A judge’s decision Tuesday in the legal battle between FreightTech providers project44 (p44) and MyCarrier could be viewed as a win-win or loss-loss for both companies.
For p44, the losing comes in the decision by Delaware Chancery Court Judge Kathaleen McCormick not to impose a temporary injunction against MyCarrier in its effort to create its own software that mimics the functionality p44 provides to its less-than-truckload customers.
For MyCarrier, the loss is the fact that McCormick found that while p44 faced no “irreparable injury” by MyCarrier’s efforts to develop its own LTL software solutions – the test for granting a preliminary injunction – its actions in the conflict with p44 mean the latter would likely prevail should the lawsuit go to trial.
But observers who spoke to FreightWaves noted that even a victory for p44 in that litigation, in order to be a total triumph, would likely need to somehow bar MyCarrier from doing what it wants to do going forward: build its own LTL software functionality, including an electronic bill of lading (eBOL) capability, and continue working with SMC3, which MyCarrier is now using in place of p44 to push its LTL solutions out to customers. A preliminary injunction would have stopped MyCarrier from working on its own or in conjunction with SMC3 to achieve those capabilities.
And while the judge’s review of the back-and-forth between p44 and MyCarrier seems to come down solidly on the argument that MyCarrier breached its contract with p44, that was not enough to show irreparable harm or injury. It means MyCarrier, for now at least, can keep doing what it has been doing for several months.
The two sides appeared before Judge McCormick in late January.
Arbitration ongoing
Representatives from both companies told FreightWaves MyCarrier and p44 are engaged in arbitration in Delaware that began months ago.
“It’s ultimately the arbitrators who will resolve it with finality,” Taylor Mitchell, MyCarrier’s CFO, said in an interview with FreightWaves.
Mitchell said whatever the outcome of arbitration, MyCarrier sees a strong likelihood it will be able to continue not only its relationship with SMC3 but its own development efforts.
“It’s really just going to be, OK, you guys need to split up,” Mitchell said. “But it’s not expected to be anything other than resolution from a monetary perspective.”
The decision spelled out the basis of the relationship between the two companies.
“MyCarrier uses P44’s Freight API platform to connect carriers and shippers in the supply chain by providing data and information regarding shipments,” McCormick wrote. “P44 essentially serves as the pipe through which MyCarrier accesses the systems of the carriers that it then connects to the shippers.”
Judges rejects p44 arguments on injunction
The judge ticked off four p44 arguments regarding irreparable harm and dismissed them all.
The first is that by pushing out p44 in favor of a new alliance with SMC3, MyCarrier’s actions would “distintermediate” p44 and cause it to lose business. But with total revenue of about $125 million, p44 can now show that a loss of about 8% of that if MyCarrier stays away “does not amount to irreparable harm.”
An argument by p44 that the severing of relationships with MyCarrier has damaged its reputation “fails,” the judge wrote, because it is backed up only by a statement from p44 management. “This sole statement is too little to go on,” McCormick wrote.
A third argument by p44 is that the data provided by MyCarrier was being used to strengthen the overall data offerings of p44, and now it is gone. But McCormick noted that the data is only kept for three to six months, and the MyCarrier data was too small a percentage of total data ingested by p44 to make a huge difference.
McCormick also found that the contractual relationship between the two companies did not give p44 an “independent right” to the data. That ties into p44’s fourth argument about the use of data, and with the third argument having been rejected, the fourth was as well.
The half-empty, half-full nature of the decision was reflected in the two companies’ formal statements about McCormick’s ruling.
“We are very pleased with the Delaware Court of Chancery’s March 3rd opinion, holding that p44 is ‘likely to prevail’ on the merits of its claims for breach of contract based on MyCarrier’s development of eBOL and transition to SMC3 during the term of the parties’ 5-year agreement,” Jennifer Coyle, p44’s general counsel, said in a statement emailed to FreightWaves.
“Although we are disappointed that the Court did not grant the motion for preliminary injunction, we recognize this ‘extraordinary form of equitable relief’ is a very difficult bar to meet,” Coyle added, quoting the court’s words.
And from MyCarrier CEO Michael Bookout: “We are gratified that the Delaware Court of Chancery denied project44’s motion to enjoin MyCarrier. This ruling allows MyCarrier to continue to drive innovation for our customers.”
Reviewing the history
McCormick’s review of the events that led to the fissure between the two companies came down mostly on the side of p44’s arguments that MyCarrier had broken the terms of the two companies’ agreements.
She went over the several key developments between the two: an original deal signed in 2017 at a highly favorable price for MyCarrier, with p44 hoping to benefit from the data the deal would provide it into its larger offerings; a 2023 renewal that came despite MyCarrier’s misgivings about the p44 eBOL offering, particularly in regard to how it interacted with new standards from the National Motor Freight Traffic Association, an LTL trade group; and efforts by MyCarrier to begin constructing its own eBOL solution, which p44 says were a violation of the terms of the two companies’ agreement.
(Coyle said in her statement to FreightWaves that p44 has “doubled down on its commitment” and launched an eBOL product in July that is compliant with NMFTA standards.)
McCormick said Bookout had told Jett McCandless, his counterpart at p44, that he “100 percent” wanted to stay with p44. But she added that what Bookout said was an “overstatement.” “In fact, at the time he made that statement, MyCarrier was actively looking for ways to replace p44, including by building their own ‘proxy’ Software,” McCormick wrote.
She recapped the back-and-forth between the two companies over whether MyCarrier was trying to build an alternative – the evidence leaves little doubt that was going on, but MyCarrier was arguing an interpretation of the contract that would have provided a “carve-out” for its activities – and whether that violated the agreement between the two companies.
The dispute began coming to a head in June 2024 when p44 sent MyCarrier a cease-and-desist letter, saying MyCarrier’s efforts to develop eBOL technology was in violation of the agreement. That set off a series of legal claims and counterclaims.
In September, MyCarrier announced its deal with SMC3 that effectively put p44 on the shelf and substituted SMC3. P44’s services are no longer available through MyCarrier.
In October, according to McCormick’s ruling, “MyCarrier gave p44 five days’ notice that it would ‘resume eBOL work, but only such work as is not stand-alone and is not sold in competition with p44’s products or services.’”
But she saw that as a violation of the contract. MyCarrier cited an “exclusion” in the contract as its defense of the work it was doing with SMC3. But, McCormick wrote, “this exclusion does not permit MyCarrier to transition to an alternative provider such as SMC3 for the same services P44 used to provide and cease using P44 altogether.”
More articles by John Kingston
Penske Truck Leasing hangs on to investment-grade debt rating from Moody’s
XPO lawsuit against 2 ex-employees gives look into noncompete agreements
‘What did these men do?’ judge asks in throwing out indictment of NFI’s Brown
The post Project44 and MyCarrier can both claim partial win in Delaware court decision appeared first on FreightWaves.
