Wednesday, Sept. 3, 2008 – A ruling issued today is being hailed by OOIDA as a significant win in the battle between the interests of big business and individuals.

In ruling that the trial court judge made mistakes in handling an OOIDA case against mega-carrier Landstar System Inc., a three-judge panel of the U.S. Court of Appeals for the 11th Circuit made the strongest statement to date about how motor carriers are required to do business with leased owner-operators.

At issue in the case are undisclosed chargebacks and markups that Landstar made against its owner-operators’ pay. The Owner-Operator Independent Drivers Association has long contended that federal leasing regulations require motor carriers to disclose all such charges, and provide documentation about how such charges are figured.

“This ruling certainly affirmed everything that we needed affirmed in the leasing rules and overturned many of what we considered to be erroneous decisions by the lower court,” said Jim Johnston, OOIDA president and CEO.

“The important thing here is that the owner-operator be fully informed of what the costs and fees are that a carrier is going to charge. Then you can make your decision based on having all of the information.”

As of midday Wednesday, Johnston and other OOIDA leaders were reviewing the ruling with the Association’s legal team. To read the ruling, click here. Specifically, the ruling states that carriers are not in compliance with the federal regs if their leases with owner-operators do not provide computation of how chargebacks are calculated and the documentation necessary to confirm those calculations.

“This is a landmark ruling in which the Court of Appeals has upheld the rights of truckers to obtain complete, transparent and truthful disclosures from carriers regarding how their compensation – and deductions from that compensation – are calculated,” said Dan Cohen, one of the attorneys with The Cullen Law Firm, which is handling the case for OOIDA.

“The decision, coming from one of the highest courts in the country short of the Supreme Court, unconditionally endorses the standards we have advocated in this and many other cases on behalf of OOIDA’s members.”

Both Cohen and Johnston said that they are confident that the appeals judges’ ruling will put motor carriers on notice that they can no longer make their profits in the shadows and at the unknowing expense of individual owner-operators.

“This ruling sends out a clear message to all carriers that they must strictly comply with the regulations, or they will be subject to liability for any violations,” said Cohen.

Although the ruling had many positives in the truckers’ column, there was a downside. The appeals judges upheld part of the lower court’s rulings and said that the carrier is not required to reimburse owner-operators for undisclosed deductions it made against drivers’ settlement sheets.

“We had sought reimbursement to the truckers of the profits Landstar made from its undisclosed markups, and the court ruled that was not an option,” Johnston said.

“We disagree because that is contrary to some other rulings in that same circuit.”

OOIDA leaders are considering whether to ask for a “rehearing” of that aspect of the appeals panel ruling. The truckers could request that the same three-judge panel rehear parts of the appeal, or they could request that all 15 judges on the 11th Circuit’s Appeals Court rehear parts of the arguments.

Johnston said it is particularly important that the restitution and disgorgement issue be resolved because of the deterrent potential it has in terms of carriers’ behavior.

“We’re very pleased that the court upheld the leasing regs and the fact that Landstar was clearly violating those regulations,” said Johnston. “We are looking at going back and asking for a rehearing on restitution and disgorgement. If the court will reconsider that, then the whole issue of reimbursement would be back on the table, as well as the possibility of reinstituting the class action.”

One reason that Johnston thinks it is important to continue to pursue the Landstar case is because the court has ruled that they were in violation of the regs by not disclosing markups and chargebacks.

“If the only remedy is an injunction, which basically means the court says ‘hey guys, don’t do that again,’ then there is no deterrent for other carriers to not violate the regs,” Johnston said.

“We feel if they didn’t disclose the charges then they should have to reimburse the owner-operators what they charged them. That would be a deterrent for other carriers.”

OOIDA originally filed the case against Landstar and its operating companies in November of 2002.

– By Coral Beach, staff editor
coral_beach@landlinemag.com