SPECIAL REPORT: Truckers make headway in four major OOIDA lawsuits

| 4/16/2004

Court continues to rule in OOIDA’s favor in Arctic case; settlement agreement near

The District Court for the Southern District of Ohio has issued additional favorable rulings in OOIDA’s class-action lawsuit against Arctic Express. By an order dated March 15, 2004, Judge Algenon Marbley clarified certain of his prior rulings governing the calculation of damages to be awarded to the class resulting from Arctic’s violation of the escrow provisions of the truth-in-leasing regulations. The court reaffirmed its dismissal of alleged debts unrelated to maintenance claimed by Arctic against class members. Judge Marbley also ruled that Arctic could not assert claims for those debts as an offset to amounts in maintenance escrow that each class member is entitled to recover from Arctic.

The court found in OOIDA’s favor on the methodology to be used in calculating the net balance in escrows to be returned. Judge Marbley rejected the further introduction by Arctic of evidence as to each individual’s maintenance account. A uniform method of calculating damages based upon Arctic’s records will be used, with any uncertainty resulting from Arctic’s failure to keep its records as required by the regulations to be resolved in favor of the class.

At press time, Arctic and OOIDA were discussing settlement, and it appears an agreement may be near.

Allied Holdings motion to compel arbitration denied

On March 11, 2004, U.S. District Judge Charles A. Pannell Jr. (the Northern District of Georgia) denied a motion by Allied Holdings to dismiss the case brought against it by OOIDA and compel arbitration. In making his ruling, Judge Pannell determined the arbitration provisions contained in Allied’s owner-operator leases cannot be enforced under the Federal Arbitration Act as the lease agreements entered in between truck drivers and motor carriers merely set out the terms of the relationship as established by federal regulations. Judge Pannell reiterated opinions from other courts that the contractual relationship of a lease agreement between a carrier and owner-operator constitutes an employment contract of a transportation worker. Transportation workers are expressly exempt from coverage of the FAA.

The denial of Allied’s motion is consistent now with rulings obtained by OOIDA in several other federal courts against other carriers such as Landstar and C.R. England. Allied has appealed Judge Pannell’s ruling to the Eleventh Circuit Court of Appeals in Atlanta.

Distribution of Intrenet settlement begins

The U.S. Bankruptcy Court has approved the final settlement and settlement distribution plan to return escrow accounts to owner-operators leased to the four motor carriers within Intrenet Inc. when it ceased operation on Jan. 2, 2001, and declared bankruptcy. Responding to calls from members, OOIDA had intervened on behalf of more than 1,000 owner-operators leased to Roadrunner Distribution, Roadrunner Trucking, Advanced Distribution System and Eck Miller Transportation who had been terminated as of that date without the return of their escrow.

OOIDA had also included Huntington National Bank in its court action and was successful in keeping the escrow accounts held by the defendants at the time of the bankruptcy separate from the bankruptcy estate. As part of the settlement, Huntington National Bank has now funded the settlement account and distribution of the funds has begun.

Appeals Court upholds OOIDA position in workers’ comp case against New Prime Inc.

The Missouri Court of Appeals has held that New Prime Inc. would have to defend itself against a civil class-action lawsuit brought by OOIDA charging that it wrongfully required certain drivers to purchase workers’ compensation insurance from it. On March 29, 2004, the Court of Appeals rejected arguments by New Prime Inc. that certain owner-operator drivers fell outside the statutory definition of employee and that an individual’s exclusive remedy was before Missouri’s Division of Workers’ Compensation, not the courts.

OOIDA, along with member Jeffrey Warta, had filed a class-action suit in Missouri Circuit Court against the Springfield, MO, motor carrier in January 2003 on behalf of individual owner-operators. Prime is alleged to have violated Missouri law by engaging in a scheme by which it deducted workers’ compensation premiums from Warta and other similarly situated drivers. At the same time, Prime considered itself the employer of Warta and other drivers when a workers’ compensation claim was made. The suit also alleges that Robert and Lawana Lowe and Vera Lowe, the owners of New Prime Inc., exercised a level of control over New Prime Inc. to make them personally liable for the wrongful acts of the corporation.

The central issue of the appeal dealt with whether Warta fell within the statutory definition of employee. That definition specifically exempts a driver who owns and operates a truck from the definition of employee.

Plaintiff Warta, however, leased a truck from Success Leasing Inc. (also owned by members of the Lowe family) under a contract that specifically provided that Warta acquired no ownership interest in the truck during the term of the lease. Under Missouri law, an employee for purposes of workers’ compensation includes owner-operators who lease their vehicles under a lease-purchase agreement but who have no ownership interest in the equipment. At the same time, Missouri’s workers’ compensation law prohibits an employer from charging an employee for workers’ compensation coverage.

The Appeals Court reasoned since Warta was not the owner of the truck leased to New Prime Inc., he did not fall within the exception to the statutory definition of employee.

Commenting on this current court action against Prime, OOIDA President Jim Johnston said, “Carriers simply cannot expect to get all of the protections of limited liability available to employers under the law and then turn around and charge employees for premiums.”