Farm-Out Liability: You Handed Off the Trip, Not the Risk

Most operators treat a farm-out as a clean handoff. The trip goes to the partner carrier, and the risk goes with it — their vehicle, their driver, their insurance, their problem. That instinct was legally defensible for years. As of May 14, 2026, it isn’t.

On that date the U.S. Supreme Court ruled 9-0 in Montgomery v. Caribe Transport II, LLC that the FAAAA’s safety exception preserves state negligent-hiring claims against brokers. Translated out of legal language: the party that selected the carrier used to have a federal preemption defense that ended the case early, often before discovery. That defense is gone.

If you farm out work in the United States, farm-out liability is now a standing exposure in your business, and it attaches at the moment you choose who gets the trip.

What Actually Changed

The old sequence looked like this. A crash happens on a farmed-out trip. You get named in the suit alongside the operating carrier. Your attorney moves to dismiss on federal preemption grounds, and the case against you ends before it costs you real money.

The new sequence has no exit ramp. Negligent-hiring claims now survive that motion, which means discovery, depositions, your booking records, your emails, and your process for picking partners all become evidence. The question in front of a jury is no longer whether you operated the vehicle. It’s whether you exercised reasonable care in choosing who did.

That is a different question, and most operators have never had to answer it under oath.

A Satisfactory Rating Is Not a Shield

The number the industry is circling is from a Dallas County jury: a $604 million advisory verdict against C.H. Robinson in Lipe v. Lupus Superior. The jury assigned 23% liability to C.H. Robinson for selecting a carrier with safety concerns.

Three details matter more than the headline figure.

Read those together and the exposure is clear. The rating is a floor, not a defense. Not operating the vehicle is not a defense. And the coverage most operators carry is not sized for this environment — the federal financial responsibility minimum for vehicles seating 16 or more is $5 million, a figure that predates the current verdict climate by decades.

Farm-Out Liability Follows the Crash, Not Your Office

Federal preemption gave the industry one consistent rule. What replaces it is fifty state common law standards on negligent hiring, and the one that applies is the law where the crash happened — not where you’re based, not where you booked, not where your partner is domiciled.

For an operator running interstate work, or feeding trips into a network that moves passengers across state lines, that means your exposure profile changes trip by trip. You cannot standardize on your home state’s rules and assume you’re covered.

The File You Build Before the Trip

The practical response the industry is converging on is documentation, captured before the trip runs, not reconstructed after a claim. Four items:

1. Confirmation of active operating authority on the booking date
2. Current FMCSA safety rating
3. Insurance certificate naming you as additional insured
4. Screenshot of SMS BASIC percentiles as they appeared on the booking date

The fourth item is the one operators skip, and it’s the one that does the most work. BASIC percentiles move. A screenshot dated the day you booked proves what you saw when you made the decision — which is the exact question a negligent-hiring claim asks. Reconstructing it two years later proves nothing, because the data will have changed.

Retain the file at least as long as your state’s personal-injury statute of limitations.

Where Your GNet Connect Profile Fits

A complete GNet Connect profile already carries part of this. Operators upload their certificate of insurance and operating documentation, fleet details, and airport permits, and partners searching the network can see them before they send a request rather than chasing paperwork by email after the fact.

How it works in practice:

1. You complete your profile — COI, operating authority, fleet list, permits.
2. Partners across the network find you through Connect search or Fleet search.
3. Before they send work, they can review your documentation on your profile.
4. You do the same on theirs before you farm out.

Be clear about what that does and does not cover. A Connect profile makes your partner’s documentation available and makes yours available to them, which removes most of the friction from steps 1 and 3 of the file above. It is not a legal opinion, and it does not capture the point-in-time FMCSA and BASIC data described in items 2 and 4 — you still need to pull and date-stamp those yourself on the booking date.

What it does change is the excuse. “I couldn’t get their paperwork in time” stops being a reason a farm-out went out undocumented.

Questions About Farm-Out Liability

What did the Supreme Court actually decide?
In Montgomery v. Caribe Transport II, LLC (May 14, 2026), the Court held unanimously that the FAAAA’s safety exception preserves state-law negligent-hiring claims against brokers, removing the federal preemption defense that previously ended many such cases early.

Does this apply to me if I only farm out occasionally?
Yes. The exposure attaches to the act of selecting the carrier, including informal farm-outs between operators who have worked together for years.

My partner had a Satisfactory FMCSA rating. Am I covered?
Not on its own. In Lipe v. Lupus Superior, the selected carrier held a Satisfactory rating and the jury still assigned 23% liability to the party that chose them.

Which state’s law applies?
The law of the state where the crash occurred, not where you are based or where the booking was made.

Is $5 million in coverage enough?
That is the federal minimum for vehicles seating 16 or more passengers. It is a compliance floor, not a risk assessment. Talk to your broker about where your actual exposure sits.

How long should I keep farm-out documentation?
At minimum, the length of the personal-injury statute of limitations in the states you operate through.

This article is industry news and general information, not legal advice. Farm-out liability turns on the specific facts of each booking and the law of the state involved. Consult your own counsel and your insurance broker about how this ruling applies to your operation.