U.S. District Court issues ruling against Arctic Express Inc. in cases brought by OOIDA

| 9/5/2001

Sept. 4, 2001, Grain Valley, MO -- A U.S. District Judge has issued his written opinion granting summary judgment to the Owner-Operator Independent Drivers Association (OOIDA) in its lawsuit against Arctic Express Inc.

OOIDA, with members Carl Harp, Garvin Keith Roberts and Michael Wiese had filed suit against Arctic Express Inc. of Hilliard, OH and its affiliate truck leasing company, D & A Associates LTD, claiming violations of the federal truth-in-leasing regulations for their failure to return escrow accounts after the termination of the owner-operators' leases. Among the key issues being challenged by OOIDA were clauses in the lease/purchase agreements stipulating conditions under which the escrow accounts would be forfeited by the owner-operators.

In making his summary judgment, U.S. District Court Judge Algenon L. Marbley (for the Southern District of Ohio, Eastern Division) has found in OOIDA's favor on the merits of the case on both matters of law and matters of fact.

Referring to the companies in his strongly worded opinion, Judge Marbley wrote "...this Court concludes that the Lease Agreement and Lease/Purchase Option are in violation of §376.12(k). The Defendants here did not substantially comply, nor did they slightly comply. Arctic, behind the shield of an affiliated company, D & A, absconded with the Plaintiff's escrow funds. Following the ICC's guidance, this Court will not let pass 'abuses or the potential for abuse occasioned by collusion between a carrier and the third party beneficiary of an equipment purchase deduction.' "

In addressing the specific "conditions" for the return of escrow accounts contained in the carrier's lease agreements, Judge Marbley concluded that evidence showed that the maintenance fund to which the owner-operators had been contributing was being considered by the companies as "a general fund to satisfy any obligation incurred by the members, which is in violation of the letter and spirit of the Regulations." Judge Marbley went on to add, "In its final analysis, the Court concludes that the adoption of the Defendants' argument that they have satisfied §376.12(k) by describing the "conditions" for the return of escrow funds could lead to absurd results."

"This ruling is one of the most important court opinions that we have obtained to date in challenging the abuses of carriers who disregard or manipulate the federal leasing regulations out of personal or corporate greed," said OOIDA President Jim Johnston. "Judge Marbley's language in this opinion makes the point very clearly on behalf of owner-operators that the court recognizes their rights under both the letter and the purpose of the truth-in-leasing regulations."

Johnston added, "This court ruling establishes a huge precedent under which OOIDA and its members can even more aggressively pursue the many other carriers who are taking advantage of owner-operators through lease agreements that violate federal law."