Monday, November 4, 2002

OOIDA's Board approves class action suit against Landstar System Inc.

Nov. 1, 2002, Grain Valley, MO - Today the board of directors of the Owner-Operator Independent Drivers Association, Inc. (OOIDA) approved the filing of a lawsuit against Landstar System Inc. and its operating companies: Landstar Express America Inc., Landstar Gemini Inc., Landstar Inway Inc., Landstar Ligon Inc., Landstar Logistics Inc. and Landstar Ranger Inc.

Joining OOIDA in the suit are OOIDA members and current and former Landstar truckers, G.L. Brewer, William D. Cunningham, Gerald E. Eidam, Jr., Carey R. Laue, James E. Michael, Robert Penman and James E. Schmidt. The class action suit charges Landstar has been violating the federal truth-in-leasing regulations in three different ways.

First, OOIDA is seeking refunds of alleged overcharges for fuel Landstar buys from truckstops when owner-operators use their Comdata-issued fuel card. The OOIDA suit alleges Landstar obtains a significant discount on those transactions and only passes on a portion of that discount to the drivers. The suit also alleges that Landstar imposes excessive chargebacks for fees charged to them by Comdata. OOIDA is also seeking refunds of alleged overcharges for base plates and permits that the company obtains on behalf of owner-operators.

Finally, OOIDA is seeking refunds of chargebacks to or reductions from compensation for costs charged by U.S. Bank on Department of Defense shipments. The Department of Defense requires all motor carriers hauling its shipments to obtain the payment through U.S. Bank's Power Track payment system. The complaint alleges Landstar reduces the rated freight bill by two percent for this cost before it calculates owner-operators' compensation even though it is charged only one percent by the bank for most of these transactions. Since these deductions are not shown on owner-operator settlement sheets nor mentioned in owner-operator leases, OOIDA believes they are fully recoverable as undisclosed chargebacks or undisclosed reductions in compensation under the truth-in-leasing regulations.

Landstar and its companies have operating agreements with over 8,000 owner-operators.

Landstar's share price fell recently on word from its Chief Executive, Jeff Crowe, that the company was having difficulty recruiting and retaining owner-operators. Jim Johnston, president of OOIDA, says "We believe the difficulties carriers claim to have in recruiting drivers are more a result of the discriminatory treatment owner-operators are subjected to by these companies. Business practices that unfairly take advantage of owner-operators are continuing to drive increasing numbers of experienced, quality truckers out of the industry."

Commenting on OOIDA's aggressive position in the courts towards motor carriers, Johnston said "the purpose of this and other suits against motor carriers is to correct these practices and to promote greater compliance with the federal regulations. When unscrupulous companies cannot subsidize their profits at the expense of its owner-operators they will have no choice but to raise rates to profitable levels or go out of business." OOIDA is currently engaged in lawsuits with a number of major motor carriers over alleged violations of the federal leasing regulations. Among these are C.R. England, Swift, Prime, Heartland Express and Mayflower.

Founded in 1973, the Owner-Operator Independent Drivers Association (OOIDA) is comprised of more than 86,000 owner-operators, professional drivers and small business truckers from all 50 states and Canada. OOIDA represents the interest of this nation's more than 350,000 small business trucking professionals in the legislative and regulatory processes at both federal and state levels.

OOIDA goes after former Burlington executives: files class action suit over breach of fiduciary duties and misuse of escrow accounts

Nov. 1, 2002, Grain Valley, MO - For the first time, the Owner-Operator Independent Drivers Association (OOIDA) has filed an independent lawsuit against individual officers of a bankrupt carrier in an attempt to recover owner-operators' escrow funds.

On Oct. 31, OOIDA filed a class action in the Hamilton Circuit Court (Hamilton County, IN) against former Burlington Motor Carrier Inc. executives Thomas Grojean, Terry Wallace, W. Andrew Berry, Jeffery Collier and Brian Gast. Joining OOIDA in the suit are three of its owner-operator members, Tom Bays II, Richard Bolduc Jr. and Mark Neff.

Burlington filed for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code on July 9, 2001 only months after OOIDA filed a lawsuit in U.S. District Court in Indiana, claiming violations of the federal truth-in-leasing regulations. OOIDA pursued its original complaints in the bankruptcy court. However, in May 2002 the Daleville, IN, motor carrier converted the bankruptcy to a Chapter 7 proceeding and ceased operations, having used up all funds in its possession, including owner-operators' escrows.

The new suit filed against the Burlington officers alleges that the owner-operators' escrow funds held by the company were never returned to them. Furthermore, it alleges that the escrow funds were used by the company's management to cover the general obligations of the company, including their own compensation, instead of being preserved and returned after termination as required by the federal leasing regulations. In doing so, it is alleged that the officers of the company breached their fiduciary duties as trustees of those escrow funds as well as the fiduciary duties that arise where the corporation is insolvent or operating in the zone of insolvency.

