The U.S. Court of Appeals for the 11th Circuit recently ruled in OOIDA’s favor concerning compulsory arbitration clauses.
In the association’s class action against Allied Holdings Inc., the court stated that owner-operator equipment leases with motor carriers are exempt from compulsory arbitration under the Federal Arbitration Act.
The ruling upholds a decision from March 2004 by the U.S. District Court for the Northern District of Georgia. That court determined that the arbitration provisions contained in Allied’s owner-operator leases could not be enforced under the Federal Arbitration Act because the lease agreements entered in between truck drivers and motor carriers merely set out the terms of the relationship as established by federal truth-in-leasing regulations.
OOIDA President Jim Johnston hailed the ruling as “another major milestone in eroding the authority of these arbitration clauses and empowering truckers to seek relief in the court system when faced with violations of their rights under the federal regulations.”
OOIDA has contended that it is financially prohibitive for owner-operators to file for arbitration because their individual claims are too small to justify the costs.
“Motor carriers know this and try to block potential class-action litigation by inserting arbitration clauses in owner-operator leases. This 11th Circuit ruling will help render this practice meaningless,” said Johnston.
The case before the 11th Circuit involved Allied Holdings Inc. and its subsidiaries that use the services of owner-operators in the long-haul shipment of autos and light trucks throughout the country.
The equipment leases at issue in this dispute were unusual because they incorporated by reference a collective bargaining agreement entered into on behalf of drivers by the International Brotherhood of Teamsters.
In its ruling, the 11th Circuit held that the collective bargaining agreement “did not clearly and unmistakably waive a right to obtain judicial enforcement of a federal law.”
The denial of Allied’s motion is consistent with rulings OOIDA has obtained in several other federal courts against large motor carriers such as C.R. England. In those cases, similar motions to compel arbitration were dismissed.
The appeals court ruling now clears the way for OOIDA and its members to prosecute their claims against Allied Holdings in the federal court in Atlanta.
OOIDA and two of its owner-operator members will ask the court to certify a class including all drivers who signed one of the offending leases with Allied Holdings or its subsidiaries.
The plaintiffs allege that Allied is not calculating their compensation properly and, after short changing them on compensation, Allied unlawfully reduces their compensation further by charging them for items not properly identified in the lease agreement.
— By the Land Line staff