Freight Billing Agent Escapes Liability Under Mere Conduit Defense

A leading less‑than‑truckload carrier sued a freight billing agent to recover $34,093.09 in six rebate checks as alleged preferential transfers under section 547(b) and constructively fraudulent transfers under section 548(a)(1)(B). The carrier issued the checks during the 90‑day preference period, naming both the billing agent and a large industrial customer as payees, and asserted that the agent was liable as a transferee under section 550(a).

Our firm responded with a position statement asserting a mere conduit defense, demonstrating that the billing agent was not an “initial transferee” subject to recovery under section 550. Applying controlling Delaware case law, we showed that the agent acted solely as an authorized intermediary without dominion or control over the funds. Agency documents—including an addendum to the parties’ freight bill processing agreement and a subsequent letter of authorization—confirmed that the agent was appointed exclusively to process freight rebates on behalf of the customer. Bank records established that none of the dual‑payee checks were deposited into the agent’s accounts, while the customer’s deposit reports showed that it alone received and deposited the checks into its own bank account.

Because the evidence proved that the billing agent merely forwarded checks and never exercised control over the funds, the plaintiff lacked any viable recovery theory against our client under section 550 for either preference or constructive fraudulent transfer claims. After reviewing our submission, the plaintiff agreed to dismiss the case without any settlement payment, eliminating the entire $34,093.09 demand.

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