YRC Freight hits back at XPO suit, calls broad range of allegations "meritless"

YRC Freight, the national less-than-truckload (LTL) unit of YRC Worldwide Inc., said Monday night that a lawsuit brought by XPO Logistics Freight Inc.—the former Con-way Freight—is meritless and is the act of a company that would rather battle its strengthening rival in court than in the marketplace.

In a statement, Overland Park, Kan.-based YRC Freight said it is "fortunate to have created a culture which has attracted" many top-notch professionals. Though no one was mentioned, it is likely YRC was referring to Chet Richardson, XPO Freight's former head of line-haul operations, and Paul Lorensen, who ran its Central-region operations. The circumstances surrounding their early November departures from XPO Freight to YRC Freight are a key narrative in a suit filed last Wednesday by XPO Freight in Delaware Chancery Court.

The suit charged that the YRC unit schemed to steal key XPO Freight employees, misappropriate its rival's trade secrets, encourage current XPO Freight workers to breach their fiduciary duties, and deliberately interfere with contractual nondisclosure agreements. It requested that YRC be blocked from employing or retaining seven key former XPO Freight executives for at least one year from the date of any order.

The suit alleges that both men had unfettered access to very sensitive XPO Freight information, which they took with them to YRC Freight. Richardson, for example, had access to XPO Freight's proprietary algorithmic software models that analyzed and selected the most efficient route for a customer's loads from among the countless alternatives on the carrier's network, according to the complaint.

Both men also absconded with a confidential report prepared by consultancy McKinsey & Co. outlining detailed steps to transform XPO Freight's operations after its parent, Greenwich, Conn.-based XPO Logistics Inc. closed its $3 billion purchase of Con-way Inc. on Oct. 30. The McKinsey report was given to Richardson and Lorensen on Nov. 6, three days before both men abruptly announced their resignations and went to work for YRC, the suit alleges.