TQL fires back in RICO suit: carriers lost freight to 'poor business practices'

TQL has filed its first response to the RICO lawsuit brought by a group of carriers against it and C.H. Robinson, and the 3PL's core argument is blunt: the carriers lost freight to a lower bidder, "the likely result of their poor business practices."

In three individual motions filed Monday in the U.S. District Court for the Eastern District of Texas, TQL seeks dismissal on two key grounds. First, its conduct doesn't meet the definition of corrupt activity under the Racketeer Influenced and Corrupt Organizations Act. Second, even if it did, the case sits in the wrong court.

A third motion targets a single defendant. TQL says IWS Motor Freight has no contractual relationship with it and should be out of the case entirely.

Where does TQL want this fight to happen?

Venue is the lead argument. The carrier plaintiffs — Stevens Trucking, Western Flyer Express, Christenson Transportation, E.O.S. and IWS — all signed carrier contracts that require them "to litigate any dispute with TQL exclusively in the state court located in Clermont County, Ohio."

Clermont County is a Cincinnati suburb. TQL is headquartered in Cincinnati.

"TQL requests enforcement of those agreements before adjudication of the merits," the company said in its filing. "The agreements expressly choose Ohio law."

If the federal court accepts the venue argument, the fight over broker conduct becomes moot in that courtroom. On IWS specifically, TQL says the carrier is not based in Texas and "had no direct contract with TQL and conducted no business with TQL."

A second filing, also submitted Monday, is the first public record of TQL's operational defense beyond venue. It forms part of the dismissal request.

What does TQL say about the racketeering claims?

"Plaintiffs dress this ordinary commercial setback that they are solely responsible for in the language of racketeering and false advertising because they cannot plead a single TQL act that caused a single lost account," the company says in its summary of the motion.

TQL also tries to distance itself from C.H. Robinson, which has yet to file its own response. It argues many of the lost accounts the carriers cite were lost from their relationship with C.H. Robinson — though at no point does TQL suggest its co-defendant did anything improper.

The motion rejects the carriers' core claims in direct terms: "Low rates, carrier noncompliance and a declining freight market do not establish that TQL committed racketeering or false advertising."

The carriers' suit names shippers that stopped using their services, including Johnson Controls, Kroger and Kraft Heinz. TQL's attorneys scoff at those allegations, writing that "those aggregate losses do not identify which injury was caused by the asserted TQL statutory violation."

In a less legalistic passage, TQL calls the charges "anecdotes cloaked as facts" — allegations about the industry, other brokers' practices and third-party driver injuries that are "merely rhetoric designed to distract from the absence of factual support." The carriers' claims, TQL says, are mostly "inferences."

On the alleged "falsified records," TQL says it only received those records, never created them, and "receipt of a falsified record does not establish TQL's knowing participation in its falsification."

The 'market-wide theory' under attack

TQL lays out the carriers' logic and then dismantles it: "carriers allegedly coerce workers or evade regulation; their costs fall; brokers purchase cheaper capacity; freight prices and shipper benchmarks fall; plaintiffs lose bids or operate at reduced margins."

That chain, TQL argues, doesn't hold. "That narrative does not explain which TQL predicate act directly produced a particular plaintiff's lost account, margin erosion, or aggregate revenue decline," the filing says. It adds that the carriers can't explain how using a DOT-licensed, DOT-approved motor carrier amounts to fraud — "especially true given that at least half of the plaintiffs are licensed as freight brokers with the FMCSA."

The suit has drawn comparisons to Montgomery vs. Caribe Transport II, the Supreme Court precedent on broker liability. That ruling plays no role here, TQL's arguments notwithstanding.

September was already busy for TQL on the legal front. Beyond the RICO case, it was tossed out as a defendant in a Colorado trial stemming from a fatal incident involving a truck it hired, and it made oral arguments in the Pink Cheetah case, which turns on broker transparency.

The next signal comes when the Eastern District of Texas rules on the venue motions — a decision that could move the entire dispute to an Ohio state courtroom before any RICO claim gets tested on the merits.