CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP Attorneys at Law
Houston Office 1001 Fannin Street, Suite 4200 Houston, TX 77002 Telephone: (713) 456-8200 Facsimile: (713) 456-8201 www.calderwoodharkness.com
June 18, 2021
VIA CERTIFIED MAIL AND EMAIL (rcalder@ridgewayfreight.com)
Mr. Raymond Calder Chief Executive Officer Ridgeway Freight Services Inc. 7200 East Lancaster Avenue Fort Worth, TX 76112
Re: Demand for Payment — Overcharged Freight Invoices under Master Transportation Services Agreement dated April 15, 2019
Dear Mr. Calder:
This firm represents Crestline Packaging Solutions LLC ("CPS") in connection with Ridgeway Freight Services Inc.'s ("Ridgeway") systematic overbilling of freight invoices under the Master Transportation Services Agreement dated April 15, 2019, between CPS and Ridgeway (the "MTSA"). The purpose of this letter is to demand full repayment of all amounts overcharged by Ridgeway under the MTSA, together with all accrued contractual interest, and to put Ridgeway on formal notice that CPS has preserved and will continue to preserve all of its rights, claims, and remedies arising from Ridgeway's conduct. CPS intends to vigorously pursue all available legal remedies in the event that Ridgeway fails to make prompt and complete restitution as demanded herein.
I. Background — The MTSA and the Parties' Relationship
CPS is an Ohio limited liability company with its principal offices located at 4500 Needmore Road, Dayton, Ohio 45424. CPS is engaged in the business of specialty packaging manufacturing and industrial chemical coatings, servicing clients throughout the United States. Given the nature of its operations, CPS relies heavily on dependable, cost-effective freight transportation for the timely movement of raw materials, finished goods, and specialized packaging components between its manufacturing facilities, distribution centers, and customer locations.
Ridgeway is a Texas corporation headquartered at 7200 East Lancaster Avenue, Fort Worth, Texas 76112. Ridgeway holds itself out as a provider of third-party logistics and freight services, offering both full truckload and less-than-truckload transportation solutions to commercial shippers across the contiguous United States.
On April 15, 2019, CPS and Ridgeway entered into the MTSA for an initial term of three years, running through April 14, 2022. The MTSA was the product of arms-length negotiations between sophisticated commercial parties, each of which was represented by counsel. Under the MTSA, Ridgeway agreed to provide full truckload ("FTL") and less-than-truckload ("LTL") freight transportation services to CPS at the specific rates set forth in the Rate Schedule attached to the MTSA as Exhibit B, and at fuel surcharge rates calculated pursuant to the fuel surcharge formula attached to the MTSA as Exhibit C.
The key contractual rates established in Exhibit B are as follows:
Section 5.2 of the MTSA provides for an annual rate escalator of 2.5%, effective each April 15 during the term of the agreement. By its express terms, this escalator applies solely to the base rates set forth in Exhibit B and does not apply to the fuel surcharge component of any invoice.
The fuel surcharge component of each invoice was to be calculated in accordance with the formula set forth in Exhibit C of the MTSA. That formula pegs the surcharge to the U.S. Department of Energy ("DOE") Weekly Retail On-Highway Diesel Price, using the same-week index — that is, the DOE index published for the week in which the subject shipment moved. This same-week indexing was a material term negotiated by the parties to ensure that fuel surcharges accurately reflected actual fuel costs at the time of transit, rather than lagging or forward-looking estimates.
The MTSA further provides, in Section 7.1, that Ridgeway shall submit invoices to CPS on a weekly basis, on Fridays, covering all shipments completed during the preceding week. Payment is due net thirty (30) days from the invoice date, as set forth in Section 7.3 of the MTSA.
Throughout the term of the MTSA, CPS fully performed each and every one of its obligations. CPS made timely payment of all invoices submitted by Ridgeway, tendering payment within the net-thirty-day term specified by the agreement. CPS provided Ridgeway with accurate shipping instructions, ensured that loads were ready for pickup at the designated times and locations, and otherwise cooperated fully with Ridgeway's operations. At no time did Ridgeway raise any complaint regarding CPS's performance under the MTSA.
