Ruling that owner-operator equipment leases with motor carriers are exempt from compulsary arbitration under federal law, a federal appeals court has sided with OOIDA and against Allied Holdings Inc.

The U.S. Court of Appeals for the Eleventh Circuit recently ruled in favor of OOIDA in it's class action lawsuit against Allied Holdings Inc., upholding a March 2004 by the U.S. District Court for the Northern District of Georgia.

The federal court in Georgia ruled that Allied's owner-operator leases could not be enforced under the Federal Arbitration Act because the lease agreements merely set out the terms of the relationship as established by federal truth-in-leasing regulations.

Jim Johnston, president of OOIDA 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 Eleventh Circuit ruling will help render this practice meaningless," said Johnston.

The case before the Eleventh 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 Eleventh Circuit held that the collective bargaining agreement "did not clearly and unmistakably waive a right to obtain judicial enforcement of a federal law."

The action in this case is consistent with rulings obtained by OOIDA in several other federal courts against large motor carriers such as Landstar and C.R. England. In those cases, similar motions to compel arbitration were dismissed.

This ruling clears the way for OOIDA and its members to prosecute their claims against Allied Holdings in the federal district court in Atlanta.

OOIDA and two of its owner-operator members will ask the trial court to certify a class including all drivers who signed one of the offending leases with Allied Holdings or its subsidiaries. The truckers 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.