Item 1A. Risk Factors
Item 1A. Risk Factors.
Except as set forth below, there have been no material changes to the Company’s risk factors as previously disclosed in Item 1A to Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
We may be subject to litigation claims that could result in significant expenditures.
By the nature of our operations, we are exposed to the potential for a variety of litigation, including personal injury claims, vehicular collisions and accidents, alleged violations of federal and state labor and employment laws, such as class-action lawsuits alleging wage and hour violations and improper pay, commercial and contract disputes, cargo loss and property damage claims. In addition, because our brokerage and logistics services business arranges for third-party motor carriers to transport freight on behalf of our customers, we are exposed to claims alleging that we negligently selected or hired a motor carrier whose truck was involved in an accident causing injury or property damage. In Montgomery v. Caribe Transport II, LLC , decided in May 2026, the U.S. Supreme Court held that state-law negligent-selection claims against transportation brokers are not preempted by federal law in certain circumstances. Our brokerage and logistics services represent a meaningful portion of our overall revenue. Although the long-term implications of this decision are not yet clear, the decision may increase the frequency and cost of litigation arising from our brokerage operations, lead to higher insurance premiums, or make it more difficult to obtain or maintain adequate insurance coverage for those operations. It may also increase the resources we devote to carrier selection, safety review, and compliance processes as we adapt our practices in response to this evolving litigation environment.
While we purchase insurance coverage at levels we deem adequate, we have in the past settled litigation for amounts in excess of our insurance coverage, including our recent settlement of an auto-liability claim for an amount substantially exceeding our insurance coverage, which materially and adversely affected our financial results for the fourth quarter of 2025. It is possible that the outcome of currently pending or future litigation may similarly exceed our insurance coverage or may not be covered by insurance. We accrue a provision for a litigation matter according to applicable accounting standards based on the ongoing assessment of the strengths and weaknesses of the litigation, its likelihood of success, and an evaluation of the possible range of loss. Our inability to defend ourselves against a significant litigation claim could have a material adverse effect on our financial results.
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