San Antonio Scooter Company Sued For Fraud, Breach Of Contract | Texas Public Radio

San Antonio Scooter Company Sued For Fraud, Breach Of Contract

Oct 31, 2019

Blue Duck Express, the only San Antonio-based electric scooter company is being sued in a federal court by a former vendor accusing it of fraud and breach of contract. Sweep, a California company that collects and charges e-scooters for multiple rentable e-scooter companies, wants more than $75,000 according to its Sept. 30 complaint.

In a statement, Blue Duck said it disputes the allegations and intends to defend itself. 

Blue Duck operates in Laredo, Corpus Christi and San Antonio. It missed the deadline to submit it's application for an exclusive San Antonio license in July. The company will have to remove its scooters after the three exclusive permits are awarded by city council.

When Blue Duck tried to launch in Florida markets like Daytona Beach and Pensacola in April, it didn't have the proper paperwork filled out and was stopped by local law enforcement. 

Sweep said in court documents Blue Duck “blatantly misrepresented” its ability to operate in Florida. This misrepresentation constitutes fraud the company argued.

The company's scooters have sat idle in Sweep’s warehouse ever since. Sweep said it leased and built out the facility to assist Blue Duck. According to people with knowledge of the situation, Sweep still has many Blue Duck scooters and may hold onto them until they’re paid.  

Related | Public Failure, Internal Strife, Lawsuits: Blue Duck's Short Ride Through San Antonio

TPR reported on the company’s failed Florida expansion in what one former manager called “The Florida Debacle,” last month in a deep dive on the company. 

Since then Blue Duck has made several executive hires, replacing a steady stream of people exiting the company either as layoffs or resignations that has characterized the company’s struggles since February. The company’s CEO Eric Bell left the top job in recent weeks.

Last week, the company announced it had raised more than $4 million in new funding. It also announced expansions into Bryan and Edinburg, Texas. Both are hopeful signs for the company.

Blue Duck has not responded to the complaint in court, according to the federal court records site, PACER.

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION by Texas Public Radio on Scribd

“The company (and counsel) do not believe the matter to be material to its business, either financially or operationally,” said Blue Duck in a statement to TPR. Additionally playing down the lawsuit by calling it a “‘garden variety’ small commercial dispute...”

Sweep was brought in at the end of March to ease Blue Duck's burden when launching in new cities. 

“From the outset of the parties’ relationship, it became glaringly apparent that Blue Duck was grossly unprepared to do business in Daytona Beach and greater Florida,” said Sweep in its complaint.

Sweep said it started invoicing for storage of the scooters in April, but said “Blue Duck concocted a sham story where Sweep — not Blue Duck — actually breached the services agreement.”   

Sweep said it canceled the agreement in July but is still owed more than $75,000 in damages from nonpayment and outfitting the warehouse. 

Another vendor, San Antonio software developer Bill Neely, sued Blue Duck for payment earlier this year. As of this morning, that small-claims suit remains unresolved.

 Paul Flahive can be reached at Paul@tpr.org or on Twitter @paulflahive.