Jan. 8, 2002, Grain Valley, MO - The Owner-Operator Independent Drivers Association (OOIDA) has responded to Burlington Motor Carrier's bankruptcy in the face of the legal action brought by OOIDA. On Dec. 11, OOIDA and two of its members, Brian McGrath and Arthur Shaw filed an adversary proceeding in the U.S. Bankruptcy Court (Southern District of Indiana). This complaint was followed by a separate motion filed Dec. 19 to intervene generally in the bankruptcy proceedings of the Daleville, IN, motor carrier.
Burlington had filed for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code on July 9, only months after OOIDA filed a complaint in U.S. District Court in Indiana, claiming violations of the federal truth-in-leasing regulations. With the administrative dismissal of that suit under the bankruptcy protection, OOIDA chose to pursue its original complaints in the bankruptcy court.
OOIDA's lawsuit alleges that despite Burlington's agreement and obligation to charge back premiums for insurance coverage purchased through the company, it was violating federal truth-in-leasing regulations by deducting amounts from owner-operator compensation substantially in excess of the actual premiums.
The complaint also alleges that insurance information was not properly supplied by Burlington when requested, which is also a violation of the leasing regulations.
OOIDA and its members are seeking a court-ordered end to those non-disclosure and overcharge practices plus treble and punitive damages for conversion (including criminal conversion) and fraud. The suit filed in the bankruptcy court is also demanding a jury trial and certification of the class of owner-operators who had similar lease agreements with Burlington.
"We have no intention of walking away from these types of actions simply because a carrier hides behind bankruptcy laws," says OOIDA President Jim Johnston. "These are serious abuses of the federal leasing regulations at the expense of owner-operators and we are determined to pursue companies who engage in these unlawful business practices."
Burlington continues to operate nearly 2,000 power units and 5,000 trailers throughout North America. It has an extensive presence in Mexico with offices in Monterrey and Mexico City supported by a full operations facility in Laredo, TX. In addition to its longhaul fleet, Burlington also provides regional services through fleets based in Atlanta and Chicago. The company was ranked 18 in revenues among the top 20 largest truckload van carriers in the United States in 2000.
On Dec. 6, Thomas F. Grojean, Sr. chairman and CEO, and Terry A. Wallace, president and COO of Burlington announced that senior executives of the company intended to purchase certain assets and substantially all of Burlington's business.
"We had always planned to proceed with our complaint, despite Burlington's bankruptcy," said Johnston, "but when we became aware that Tom Grojean and his associates were going to try to buy up Burlington assets and business, we immediately filed the adversary proceeding and the motion to intervene. We want to make the seriousness of our intentions very clear."
The Grojean name is well-known in the trucking industry due to the Grojean family's numerous and diverse involvements. Grojean operates several motor carrier companies, doing business as Grojean Transportation Inc., headquartered in West St. Paul, MN. The group includes Greenfield Transport, TMG Express, Hirschbach Motor Lines, Van-Pak and Schanno. Burlington is not a part of that group.
Johnston went on to add, "Based on the allegations in the Burlington case and Grojean's business and family connections to these companies, it might be prudent for owner-operators participating in any of these companies' sponsored insurance programs to request insurance documentation supporting the premiums charged for any coverage purchased."
If you are a current or former Burlington owner-operator, or you have questions or information about this case, call OOIDA's business services department at (800) 444-5791.