The legal fight between Pink Cheetah and Total Quality Logistics (TQL) over broker transparency reached the U.S. Court of Appeals for the District of Columbia last week, with oral arguments lasting roughly 20 minutes.
The relatively brief hearing, however, comes as another, much longer process is approaching a critical stage: the federal government’s effort to revise the rules governing transparency in property broker transactions.
The comment period for the proposed federal rulemaking on broker transparency closed last year following publication of a notice in the Federal Register. The post-rulemaking process is now reportedly in its final stages. The Federal Motor Carrier Safety Administration (FMCSA) sent its latest update to the White House Office of Information and Regulatory Affairs late last month.
The proposed rule would establish tighter requirements governing the information brokers must disclose to the motor carriers they hire and the shippers they serve. However, the rule has not yet become law.
That did not prevent the issue from becoming relevant during last week’s appellate arguments.
Laurence Socci, outside counsel for Pink Cheetah, argued that the lower District of Columbia court made an error when it granted TQL summary judgment and dismissed Pink Cheetah’s lawsuit. The case concerns TQL’s refusal to provide documentation that Pink Cheetah says it was entitled to receive.
Socci’s appearance before the appellate panel lasted only about 20 minutes — considerably shorter than the preceding arguments in California vs. the U.S. Department of Transportation, which was heard by the same panel.
A dispute that predates the current rulemaking
Socci emphasized that the events at the center of the Pink Cheetah-TQL dispute date back to 2023, well before the latest federal rulemaking effort began.
“This happened long before any rulemaking was going on,” Socci said, arguing that the current rulemaking process has little bearing on the underlying lawsuit.
According to Socci, the central question before the court is whether the district court dismissed Pink Cheetah’s complaint prematurely.
“The issue is whether the district court prematurely dismissed the complaint, and we argue that it did,” he told the judges.
TQL’s outside counsel, Scott Carey of Baker Donelson, took a different view and urged the court to consider the ongoing rulemaking.
“I would point out that there is a rulemaking going on right now,” Carey said.
He noted that the agency has spent six years working on the regulation and highlighted one unresolved question in particular: whether transportation contracts between brokers and motor carriers can include waivers concerning disclosure rights.
“That issue has not been settled,” Carey told the court.
That question over waivers is central to the dispute surrounding a 2023 shipment of ice cream handled by TQL and Pink Cheetah. Some of the ice cream was ultimately rejected by the end customer.
According to Pink Cheetah’s original lawsuit, TQL’s standard contract with its carriers included language under which the carrier waived its rights to broker records that federal law says must be supplied upon demand under 49 C.F.R. § 371.3.
The weight of the FMCSA email
Another key issue concerns an email sent by the FMCSA on November 30, 2023, after Pink Cheetah contacted the agency and asked it to require TQL to provide the requested documentation.
TQL argues that the FMCSA email did not constitute an “enforceable order of the Secretary,” according to the company’s brief filed with the appellate court.
TQL’s position relies on the district court’s conclusion that the email, by its own terms, amounted only to “guidance” and therefore could not be enforced under the statute.
Pink Cheetah’s original complaint presents the November 30 communication differently. It states that the FMCSA issued an order directing TQL to remove the waiver language from its contracts because the language violated existing federal law.
TQL also maintains that it supplied records after receiving the FMCSA communication.
However, Pink Cheetah argued that the information provided was insufficient. After TQL supplied FMCSA with various data, Pink Cheetah continued seeking additional records.
TQL declined that request, relying on the waiver provision contained in the parties’ pre-existing agreement, according to the company’s appellate brief.
During questioning from the bench, Socci was asked whether TQL could, under current federal law, have its carriers and shippers waive the disclosure requirements.
When asked whether federal authority exists for such a waiver, Socci responded that he did not have that information “off the top of my head.”
He nevertheless argued that if additional records are required, that would provide further grounds for sending the case back to the district court.
Socci also maintained that the lower court should not have dismissed the significance of the FMCSA’s directives simply because they contained informal characteristics.
The district court, he argued, “was not entitled to disregard concrete directives while treating its informal features as dispositive.”
The payment disclosure draws attention
The amount Pink Cheetah was ultimately paid is not part of the arguments currently before the appellate court. However, the financial information contained in the disclosed records has attracted considerable attention.
According to Pink Cheetah’s appellate brief, the records showed that the carrier received only 56% of the payment for the shipment in question.
The company argued that TQL retained approximately 40% as a commission, compared with what Pink Cheetah described as the reasonable and customary broker margin of approximately 14% to 16%.
Pink Cheetah cited data from the Transportation Intermediaries Association for its figures concerning the average size of a broker’s margin.
The appellate court’s consideration of the case comes as the federal broker-transparency rulemaking itself moves toward a decision, leaving two related questions developing in parallel: what brokers must disclose under federal law, and whether those disclosure rights can be waived through transportation contracts.
