Back Solicitation Article

April 14, 2011Comments Off

Dealing with Flagrant Carrier Back Solicitation

By David Gee, CTB, President – Virginia Hiway, Inc. 

When our contract motor carrier began offering services directly to our shipper, we felt we needed, for the first time since 1977, to test the strength of our contract with a motor carrier in court. Although we have been harmed many times, there had never been such an open breach as this case. Accordingly, we filed suit in Richmond Circuit Court this past September. The filing stipulated our contract and asked for an injunction to prohibit the carrier from doing business with our shipper customer. Through their legal counsel, the carrier offered a quick defense of an “open market concept.” However, our attorney was somewhat surprised when the judge refused injunctive relief, but rather set the full case for trial on an expedited basis!
In preparing the case, we were confronted with some interesting questions: 1) In addition to an injunction, how much monetary damage should we ask for? Our contract did not stipulate a formula; 2) Should we, under state law, sue our shipper as well, particularly if we found he encouraged a tortuous interference. This required not only just a business decision but also more information about the case and handicapping the potential success of such an action.
Our potential court success became evident during depositions with the motor carrier’s president. He acknowledged our contract and that he violated the contract with encouragement from our shipper. In fact, our shipper requested that the carrier provide them with copies of the rates we were paying the carrier and of our contract with him. As soon as the carrier’s attorney heard the evidence, they encouraged the carrier to quickly settle with us, which we did. Accordingly, the order entered by the court in late November stipulated some of the following:
  1. Enjoined them from doing any business except through Virginia Hiway, Inc.(VHI) with the shipper.
  2. Enjoined them from using trade secrets belonging to VHI.
  3. Allowed for monetary damages to be paid to VHI.
The TIA Board recently encouraged staff to contemplate a contract with carriers that would allow mediation and arbitration prior to court filings. Were this to have been in our contract language, as well as a proper venue for pursuing an action, the motor carrier would have saved thousands of dollars in penalties and we would have saved much in legal fees! I still dream of a day that Certified Brokers, along with qualified shippers and carriers might form a platform to bring quick remedy to areas like back solicitation, carrier cargo claim issues, and other such business behaviors that are best resolved by our industry.

 

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