Montgomery Update

The Supreme Court issued its decision in Montgomery v. Caribe Transport II, LLC, just over two months ago, and since then, there have been many different views on what the Court decided and what its impact will be. While the decision addressed a rather narrow question, it highlighted an area of liability exposure for those hiring carriers that will likely have widespread reverberations. As the courts continue to develop the contours of broker liability, especially in the area of negligent hiring, one can anticipate a tightening broker liability insurance market and increased underwriting scrutiny of carrier selection protocols.

To be clear, the Supreme Court did not set the standard for reasonable care in selecting a carrier. That continues to be developed by the courts on a case-by-case and state-by-state basis. By rejecting the applicability of a federal preemption defense to negligent hiring claims, the Supreme Court has drawn more attention to considerations that will affect the entire transportation ecosystem of shipper-broker-carrier interactions.

Given that most carriers today have $1 million or more in auto liability insurance, plaintiffs look to brokers (and shippers) for deeper or extra pockets in accident cases where the claimed damages exceed the carrier’s insurance. This will continue to occur more frequently, and to help protect against such claims, brokers may seek to obtain liability insurance. Contingent auto liability coverage, which some brokers obtain under the belief that it provides adequate coverage, typically only provides coverage when the carrier’s insurance is not available and does not provide coverage for negligent hiring claims. As more brokers attempt to secure truck broker liability insurance, some insurers are reassessing their participation in that market, and those remaining are continuing to strengthen their underwriting standards. This will lead to a tightening market with concomitant cost increases that escalate, not unlike the carrier insurance market.

The Court’s decision may increase demand for broker services from shippers. Shippers that contract directly with carriers may, like brokers, be liable for negligent hiring of carriers with which they contract. In most instances, the shipper becomes a step removed from the selection of the carrier if it makes use of a broker. The Firm anticipates shippers may continue to seek to impose their own carrier vetting standards on brokers.  As such, brokers will need to guard against assuming any vetting obligations they are not able to satisfy. To be sure, shippers and insurers will be focusing more attention on a broker’s carrier selection protocols. For shippers, they will seek to establish that they were reasonable in selecting the particular broker.

The Montgomery decision highlighted potential liability exposure for brokers, but it bears reminding that liability is not a foregone conclusion. With a reasonable carrier vetting policy and practices to match, the broker may have acted reasonably in contracting with a carrier even if that carrier is involved in an accident. Further, the concurring opinion noted that whether the broker’s selection of a carrier proximately caused the claimant’s injuries will be an issue in each case. In the aftermath of Montgomery, there have been several federal court decisions reinforcing that the FAAAA does provide a preemption defense against claims related to cargo theft or loss as opposed to personal injury; though there have been a few decisions finding the safety exception still applies. Brokers and shippers should be reviewing how they select carriers they contract with and keep abreast of developments in the law.

Motus Issues Continue More than Two Months After Launch

Pitched as a modernized, secure registration system to streamline processes and provide a more intuitive, user-friendly experience, in the months following its mid-May rollout, many users have found MOTUS to be anything but. Significant technical issues plague the system, causing substantial operational impacts for brokers and carriers and confusion for those relying on information within the system.

Those issues include:

• Inconsistent records within Motus and SAFER regarding registration status
• Failure to reflect all authorities held by the registrant before the Motus rollout
• Updates following name changes or insurance filings suggest the company is a new registrant
• Inaccurate identification of required insurance results in improper authority suspension
• Delays or inability to process applications for new operating authorities
• Delays in routine updates to company information
• Inability of companies to claim USDOT numbers

Until Motus is stabilized, it is important to review your Company data within FMCSA’s systems.  The Firm has seen unexpected data changes from day to day and experienced significant delays in technical support and an inability to resolve issues. Through its contacts, the Firm has assisted companies in navigating traditional support services and resolving Motus errors impacting business operations.

California Amends Arbitration Law to Mirror the Federal Arbitration Act’s “Transportation Worker” Exemption

On June 30, 2026, Governor Newsom signed into law AB 2155, which adopts, for purposes of the California Arbitration Act (CAA), “any and all exclusions” under the Federal Arbitration Act (FAA). The FAA’s primary exclusions are for “transportation workers” under Section 1 (“contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate commerce”), and for claims of sexual assault and sexual harassment under Section 402. While previously it was possible to arbitrate claims under the CAA that were otherwise exempt under the FAA, effective January 1, 2027, that pathway will be closed.

California’s legislation comes on the heels of the Supreme Court’s decision in Flowers Foods v Brock, where the Court rejected a categorical rule that a worker had to cross state lines to be engaged in interstate commerce for purposes of the FAA’s transportation worker exemption. Instead, the Court held that a driver who only transported goods on the last, intrastate leg of a journey that moved across state lines could still be considered to be “engaged in interstate commerce” for purposes of the FAA. For transportation providers that intend to use the CAA to govern the arbitration of disputes for workers who are exempt from the FAA, they should revisit their arbitration agreements and overall arbitration program before AB 2155 goes into effect on January 1, 2027.

California’s Heat Illness Prevention Regulation Creates Recovery Period Risk for Transportation and Logistics Employers

Since 2013, California employers have been required to provide “recovery periods” to employees working in high-temperature environments to prevent heat illness. Until recently, the law only applied to employees who worked outdoors. In July 2024, a new regulation went into effect, expanding the law to cover indoor employees and opening a new battleground for potential wage-and-hour litigation.

