OTR alleges DAT is picking and choosing which parts of the judge’s order it wants to adhere to and is only halting signing up new clients. (greenleaf123/Getty Images)
The Superior Court of Cobb County in Georgia is set to hold a June 17 emergency hearing that may see DAT Freight & Analytics forced to temporarily halt operations at its newly acquired Outgo factoring subsidiary.
Senior Judge Adele Grubbs on June 13 convened the June 17 hearing after a June 12 emergency motion for hearing from OTR Capital — which does business as OTR Solutions — accused DAT of ignoring parts of a June 10 ruling from the bench.
OTR alleges Beaverton, Ore.-based DAT’s acquisition of Seattle-based Outgo and subsequent actions breach binding agreements between the erstwhile partners and are causing harm to OTR’s business.
OTR filed an initial complaint May 30 and sought an emergency hearing.
At a June 10 interim hearing, Grubbs wrote: “The court finds that OTR has shown (1) a substantial threat of irreparable harm without entry of this order, (2) the equities of the threatened injury to OTR outweigh any harm this order may cause defendant DAT Solutions, (3) there is a substantial likelihood that OTR will succeed on its claims for relief, and (4) this order serves the public interest.”
DAT was ordered to not compete directly with the factoring business of OTR in the U.S. through Outgo or any other option, cease providing factoring services through Outgo in the U.S. and cease any use of a “blue checkmark” in the provision of online factoring services.
Factoring is a service that enables carriers to receive immediate payment for freight invoices.
OTR now alleges DAT is picking and choosing which parts of the judge’s order it wants to adhere to and is only halting signing up new clients.
“Nothing in the court’s order creates a broad carve-out for DAT to conduct business-as-usual for its existing client base or to competitively market its services,” the motion warned.
OTR requested a “substantial fine for every day that DAT fails to comply.”
The basis for the case centers on OTR alleging the purchase of Outgo is a violation of a non-compete clause.
DAT and OTR entered into a nondisclosure agreement to discuss a potential referral partnership.
Under the NDA, DAT agreed to protect OTR data and that a breach of the agreement would cause OTR “irreparable harm which could not be adequately compensated by damages,” according to court documents.
In August 2021, the two companies entered into a referral and revenue sharing agreement. The agreement contains a non-compete clause and a commitment to not create a factoring business, argues OTR.
“If OTR had known that DAT intended to directly compete against OTR, and violate the parties’ contract, OTR would not have made substantial payments to DAT in referral fees,” it wrote in the May 30 complaint.
Ultimately, OTR wants:
- Outgo operations to come to a halt
- DAT to return “confidential information including client lists or pricing”
- DAT to cease offering factoring services
- DAT to place Outgo revenue in an escrow account
- Compensatory damages
- Punitive damages
- The removal of all Outgo references from the DAT load board
Roswell, Ga.-based OTR argues that for a number of years, DAT had access to confidential and proprietary OTR data all while maintaining “the false premise” it would not compete against OTR.
The company also alleges DAT is soliciting OTR clients and “leveraged its control of an online freight analytics database to sow market confusion and engaged in trade practices that permit it to profit from OTR’s goodwill and reputation.”
In addition, OTR alleges that the blue checkmark on the DAT load board indicated before May 15 that OTR had assessed the shipper’s creditworthiness and was willing to provide a carrier with factoring for the specific shipment, but that this was still being used.
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A spokeswoman for DAT told Transport Topics June 13: “We believe the suit is without merit and will defend ourselves vigorously.”
“We are concerned that OTR’s actions directly impact the cash flow of our carrier customers. Cash flow is the lifeblood of these small businesses, and any disruption to it can severely impede their operations. At DAT, our priority is the success and stability of our customers,” she said in an email.
“As this is pending litigation, we have no further comment on the case itself at this time,” she added.
