YRC Worldwide Inc. boasted when it hired key executives from rival carriers recently. Now one of the rivals has sued.
XPO Logistics Freight Inc., known as Con-way Freight before a $3 billion buyout last year, contends that YRC raided its executive ranks and “misappropriated XPO Freights’ most valuable trade secrets” in the process.
The lawsuit targets YRC Freight’s actions in hiring Paul Lorensen, who had led Con-way Freight’s central region, and Chet Richardson, who led its line-haul operations. It also mentions five others who it said have gone to work for YRC.
The lawsuit, filed in Delaware Chancery Court, does not name the men as defendants.
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In a statement, YRC Worldwide said there was “no substance to the claims made by XPO against YRC Freight in its lawsuit.” YRC called the allegations “meritless allegations presented by a competitor that has chosen to invoke the legal process in an attempt to thwart the progress being made by YRC Freight in service to its customers.”
Gregory Williams, an attorney for XPO Logistics, declined to comment.
YRC Worldwide, which owns YRC Freight, announced two Con-way hires, as well as a FedEx Freight executive it hired, in a news release on Jan. 26. It played up the executive additions as evidence of YRC Freight’s improving operations.
“We are being contacted by people in the industry who have experience and can contribute to the company in a way that continues moving us forward,” Darren Hawkins, president of YRC Freight, told Wall Street analysts last week. “It’s a good testament to our performance and also the confidence people have about pursuing YRC Freight as a place of employment.”
According to the lawsuit, Lorensen and Richardson resigned from Con-way on Nov. 9 and immediately went to work for YRC Freight. The job offers and their informal acceptances, however, came a month or more earlier than that, it said.
In the intervening weeks, the lawsuit said, both men were deeply involved in and had access to XPO Freight’s newly developed strategies. Notably, it said, they stuck around long enough to gain access to a key consultant’s report that the lawsuit said reflects XPO Freight’s “strategic playbook.” In some cases, this included XPO Freight’s strategy to compete specifically against YRC Freight, the lawsuit said.
“There was no legitimate purpose for Lorensen and Richardson to delay their resignations for more than a week post-acquisition. Rather, knowing that it would be extremely useful for YRC, they waited to resign until they acquired the McKinsey Report and had an additional opportunity to cover their trail of disloyalty as best they could,” the lawsuit said.
The lawsuit seeks preliminary and permanent injunctions against YRC Freight. The court orders, if granted, would require YRC Freight to return XPO Freight trade secrets and bar it from employing Lorensen, Richardson and the five others for at least one year.