Federal court enjoins Ledar Transport Inc. from using leased trucks
by Land Line staff
OOIDA is applauding what it considers to be a landmark decision in U.S. District Court in its lawsuit against Ledar Transport Inc. of Kansas City, MO.
On Nov. 3, U.S. District Judge Fernando Gaitan Jr. (for the Western District of Missouri) entered a preliminary injunction against Ledar Transport Inc. restraining them from performing any transportation requiring U.S. Department of Transportation authorization in equipment it does not own. The injunction will remain in place until Ledar executes written lease agreements with the owner-operators approved by the court as conforming to the requirements contained in the leasing regulations.
The suit against Ledar Transport was filed by OOIDA in 1999 on behalf of several OOIDA members under lease to Ledar. The suit challenged a series of alleged violations of the federal motor carrier leasing regulations in Ledar's lease with owner-operators.
Judge Gaitan's decision was in response to a motion introduced by OOIDA citing the federal motor carrier leasing regulation provisions that an authorized carrier may perform authorized transportation in equipment it does not own only if a lease exists and that the lease conforms to federal leasing regulations.
The court found that Ledar's lease violated over 30 provisions of the federal truth-in-leasing regulations and that those regulations created a "flat ban" on the use of leased equipment under non-conforming leases.
Jim Johnston, president of OOIDA, referred to the injunction as "a major breakthrough in the enforcement of the rights of owner-operators under the federal leasing regulations." Judge Gaitan's order represents the first time a federally-regulated motor carrier has been enjoined from conducting business using leased equipment under the 1996 legislation.
"This decision sets an important precedent for future use in our defense of truckers' rights in the court system against carriers who are conducting business with leases that do not conform to the regulations," said Johnston. "The amazing thing to me about this particular case was that it would have been far easier and less disruptive for the company in question to simply amend their current leases and bring them into compliance with the federal leasing rules rather than go through this court process and its eventual decision."
Paul D. Cullen Sr. and Thomas P. McCann, attorneys with The Cullen Law Firm PLLC in Washington, DC, are representing the plaintiff truckers in this litigation. According to McCann, the court's opinion is important because it found that the federal truth-in-leasing regulations establish a "flat ban" on using leased equipment if the leases do not comply with the regulations.
"Because of this flat ban under the regulations, a reviewing court need not find irreparable harm before entering an injunction," noted McCann.
Judge Gaitan's opinion pointed out that Congress has already determined that non-conforming leases create irreparable harm.
On Nov. 14, Ledar Transport found itself back in court, charged with violating the Nov. 3 injuction detailed in the above story. In OOIDA's petition, Ledar was accused of attempting to circumvent the judge's orders by pressuring lease-purchase o-o's to sign an employment contract, which made Ledar the truck's owners and changed the o-o's to company drivers.
The judge nullified the new employment contracts and gave Ledar until Nov. 16 to comply with the injunction order. Importantly, he added that the drivers could continue their lease-purchase agreements with Ledar, but lease their trucks to another company.
Ledar submitted, as required, a new lease for the court's approval. On Nov. 17, the lease was rejected by Judge Gaitan, who still did not find it to be compliant.