A $604 million court ruling is forcing freight brokers to take a hard look at how they vet their carriers. Josh Lovan, a business advisor in security and risk management at J.J. Keller, says basic checks are no longer sufficient, plaintiff attorneys are now demanding "true vetting," and brokers must raise their safety and compliance standards to a defensible level or face potentially catastrophic financial and legal consequences.

The $604 million verdict, handed down July 23 in Dallas County and stemming from a 2021 accident, is sending shockwaves through the freight brokerage industry and exposing how thin most carrier vetting programs really are. According to Lovan, the case — combined with a recent Supreme Court ruling on freight broker liability — has triggered an urgent wave of compliance questions from brokers of all sizes. The ruling lands on an industry where the vast majority of freight moves are arranged by intermediaries: thousands of licensed brokers in the United States match shippers with motor carriers, yet many rely on automated onboarding that checks little beyond active operating authority and a certificate of insurance.

"Carriers that are waiting in the next 12 to 24 months to really get a plan to kind of put together a carrier vetting process are really missing the boat," Lovan said. "Because if there's a catastrophic accident in the next 12 or 18 months while you're building your program, that's just not good enough."

For years, the compliance bar for brokers was low: confirm that a carrier had active operating authority and valid insurance, then move the freight. A carrier with five power units and six months in business was fair game. Plaintiff attorneys are now demanding far more, and courts are delivering nine-figure verdicts to reinforce that expectation. Because major litigation can take years to resolve — the Dallas County case involved a 2021 accident decided in July 2023 — brokers face exposure from accidents that occurred long before they began tightening their processes. The gap is compounded by the federal minimum insurance requirement for motor carriers, which has remained at $750,000 since 1985 and can be exhausted many times over by a single catastrophic crash, leaving brokers and shippers as the remaining deep-pocketed defendants.

"Being good and being lucky are 2 very different things. And in the world of transportation and enforcement, most carriers get lucky rather than just being good."

Lovan laid out three immediate steps brokers should take. First, elevate carrier vetting to a "defensible standard," reviewing CSA scores, roadside inspection trends, hours-of-service records, and driver fitness data rather than relying on insurance alone. The CSA (Compliance, Safety, Accountability) program, run by the Federal Motor Carrier Safety Administration, is the government's primary safety measurement system for interstate carriers, and its data is publicly available — meaning plaintiff attorneys can, and do, pull the same records brokers can. Second, document every carrier selection decision, including a written record of why certain carriers were rejected. Third, standardize and enforce safety criteria across the entire network, eliminating one-off exceptions made for long-standing relationships. A company can go from poor compliance standing to looking like a completely different operation within 18 months, he said, but only if it starts immediately.

Asset-based carriers generally understand the stakes better than non-asset brokers, panelists noted, because they manage driver qualification files, CSA scores, and maintenance programs every day. Brokers also face a communications liability gap: where asset carriers route driver contact through recorded phone systems or back-office platforms, broker-to-driver conversations frequently happen over text and email with little discipline around language — all of it discoverable in litigation.

Lovan warned brokers against two common misconceptions: that carrier indemnification clauses offer real protection when the carrier is a small operator with a $750,000 policy, and that purchasing new insurance coverage will shield them from cases already working through the court system. Lawsuits tied to accidents from 2022 and 2023 are actively being amended to add brokers as defendants now that the legal landscape has shifted — making retroactive fixes impossible.

The Dallas County jury's $604 million verdict on July 23, tied to a 2021 accident, has put freight brokers on notice about carrier vetting liability. Lovan says brokers must document not only which carriers they select but also why they rejected others — a practice rarely seen in the industry. And while any company can reach a defensible compliance standard within 18 months, brokers must start now, given the years-long litigation timeline for trucking cases.

This article is based on a transcription of the interview; the full interview is available in the accompanying video.

Source: FreightWaves