Under California law, a “recovery period” is a cool-down period that employers must provide to employees who work in high-temperature environments. Employers may not require employees to work during a recovery period, and Labor Code section 226.7 provides for an additional hour of premium pay for each workday a recovery period is not provided in accordance with the regulations.

The new regulation, Cal. Code Regs. tit. 8, § 3396, expanded recovery period obligations to indoor employees. Since many California warehouse and distribution facilities are located inland, where temperatures are higher, this creates a new source of wage-and-hour exposure.

The regulation governing indoor employees requires employers to provide access to cool-down areas and preventative cool-down rests under specified conditions. Litigation trends suggest that recovery period claims may become an increasingly common feature of class and representative actions for employees working in high-temperature facilities.

Employers should review indoor heat exposure points now, confirm whether Section 3396 applies, update written heat illness prevention plans, train supervisors, document temperature measurements, and ensure employees are provided the required recovery periods.

If you have questions about indoor heat compliance or recovery period risk, the Firm is actively advising employers on prevention planning and litigation exposure.

Spotlight: Class Action Defense & Complex Litigation

Transportation companies today face class and collective action exposure from many directions. Plaintiffs’ attorneys continue to aggressively pursue representative lawsuits alleging a wide range of wage-and-hour claims, as well as violations of state data privacy laws, wage transparency laws, consumer-protection statutes, and the federal “Truth-in-Leasing” Regulations. At the same time, developments in the law regarding the enforcement of arbitration agreements, federal preemption, and transportation industry-specific exemptions continue to shape the legal landscape governing this type of litigation.

To successfully defend these matters, Scopelitis Law Firm’s Class Action Defense & Complex Litigation attorneys draw not only on their vast litigation experience, but also a deep understanding of how transportation businesses operate, as well as the contours of the industry-specific laws and regulations with which they must comply. For decades, transportation companies have relied on Scopelitis to defend some of the most significant and complex litigation in the industry.

Because transportation companies operate across multiple jurisdictions, many face class and collective actions in states other than those where they are headquartered. The Firm’s Class Action Defense & Complex Litigation Practice represents motor carriers, logistics providers, brokers, warehouse operators, final-mile delivery companies, and other transportation businesses in courts and arbitration forums throughout the country, enabling clients to rely upon a single transportation industry-focused legal team regardless of where the litigation is filed.

Recognized nationally by BTI Consulting Group as one of the country’s leading class action defense practices in 2026, the practice has defended hundreds of class and collective actions involving issues unique to the transportation industry. Those matters frequently involve:

• Worker misclassification claims
• California-specific wage and hour claims, such as claims brought under the State’s Private Attorneys General Act (PAGA)
• Minimum wage and overtime claims under the Fair Labor Standards Act
• Minimum wage and overtime claims under various state laws
• Deduction and business expense reimbursement claims under various state laws
• Workplace and data privacy claims
• Claims alleging violation of state business opportunity and consumer protection laws
• Claims alleging violation of wage transparency laws
• Claims alleging violation of the federal Truth-in-Leasing Regulations

These cases often turn on issues unique to the transportation industry and require a fundamental understanding of the operations they affect. Driver compensation systems, mileage and trip-based pay structures, independent contractor relationships, dispatch practices, Federal Motor Carrier Safety Regulations, the nature of multi-state operations, brokerage relationships, and industry-specific business models frequently create legal questions that require the industry-level expertise Scopelitis attorneys bring to bear. Understanding those operational realities can be critical in determining the outcome of litigation.

Over the last several years, the transportation industry has also experienced an increase in technology-related claims. Those claims often challenge data privacy practices related to the use of technologies utilized by companies in the transportation industry, including driver-facing cameras, automated gate systems, and tools that many transportation companies utilize to enhance safety and operational performance. As these claims have become more common, defending them requires counsel who understand both the legal risks and the operational considerations driving technology adoption.

The group’s approach extends beyond defending lawsuits after they are filed. Scopelitis attorneys in the Class Action Defense & Complex Litigation Practice regularly work collaboratively across practice areas to help clients assess and reduce litigation risk before disputes arise. This work includes:

• Reviewing arbitration programs
• Evaluating contractor agreements
• Assessing compensation practices
• Advising on privacy compliance
• Developing strategies designed to minimize exposure while preserving operational flexibility

Because transportation businesses operate in a highly regulated environment, effective risk management often requires coordination across litigation, labor and employment, privacy, regulatory, and safety practice areas. By combining deep transportation knowledge with sophisticated class action experience, Scopelitis attorneys provide legal counsel grounded in an understanding of both the law and the industry.

For more information regarding, contact the Scopelitis Class Action Defense & Complex Litigation team.

Scopelitis Quarterly Headline Roundup: Summer 2026

$604 Million Highway Accident Verdict Included Claims Against C.H. Robinson

Transportation Counsel in Mergers and Acquisitions

The New CNS Cargo Membership Handbook: A Practical Guide to the 8th Edition

Building a Misclassification-Resistant Motor Carrier: Structural Considerations for the Independent Contractor Model

Scopelitis Video Briefing: Often-Overlooked Requirements of the Federal Leasing Regulations (49 C.F.R. Part 376)

SA Updates its SSI Guidance to the Air Cargo Industry