OOIDA has already established in the courts that such escrow funds are held in trust and, accordingly, are not part of the bankruptcy estates of failed carriers. The class action seeks monetary relief in the form of the return of all escrow accounts and interest to all potential members of the class.

"We have said all along that we have no intention of walking away from these types of actions simply because a carrier and its management choose to hide behind bankruptcy," says OOIDA President Jim Johnston. "Where federal leasing regulations have been violated at the expense of owner-operators, we are determined to pursue those companies and, if need be, their individual corporate officers, who engage in this kind of abuse."

He added, "Corporate executives are in a position to have knowledge of, and active involvement in, such unlawful business actions. They would also know before anyone else the financial difficulties that their company is in and therefore cannot continue to recruit owner-operators and collect escrow accounts from those drivers without protecting those funds."

OOIDA member finishes Ironman Triathlon

As an over-the-road driver, OOIDA member Wid Lyman of Pelham, MA, has experienced his share of daunting moments. But on October 19, the 45-year-old trucker faced a super-sized challenge in the land of manta rays and muumuus.

He competed in the Ironman Triathlon World Championship in Kailua-Kona, Hawaii. Lyman had to draw upon previously untapped physical and mental reserves to swim 2.4 miles in the Pacific Ocean, bike 112 miles across windy lava fields, and run 26.2 miles in the heat and humidity to complete the race within the alloted 17 hours. He was joined in his quest by 1,540 athletes, ages 19-80, from around the world and 49 states. During the race, Ironman officials reported that more than 100,000 gallons of fluid replacement and 600 bottles of sunscreen were provided by the 7,000 volunteers that lined the 140.6 mile race course.

In just under fifteen hours, Lyman accomplished his goal. Also surviving the grueling day were more than 1,400 other entrants. Other finishers included 72-year-old Sister Madonna Buder, a nun from Washington state, and Governor Gary Johnson of New Mexico.

This year over 20,000 triathletes vied to participate in the Hawaii Ironman. In order to enter the race, the majority of the competitors have to earn a qualifying spot in one of the 23 qualifier races held throughout the world. A lucky 150 Americans can gain entrance via a lottery, which gives an opportunity to amateur athletes. Lyman won his spot through the lottery, but he still had to complete a half-ironman distance to validate the slot. He chose to compete in the Half Vineman Triathlon in Sonoma County, California in August of this year. Prior to the Vineman, he also successfully participated in the Greater Hartford Triathlon in Connecticut and the Pigman Triathlon in Iowa.

Land Line's December print edition will feature more about Wid Lyman and how he prepared for the competition.

The 2002 Ironman Triathlon World Championship will air on NBC on Saturday, November 23, 2002. Check your local listing for times in your area.

Mexican truck entry appears close

U.S. Trade Representative Robert Zoellick said the U.S. Department of Transportation would soon issue final regulations to allow Mexican motor carriers access to U.S. markets, press reports say.

"FMCSA has fulfilled its responsibility and is ready to open the border," said Federal Motor Carrier Safety Administration (FMCSA) Spokesman David Longo. He told Land Line Oct. 31 the agency is ready to perform safety audits, truck inspections and ensure safety compliance.

However, Transportation Secretary Norman Mineta has not yet certified it is safe to open the border, Longo said. "There's no timetable for this," he added. "We're waiting just like everyone else to hear."

Meanwhile Pedro Cerisola, the Mexican minister of transportation and communications, complained last week about U.S. discrimination against Mexican carriers. He said the United States has imposed one set of rules on Mexican trucks and another standard on U.S. and Canadian trucks.

He said Mexico would consider bringing the issue back to a NAFTA Arbitration panel. Last year, a NAFTA arbitration panel ruled that the U.S. refusal to allow access to Mexican carriers was in violation of NAFTA.

In a related development, Canadian Prime Minister Jean Chretien said he wants Mexican President Vincente Fox and U.S. President George Bush to review NAFTA next year when the agreement reaches its 10-year mark.

"It will be 10 years (since NAFTA was signed) next year and perhaps the time has come to pause and look at where we're going from next year on," Chretien said Sunday after meeting with Mexican President Vicente Fox. "So (Fox) has invited me to come and discuss that. We will certainly have a trilateral with President Bush next year."

Chretien and his Liberal party opposed the free trade agreement before they came to office in 1993. They have since backed liberalized international trade. "We all agreed we gained," Chretien said. "It's possible to do better."

Bush signs ports-to-plains bill

President Bush signed legislation Oct. 30 designating the so-called "ports-to-plains" commercial corridor that would create a four-lane highway route through Texas, New Mexico, Oklahoma and Colorado, AP reports.

The corridor runs from Laredo and Del Rio, TX, through Lamar and northward along U.S. Highway 287. Organizers hope it will eventually provide a major NAFTA-related trade route linking Mexico, the United States and Canada.

