Editor’s note: This op-ed for Bus & Motorcoach News is written by Michael Rogers, founder of Buslane and former president of the Northwest Motorcoach Association. The views expressed are those of the author and do not necessarily reflect the views of Bus & Motorcoach News or United Motorcoach Association.
It is a busy weekend and you are sold out. On Saturday morning, a coach goes down — turbo, air leak, does not matter — and there is a group standing on a curb in 90 minutes. So you call the company down the road, the one you have known for 15 years, and it has a bus.
Crisis handled.
You did not broker anything. You solved a problem and gave a friend some work.
That is not what a plaintiff’s attorney will call it.
On July 23, a jury in Dallas County returned a $604 million advisory verdict against logistics company C.H. Robinson. The case, Lipe v. Lupus Superior, came out of a 2021 crash on Interstate 20 that killed three people. The jury split the fault three ways: 45% to the driver, 32% to the carrier, and 23% to C.H. Robinson, which acted as the broker — though the company never owned a truck or employed a driver, and only selected the carrier.
The theory was straightforward. Though Robinson neither owned the vehicle nor directly employed the driver, it had not adequately vetted the carrier’s safety record and therefore had liability.
Nine weeks earlier, the Supreme Court had made that theory possible. In Montgomery v. Caribe Transport II, LLC, decided 9-0 on May 14, the Court held that the FAA Authorization Act’s safety exception preserves state laws covering negligent-hiring claims against brokers. The federal preemption defense that had been getting those cases dismissed early was gone.
The verdict is advisory, post-trial proceedings are pending, and C.H. Robinson has said it will appeal, so no final liability has been adjudicated against anyone. Every word of analysis written about either case has been aimed at trucking. Almost none of it has been aimed at us, but something in it should stop any operator cold.
Exemption is gone
Everyone gets sued. That has always been true — the driver, the carrier, whoever arranged it, and anyone else in reach with a policy. The Lipe verdict form is the proof: 45%, 32%, 23%. One crash, three defendants.
What changed in May is not who gets named. It is who gets out.
The party that picked the carrier used to have a federal defense that ended the case early, often before discovery. That defense is gone. Being named was never the expensive part. Being unable to leave is.
Which brings us back to Saturday morning. When you picked up the phone and called the company down the road, you selected a carrier for a customer who was paying you. For the length of that trip, that is what you were. It does not matter that you have known the owner for 15 years, that no money changed hands beyond the farm-out rate, or that you were solving an emergency rather than running a business model.
C.H. Robinson made a version of that argument, and it did not work. The company told the court that the carrier had safely delivered nearly 270 loads for its customers and held a Satisfactory
FMCSA rating when it was selected — a rating that remained Satisfactory even after a federal review of this crash.
Long track record, clean federal grade. The jury assigned 23% anyway, because what the plaintiffs put in front of them was different: federal regulators had been flagging that carrier for unsafe driving for more than a year, and it had crossed intervention thresholds in two SMS categories.
Read that again with your own farm-out list in mind. The relationship is not the record. Two hundred and seventy clean trips tell you what has already gone right. They tell you nothing about what the safety data said last Tuesday.
That is not an argument against interlining. Farming out is how this business has always worked, and it should stay that way. It is an argument about what you can produce afterward.
‘Nuclear’ verdicts
It is worth pausing on how little structure sits underneath any of this. The Federal Motor Carrier Safety Administration registers brokers of property and brokers of household goods, each on a $75,000 surety bond, both filing on Form OP-1 — “Application for Motor Property Carrier and Broker Authority.” Passenger carriers file OP-1(P) for their own operating authority.
There is no passenger equivalent of broker authority. No registration, no bond, no process agent, nothing. Operators have complained about that layer for 20 years, and until this spring the complaint was about pricing. It is now about liability, and it reaches the operator farming out a run as squarely as the website that took the deposit.
Another wrinkle is worth noting. The preemption provision at issue in Montgomery sits in the subsection of the statute governing transportation of property. The shield may never have covered passenger arrangements at all, which would mean our exposure did not change in May.
It only became visible.
