The 11th Circuit Has Ruled in Favor of Preemption for A Broker's Role. Will the Supreme Court Grant Certiorari?

ABSTRACT: Last summer the U.S. Supreme Court denied, without explanation, an invitation to review a 9^th Circuit opinion[1] that affirmed the denial of preemption for brokers. On April 13, 2023, the 11^th Circuit, in Aspen American Insurance Company v Landstar Ranger, Inc. 2023 U.S. App. Lexis 8845 ___ F. 4^th ___, 2023 WL 2920451, affirmed the district court’s application of preemption, barring a claim against a broker. Will these opinions be reconciled before the U.S. Supreme Court?

Tessco Technologies Inc. (Tessco) hired Landstar Ranger Inc, (Landstar) as a broker to transport a load. Landstar mistakenly turned the load over to a thief posing as a Landstar qualified motor carrier. The thief stole the load. Tessco’s insurer Aspen American Insurance Company, (Aspen) sued Landstar, claiming Landstar was negligent under Florida law in its selection of the carrier.

The district court dismissed Aspen’s state-law negligence claims against Landstar, concluding Aspen’s negligence claims were expressly preempted by the FAAAA. See 49 U.S.C. § 14501 (c) (1)-(2).

The 11^th Circuit Court’s opinion guides its reader through the maze of the preemption rationale, first finding the claims were related to “a price, route, or service of …[a] motor carrier… broker or freight forwarder with respect to the transportation of property.” (Id at § 14501 (c) (1).  The court also found the “safety exception” at § 14501 (c) (2) was not applicable.

The “safety exception” determination seems to be the issue that most often foils a broker’s preemption argument. The 11^th Circuit determined that for the claim of Aspen to fall within the “safety exception”, (1) the negligence standard must constitute an exercise of Florida’s “safety regulatory authority”[2] and (2) that authority must have been exercised “with respect to motor vehicles”. (22-10740 p 12.) The Court held that although Aspen’s claims satisfy the first requirement, they do not satisfy the second.

The court interpreted the “respect to motor vehicles” portion to require a “direct relationship” between the state law and motor vehicles.   The court determined that a broker’s actions do not involve the direct operation of a motor vehicle. The motor carrier has the “direct connection.” 

There appears to be a split in the Circuits. Will the United States Supreme Court decide the preemption issue? Does Aspen, an insurer, have an incentive to challenge an opinion that is good for the insurance and trucking industries? Stay tuned.