Supreme Court Kills Broker Preemption Shield, State Negligence Claims Now Allowed

Can a shipper sue my brokerage for picking the wrong carrier?

Yes. On May 22, 2026, the U.S. Supreme Court ruled unanimously in Montgomery v. Caribe Transport II that state negligent carrier selection claims against freight brokers are not preempted by federal law. For twenty years, brokers relied on the Carmack Amendment and the FAAAA to argue that state negligence claims did not apply to them. That defense is gone.

The Court's holding is precise: a plaintiff whose cargo was damaged, lost, or involved in an accident can now sue the freight broker directly for failing to exercise reasonable care in selecting the carrier. The critical word is reasonable. The Court did not define it. That definition will be written in discovery, deposition, and verdict over the next five years.

What does reasonable care mean now?

Checking a carrier once at onboarding is no longer reasonable care. A carrier who passes your FMCSA check at 9 a.m. can have their authority suspended by noon. You find out when the claim lands, and your onboarding record is the only documentation you have.

The direction is unmistakable: reasonable care is moving toward a documentation standard, not an intention standard. The freight broker who can produce timestamped, cryptographically sealed records when a plaintiff's attorney requests discovery is in a fundamentally different legal position than the one who cannot.

According to the source, what reasonable care now requires for freight brokers includes live FMCSA authority verification at the moment of booking confirmation, not just onboarding; real-time insurance certificate validation at dispatch; carrier safety rating checks sealed to an immutable ledger with a forensic timestamp; and documentation that proves the screening happened and what the result was at that exact moment.

Eleven days later, the White House extended compliance obligations across the logistics chain

On June 3, 2026, a White House Executive Order directed DHS and DOJ to heavily prioritize four specific areas: forced labor, misclassification, undervaluation, and illegal transshipment. These are not new violations. The difference is enforcement intensity.

The EO requires importers to certify compliance with anti-smuggling laws, submit detailed product specifications, and provide copies of exact export documentation filed with foreign customs authorities. The customs broker who helped prepare those certifications carries exposure when they are wrong.

For freight forwarders who arrange shipments from high-risk origins (including but not limited to Xinjiang, Iran-adjacent trade routes, and Hormuz-transiting cargo), the EO creates enhanced documentation requirements for every shipment in those corridors.

NVOCCs face carrier-grade duties without operating vessels

Non-Vessel Operating Common Carriers issue their own House Bills of Lading. They are carriers in the eyes of the law, which means they owe carrier-grade duties to shippers even though they do not operate the vessels. This creates a compliance obligation that freight brokers do not face: the NVOCC is responsible for every party in the chain they assemble.

Civil OFAC violations can reach $377,700 per incident. The defense of "I'm just the forwarder" carries no legal weight. NVOCCs are not forwarders. They are carriers.

The compounding problem is timing. OFAC adds and removes entities from the SDN list continuously. A consignee who was clean when the booking was confirmed may be listed by the time the vessel departs. An ocean carrier who was compliant when the service contract was signed may be flagged during transit.

The standard NVOCC compliance process (periodic screening, manual checks, annual reviews) does not address this exposure. It documents that you screened once. It cannot document that the party was clean at every moment that matters.

Customs brokers certify what importers tell them, and carry the exposure

Customs brokers have always operated at the intersection of legal responsibility and client dependency. You certify what your importer tells you. You file the documentation they provide. When that documentation is wrong (intentionally or not), your name is on the filing.

The June 3 EO changed the enforcement priority calculus significantly. The customs broker who helped prepare compliance certifications carries exposure when they are wrong.

This is particularly acute for UFLPA compliance. CBP's forced labor enforcement requires importers to provide clear and convincing evidence that goods from Xinjiang were not produced with forced labor. The customs broker who can point to factory-level physical verification sealed to a ledger before the shipment moved is in a defensible position. The one who cannot is not.

The question is not whether you trusted your importer. It is whether you can prove what they told you, when they told you, and that you acted on that information with reasonable professional care.

Warehouse operators face exposure at the release event

When cargo leaves a warehouse damaged, short, or with a compliance gap, the warehouse operator's defense is the release documentation. In most operations today, that documentation is a paper form, a signature on a delivery receipt, or an entry in a warehouse management system that was not designed to be forensically defensible.

The post-Montgomery environment creates a secondary exposure for warehouse operators: if they release cargo to a carrier that is subsequently found to have been non-compliant at the time of release, the warehouse operator's release documentation is part of the chain of evidence. A release record that shows no carrier compliance verification at the moment of transfer is a gap that plaintiffs will exploit.

The new standard is forensic, not periodic

Every entity in the North American logistics chain now faces a version of the same challenge: the documentation they have is not the documentation the new environment requires. Paper records, periodic screenings, onboarding checks, and WMS entries were designed for an era when courts and regulators accepted good-faith compliance efforts as reasonable care. That era ended in May 2026.

The new standard requires cryptographic sealing of compliance records at the moment of verification, immutable timestamping that proves when the check was performed, and a forensically defensible chain of custody across every handoff. The logistics operator who can produce that documentation when discovery is requested (or when a CBP auditor walks in the door) is in a fundamentally different position than the one who cannot.

What brokers should add to their carrier-onboarding workflow now

Run live FMCSA authority checks at booking confirmation, not just onboarding. Verify insurance certificates in real time at dispatch. Document carrier safety ratings with forensic timestamps. If you cannot produce a timestamped record showing the carrier was compliant at the exact moment you tendered the load, you have no defense when the plaintiff's attorney asks what reasonable care you exercised.

The Supreme Court did not create this problem. It exposed it. The June 3 Executive Order handed prosecutors the mandate to act on it. The question now is not whether to solve it. It is how fast.