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."