The route designation should aid state officials in getting federal funding to develop the highways. The legislation identifies two routes, since one favored route would have excluded New Mexico and the other would have left out Oklahoma.

Canada cautions U.S.-bound travelers

The Canadian government has issued a travel advisory in reaction to tough new U.S. anti-terrorism laws. The government is urging its citizens born in certain countries like Iraq and Saudi Arabia to think twice before entering the United States.

The advisory issued Monday focuses on a U.S. regulation adopted in September permitting authorities to closely monitor anyone born in certain countries suspected of terrorism links upon arrival in the United States.

Canada considers the system discriminatory because it targets citizens based on where they were born, said Reynald Doiron, a Canadian foreign-affairs department spokesman. "It's against basic principles on both sides of the border," Doiron said. "Canadian citizens should be exempted from that measure."

Syria, Iran, Iraq, Libya and Sudan are the countries listed in the U.S. National Security Entry Exit Registration System introduced on the first anniversary of the September 11 attacks. The system authorizes the U.S. Immigration and Naturalization Service to photograph, fingerprint and monitor the arrival and departure of visitors born in or citizens of those nations.

The Canadian travel advisory notes that people from Pakistan, Saudi Arabia and Yemen "could also attract special attention from American immigration and security authorities."

Canada's relationship with the United States already is under strain over a drawn out trade dispute about Canadian lumber exports, recent tensions over wheat exports and opposition to a unilateral war with Iraq.

Williams to sell travel centers

Williams announced Wednesday it has agreed to sell its 60 travel centers in 15 states to a joint venture of Pilot Corp. and Marathon Ashland Petroleum LLC. The Tulsa, OK-based company said the deal includes $190 million cash, including fuel inventory, merchandise and supplies.

Steve Malcolm, Williams' chairman, president and CEO, said, "We are executing our plan to rebuild our finances. We're continuing to optimize our cash position, reduce debt and focus on core businesses like gas pipelines, natural gas production and midstream services such as gathering and processing."

Sale proceeds will be used to retire $109.2 million of debt associated with the travel centers and for general corporate purposes, the company said.

Finally: Diesel prices decline

For the first time in 10 weeks, weekly retail on-highway diesel prices declined. According to figures released by the Energy Department Oct. 28, the national average cost of diesel dipped to $1.456 this week from last week's high of $1.469.

The highest prices nationally are in California, where the price this week is $1.549. The lowest average prices this week are in the Lower Atlantic region. Fuel there dropped to $1.407 this week from $1.427 per gallon last week.

Prices declined in all regions of the country, except in New England, where this week's price is $1.496 compared to $1.488 last week.

The remaining regions' price-per-gallon is as follows: East Coast, $1.442; Central Atlantic, $1.513; Midwest, $1.457; Gulf Coast, $1.417; Rocky Mountain, $1.509; and the West Coast, $1.524, respectively. The Department of Energy reports the average price of self-serve each week. Prices are based on a survey of 350 diesel service centers nationwide and include taxes.

TSA spending draws concern

The Transportation Security Administration (TSA) has been taken to task by critics for its spending habits, the Wall Street Journal reported.

The agency, charged with securing the nation's transportation networks, particularly its airports, has several times asked Congress and the Bush administration for more funding, but the Journal reported several expenditures that have raised eyebrows.

Among the questionable budget items was a $400,000 remodeling effort on former TSA chief John Magaw's office and a seven-week recruiting stay at Wyndham Peaks Resort and Golden Door Spa near Telluride, CO, at a cost of $147 a night, not including extra security.

Rep. Harold Rogers (R-KY), chairman of the House Transportation Appropriations Subcommittee, has complained about a "a cornucopia of wasteful spending" by the agency, the paper said.

PA creates buggy safety manual

The Pennsylvania Department of Transportation is working on a new safety manual for horse-drawn buggy drivers, in an effort to curb crashes with fast-moving vehicles on winding Amish country roads. Seven members of an Amish family were hospitalized Sunday night after the latest such accident.

The new manual will focus on common sense and courtesy, emphasizing lights and reflectors the law requires on carriages to make buggies more visible. "It's primarily going to be geared toward the Amish, giving them some tips on how to cope with much heavier, faster-moving vehicles than their buggies," said PENNDOT spokesperson Rich Kirkpatrick.

In the latest crash, an SUV plowed into an Amish family's buggy Sunday night on an unlit, two-lane bridge over the Susquehanna River near Holtwood. The collision threw the family, including five children from ages 3 to 11, from the buggy and killed the horse.

No charges reportedly have been filed against the SUV driver, Dale Baughman, who struck the buggy from behind. Baughman was not injured.

Pennsylvania had 371 horse-and-buggy accidents, killing 18 people, from 1996 to 2000. In 40 percent of the crashes, the buggy was struck from behind.