GlobalTranz wants Supreme Court to punt on broker liability issue

Source: Freight Waves (December 12, 2023)

GlobalTranz wants the Supreme Court to let more time pass and possibly more legal decisions to come down before the nine justices weigh in on the question of broker liability.

That GlobalTranz would argue against the high court granting certiorari review to the appeal of Ying Ye is not surprising. Ye’s case against GlobalTranz for its actions in hiring Global Sunrise, the carrier involved in a 2017 accident that killed her husband, failed in both the U.S. District Court for the Northern District of Illinois and on appeal to the 7th Circuit.

Ye last month asked the Supreme Court to review the decision, arguing that the exclusion of the 3PL from liability was based on a legal finding that puts it in conflict mostly with a decision from the 9th Circuit, Miller v. C.H. Robinson. In that case, a suit against the brokerage giant (NASDAQ: CHRW) over an accident that left a passenger car driver a quadriplegic did ultimately set a precedent that a 3PL was not legally protected against damages if it hired the carrier involved in an accident. The lawsuit ultimately was settled. But the precedent it set is considered extremely troubling by the trucking legal community.

A C.H. Robinson attempt to appeal that decision and have certiorari granted by the Supreme Court failed in June 2022. But the Ye case created the type of conflict among circuit court decisions that can help beat the small odds the nine justices will hear a case.

While the GlobalTranz brief filed last week against certiorari is multifaceted, its closing argument boils down to give it time, there will be others.

The GlobalTranz stance is understandable but is not necessarily going to be shared among members of the trucking and 3PL bar. They have been waiting for an opportunity to see the precedent in Miller v. Robinson overturned, and the conflict between the Ye case and the Miller case raised that possibility.

The brief filed by GlobalTranz last week in response to the Ye certiorari petition does not deny that there are significant issues raised in her litigation and the decision of the courts, both lower and appellate, to exclude the 3PL from liability. Having Miller v. Robinson come to a different conclusion elevates the issue, according to Global Tranz. “The current uncertainty profoundly affects the core business functions of freight brokers, which serve a central role in the efficient operation of supply chains throughout the United States,” GlobalTranz says in its brief.

But there is no urgent need to straighten it all out, according to the GlobalTranz argument. “Despite the importance of the question presented, however, there are reasons why the Court may wish to allow the question to percolate further in the lower courts.”

At the heart of the difference between the Miller and Ye cases is not the question of whether the Federal Aviation Administration Authorization Act (F4A or FAAAA) protects a brokerage from liability. F4A prohibits a state from acting in such a way that might affect transportation “prices, routes or service.”

But it also has a safety exception and that’s the issue in the dispute.

As GlobalTranz says in its opening paragraphs of its certiorari challenge, the question of the exemption is “whether a common-law negligent-hiring claim against a freight broker, seeking redress for personal injuries caused by a motor carrier’s driver, is preempted because it does not constitute an exercise of the ‘safety regulatory authority’ of a State with respect to motor vehicles’ within the meaning of the FAAAA’s safety exception.”

In Ye’s case, the lower court and the U.S. Court of Appeals for the 7th Circuit said GlobalTranz was protected by the safety exemption. The 9th Circuit concluded otherwise in Miller v. Robinson. As GlobalTranz noted in its filings, the facts of the two cases are remarkably identical: A driver hired by a brokerage is involved in an accident. There is a death in one instance and a paralyzing injury in the other. That’s about the only difference.

One of the arguments made by GlobalTranz is that the 7th Circuit “correctly held that petitioner’s claim is preempted by the FAAAA, so there is no need to correct the outcome in this case.”

What is at stake, however, is a dispute that is “shallow,” according to GlobalTranz. There are only two circuits — the 7th and 9th — that have come to different conclusions on the question of whether the safety exemption can drag in a freight broker on the question of liability even if the F4A provisions of routes, prices and services would otherwise protect it.

“Further percolation may therefore be helpful to the Court,” Global Tranz attorneys write in the second instance of the word “percolate.”

And given that the 7th Circuit’s decision is “well-reasoned,” according to GlobalTranz — not a surprising conclusion given that it was victorious in the case — “the Ninth Circuit may choose to reconsider its holding in Miller.” It cites several other cases, not connected to the F4A, in which the 9th Circuit’s conclusions could be viewed as having a view on preemption in state versus federal issues that a different lineup of appellate court judges might hold differently in any other cases involving freight broker liability.

And in a projection not likely to bring happiness to the 3PL community, GlobalTranz argues that there will be other cases. “Given the proliferation of cases against freight brokers, other courts of appeals will surely have the opportunity to address the question presented in the near future,” it says.

The other legal issues discussed by GlobalTranz in its brief are familiar. The 3PL discusses the history of the F4A and why it restricted state action that might impact prices, routes and services. Finding liability for brokers would impact their operations, something F4A is specifically written to prevent. And while the state exemption exists, it is aimed at operators of motor vehicles, and there is nothing in the language to suggest that a freight broker could be considered the operator of a motor vehicle.

Elsewhere in the response, GlobalTranz notes the roads to separate conclusions taken by the two courts. “The Ninth Circuit began by addressing a question that the Seventh Circuit did not reach in this case: namely, whether the state ‘safety regulatory authority’ pre-served by the safety exception includes a common-law claim for negligent hiring against a freight broker,” the GlobalTranz attorneys write. “Construing the safety exception ‘broadly,’ in part based on the presumption against preemption, the Ninth Circuit determined that the answer was yes.”