Court Upholds $4.61 Million Judgment Against USA Truck Over Commissions
This story appears in the Oct. 12 print edition of Transport Topics.
A federal appeals court upheld a $4.61 million jury verdict in favor of a South Carolina freight agent in its legal battle against USA Truck, affirming a lower court finding that the Van Buren, Ark., truckload carrier owed several years of commissions to one of its former agents.
A three-judge panel of the 8th U.S. Circuit Court in St. Louis unanimously affirmed on Oct. 1 the 2007 verdict and related judgments of a federal district court in Jonesboro, Ark. The lower court found in favor of All-Ways Logistics, an agency run by a Greenville, S.C., husband and wife who had worked for USA Truck, the nation’s 16th-largest truckload carrier.
Most of damages claimed were generated between April 2002, when USA Truck ceased paying its 5% commission to All-Ways, and October 2005, when USA formally cancelled its commission agreement with All-Ways. During that period, USA hauled $59.3 million worth of freight for an All-Ways related shipper, and the jury said the trucking company owed the agent’s 5% commission on that — $2.97 million.
“This is a sound endorsement of the rights of a commissioned agent to enforce contracts,” said Robert Cearley, attorney for All-Ways and its owners, Cheryl and Mike Anderson. “This shows that good faith and fair dealing are still important in commerce,” Cearley added.
Andrew Dallas, one of USA Truck’s attorneys, said the carrier is still weighing its options, which include an appeal to the same three-judge panel or to the 11-judge 8th Circuit as a whole. He said USA has 14 days from the date of the Oct. 1 filing to decide.
“We respectfully disagree with the 8th Circuit and don’t think we’ve done anything wrong,” Dallas said.
“This was one very specific case, based on a specific contract with a specific person. There will be no continuing effect on the company’s business,” he said.
USA Truck had $448.1 million in revenue for the 12 months ended June 30, with a net loss of $77,000.
USA Truck and All-Ways started doing business together in 1999, when USA purchased trucking company CCC Express, according to a 2007 memorandum by Susan Webber Wright, the trial court judge.
All-Ways was an agent for CCC at the time of the acquisition.
Wright’s memo said the Andersons and All-Ways brought two major shipping clients into USA’s fold: Rheem Manufacturing Co. and W.W. Grainger Inc. Cearley said the two shippers were the Andersons’ two major clients, and they also generated a lot of revenue for USA.
In March 2002, Rheem picked USA Logistics, a division of USA Truck, to be Rheem’s third-party logistics provider, or 3PL. In April, USA ceased paying commissions to All-Ways, and the Andersons protested. However, the formal cancellation letter from USA did not show up for another 3½ years, according to the documents.
The court documents also said there was a souring in All-Ways’ relationship with Grainger. Grainger transportation manager Janet Kemp “testified that Grainger wanted to deal with USA Truck directly and have All-Ways Logistics/Mike Anderson ‘taken out of the middle’ from dealing with Transplace Inc. [Grainger’s 3PL] and Grainger on the Grainger account.”
Beyond the $2.97 million in Rheem account commission, which was decided upon by the jury, other elements of the district court judgment against USA Truck were: $1 million in attorney fees, $583,000 in prejudgment interest, $40,268 related to the Grainger account and $18,000 in court costs.
“The lesson here is that you need to know what your contracts say,” said Rob Moseley, a lawyer for Smith Moore Leatherwood in South Carolina who has run educational sessions on legal issues at the Management Conference & Exhibition of American Trucking Associations.
“This case will embolden brokers and agents to be more forceful in enforcing clauses on back-solicitation of freight. You’ve got to be very careful on the wording in those clauses,” said Moseley, who has done work for USA but not in the All-Ways case.