Now put numbers on it. C.H. Robinson disclosed an insurance tower of $155 million against that $604 million verdict — one of the largest transportation intermediaries in North America, and its coverage does not reach.
Our own federal financial responsibility minimum is $5 million for a vehicle with 16 or more passenger seats. The American Transportation Research Institute puts the median nuclear verdict – defined as a jury award exceeding $10 million – at $36 million as of 2022, up roughly 50% from 2013, with average verdicts above $1 million climbing from $2.3 million in 2010 to $22.3 million in 2018.
And the single largest factor driving verdict size in ATRI’s data are cases involving children — an average increase of $27 million where a child was injured or killed – youth sports, school groups, church trips. That is the charter calendar.
There is also a quieter way this ends, and it reaches operators who never have a crash at all.
ATRI’s interviews found that nuclear verdicts are rarely the direct cause of a carrier closing — rising insurance costs are. Premiums price the whole pool. When the worst outcomes get worse, everyone pays for it, and small carriers end up choosing between coverage they cannot afford and exposure they cannot survive.
There is a limit to all of this, and it is worth stating fairly. One day after Montgomery, the Texas Supreme Court held in In re Home Depot U.S.A. Inc. that a passive shipper owes no duty to the driving public simply for hiring a federally regulated carrier.
But read that carefully before taking comfort in it. It binds Texas and nowhere else, and it concerns a shipper handing goods to a carrier — not an intermediary selecting a carrier on a customer’s behalf. An operator farming out a run sits on the selection side of that line.
That is the part of Montgomery the trucking coverage has largely buried. What federal preemption gave brokers was one answer, everywhere. Take it away, and the question falls to 50 separate bodies of state common law that disagree on when a party who engages an independent contractor owes a duty to the public. The exposure now depends on where the crash happens.
And you do not choose where that is. You send the coach to the state the group is going to. A Washington operator who hands a run to an Idaho carrier for a move through Montana is answering to Montana law, whatever the rule may be at home. Which is why the file you keep before handing off a run matters more than what you call yourself: reasonable care in carrier selection is the one thing that helps you in every jurisdiction, because every version of the standard starts there.
What to do
Two practical consequences follow for operators.
The first is that your safety record has become a commercial asset in a way it was not six months ago. Any serious intermediary is now going to look at authority status, safety rating, insurance limits, and BASIC percentiles before placing a trip, because failing to look has a price. Clean records will get more work. That is the freight industry’s experience already, and it will arrive here.
The second is that when you place a trip with another carrier, you are, for that trip, the party selecting the carrier. The standard applies to you in that moment. This is manageable, and it does not require a compliance department. It requires a file.
Before you hand a run to another company, pull four things and save them: confirmation that their operating authority is active, their current FMCSA safety rating, a certificate of insurance meeting your own limits that names you as an additional insured — not merely as certificate holder, which only means you receive the paperwork — and a screenshot of their SMS BASIC percentiles on the date you booked.
Four documents, 10 minutes, filed by trip and date. Keep them at least as long as your state’s personal-injury limitations period, which is longer than most operators assume, and longer still where a minor was aboard.
None of this is new. Experienced operators have been asking for additional insured status for years, and it is standard practice for good reason. It is worth repeating anyway, because the handshake farm-out between two companies that have traded work for two decades is precisely where the file tends not to get made.
Asking Dave for the certificate is not an insult to Dave. It is the thing that lets you keep sending Dave work after your insurer starts asking what your selection process looks like.
Pulling the data and then ignoring it is worse than never pulling it, because it converts “should have known” into “knew.”
If something in those four items looks wrong, the answer is to place the trip somewhere else. If you look, write down what you did about it.
None of this is a reason to stop farming out. It is a reason to farm out on paper. The operators who come out of the next few years ahead will be the ones who can produce the file — and the intermediaries who cannot will find the market has gotten narrower around them.
Michael Rogers is the founder of Buslane and served three years as president of the Northwest Motorcoach Association. He has 27 years in the charter industry as a former owner-operator. This article is general information, not legal advice; consult your own counsel.
