Montgomery v Caribe Transport Oral Argument Preview

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This week, the Supreme Court will hear oral arguments in Montgomery v. Caribe Transport, a major regulatory case.

A quick way to estimate any case’s importance is to look at which groups are interested enough to submit amicus curiae (“friend of the court”) briefs. Based on this metric, Caribe Transport is a blockbuster, featuring amicus participation from the biggest companies (Amazon), trade associations (U.S. Chamber Commerce), and even the federal government (acting through the Solicitor General).

I could write a book about this fascinating case, but time permitted only the following FAQ.

What’s the Regulatory Background?

This case’s backstory reads like a history of federal regulation. During the first half of the twentieth century, the federal government set out to micromanage entire economic sectors, including rail freight, air travel, and interstate trucking. This is known as economic regulation, and it can be distinguished from a wave of social regulation legislated by Congress in the late 1960s and 1970s (think: environmental and occupational safety rules).

For economic regulation, the government’s primary tools are market-forcing measures like price controls and limits on competition. The problem with this sort of central planning, of course, is that it never works. Instead, the government’s heavy hand invariably leads to higher prices and worse service. By the late 1970s, the failure of economic regulation had become apparent enough to galvanize reform. At that time, deregulation had unlikely champions, foremost among them being President Jimmy Carter, but also the likes of Senator Ted Kennedy.

Caribe Transport relates to the backend of this story—specifically, deregulation of the interstate freight trucking.

What is the Statutory Context?

With the Motor Carrier Act of 1980, Congress ended federal economic regulation of interstate trucking. These reforms were immediately successful, resulting in estimated benefits of $84 billion to $124 billion a year (in 2026 dollars) in shipping, merchandising, and inventory costs.

Deregulation, however, was incomplete. Despite ending federal economic regulation in 1980, Congress left the states free to impose economic regulations on freight trucking. By the early 1990s, state economic regulation had become a “huge problem,” according to a congressional conference report. A tangled web of local rules threatened to undo the benefits wrought by federal deregulation.

Prompted by such concerns, Congress in 1994 amended the Motor Carrier Act to prohibit, or preempt, states from imposing economic regulations on interstate freight trucking. At the same time, Congress carved out an exception to its preemption provision. Specifically, lawmakers preserved the states’ “safety regulatory authority.” The upshot is that Congress preempted state economic regulation, but States retained authority to regulate safety.

Caribe Transport centers on this safety exception to federal preemption of state regulation for interstate freight trucking.

What is the Legal Question Presented to the Supreme Court?

Deregulation overhauled the freight trucking industry, leading to a wave of restructuring, new market entrants, and greater efficiencies. A leading example of this transformation is the rise of trucking brokers, who act as intermediaries between shippers and motor carriers. They don’t own the transported goods, nor do they operate the trucks; instead, brokers connect shippers and truckers. Trucking brokers have significantly increased their market share, growing from under 6% of U.S. truckload freight in 2000 to about 27% today, driven by digitized and fast-moving logistical technologies.

As the trucking industry has undergone these changes, there has been a concomitant rise in personal injury lawsuits stemming from accidents. According to the American Transportation Research Institute, the number of these cases filed annually increased at an average rate of 3.7% from 2014 to 2023, while the median size of the largest judgments—more than $10 million, known as “nuclear” verdicts—increased almost 50%. These increases are incongruous with traffic safety data, which show an almost 35% decline from 2000 to 2020 in fatal crashes per 100 million vehicle miles.

In the typical personal injury suit, the plaintiffs will sue the truck company to pay for medical care, lost wages, and suffering. These suits unequivocally are not preempted by Congress.

Increasingly, plaintiffs also are targeting entities that are adjacent to trucking—in particular, trucking brokers. Here, the legal claim is that the brokers failed to adequately screen the safety record of the trucking service they arranged for shippers. This legal claim, known as negligent selection, is at issue in Caribe Transport.

Lower courts are utterly conflicted over whether Congress preempted negligent selection claims against trucking brokers. More specifically, the dispute boils down to whether these claims fall within the safety exception to federal preemption of state regulation for interstate freight trucking.

The Seventh Circuit and the Eleventh Circuit say these claims do not fall within the safety exception and, therefore, are preempted. On the other hand, the Sixth Circuit and Ninth Circuit say these claims fall within the safety exception (and are not preempted).

Why is There So Much Interest in the Case?

In the introduction, I noted the lineup of heavy hitting institutions that are participating as amicus curiae in Caribe Transport. Their involvement is a testament to the case’s importance for the national economy.

Most directly, the circuit split on the law has left trucking brokers subject to a dizzying array of conflicting standards across the country. The onset of brokering has been a key efficiency engendered by deregulation, but brokers cannot function effectively in an environment where liability depends on how far the chosen motor carrier made it down the road—and in which federal Circuit that road lies—when an accident occurs. Without a single, uniform ruling about the scope of federal preemption, brokers are simply left to guess what law governs their businesses.

Indirectly, the legal uncertainty helps drive up insurance costs. From 2010-2020, insurance premium costs per mile increased by 47 percent for trucking companies. The cost increases in turn affect most of the supply chain, given that trucking transports 72% of all domestic freight tonnage.

Modern economies run on logistics, and Caribe Transport is the most important regulatory case for logistics to come down the pike in a long time. And that’s why there is so much interest in the case.

What Will SCOTUS Decide?

It’s a fool’s errand to prognosticate how the Supreme Court will decide. Nevertheless, I’ll venture a guess.

I think the side that seeks preemption (Caribe Transport) has the better argument. To my eyes, the statutory structure makes it clear that Congress intended to preempt negligent selection suits. As Caribe Transport notes in its brief, the overall regime doesn’t make much sense if the other side (Montgomery) is correct. That’s because Congress expressly preempted these sorts of lawsuits in intrastate commerce. It would be exceedingly strange for Congress to bar states from regulating within their borders, yet to allow states to regulate the same matter across their borders. Such a result would flip preemption on its head.

But, again, predicting the Supreme Court’s decision-making is like forecasting the weather in Denver—it’s an inherently uncertain enterprise.

Oral arguments take place on March 4th. Although it’s a mistake to read too much into these live arguments, they shouldn’t be ignored, either. I will amend this post with my reactions to oral arguments.

Update: Reaction to Oral Argument

Only four Justices showed their hands during oral arguments.

Based on their questions, Justices Jackson and Sotomayor appeared to be firmly in the no-preemption camp. Although this position was clearer for Justice Jackson, both seem to interpret negligent selection suits as falling within the safety exception.

On the other hand, Justices Kavanaugh and Alito appeared to be in the preemption camp. They both pressed Montgomery’s counsel (super-lawyer Paul Clement) on the anomaly I discuss above. Congress expressly preempted these sorts of lawsuits in intrastate commerce, but Montgomery is arguing that these suits are not preempted in interstate commerce. That's the reverse of how preemption typically works. Finding this incongruity “very hard to accept,” Justice Alito told Mr. Clement, “I came to the argument hoping you were going to give us some brilliant way of reconciling these two provisions other than just live with it, but I guess … there is no such theory.”

The biggest surprise was the apparent curiosity of Chief Justice Roberts, along with Justices Thomas and Gorsuch, in Montgomery’s argument that proximate causation, rather than statutory preemption, is the proper framework for limiting tortious claims against trucking brokers. This argument was raised in Montgomery’s reply brief.

Justices Kagan and Barrett did not tip their hands.

In sum, two Justices apparently favor preemption, and two Justices likely disagree. The other five Justices seemingly could go either way, and I expect them to do so in a block. So, I’m guessing it’ll be 7 – 2, but I don’t know which side will win.