New lawsuit approach: accusing C.H. Robinson, TQL of RICO violations

(Editor’s note: C. H. Robinson has released a lengthy statement in response to the lawsuit. Its entirety is published in different parts of this article.) The latest legal battleground for brokers is a federal lawsuit in Texas that accuses two of the biggest 3PLs of violating the Racketeer Influenced and Corrupt Organizations Act (RICO).

The suit, filed Wednesday in the federal district court for the eastern district of Texas, accuses C. H. Robinson (NASDAQ: CHRW) and TQL of having “engaged in a pattern of racketeering activity predicated on forced labor and wire fraud from which (they) knowingly (or with reckless disregard) derive a substantial financial benefit.”

“Defendants operate, control, and influence enterprises alongside Illegal Carriers to funnel customer freight through non-compliant carriers for Defendants’ financial gain,” the lawsuit adds.

The lawsuit was brought by six carriers: Stevens Trucking, Western Flyer Express, D&M Carriers d/b/a Freymiller Trucking, IWX Motor Freight, Christenson Transportation Inc and E. O. S. Inc. The suit brings up a separate question: how many of these suits are brokers going to face? The reality is that while the ruling on broker liability in Montgomery vs.

Caribe Transport II holds the potential for legal damage to the brokerage community, the suit filed by the carriers against C. H. Robinson and TQL has nothing to do with Montgomery legally, and could have been filed even if that case went the other way at the Supreme Court. C. H. Robinson responded with a lengthy statement.

“We reject the allegations in this civil lawsuit, its false characterization of C. H. Robinson and our business practices, and its fundamental inaccuracies about how the freight market actually works,” the company said in its opening paragraph.

Super Ego is a player in the suit But one of the key players in the lawsuit not named as a defendant is Super Ego Trucking. The lawsuit refers several times to Illegal Carriers, with the capitalization put there by the plaintiffs’ attorneys. Super Ego is mentioned as an example of “one of the Illegal Carrier networks at issue here.” The lawsuit notes that C.

H. Robinson had dubbed Super Ego one of its “carriers of the year,” specifically for carriers with more than 1,000 trucks. That designation was handed down approximately a year ago. There are other allegations in the suit about the choice of carriers by the 3PLs, which also was a target of C. H. Robinson’s statement.

“All the carriers we work with are authorized by the federal government, plus meet additional safety standards and higher levels of insurance than legally required,” the statement said. Since then, Super Ego has been the subject of a highly critical report on 60 Minutes, and is the defendant in a lawsuit over its practices.

Some aspects of the lawsuit get right to an issue that brokers, especially C. H. Robinson, have been particularly concerned about: being classified as a carrier. The decision in Montgomery vs. Caribe Transport II did open the door to brokers being able to be held negligent or liable on the same basis as carriers. But the Stevens et. al. vs. C. H.

Robinson/TQL lawsuit goes in a different direction Broker said to be a carrier “Despite operating as a motor carrier as defined by (federal code)–including use of their own trailers, dispatch of drivers, and assumption of care, custody and control of freight–TQL and C. H.

Robinson rely on their purposes status as a ‘broker’ (lawsuit’s quote marks) to knowingly avoid registering as motor carriers with the Department of Transportation, which in turn allows them to evade regulatory obligations requiring the reporting of safety violations and crashes involving the Illegal Carriers they use to haul loads for their customers,” the lawsuit says.

C. H. Robinson already is fighting an action in a Texas court that involves not only a more than $600 million verdict in a case involving a fatal wreck, but also raises the question over whether a broker can be found to be a carrier. The jury in that case did make that finding against C. H. Robinson.

The lawsuit spells out specific lost business by the carrier plaintiffs in what could be seen as an attempt to establish standing in the courts.

For example, it says that EOS, Western Flyer, IWX and Chestenson “have been priced out” of the business moving freight to and from Graphic Packaging International’s mill in Texarkana, Texas because of “the conduct alleged in this complaint.”

The “Illegal Carriers” are also accused of engaging in behavior that has come to be known as acting as “chameleon carriers.”

“A ‘chameleon carrier’ is a fraudulent trucking company that operates by shutting down a previous entity with a poor safety record and then reopening the same operation under a new name and DOT number to obtain a clean slate with the Department of Transportation,” the lawsuit says.

Former employees check in The lawsuit has a series of quotes that it says are from former employees of Super Ego, though t