July 18, 2023

DAT, Convoy drop lawsuits against each other


Load board DAT Solutions and digital freight brokerage Convoy have agreed to drop their lawsuits against each other, according to a notice filed by the two companies’ attorneys on Monday in an Oregon federal district court. 

The notice specifies that the parties agreed to dismiss their claims “with prejudice,” meaning that neither party can refile lawsuits on the same grounds, which is typical after an out-of-court settlement has been reached.

The terms of the settlement are confidential.

The legal battle began in January 2022, when DAT sued Convoy for breach of contract and theft of trade secrets after the latter launched a load board-like product called Convoy for Brokers. Convoy countersued, saying that DAT’s contracts illegally restrained trade and constituted a monopoly under Oregon and federal law.

In May, U.S. District Judge Karin Immergut appeared to tilt the dispute in Convoy’s favor when she dismissed most of DAT’s claims against Convoy but allowed all of Convoy’s claims against DAT to proceed. Convoy had complained that if a DAT load board customer does not agree to sign an exclusivity clause prohibiting them from posting their loads to any other load board, the customer has to pay DAT higher rates. Convoy also argued that a DAT exclusivity clause unfairly barred it from contributing its own data to any other competing trucking rate assessor.

At that point, DAT had little to gain except perhaps some remuneration for breach of contract, while it had a lot to lose: There was a chance that Immergut could find its strict exclusivity clauses illegal.

Meanwhile, after the decision in May, Convoy had successfully fended off most of DAT’s claims and had little to gain by further pursuing the matter in an expensive trial. A settlement seemed likely. In the end, while DAT’s attempt to punish Convoy for opening a competing load board and contributing to alternative rate assessors failed, DAT’s noncompete and exclusivity clauses have been left formally intact. 

An attorney familiar with the case commented, “Given the poor quality of DAT’s initial pleadings, as indicated by the judge’s dismissal without prejudice of most claims, DAT likely hoped Convoy would see [defending itself] as exceedingly expensive. Adding to that, on its face, DAT had a strong claim and DAT probably thought Convoy would capitulate early. DAT underestimated Convoy’s attachment to its new product and/or were blind to their own antitrust vulnerability. Convoy scrambled DAT’s plan with a strong and aggressive counterclaim. The only downside to the counterclaim was that it made it ‘must win’ litigation for DAT. When neither side can afford to lose, the case is prime for settlement.”

It’s still an open question as to what this legal outcome means for other current DAT load board customers, especially freight brokers who want full control over their own rate and shipment data.


Source link

In this article:
Share on social media: