Initial Thoughts on Montgomery v. Caribe Ruling - Bigger is Better

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Initial Thoughts on Montgomery v. Caribe Ruling - Bigger is Better

Airfreight & Surface Transportation

FLASH

FLASH: Initial Thoughts on Montgomery v. Caribe May 14, 2026

Ruling - Bigger is Better

●Montgomery v. Caribe Ruling. This morning, the Supreme Court unanimously

ruled against CHRW in the Montgomery v. Caribe broker liability case. The

ruling allows brokers to be found liable for negligent hiring of drivers,

which was previously preempted by federal law under the Federal Aviation

Administration Authorization Act. In a volatile trading session, CHRW stock is Scott Group

now down only 2% intra-day following the release, while LSTR stock is down sgroup@wolferesearch.com

(646) 845-0721

1% and RXO is trading down 7%. In contrast, our TL Index is trading up 9% View Scott’s Research

with KNX up 13%. View Comp Table

●Implications for Brokers. We believe the first order effect of the ruling will be Jacob Lacks

an increase in insurance costs for truck brokers. Over time, we'll see if brokers jlacks@wolferesearch.com

(646) 845-0726

are able to offset higher costs through either higher sell rates or potentially

even lower buy rates as they absorb a portion of the liability from carriers. We Ivan Yi

iyi@wolferesearch.com

believe this will raise fixed costs for brokers to operate, which will likely lead (646) 845-0724

to share gains for the largest brokers like CHRW that are best positioned to Cole Couzens

absorb these higher costs. Further, in Justice Kavanaugh's opinion, he wrote ccouzens@wolferesearch.com

that "brokers should be able to successfully defend against state tort suits if Preston Webb

the brokers have acted reasonably and arranged transportation with reputable pwebb@wolferesearch.com

trucking companies." We suspect this means that brokers will increase their