Farmers in North and South America have sued C.H. Robinson, the world’s third-largest logistics company, alleging illegal business practices they say defrauded them. C.H. Robinson is pushing back against their lawsuit, through which the growers are seeking more than $1 billion in compensation.
Their claim is based on allegations the third-party logistics giant engaged in “deceptive business practices.” The complaint, which seeks class-action status, was filed in the US District Court for the District of Minnesota in mid-January.
“We deny any and all allegations of wrongdoing and look forward to vigorously defending our actions, as well as filing legitimate counterclaims against the growers,” C.H. Robinson said in a statement to FreightWaves.
The growers allege that Robinson Fresh, a company owned by C.H. Robinson Worldwide Inc., headquartered in Eden Prairie, Minnesota, profited from the transportation of consigned produce, termed “freight topping,” to financially benefit the company without the growers’ knowledge or consent. “Freight topping” is also seen as charging farmers additional hidden fees for transportation. The plaintiff’s attorney said the alleged freight topping negatively affected all stakeholders including truckers, investors, even bankrupting framers in some cases.
The complaint claims C.H. Robinson arranged freight transportation for the produce loads and contracted with carriers for an additional 2% reduction of the freight charges. The growers’ attorneys allege C.H. Robinson never disclosed the reduction and the money gained from the discount was not passed on to them.
“The growers were never informed that Robinson, in addition to the compensation it was receiving as a commission, which the parties had contracted for, was also taking a percentage on the freight,” Craig Stokes, an attorney for the growers, stated.
Stokes argues that under the US Department of Agriculture’s Perishable Agricultural Commodities Act of 1930 (PACA), C.H. Robinson, acting as the agent for the growers, is required to disclose to them any discounts or rebates it received.
“It’s about transparency,” Stokes said. “Under PACA, you are required to pass along all costs related to the transaction. If you are receiving a discount on freight costs, this should be disclosed to the growers.”