(Editor’s note: Several additional aspects of the dispute have been added from its original edition.)
WILMINGTON, Del. – The dispute between MyCarrier and project44 (p44) made its way into a courtroom last week with two key claims by attorneys: that MyCarrier’s development of its own electronic bill of lading (eBOL) and APIs violates a contract between the companies, and that issues MyCarrier had with p44’s eBOL made that step by MyCarrier necessary.
In a three-hour hearing at Delaware Chancery Court, held in Wilmington because p44 is incorporated in the state and because the two sides’ contract requires that disputes be settled there, the immediate issue at hand was the p44 request for a temporary injunction that would stop development work being undertaken by MyCarrier.
Project44, which says it is the largest network of APIs in transportation, wants MyCarrier, whose TMS is targeted to mostly smaller less-than-truckload carriers, to halt development of what p44 says would be a competing eBOL.
The two companies are operating under a five-year agreement that allows MyCarrier to sell certain p44 product offerings. The deal was signed in August 2023. But the relationship between the two companies had gone back further than that.
In the original lawsuit filed last summer, MyCarrier sought to have p44 enjoined from suspending MyCarrier’s access to some of the services provided in the contract. That was the basis for the original legal action filed July 1. An attorney for p44 said the original injunction request from MyCarrier had been withdrawn and what was before the Delaware court was only the p44 request for an injuntion.
‘False promises not to compete’
The core of p44’s accusation against MyCarrier was laid out in the request for the injunction p44 filed in August and then in a December brief.
“At the same time the parties were negotiating the contract, which restricts MyCarrier’s ability both to compete with p44 and to ‘build behind’ anything that is substantially similar to what p44 provided, MyCarrier was planning to build a standalone system to replace p44 and avoid the price increases that would kick in halfway through the contract’s five-year term,” the injunction request said. “After knowingly inducing p44 with false promises not to compete, MyCarrier developed a competitive eBOL product (a product already offered by p44 in the suite of Services licensed by MyCarrier) so it could offer the valuable function of electronic billing to customers directly, instead of through p44 — the first step in an 18-month plan to incrementally introduce a proxy system with the same functionality as p44.”
The only testimony in court was from the attorneys for the companies: Lazar Raynal of the law firm of King & Spalding for p44 and Jeffrey Simes of Goodwin Procter representing MyCarrier.
The case was heard before Judge Kathaleen McCormick, chancellor of the Chancery Court. Given Delaware’s role as a leading state for incorporations due to favorable laws and tax policies, the Chancery Court is the site of many notable court battles. A year ago, the dispute between Forward Air (NASDAQ: FWRD) and Omni Logistics was settled as the two sides were about to go to trial, and Forward’s controversial acquisition of Omni was completed.
McCormick most recently heard the case involving Elon Musk’s pay package at Tesla. She did not issue a ruling from the bench at the close of Thursday’s arguments by MyCarrier and p44.
Boiling down the arguments, Raynal accused MyCarrier of working behind p44’s back in clear violation of the contract between the companies. MyCarrier did not dispute that the project was ongoing, but Simes said significant problems with p44’s eBOL, specifically in its capabilities for LTL carriers, made whatever work it was undertaking necessary.
While Simes laid out his arguments in an oral presentation, Raynal came complete with a presentation that included video snippets from depositions taken during the discovery process.
‘Amazing accelerator’
That presentation also included screenshots of emails including one from MyCarrier CEO Michael Bookout to p44 CEO Jett McCandless. In it, Bookout said MyCarrier “would never build behind your back. We have always been complimentary about your services. P44 has been an amazing accelerator.”
Raynal, citing Bookout’s deposition, said the CEO had said, “I have no intention to compete with p44.” But a replacement for the p44 eBOL was already being developed in the proxy project, Rynal said, “and it would allow them to go straight to a carrier without using us.”
One of the most notable moments in the three hours of testimony came when Raynal showed excerpts from testimony of Chris Scheid, a co-founder with Bookout of MyCarrier. Under questioning from Rynal about meetings he participated in regarding the proxy project, Scheid took long pauses before answering, said there were instances he could not recall and looked extremely uncomfortable when asked to discuss the subject.
“This is the guy who was in charge of the project, and he can’t answer a simple straight question with a simple straight answer,” Raynal said.
In his own deposition, McCandless said MyCarrier had been given a discounted price for p44 services because the data that would come to p44 as a result of the MyCarrier deal would provide value beyond the price in the contract.
The slide presentation also includes a screenshot of an internal MyCarrier memo about the proxy project that says the goal is to “incrementally introduce a proxy system that could eventually replace the P44 system.”
Although it wasn’t extensively discussed, the dispute between p44 and MyCarrier took on what amounts to a third player in late December when p44 sued competing supply chain platform SMC3 in federal court in Georgia for its deal with MyCarrier to offer services similar to p44’s.
Another document introduced by p44 showed the thinking at MyCarrier that was then echoed by Simes in his presentation: there were technical issues with the p44 eBOL.
A charge of instability
In an internal email from Sept. 27, 2023, John Hess of MyCarrier summarizes a conversation among MyCarrier executives as the motivation for the proxy project – an email dated less than two months after MyCarrier and p44 signed the five-year deal. At the top of the list: “P44 has been unstable due to technical debt, underinvestment and poor customer focus.”
The open court discussion by Simes of the p44 eBOL as it was used by LTL carriers was harsh. He said major LTL carriers Old Dominion (NASDAQ: ODFL) and Estes had shut down their use of the p44 eBOL “because it was not set up for LTL,” Simes said.
P44 was “unwilling to do what we asked them to do,” Simes said, “and we won’t go forward unless we can solve those problems.”
An attorney for p44 said both LTLs cited by Simes continue to use the p44 eBOL. A spokeswoman for Estes said the service was never “turned off,” as was stated in court.
Simes said an eBOL is “not complicated” and is not a tool that has a customer charge attached to it.
“So why would MyCarrier go through all this trouble to provide eBOLs for a handful of parties?” Simes said. “Because those carriers want it. MyCarrier exists to service these carriers, and project44 was not supplying [an eBOL] in a way that worked.”
Whether that was going to be fixed was a concern at MyCarrier, according to Simes. “We weren’t sure they are committed to this space,” he said.
The dispute is wide enough that descriptions of the current status of the relationship between the two companies aren’t consistent.
An attorney for p44 said in an email to FreightWaves that the p44 eBOL/LTL Dispatch product can still be accessed through MyCarrier. The contract signed in August 2023 was not canceled as a result of the dispute.
But Simes, in an email to FreightWaves, said that while the p44 offerings are still available through MyCarrier, the deal with SMC3 was aimed at replacing p44.
He also said arbitration is ongoing in the dispute, with a status conference to be held this week.
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