Item 1A. Risk Factors
ITEM 1A: RISK FACTORS
The following risk factor replaces the risk factor entitled “ Insurance, claims exposure, and ‘nuclear verdict’ trends could materially increase costs ” included in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10‑K for the year ended December 31, 2025.
Accidents involving our vehicles, drivers, owner-operators or third-party motor carriers, and developments in the litigation environment, could materially increase our costs.
Our operations expose us to personal-injury and property-damage claims arising from accidents involving vehicles owned or operated by us, our employee drivers and owner-operators providing services under our operating authority. Our freight brokerage operations, as well as other portions of our business in which we arrange for third-party motor carriers to transport freight, also expose us to claims arising from accidents involving those carriers.
The transportation industry has experienced increased claim severity and large jury verdicts. Our freight brokerage operations, as well as other portions of our business in which we arrange for third-party motor carriers to transport freight, expose us to claims arising from accidents involving those carriers. Plaintiffs may allege that we negligently selected or retained a motor carrier, even though the vehicle involved in the accident was not owned or operated by us and the driver was not our employee.
On May 14, 2026, the U.S. Supreme Court held in Montgomery v. Caribe Transport II, LLC that a state-law claim alleging that a transportation broker negligently selected a motor carrier is not preempted by the Federal Aviation Administration Authorization Act because a claim of that type falls within the statute’s motor-vehicle-safety exception. The decision addressed whether such a claim may proceed, not whether the broker was negligent or liable. Nevertheless, the decision eliminates a potentially significant federal preemption defense to claims of the type addressed by the Court and may increase the number, scope and cost of claims arising from our selection and use of third-party motor carriers. Because the governing standards are derived from state law, they may vary among jurisdictions and continue to develop through litigation.
These developments could result in increased defense costs, settlements, judgments, insurance premiums and self-insured retention levels and could make appropriate insurance coverage more difficult or expensive to obtain. They may also require us to devote additional resources to carrier qualification, safety review, compliance and documentation. Insurance maintained by third-party motor carriers or by us, and any contractual indemnification rights, may be unavailable, insufficient or subject to exclusions or other limitations. An adverse judgment or settlement, or the establishment or increase of related reserves, could materially adversely affect our business, financial condition, results of operations and cash flows.
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