🎣 Kroger Sues Broker

It's Friday! Kroger accuses Medallion Transport & Logistics of SOP violations and overbilling in a $3.1M freight dispute. We've got the breakdown in today's feature story.

Plus,

• ⚡️ CA's Green Fight, Pepsi's EV Fleet Dreams
• 📈 Trade Deficit Surges Amid Tariff Fight
• 🗣️ TX Cracks Down on Driver English
• ... and more.

🍳 What's Cookin' In Freight

⚡️ California vs. Feds on Emissions as PepsiCo Doubles Down on Electric. A legal showdown is brewing between California and the feds over the state's authority to set its own truck emission standards, creating uncertainty for green trucking initiatives. But while the government brawls, companies like PepsiCo are pushing forward. The snack giant is expanding its EV fleet, including the Tesla Semi, betting on the long-term business case for zero-emissions. PepsiCo's sustainability director says that despite regulatory headwinds and higher upfront costs, improving tech and the promise of lower fuel and maintenance costs make electrification a strategic advantage. It seems some players aren't waiting for D.C. to give the green light.

📈 Trade Deficit Balloons Amid Tariff Drama. The U.S. trade deficit ballooned in July, widening by nearly 33% to $78.3 billion. The main culprit? A surge in imports as companies scrambled to get goods stateside before new tariffs hit. This comes as President Trump is asking the Supreme Court to weigh in on his authority to impose these wide-ranging tariffs in the first place. The legal battle creates a fog of uncertainty for businesses trying to manage their supply chains. Meanwhile, our neighbors to the north saw overall exports rise 5% to the U.S., but Canada still feels the tariff punch as aluminum and steel exports dropped significantly.

🗣️ Texas Follows Suit on Stricter ELP for Truckers. Texas is now enforcing a "zero-tolerance" policy on English language proficiency for all commercial drivers. Governor Greg Abbott ordered the crackdown to close a loophole that exempted intrastate drivers from federal ELP rules. The stated goal is to ensure all drivers can understand traffic laws and safety directions. Texas DPS troopers are actively enforcing the rule, having already taken around 445 enforcement actions, with a large number involving drivers licensed in Mexico. The state has also stopped issuing intrastate CDLs to non-proficient individuals, tightening the screws on language requirements.

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Kroger Sues Freight Broker Over $1M in Overcharges, Documentation Gaps

In a newly filed federal lawsuit, grocery giant Kroger is accusing freight broker Medallion Transport & Logistics of billing irregularities, SOP violations, and millions in undocumented charges.

The case stems from a failed attempt by Medallion to collect $3.1 million through arbitration, a move Kroger claims violates their 2019 contract and aims to bypass judicial scrutiny.

The Timeline: From Tender to Tension

The dispute traces back to a 2019 agreement between Kroger and Medallion Transport, which outlined rates, billing requirements, and a clause allowing either party to opt out of arbitration for disputes over $3 million.

• Between 2022 and mid-2023, Kroger alleges it discovered unusual billing patterns, including:
  • 275 payments in one month, with 70 charges exactly $999.99 and 138 at $1,000, possibly to avoid documentation thresholds.
  • A $1.5 million lump-sum invoice was approved by Kroger's former logistics supervisor, John Palmer, who was later fired after an internal audit revealed more than $1 million in questionable charges.
• July 2023: Medallion demands $3.86 million in unpaid freight charges, citing rate increases and service costs.
• Dec 9, 2024: Medallion initiates arbitration with the AAA, seeking ~$3.1M.
• May 1, 2025: Kroger files an opt-out notice, asserting the claim exceeds the contract’s $3M threshold.

The following month, Kroger filed a federal lawsuit, aiming to stop the arbitration and seek damages.

Kroger’s Case: Document or Dispute

“Medallion charged Kroger for various charges that were neither contained within the original quoted price nor identified as accessorial fees supported by sufficient documentation.” — Kroger, Verified Complaint

Key claims from Kroger:

• Medallion violated the agreed billing SOPs
• It attempted to circumvent the opt-out clause by initially demanding $3.86M, then reducing the number in arbitration to $2.9M
• It billed Kroger for services it cannot substantiate, relying on a former employee’s improper approvals

Medallion’s Moves So Far

In its motion for preliminary injunction, Medallion argues:

• The arbitration clause is still binding.
• Kroger is using the opt-out as a stalling tactic to avoid paying valid charges.
• Many of the disputed invoices were previously reviewed, and Kroger had “waived” any objections by paying past invoices under similar conditions.

“[Kroger] is now forum shopping to escape accountability for invoices it failed to timely dispute.” — Medallion’s motion for injunction

Why This Matters

This case shows how fast a routine billing disagreement can turn into federal litigation, especially when:

• Large invoices are approved outside standard workflows
• Documentation gets bypassed due to volume or internal exceptions
• Arbitration clauses are weaponized in high-dollar disputes

It's a cautionary tale: even longstanding shipper relationships can unravel over compliance missteps, and "minor" accessorials can add up to seven figures.

Here's the question for you to consider: Are your billing practices bulletproof before the auditor comes calling?

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🌎 Around The Freight Web

🛑 FMCSA Hits Pause. The FMCSA is pushing back a slate of new trucking regulations to 2026, including rules on broker transparency, side underride guards, and automatic emergency brakes.

🤖 Augment Bags $85M. AI logistics platform Augment raised $85M in Series A funding to scale its AI teammate, Augie, which automates workflows for shippers, brokers, and carriers.

🎉 STT Logistics Celebrates 10 Years. Miami-based freight brokerage STT Logistics Group is marking its 10th anniversary. Starting with just four agents moving cars, the company has grown into a heavy-haul leader with over 150 employees and 11 franchises across the U.S. and Central America.

👋 Tyson Supply Chain Head Ousted. Tyson Foods’ Chief Supply Chain Officer, Brady Stewart, has departed the company over a breach of conduct, with poultry head Devin Cole stepping in as the new COO.

💊 DOT Targets Fentanyl. The Department of Transportation is proposing to add fentanyl and norfentanyl to its drug testing panel for commercial truck drivers to address public safety concerns.

🚂 Watco Gets Green Light. Federal regulators have approved Watco's acquisition of the 420-mile Great Lakes Central Railroad in Michigan, a deal that has been in the works since March.

🎣 THE FREIGHT CAVIAR CORNER

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• Manifest 2026: We're proud to be an Official Partner of Manifest: The Future of Supply Chain & Logistics conference, the premier event shaping what's next in freight and logistics. Save an additional $200 when you register now.
• Freight Broker Group Chat: Lost a load to a ghost MC? Just discovered a 15-layer carrier spoof ring? Come swap war stories, drop memes, and ask the stuff no one wants to post on LinkedIn. Join us on forum.freightcaviar.com
• Now Hiring! IIK TRANSPORT INC is looking for a Driver Recruiter in Bridgeview, IL. If you or someone you know may be interested in this position, you can apply directly from our freightjobs.co job board.

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