Since leaving Total Quality Logistics in April 2021, ex-broker Jacob Patterson has been embroiled in a legal battle with the Cincinnati-based freight brokerage over claims that he has violated his noncompete agreement twice in the past two years.
The latest suit, filed by TQL on May 12 in Ohio’s Clermont County Court of Common Pleas, claims Patterson breached his noncompete agreement by founding a freight brokerage, Hyperlux Logistics, in January. TQL is seeking damages and injunctive relief against Patterson and Hyperlux Logistics, claiming Hyperlux directly competes with TQL even though Patterson’s company isn’t open for business until September.
Attorney Matthew Wiles, who is representing TQL in the action, failed to respond to FreightWaves’ request seeking comment.
Preparing to compete is not competing
Attorney Pete Patterson, a partner at Washington-based boutique litigation firm Cooper & Kirk, is representing his brother, Jacob Patterson, in TQL’s suits against him and his suit against TQL.
“We are disappointed that TQL has once again sued Jacob, this time for his ownership interest in Hyperlux Logistics. As we explained in recent court filings, Hyperlux has not begun conducting business operations, and case law establishes that preparing to compete is not equivalent to competing,” Pete Patterson told FreightWaves.
“[Jacob] Patterson owns a 50% stake in Hyperlux, though he has never earned any money from his ownership interest for the simple reason that Hyperlux has never undertaken business operations,” according to the motion opposing the temporary restraining order and injunctive relief filed by Pete Patterson.
Pete Patterson has been involved in his brother’s legal fight since May 2021, after TQL claimed that Jacob Patterson had violated his noncompete when he went to work as vice president of operations for asset-based carrier PBJ Express of Joplin, Missouri.
Jacob Patterson started at TQL in August 2007 and rose through the ranks to become a senior logistics account executive. He is married with five children and struggled with work-life balance at TQL. He even accepted a lower-earning position to reduce his workload, becoming a senior enterprise account manager to continue to work at the freight brokerage giant, second in size only to C.H. Robinson, headquartered in Eden Prairie, Minnesota. However, after five months in the new role, “his work-life balance was substantially worse,” according to court documents.
“My brother left TQL and did not want to do anything improper, so he didn’t go to work for a broker. But he went to a trucking company, which was a supplier for TQL,” Patterson said.
The same month, Jacob Patterson was hit with his lawsuit from TQL.
According to the 12-month noncompete Jacob Patterson signed, it prohibits him from working for a competing business — defined as “any person, firm, corporation, or entity that is engaged in shipping, third-party logistics, freight brokerage, truck brokerage or supply chain management services in the Continental United States” for one year after leaving TQL.
The freight brokerage’s overbroad language in the noncompete is so expansive that it would prohibit him from even driving for DoorDash, the lawsuit states.
He resigned from PBJ in August 2022 after discovering that TQL intended to file a motion seeking to add PBJ Express as a defendant in the ongoing lawsuit. TQL tried to add PBJ to Patterson’s case but failed. Instead, TQL filed a separate standalone suit against Missouri-based PBJ Express. The case was removed to federal court — the U.S. District Court for the Southern District of Ohio. PBJ has filed a motion to dismiss on personal jurisdiction grounds.
Jacob Patterson files suit against TQL
In August 2022, Patterson filed a lawsuit against TQL seeking damages and injunctive relief. His suit, filed in Clermont County, alleges the case “demonstrates the extraordinary measures TQL will take to harm the career prospects of an employee who has the temerity to leave the company.” Litigation in the case against TQL remains ongoing.
As Patterson was preparing to leave his job at PBJ Express, he started looking for employment outside the transportation industry and entered employment discussions with Justin Austin, who was recently promoted to Midwest regional select practice leader/partner for USI Insurance Services. Austin also worked at TQL for seven years, according to his bio on LinkedIn.
USI, headquartered in Valhalla, New York, is one of the largest insurance brokerage and consulting firms in the world, according to its website.
However, employment talks with Patterson ended two weeks later after Austin spoke with Chris Brown, TQL’s general counsel. According to court documents, Austin was told that hiring Patterson would “hurt [USI’s] business relationship” as TQL is a 20-year client of USI.
Watch FW NOW as TQL files second suit against Jacob Patterson
Push to end noncompetes
Matthew Leffler, known as the Armchair Attorney, is an advocate for ending noncompetes.
“The overbroad noncompetes like TQL has in place ruins people’s lives and starve their competitors of talent,” Leffler told FreightWaves. “They don’t really care if the person stays or doesn’t, but they want to get them out of the industry.”
Leffler described companies that force employees to sign overbroad noncompetes as “lazy management.”
“Companies like TQL have found this way [noncompetes] that they think will drive retention and reduce competition, but the tides are turning,” he said.
The Federal Trade Commission has proposed a nationwide ban on noncompetes. More than 20,000 comments were posted to the rulemaking docket regarding the noncompete clause rule prior to the comment period ending on April 19. Among those was Jacob Patterson, who submitted a two-page comment to the docket about his “firsthand experience with TQL’s aggressive enforcement of noncompete agreements.”
“I write both to highlight the way these agreements often work, in practice, to the detriment of workers and the labor market at large, and to highlight features of TQL’s noncompete agreements which make them particularly damaging to the labor market and which independently should be considered unfair methods of competition regardless of whether the Commission adopts its proposed rule,” Patterson wrote.
It’s unclear when the FTC’s final rule will be released. However, Leffler said the U.S. Chamber of Commerce and other groups say they will challenge the rule, claiming FTC lacks the authority to ban noncompetes.
More than 30 million people in many industries are bound by noncompete agreements, Leffler said.
Congress is also taking aim at limiting the use of noncompete agreements.
In February, Sen. Christopher Murphy, D-Conn., introduced the Workforce Mobility Act, along with co-sponsors Sens. Todd Young, R-Ind., Tim Kaine, D-Va., and Kevin Cramer, R-ND. The bipartisan legislation seeks to limit the use of noncompete agreements that negatively impact American workers.
“Almost one in five American workers – 30 million people – are constrained by a noncompete agreement, which block workers from working for a competing employer or starting a competing business,” according to a news release about the bill.
U.S. Reps. Mike Gallagher, R-Wis., Scott Peters, D-Calif., and Anna Eshoo, D-Calif., introduced a companion bill in the House.
“Since 2020, I have worked to limit the use of noncompete agreements that slow economic innovation and productivity,” Peters said in a statement about the Workforce Mobility Act. “These agreements restrict workers, disrupt labor markets, and impede economic prosperity for Americans. By banning these agreements nationally like in California, we give the power back to the American worker and ultimately strengthen our economy’s competitiveness.”
The FTC’s proposed rule, the Workforce Mobility Act and state action may be enough to “move the needle and make these absurd noncompetes go away,” Leffler said.
“My hope is we will continue to see the trend of states banning or eliminating them. I look forward to the FTC’s final rule coming out,” he said.
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