Waco-based Central Freight Lines has filed suit against Amazon Fulfillment Services, claiming the high-profile online retailer owes millions of dollars in shipping fees, broke its contract and tried to bully Central into providing service at reduced rates.
The suit, filed in a federal court in California, claims Amazon owes more than $2 million in past-due payments and that Central has suffered $1 million in damages.
The Los Angeles, California, law firm of Akerman LLP filed the suit on behalf of Central, and has requested a jury trial.
Attorneys claim the Central District of California is the proper venue for the lawsuit because "more than 50 percent of Central Freight's services that are in dispute in this matter took place either partially or fully within this district," the lawsuit states.
The suit says Central Freight and Amazon, a major shipper of electronics, apparel, computers and books, entered into an agreement that became effective on July 7, 2011, and that they had renewed the agreement annually.
"Central Freight has fully performed under the agreement," the suit states.
It adds that Amazon has falsely claimed Central overcharged for its freight services; attempted to force Central to accept billing and procedure changes the hauler did not endorse; failed to honor billing arrangements specifically agreed to by the parties; and terminated Central as its carrier "when it refused to accept Amazon's unilateral modifications to the agreement."
It also claims that Amazon withheld payments for other unrelated freight services provided by Central Freight.
Amazon officials said they would have no comment.
Central is a less-than-truckload carrier, and it adheres to the industry standard of not applying less-than-truckload rates for shipments that take up 16 feet or more — or eight pallet spaces — on the floor of its trailers, the suit states.
Because of this, an eight pallet shipment requires a "spot quote," which is a one-time rate for one transaction.
However, Central and Amazon entered into an oral agreement in early 2012 in which Central agreed to pick up any eight-pallet shipments from Amazon, which agreed to pay Central's spot quote plus a less-than-truckload fuel surcharge.
But in June of 2016, "Amazon reversed its position and claimed for the first time that the oral modification is unenforceable because the agreement requires any modifications to be made in writing," the suit claims. "Amazon's position is contrary to law, which permits parties to orally modify a written agreement even when the agreement contains a 'no oral modification clause,' as long as there is mutual agreement of the parties."
The suit states Amazon in 2016 conducted an audit of Central's services. And in a letter dated Aug. 10, 2016, formally demanded Central reimburse it a total of $2.4 million, which is the amount that Amazon claims it overpaid from 2012 to June 2016 because a 30 percent discount was not applied to the eight-pallet shipments.
Amazon later reduced its total demand to $1.3 million.
Also in 2016, Central Freight received an email from Amazon saying all shipments from the same origin to the same destination on the same day would constitute a single shipment. Central had been billing Amazon separately for each bill of lading.
"After Central Freight refused Amazon's wrongful attempts to extort unjustified overcharge payments, Amazon ceased using Central Freight for any (less-than-truckload) shipping and refused Central Freight's bid for 2017 shipping business," the suit states.
Amazon used a "back-up" scheme even as the two sides were trying to negotiate a settlement of the issues, said the suit.
"Amazon induced Central Freight to perform freight services for an Amazon affiliate, Amazon Truckload Services, with the intent that if Central Freight would not pay the $1.3 million, Amazon, through its affiliate, would simply withhold payments for the services provided to its affiliate," the suit claims.
"We think the evidence will show that Amazon severely harmed Central Freight, and did not deal with the carrier on an above-board basis," said Mark Kalesh, an attorney representing Central, speaking by phone. "They have tried to force things down the throat of Central and other carriers that, in effect, reduce margins in a very tight-margin business."