In a prelude to a trial that will see OOIDA argue that truckers are owed $42 million-plus, a federal judge ruled Landstar System violated federal leasing regs with undocumented markups on chargebacks such as tires and base plates.
U.S. District Judge Henry Lee Adams Jr. entered the ruling Oct. 6 in a class-action case filed by OOIDA on behalf of more than 27,000 owner-operators currently and formerly leased to Landstar and its operating companies Ranger, Ligon and Inway.
Although the case must still go to trial to determine the actual amount of money due to the truckers, OOIDA leaders said Adams' ruling is very good news.
"The days of secret, undocumented profits are coming to an end following these rulings," said Jim Johnston, president and CEO of the Owner-Operator Independent Drivers Association.
Having argued against Landstar's request that the judge throw out the truckers' case, OOIDA's General Counsel Paul Cullen Sr. said that the judge's ruling - as well as a similar ruling this fall from a federal judge in Utah in OOIDA's case against carrier C.R. England - will go far to put truckers back in the driver's seat when it comes to their compensation.
Cullen said the rulings mean that motor carriers can only earn profits on chargeback items if they document those profits, or markups, and make that documentation available to drivers.
OOIDA filed the case in November 2002 in U.S. District Court in Jacksonville, FL, and asked that it include all owner-operators leased to Landstar beginning Nov. 1, 1998, and continuing through the resolution of the lawsuit. The court granted that class status, and OOIDA's legal team from The Cullen Law Firm in Washington, DC, has reviewed more than 1 million documents in preparation for the trial, which is expected to be in early 2007.
The judge's rulings this fall came in response to "cross motions for summary judgment." Those motions basically had Landstar arguing that there were no legal grounds to take the case to trial and the truckers' attorneys arguing that there was no legal doubt that the carrier's leases and actions were in violation of federal regs.
In addition to ruling that Landstar violated federal truth-in-leasing regulations by not documenting markups on chargeback items, Judge Adams firmly rejected Landstar's "substantial compliance" defense.
"Landstar had taken the position that it need not make disclosures in its written lease agreement so long as it made disclosures outside of the agreement," Cullen said. "The court rejected Landstar's argument and sided with OOIDA and the truckers, holding that the regulations called for strict compliance in a motor carrier's written lease agreement."
On another point, the judge did not rule in favor of the truckers, but neither did he rule in favor of Landstar.
"OOIDA's position is that the Landstar leases did not identify all the reductions to adjusted gross revenue made before Landstar calculated the driver's percentage share of the revenue," Cullen said. "While the court did not affirmatively grant summary judgment to OOIDA on this claim, neither did it award summary judgment to Landstar. Thus, the question of whether Landstar's conduct in calculating driver compensation was lawful appears to be an issue for trial."
OOIDA's leaders were not disheartened by the judge's decision.
"While the court chose to disagree with some points in our original complaint, we are satisfied that the core items of documentation of all chargebacks and strict compliance to the regulations were affirmed," Johnston said.
The truckers' attorneys estimate that monetary damages related to the chargeback claims that the judge's October ruling addressed are more than $42.7 million. Damages for items not yet ruled on are estimated to be an additional $5.5 million.
- By Coral Beach, staff editor
coral_beach@landlinemag.com
