Attorneys for OOIDA and Landstar System Inc. faced off Wednesday, Jan. 16 in federal appeals court in a multimillion-dollar case that could send ripples through the industry in terms of how carriers’ leases disclose markups and chargebacks against owner-operators.

The case has been in the works since November 2002, and leaders with the Owner-Operator Independent Drivers Association are confident that the oral arguments this week will lead to a favorable decision for truckers.

The approach the appeals court has taken with the case is just one reason behind that confidence, according to Dan Cohen, one of the attorneys on OOIDA’s legal team.

“We are pleased with the speed at which the case has progressed on appeal. I’ve been practicing 22 years, and I’ve never seen oral arguments scheduled so quickly,” Cohen said in early November 2007.

Another reason behind the confidence is the very reason the truckers are appealing, Cohen said.

“We’re going to argue to the Court of Appeals that we did win on summary judgment,” Cohen said, referring to the trial judge having reversed his own ruling. “He can’t reconcile his summary judgment ruling with his post-trial ruling.”

Another self-reversal on the part of Judge Henry Lee Adams Jr. is at issue in the appeal. In August 2005 the judge granted OOIDA’s request that the case be certified as a class action with more than 26,000 drivers in the class of plaintiffs.

A year ago, on the opening day of the trial in January 2007, Adams announced from the bench that he was decertifying the class and that the trial would move forward with only a handful of individually named truckers as plaintiffs. He also severely limited the scope of the trial.

“He basically cut one of our legs off before the race,” said Jim Johnston, OOIDA president and CEO.

During the course of the three-day trial in his Jacksonville, FL, courtroom, Adams made several contradictory rulings from the bench and ultimately denied the truckers any relief for Landstar’s violations. The judge did not file written versions of the rulings until two and a half months later.

His ultimate ruling was in contradiction to a pretrial order he issued in the fall of 2006 that granted summary judgment to the class as to Landstar’s liability. At that time, Adams ruled that Landstar had violated federal law by failing to provide documents that would allow drivers to determine the validity of chargebacks.

In addition to the actions of the trial judge and the quick response of the appeals court, Cohen said there is another factor working in the truckers’ favor: Landstar’s defense.

“Landstar has a very shallow legal argument that is premised on its own self-serving characterization that we are trying to impose price controls,” Cohen said. “This is nothing more than a theatrical maneuver which Landstar apparently hopes will distract the appellate court from addressing the fundamental legal issues. We are confident it won’t fly.”

In reality, the carrier’s attempt to manipulate prices charged against its leased owner-operators is the reason OOIDA and truckers filed the lawsuit.

The case against Landstar and its operating companies Inway, Ranger and Ligon, contends that the carrier violated federal truth-in-leasing law by making undisclosed markups and chargebacks against owner-operators’ compensation.

“The truth-in-leasing regs were put in place to cure the very real problem of motor carriers using their greater economic position to take advantage of the weaker position of owner-operators,” said OOIDA’s Johnston.

“The case against Landstar, in our opinion, cuts to the very heart of those principles.”

OOIDA’s legal team has calculated that, since 1998, Landstar and its operating companies charged back $37 million more against owner-operators settlements than it paid outside suppliers for various items.

“If allowed to stand, the Jacksonville federal court’s ruling would leave drivers defenseless against chargeback violations by large carriers, said Jim Johnston, OOIDA president and CEO. “Under this interpretation the regulations are completely useless in protecting drivers from improper chargebacks by motor carriers.

“This certainly is not what Congress or the Interstate Commerce Commission intended when the regulations were adopted years ago. I have every confidence that the Court of Appeals will correct these errors.”

– By Coral Beach, staff editor
coral_beach@landlinemag.com