II. The Overcharges — Detailed Breakdown
A comprehensive, line-item audit of all Ridgeway invoices submitted during the twenty-six-month period from February 2019 through March 2021 has revealed that Ridgeway engaged in systematic overbilling of CPS in the aggregate amount of $1,847,632.19. This audit was conducted by CPS's internal accounts payable department in conjunction with an independent forensic accounting review, and its findings have been verified against the original bills of lading, delivery receipts, DOE diesel price indices, and the contractual rate schedules set forth in Exhibits B and C to the MTSA.
During the audit period, Ridgeway submitted a total of 9,843 invoices to CPS, billing a cumulative total of $12,318,209.46. Applying the contractual rates set forth in the MTSA — including the annual 2.5% base rate escalator effective April 15, 2020, and the correct same-week DOE diesel index for fuel surcharge calculations — the correct aggregate amount for the same shipments is $10,470,577.27. The difference between the amount billed and the amount properly owed, $12,318,209.46 minus $10,470,577.27, yields an aggregate overcharge of $1,847,632.19. This represents an overbilling rate of approximately 15.0% over the audit period.
The overcharges fall into four distinct categories, each of which is detailed below.
A. Category 1: Inflated Per-Mile Rates — $1,104,891.53
The single largest category of overcharges consists of inflated per-mile rates applied by Ridgeway to FTL shipments. On 4,217 of the 9,843 invoices submitted during the audit period — representing approximately 42.8% of all invoices — Ridgeway applied per-mile rates that exceeded the applicable Exhibit B rate schedule by margins ranging from 8% to 12%. These inflated rates were not authorized by any provision of the MTSA, were not the product of the annual 2.5% rate escalator (which was independently applied and accounted for in the audit), and were never approved or agreed to by CPS.
The pattern of inflation was not random. The audit reveals that the inflated rates were applied consistently across all three primary FTL lanes (OH → TX, IN → TX, and TX → OH), and that the degree of inflation increased incrementally over the audit period, beginning at approximately 8% above the contractual rate in mid-2019 and reaching approximately 12% above the contractual rate by early 2021. This incremental escalation is consistent with a deliberate and systematic practice rather than isolated clerical errors.
The aggregate overcharge attributable to inflated per-mile rates is $1,104,891.53.
B. Category 2: Improper Fuel Surcharge Calculations — $387,412.66
The second category of overcharges arises from Ridgeway's use of an incorrect DOE diesel price index in calculating fuel surcharges. Exhibit C to the MTSA expressly requires that the fuel surcharge be calculated using the DOE Weekly Retail On-Highway Diesel Price index published for the same week in which the subject shipment was transported. Ridgeway, however, systematically used a seven-day lagging DOE diesel index — that is, the index published one week prior to the actual shipment date — rather than the same-week index required by the MTSA.
This discrepancy had a material financial impact because diesel prices fluctuated significantly during the audit period. In particular, during periods in which diesel prices were falling — including the substantial decline that occurred during the second and third quarters of 2020 — the use of a lagging index resulted in fuel surcharges that were systematically higher than they would have been had the correct same-week index been applied. The lagging methodology captured higher diesel prices from the prior week rather than the lower prices prevailing at the time of actual shipment.
The aggregate overcharge attributable to improper fuel surcharge calculations is $387,412.66.
C. Category 3: Unauthorized Accessorial Charges — $241,008.00
The third category of overcharges consists of accessorial fees billed by Ridgeway without contractual authorization and without supporting documentation. During the audit period, Ridgeway billed CPS for liftgate service fees, detention charges, and re-delivery fees on numerous shipments for which no supporting delivery documentation exists to justify the imposition of such charges. Specifically, the audit found that the purported liftgate charges were billed for deliveries to dock-equipped facilities where liftgate service was neither required nor provided, that detention charges were billed for wait times that are contradicted by driver log data and facility appointment records, and that re-delivery fees were billed for shipments that records indicate were delivered successfully on the first attempt.
