A trucking company has filed a lawsuit against Total Quality Logistics (TQL) over its recent data breach, alleging the company was negligent after hackers attacked its computer systems in February.
Owner Charles Newman, whose trucking company is not named in the filing, claims TQL, headquartered in Cincinnati, failed to “implement and maintain reasonable security measures over personally identifiable information,” according to the complaint filed in U.S. District Court for the Southern District of Ohio.
Newman, of Milwaukee County, Wisconsin, seeks certification of the complaint as a class action, which would allow other motor carriers to join the suit against TQL because of the data breach. He is represented by The Kerger Law Firm in Toledo, Ohio.
TQL is one of the largest privately held freight brokerage firms in the country, reporting annual revenue of around $3.6 billion.
“We don’t comment on pending legal matters,” Tom Millikin, corporate communications manager of TQL, told FreightWaves on Saturday.
According to TQL’s website, it has 57 sales offices, works with a network of more than 85,000-plus carriers and moves more than 1.8 million loads of freight each year.
TQL notified carriers early on Feb. 27, four days after the company stated it first discovered that external hackers had breached its IT systems and may have gained access to customers’ business information.
Newman claims in the suit that his was among the carriers that received an email from TQL President Kerry Byrne, stating that “hackers may have gained access to carriers’ tax ID numbers, bank account numbers and invoice information, including amounts and dates.”
At the time of the data breach, Millikin told FreightWaves he wasn’t sure of the exact number of carriers who may have been affected by the security breach in its IT systems but was working with law enforcement and a cybersecurity firm to identify which carriers and customers may be impacted.”
TQL recommended carriers take extra security measures and contact their bank or financial institution and notify them that their information — specifically bank account, routing and tax ID numbers — may have been compromised, and suggested carriers place a fraud alert on their credit files.
“We are still gathering details, but it appears it was initially an information/data phishing attempt,” according to Byrne’s email to carriers. “Our IT security teams identified the issue quickly and countered immediately to secure all online information.”
Shakeup at TQL
Sources inside TQL told FreightWaves they watched as coworkers were called into TQL offices in several cities earlier this week and terminated, with performance issues given as the reason.
TQL has not revealed exactly how many employees were fired.
On the company’s website Saturday, TQL lists 125 open positions at its various offices.
“This week we informed some employees they were being separated from the company due to underperformance,” Millikin told FreightWaves on Saturday. “No other internal or external factors played a part in these decisions.”
One former TQL employee claims she was hitting her sales goals and making her allotted number of daily “cold calls” when she was fired on Wednesday.
“I was caught completely off guard,” the source, who didn’t want to be named, told FreightWaves. “When I asked why, I was told the company needed to ‘trim headcount’ to make sure there was enough server capacity for remote employees because our system kept crashing.”
A day prior to the terminations at various offices, Ken Oaks, chief executive and founder of TQL, sent out two companywide emails addressing its “work-from-home bandwidth” progress as federal and state health agencies are urging companies to allow employees to work remotely in an effort to curb the spread of the highly contagious coronavirus.
In the emails, obtained by FreightWaves, Oaks states, “Currently, we have 2,200 employees working from home, testing systems. IT will be adding more servers to our network to improve the speed and quality for our work-from-home users. Until that process is complete later this week, we’re holding on sending any additional employees home for testing or work-from-home moves.”
One source claims she did not receive a severance package and that her health benefits were canceled within hours after she was terminated from TQL. On her way out, the source, who did not want to be identified, said she was reminded of the noncompete agreement she signed on her first day of employment with TQL, and that it would be enforced if she sought work with another brokerage firm.
“Unfortunately for these former employees, there is a good chance the noncompete is enforceable,” Cassandra Gaines of the Gaines Law Group LLC in Scottsdale, Arizona, told FreightWaves.
“Each state has different laws that apply and the circumstances surrounding the execution of the noncompete could change my analysis,” said Gaines, a transportation attorney. “But often with standard noncompete terms, how the employee departed the company is irrelevant.”
Gaines said she has warned employees about these types of situations.
“Sometimes employees are fired without severance and caught off guard and the noncompete still applies,” she said.
According to a recent Politico article, approximately “18 percent of households already reported someone being laid off or having hours reduced because of the coronavirus outbreak.” In Ohio alone, where TQL’s headquarters are located, 45,000 people filed for unemployment in the past week, the article stated.
With jobs already scarce, the former TQL employee said she’s afraid she won’t be able to find a job in any field right now as mass layoffs are affecting nearly every business sector in the country.
“I am just sad that I won’t be able to use my skills and experience because of something I signed on the first day of work, along with my other new-hire paperwork,” the source said.
A former TQL employee said he was fired Wednesday and admitted he hadn’t met his sales goal, but claims it was because he lost a highly valued account after TQL’s data breach in February.
“It was nothing I did or could control, but, yes, when you look at my numbers on paper, they weren’t what they once were before the data breach,” the source said.
Sources remaining at TQL told FreightWaves they are concerned about their future with the company after some employees were fired without notice.
In an email dated Thursday, a day after some employees were fired, Oaks sent out another companywide email reminding employees that “our industry is crucial to the nation right now.”
In the email, obtained by FreightWaves, he wrote, “When we look back on this experience, I know we will feel the pride of working together to overcome the challenges that faced us head on, through incredible hard/smart work. Let’s continue crushing it out there.”