DOJ Investigation Into Freight Brokers “Making Progress,” Likely Probing “Biggest Players”

Washington D.C. – The United States Department of Justice (DOJ) is continuing to investigate the business practices of freight brokers.

Last month, a confluence of events led to the DOJ opening an investigation into alleged violations of the 1890 Sherman Antitrust Act, which criminalizes corporate collusion for the purpose of price fixing.

Nearly a month later, that investigation is continuing according to C.J. Karman, founder of Ezlogz, and his attorney, Anthony Todaro, of DLA Piper LLP.




 

In fact, Todaro says he expects the ongoing probe to last at least “several months.”

“We are pleased they are investigating the matter and taking it very seriously,” Todaro told Transportation Nation Network (TNN) this week. “They are making progress.”

Todaro confirmed he has had multiple contacts with DOJ officials regarding the case.

Karman says his goal is to make sure there is fairness in the relationship between carriers and brokers.

“Truckers must be paid what they truly deserve and work hard for each day,” he said. “It’s simply not fair to allow the brokers to make all the money pushing a few buttons, leaving the driver with pennies on a dollar.”

Karman, along with Mike Landis of the United States Transportation Alliance (USTA), met last month at the White House with Mark Meadows, President Donald Trump’s Chief of Staff, and Jim Mullen, Acting Administrator of the Federal Motor Carrier Safety Administration (FMCSA).




 

Since that meeting, Karman has followed up with Meadows providing him with numerous recommendations for broker reforms.

The most essential of which is the enforcement of 49 CFR 371.3 which requires brokers to provide a copy of the transaction record to carriers, at the carriers request, upon delivery of the load.

Of course, most brokers require carriers to waive this right.

Karman is asking that the FMCSA disallow the use of such provisions, as is both the Owner Operator Independent Driver’s Association and the Small Business in Transportation Coalition.

However, Mullen recently indicated the FMCSA has yet to receive a single complaint alleging brokers are failing to comply with 371.3.

Moreover, he questioned if the Agency even has the “statutory authorities” to enforce 371.3 much less prevent brokers from using contracts requiring carriers to waive its rights.




 

Further, Mullen also expressed concerns about the original intent of the regulation.

“I believe that when the reg was promulgated that the whole process was different,” Mullen stated during a webinar hosted by the Intermodal Association of North America (IANA) last month. “Motor carriers paid the brokers directly versus the shipper paying the brokers. There’s some perhaps difference of opinions as to what the net effect of that regulation was intended to be, but I’ll save that debate for a different time.”


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Todaro argues the pervasive use of 371.3 waivers is evidence of collusive behavior.

“The brokers are effectively encouraging that [waiver] requirement so that they can use it as a shield to not comply with 371.3,” Todaro contends.

The FMCSA’s resistance on this issue raises the stakes even higher on the outcome of the DOJ investigation.




 

Todaro informs that the DOJ most likely will begin by investigating the practices of the largest third-party logistics (3PL) companies.

“It makes sense that the parties they are most interested in are the biggest players because of their ability to influence the market,” he explained.

While Todaro believes the investigation could lead to fines being levied against some 3PL companies, and injunctive orders effectively disallowing certain broker business practices, he says it is unlikely criminal indictments will be issued due to the high standard of proof needed.

Still, he says, “the goal is to repair the industry” and the outcome of the DOJ investigation could help to do just that.

As for Karman, he says he will continue pushing the issue with Meadows.

TransportationNation.com will continue to bring you the latest.

 


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Comment (1)

  1. US Department of Justice, start with J B Hunt Logistics, Walmart, and the BNSF Railway … i.e. Quantum! 31 years of price fixing and never been reviewed. US Government, do your jobs!

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