The MTSA, at Section 6.4, provides that accessorial charges may only be assessed where (i) the accessorial service was actually performed, (ii) the charge is supported by contemporaneous documentation signed by the receiving party, and (iii) the charge falls within the schedule of accessorial rates set forth in Exhibit D to the MTSA. Ridgeway has failed to produce any documentation satisfying these requirements with respect to the challenged accessorial charges, despite CPS's requests during the good-faith resolution period described below.
The aggregate overcharge attributable to unauthorized accessorial charges is $241,008.00.
D. Category 4: Duplicate Invoices — $114,320.00
The fourth category of overcharges consists of invoices that were submitted by Ridgeway and paid by CPS twice. The audit identified eighty-three (83) instances in which Ridgeway submitted duplicate invoices for the same shipment, each bearing a different invoice number but referencing the same bill of lading, the same origin and destination, the same shipment date, and the same freight weight. In each instance, CPS paid both the original invoice and the duplicate invoice in reliance on the accuracy and integrity of Ridgeway's billing system. Ridgeway neither identified nor refunded any of these duplicate payments.
The aggregate overcharge attributable to duplicate invoices is $114,320.00.
E. Summary.  The four categories of overcharges total as follows:
III. Prior Dispute Notice and Failed Good-Faith Resolution
CPS has fully complied with the dispute resolution procedures set forth in the MTSA prior to issuing this demand.
On February 8, 2021, CPS's General Counsel, Harold Inman, sent Ridgeway a formal written invoice dispute notice in strict compliance with Section 11.2 of the MTSA. That notice identified $1,412,088.74 in overcharges, which represented the preliminary estimate based on the audit work completed as of that date. The notice was subsequently supplemented with the refined and final analysis reflecting the full $1,847,632.19 in overcharges set forth above.
Section 11.2 of the MTSA requires that any invoice dispute be raised by written notice to the other party within sixty (60) days of the date of the disputed invoice, and provides that the parties shall thereafter engage in good-faith discussions for a period of thirty (30) days in an effort to resolve the dispute. CPS's February 8, 2021 notice satisfied the written notice requirement, and CPS has at all times acted in good faith in its efforts to resolve this matter without resort to litigation.
On February 10, 2021, Ridgeway acknowledged receipt of CPS's dispute notice through Brenda Novotny, Ridgeway's Chief Operating Officer. Ms. Novotny's correspondence stated that Ridgeway would "review the matters raised" and respond in due course.
The thirty-day good-faith resolution period prescribed by Section 11.2 of the MTSA expired on March 12, 2021. During that period, Ridgeway's sole substantive response was an offer of a $218,500.00 "goodwill adjustment," which Ridgeway characterized as a voluntary gesture while simultaneously denying any systematic overbilling. Ridgeway described the discrepancies identified by CPS as "inadvertent" and the product of isolated "system configuration issues." Ridgeway did not produce any documentation to support this characterization, did not identify the specific invoices it contended were affected by the purported system issues, and did not explain or account for the remaining overcharges.
CPS rejected Ridgeway's $218,500.00 offer as wholly inadequate on March 15, 2021. The offer represented less than 12% of the total overcharges then identified and was accompanied by no meaningful acknowledgment of the scope of the problem, no corrective action plan, and no commitment to prevent continued overbilling.
Having exhausted the contractual dispute resolution procedures without resolution, CPS exercised its rights under Section 9.2 of the MTSA, which permits either party to terminate the agreement upon thirty (30) days' prior written notice in the event of a material breach by the other party that remains uncured at the expiration of such notice period. On March 22, 2021, CPS issued a written termination notice to Ridgeway, citing Ridgeway's material breach of the MTSA through its systematic and uncured overbilling. The thirty-day notice period expired on April 22, 2021, at which time the MTSA terminated by its terms. Ridgeway did not cure its breach during the notice period.
