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February 8, 2016 3:16 PM, EST
XPO Logistics Suit Claims YRC Poached Execs, Stole Trade Secrets
YRC Freight
XPO Logistics Inc. filed suit against YRC’s Freight unit, claiming that the company poached seven management employees, including two vice presidents, and stole trade secrets around the time that XPO was completing the acquisition of Con-way Inc.

The suit was filed in Chancery Court in Delaware, naming Paul Lorensen and Chet Richardson, two former Con-way vice presidents who were hired by YRC. Five others who switched jobs also were named in the suit, which seeks to bar all seven from working for YRC for a year. Unspecified damages also are being sought.

When asked for a response Feb. 5, YRC’s Mike Kelley told Transport Topics, “We do not comment on pending litigation.”

Several days later, Kelley told Transport Topics:

"There is no substance to the claims made by XPO against YRC Freight in its lawsuit. We will vigorously defend against these meritless allegations presented by a competitor that has chosen to invoke the legal process in an attempt to thwart the progress being made by YRC Freight in service to its customers. We welcome them as part of our 20,000 YRC Freight team members who are champions of safety and customer service.”

YRC is No. 5 on the Transport Topics list of the Top 100 largest for-hire carriers in the United States and Canada, and XPO is No. 14. With its acquisitions over the past year, including No. 4 Con-way, XPO is expected to vault to as high as No. 3 in the next rankings.

Others named in the suit are Jason Dekker, Scott Spindler, Cory Williams, Brendt Reif and James Fox. All but Reif were in sales positions at Con-way. Reif was involved in analytical projects relating to service optimization and strategic planning.

“YRC also repeatedly solicited non-public information from Lorensen and Richardson while they were still employed by XPO Freight,” said the suit, which claimed the timing of their resignations was deliberate.

Lorensen was vice president of operations at Con-way Freight. Richardson was vice president of linehaul and was in charge of efforts to optimize freight movements.

“Knowing that it would be extremely useful for YRC, [Lorensen and Richardson] waited to resign until they acquired the McKinsey Report and had an additional opportunity to cover their trail of disloyalty,” the suit alleges.

The report referenced in the suit was done by consulting firm McKinsey and Co. for XPO after the company agreed to buy Con-way for $3 billion last year. As described in the suit, the report was intended to offer an indepdendent assessment of business opportunities at Con-way.

XPO has targeted $170 million to $210 million in annual savings at Con-way’s Freight unit and has said at least $50 million of that has been achieved. In the years prior to Con-way’s sale, its improvements in profit and operating ratio at the LTL business have trailed other publicly traded carriers.

The suit also claims that Richardson and Lorensen forwarded confidential communications to YRC officials as early as September, and informally agreed to switch carriers soon afterward.