UPDATE: Progressive decision from judge in OOIDA v. C.R. England

| 6/12/2009

The latest move by a Utah judge has served a Salt Lake City mega-carrier a taste of its own medicine. The “ugh!” could be heard all the way to OOIDA’s Missouri headquarters. A new development in a class-action lawsuit destined to be remembered as one the greatest legal battles to uphold truth-in-leasing regulations asks C.R. England Inc., “How does it taste?”

In the case of OOIDA et al. v. C.R. England Inc., a federal judge in Utah ruled two years ago that the lease agreement C.R. England used with its owner-operators from the year 1998 through the summer of 2002 violated federal regulations in several respects, including by failing to specify markups on charge-back items and by forcing owner-operators to purchase administrative services from the carrier.

Judge Ted Stewart also held that C.R. England’s lease violated the escrow provisions of the leasing regulations, and specifically found that the motor carrier had improperly managed thousands of truckers’ escrow accounts.

The court ruled that the motor carrier must provide an accounting of what happened to those funds. In October 2008, Judge Stewart held that individual class members would be entitled to restitution, along with “payment of reasonable interest,” if they had positive escrow balances after consideration of any allowed setoffs. The judge then referred the case to Magistrate Judge David Nuffer to oversee the disposition of individual class members’ escrow claims.

One of the big issues facing the magistrate judge is exactly how much that rate of interest should be. OOIDA suggested that Utah’s statutory legal interest rate of 10 percent be used. C.R. England argued that the 91-day Treasury bill rate should apply.

The magistrate judge used neither in his final decision. Judge Nuffer cited a paragraph included in a number of the motor carrier’s own leases that use an 18 percent annual “finance charge” on balances overdue in the event that either party to the lease (the driver and C.R. England) defaulted on any amount due. Judge Nuffer ruled that class members who did not enter into leases containing an 18-percent default interest rate are entitled to the regulatory interest rate, or 91-day Treasury bill rate.

Those whose leases did contain the 18-percent default rate are entitled to restitution at the rate of 18 percent, or 1.5 percent per month, on escrow funds.

According to a court order filed in late May, C.R. England asserted that the 18 percent rate was “not reasonable.”

But what is good for the goose is good for the gander is proverbial jurisprudence that has not gone out of style in Utah. Judge Nuffer wrote that “the Defendant should not be permitted to argue that its own form contract is unreasonable when that rate is applied to the Defendant.”

“Our analysis indicates that class members who leased on with C.R. England between 2000 and the summer of 2002 signed contracts containing the 18 percent default rate,” said David A. Cohen of The Cullen Law Firm, OOIDA’s litigation counsel. “To the extent these drivers have positive escrow balances they will be entitled to 18 percent interest on their unreturned escrow funds.”

Cohen cautioned, however, that C.R. England has indicated that it intends to appeal the magistrate judge’s ruling to Judge Stewart.

The appeal will be filed the week of June 15, and Judge Stewart is likely to issue a ruling later this summer. OOIDA President and CEO Jim Johnston said the Association will vigorously oppose any attempt by C.R. England to overturn the magistrate judge’s ruling that the company must pay 18 percent interest on improperly retained owner-operator escrow funds.

Johnston said that Judge Nuffer has issued an aggressive schedule on wrapping up the case, including a status report due in October 2009.

– By Sandi Soendker, managing editor