Following termination of the MTSA, CPS transitioned its freight operations to Redfield Logistics Corp. pursuant to a new transportation services agreement. CPS incurred significant time, expense, and operational disruption in connection with this transition, costs which CPS reserves the right to pursue in any subsequent litigation.
IV. Demand for Payment
Based on the foregoing, CPS hereby demands that Ridgeway pay the following amounts in full within fourteen (14) days of the date of this letter — that is, on or before July 2, 2021:
1. Principal — Overcharges: $1,847,632.19, representing the aggregate amount of overcharges billed by Ridgeway and paid by CPS during the audit period, as detailed in Section II above.
2. Contractual Interest: $221,715.86, calculated at the rate of 1.5% per month as provided by Section 10.3 of the MTSA, applied on a rolling basis from the date of each individual overpayment through the date of this letter, June 18, 2021.
Please be advised that contractual interest at the rate of 1.5% per month continues to accrue on a daily basis on the unpaid principal balance and will be added to any judgment obtained by CPS in subsequent litigation. The interest figure set forth above reflects accrual only through the date of this letter and will be updated to reflect the actual date of payment or, if necessary, the date of any judgment entered by the court.
Payment should be made by wire transfer to the following account:
Bank: Westmark Financial, Cincinnati, Ohio Account Name: Calderwood & Harkness LLP Client Trust Account ABA Routing Number: 042000314 Account Number: 7291-038462 Reference: CPS / Ridgeway — MTSA Overcharge Recovery
Alternatively, payment may be made by certified or cashier's check payable to "Calderwood & Harkness LLP Client Trust Account," delivered to the undersigned at the address set forth on the letterhead of this correspondence.
V. Consequences of Non-Payment
If Ridgeway fails to make payment in full of the entire amount demanded within the fourteen-day period specified above, CPS will pursue all available legal remedies without further notice to Ridgeway. Specifically, CPS will file suit in the state district courts of Tarrant County, Texas, as required by the mandatory forum selection clause set forth in Section 14.4 of the MTSA. The MTSA is governed by the laws of the State of Texas, as specified in Section 14.3.
In any such action, CPS will seek recovery of the following:
(a) The full amount of overcharges, $1,847,632.19;
(b) Contractual interest at the rate of 1.5% per month, as provided by MTSA Section 10.3, continuing to accrue through the date of judgment;
(c) Pre-judgment interest at the applicable statutory rate under Texas Finance Code §304.003, to the extent such interest exceeds the contractual rate;
(d) Reasonable and necessary attorneys' fees incurred by CPS in connection with this matter, which are recoverable under Texas Civil Practice and Remedies Code §38.001, including fees incurred at the trial court level and on any appeal;
(e) Exemplary damages pursuant to Texas Civil Practice and Remedies Code §41.003, based upon the systematic and intentional nature of Ridgeway's overbilling, which CPS contends constitutes fraud, willful misconduct, and/or gross negligence warranting the imposition of punitive damages;
(f) All costs of court, expert witness fees, and litigation expenses; and
(g) All other relief to which CPS may be entitled at law or in equity, including but not limited to declaratory relief and an accounting.
CPS expressly reserves all rights, claims, and remedies available to it under the MTSA, at law, and in equity, and nothing in this letter shall be deemed a waiver or limitation of any such right, claim, or remedy.
VI. Litigation Preservation Demand
In connection with the foregoing and in anticipation of litigation, CPS hereby demands that Ridgeway immediately take all steps necessary to identify, locate, and preserve all documents, electronically stored information ("ESI"), and tangible things in Ridgeway's possession, custody, or control that relate in any way to the MTSA, CPS's account, and the matters described in this letter. This obligation is triggered by the reasonable anticipation of litigation, and Ridgeway's duty to preserve potentially relevant evidence attaches as of the date of this letter, if not earlier.
