Pink Cheetah, TQL fight it out as transparency rule awaited

The oral arguments in the broker transparency case of Pink Cheetah vs. Total Quality Logistics last week were relatively rapid but took place against something that has dragged on a long time: a revised federal rule on broker transparency.

The rulemaking process for a proposal on broker transparency had its period for commentary through a proposed notice of federal rulemaking close last year.

The post-rulemaking process is said to be in the final stages, with the Federal Motor Carrier Safety Administration (FMCSA) having sent its latest update to the White House Office of Information and Regulatory Affairs late last month.

But while the proposal would more tightly govern what brokers are required to disclose to the carriers they hire and the shippers they serve, it isn’t law yet. But that did not stop the issue from coming up last week in the U. S. Court of Appeals for the District of Columbia.

Laurence Socci, the outside counsel for Pink Cheetah, was in court to argue that the lower District of Columbia court had erred in issuing TQL summary judgment and tossing out the Pink Cheetah lawsuit over the broker’s failure to provide documentation to Pink Cheetah’s satisfaction.

The oral arguments were short, lasting around 20 minutes (a stark contrast to the same panel having just heard lawyers opine in the case of California vs. the U. S. Department of Transportation, heard by the same panel as the Pink Cheetah case).

Socci made clear what he thought of the proposed rulemaking on broker transparency and whether it should influence Pink Cheetah vs. TQL. Before the rulemaking began The dispute between Pink Cheetah and TQL involves developments that occurred as far back as 2023, Soucci said, “long before any rulemaking was going on.

The rulemaking going on now has really nothing to do with the underlying case. All of this happened long before the rulemaking started.” He added, “the issue is whether the district court prematurely dismissed the complaint, and we argue that it did.”

But Scott Carey, outside counsel for TQL with the firm of Baker Donelson, did want the proposed rule to be a factor. “I would point out that there is a rulemaking going on right now,” Carey told the judges.

“We’ve got six years of rulemaking over this particular agency regulation, and one of the issues is whether there can be waivers in a transportation contract between a broker and a motor carrier. That issue has not been settled.”

The reference to a waiver is the first building block in constructing the basis of the dispute between Pink Cheetah and TQL over a 2023 shipment of ice cream, some of which was ultimately rejected by the end customer.

TQL at that time had a clause in the standard contract between the broker and its carriers, according to the original lawsuit filed by Pink Cheetah, that the carrier would waive its rights to the broker records that are specified to be supplied on demand, per 49 C. F. R. § 371. 3 of federal law. What is the email’s clout?

TQL’s argument is that a November 30, 2023 email sent by FMCSA after Pink Cheetah had reached out to the agency, requesting the company provided the documentation sought by Pink Cheetah, is not an “enforceable order of the Secretary,” according to its brief submitted to the appellate court.

It cites the district court opinion that “the email, by its own terms, is merely ‘guidance’…and is not enforceable under the statute.” In that November 30 email, according to the initial Pink Cheetah complaint, “FMCSA issued an order…directing (TQL) to remove the waiver language from its contracts” because it violated existing federal law.

TQL’s also is arguing that it did provide records in response to that FMCSA email. But even after providing FMCSA with various data, Pink Cheetah wanted more. “TQL declined the request, relying on the waiver in…the parties’ pre-existing agreement,” it said in its brief.

In answering a question from the bench, Socci addressed whether TQL under current law can have their carriers and shippers waive the federal disclosure laws. The attorney was asked whether there is federal authority for such a waiver. He replied that he did not have “that information off the top of my head.”

But he added that “if more of a record is required, then that’s more of a reason to remand this case back to the district court.” The district court, Socci said, “was not entitled to disregard concrete directives while treating its informal features as dispositive.”

Payment raises some eyebrows While what Pink Cheetah got paid is not part of the arguments before the court, their disclosure did create a stir. “The records revealed that (it) received from the broker only 56% of the payment for the load in question,” the Pink Cheetah brief for the appellate court said.

“The broker extracted approximately 40% commission rather than the reasonable and customary amount of about 14% to 16%. Pink Cheetah cited the Transportation Intermediaries Association for its data on the average size of a broker’