. Last year, the US Supreme Court declined to review a personal injury suit alleging that Robinson was negligent in connection with a serious injury from an accident in 2016 involving a carrier it hired.

“What’s this [11th Circuit] the court decision holds is that — whoever the party is — that a claim against a broker for negligent selection of a motor carrier was pre-empted by the FAAAA,” said Prashad Sharmaa partner in the transportation law firm of Scopelitis, Garvin, Light, Hanson & Feary.

Clarity for both cases could come from the US Supreme Court if either of the parties seeks an appeal, Sharma said.

This has been definitely a

Read the rest