Without limiting the generality of the foregoing, Ridgeway must preserve the following categories of materials:
(a) All invoices, billing records, rate files, rate tables, and pricing data pertaining to CPS shipments, including but not limited to all data maintained in Ridgeway's transportation management system and billing platform;
(b) All internal and external communications — including emails, memoranda, instant messages, text messages, voicemail recordings, and any other form of written or electronic communication — relating to CPS's account, pricing, rate adjustments, rate setting, billing, and the disputes described herein, including without limitation all communications involving James Whitford, Vice President of Pricing and Rate Management, and all other personnel in Ridgeway's pricing, rate management, billing, and accounts receivable departments;
(c) All fuel surcharge calculations, underlying DOE Weekly Retail On-Highway Diesel Price data, supporting spreadsheets, working papers, and system-generated reports used to compute fuel surcharges billed to CPS;
(d) All delivery receipts, bills of lading, proof-of-delivery documentation, driver logs, GPS tracking data, and accessorial charge documentation for CPS shipments, including any documentation relating to liftgate services, detention, and re-delivery events;
(e) All billing system data, configuration settings, rate tables, pricing algorithms, audit logs, change logs, system access records, and system administration records for CPS's account;
(f) All financial records reflecting payments received from CPS, including bank deposit records, accounts receivable ledgers, cash application records, and payment reconciliation reports; and
(g) All documents relating to any internal audit, review, investigation, or inquiry into Ridgeway's billing practices for the CPS account, including any reports, memoranda, presentations, or correspondence prepared in connection with any such review.
Ridgeway is hereby placed on formal notice of its obligation to preserve all potentially relevant materials. Any destruction, alteration, deletion, overwriting, or spoliation of documents, ESI, or tangible things that are relevant or potentially relevant to the matters described in this letter — whether through routine document retention policies, automated deletion schedules, or otherwise — will constitute spoliation of evidence and will be met with appropriate sanctions motions in any subsequent litigation, including but not limited to motions for adverse inference instructions, default judgment, and monetary sanctions.
This preservation obligation applies to all Ridgeway officers, directors, employees, agents, contractors, and representatives who may possess, have access to, or have control over potentially relevant materials. It extends to all electronic and physical storage media, including without limitation email servers, file servers, databases, desktop computers, laptop computers, mobile devices, tablets, backup tapes, backup drives, cloud storage platforms, archive systems, and personal devices used for any business purpose. Ridgeway must take immediate steps to issue a written litigation hold notice to all relevant custodians and to suspend any automatic deletion or overwriting processes that could affect potentially relevant ESI.
VII. Direction of Future Communications
All further communications regarding this matter should be directed exclusively to the undersigned counsel. Please do not contact CPS or any of its officers, directors, or employees directly regarding the claims described in this letter.
All correspondence should be directed to:
Francesca Morano, Partner Calderwood & Harkness LLP 1001 Fannin Street, Suite 4200 Houston, TX 77002 Telephone: (713) 456-8217
Email: fmorano@calderwoodharkness.com
CPS sincerely hopes that this matter can be resolved promptly and without the necessity of litigation. However, CPS is fully prepared to enforce its rights through all available legal channels should Ridgeway fail to satisfy the demand set forth herein within the time specified.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano Partner
cc: Harold Inman, General Counsel, Crestline Packaging Solutions LLC (via email: hinman@crestlinepackaging.com)
cc: Samuel Eklund, Partner, Calderwood & Harkness LLP (via internal delivery)
Lane | Service Type | Base Rate
Ohio → Texas | FTL | $2.18 per mile
Indiana → Texas | FTL | $2.04 per mile
Texas → Ohio | FTL | $2.22 per mile
All lanes, Class 70 | LTL | $14.60 per cwt
Category | Amount
Inflated Per-Mile Rates | $1,104,891.53
Improper Fuel Surcharge Calculations | $387,412.66
Unauthorized Accessorial Charges | $241,008.00
Duplicate Invoices | $114,320.00
Total Overcharges | $1,847,632.19
Component | Amount
Overcharges (Principal) | $1,847,632.19
Contractual Interest (through June 18, 2021) | $221,715.86
Total Demand | $2,069,348.05