Kelchner v. CRST Expedited, Inc

District Court, N.D. Iowa·Decided April 2, 2025·No. 1:24-cv-00082·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION HARLEY KELCHNER, an individual, No. 24-CV-82-CJW-KEM individually and on behalf of all others similarly situated, Plaintiff, vs. MEMORANDUM OPINION AND ORDER CRST EXPEDITED, INC., CRST

SPECIALIZED TRANSPORTATION, INC., CRST LINCOLN SALES, INC., and JOHN SMITH, an individual, Defendants.

_________________________ The matter before the Court is a motion filed by defendant CRST Specialized Transportation, Inc. (“Specialized”). (Doc. 56). Specialized requests that the Court certify its order denying Specialized’s motion to dismiss (Doc. 53) for interlocutory appeal to the Eighth Circuit Court of Appeals, or, alternatively, that the Court certify a question to the Iowa Supreme Court. (Doc. 56). Plaintiff filed a resistance. (Doc. 57). Specialized filed a reply. (Doc. 58). For the following reasons, Specialized’s motion to certify an interlocutory appeal is denied, but its motion to alternatively certify a question to the Iowa Supreme Court is granted. I. FACTUAL BACKGROUND1 Specialized is a transportation company which delivers goods throughout the United States, specializing in high-volume freight and logistics. (Doc. 28-2, at 1–2). Plaintiff is an independent contractor driver who was, and apparently still is, under contract with Specialized. (Id., at 3). Defendant CRST Lincoln Sales, Inc. (“Lincoln Sales”) is a “sister company” of Specialized. (Id.). Approximately sixty percent of Specialized’s new contractors, including plaintiff, lease their equipment from Lincoln Sales. (Id., at 3–4). Defendant CRST Expedited, Inc. (“Expedited”) is another sister company of Specialized. (Id., at 2). Defendant John Smith is chairman of the board and partial owner of CRST International Holding Company, Inc., which is the parent company of Specialized, Lincoln Sales, and Expedited. (Docs. 28-4, at 1; 34, at 1–2). Lincoln Sales and Expedited are both incorporated in Iowa and have their principal place of business in Iowa. (Doc. 1, at 3). Smith is an Iowa resident. (Id., at 4). Specialized is incorporated in Indiana and has its principal place of business in Indiana. (Docs. 1, at 3; 28-2, at 1; 33, at 1). Specialized has been registered to do business in Iowa as a foreign corporation since 2020. (Docs. 40-6 & 40-9). According to its affidavits, Specialized employs its own personnel, including its leadership team, dispatchers, and other operational and support staff—all of whom live and work in the greater Fort Wayne, Indiana area. (Doc. 28-2, at 2). Specialized also employs individuals in various other states—Maryland, Illinois, Ohio, and California—but none in Iowa. (Id.). Specialized states that it “does not have a physical presence in Iowa.” (Id.). Specialized also states that, although Expedited is its “sister company,” the two

1 The facts are generally taken from plaintiff’s complaint. (Doc. 1). Additional facts are taken from affidavits and exhibits submitted by the parties. companies each have their own operating authority, personnel, headquarters, and customers. (Docs. 28-2, at 2; 28-3, at 2). Plaintiff’s complaint paints a slightly different picture than Specialized’s affidavits on several of these topics. Plaintiff alleges that the various defendants have an “interrelated network” with “common ownership, control, officers, directors, members, managers, office locations, customer databases, and mailing addresses.” (Doc. 1, at 4). Plaintiff further alleges that the corporate defendants co-mingle funds, share methods to identify potential drivers, have common marketing and recruiting staffs, share a billing department, and have a common dispatch and customer service staff. (Id.). For example, one of the attachments to plaintiff’s complaint is an allegedly deceptive advertisement which Expedited allegedly published online on behalf of Specialized. (Docs. 1, at 5; 1- 1). Plaintiff also alleges that defendants have a common website which advertises the lease purchase program, and specifically refers to Specialized as a “division” of CRST. (Doc. 1, at 7–9). The three CRST defendants all apparently share the same CEO, President, secretary, and treasurer. (Docs. 40-8 & 40-13).2 The three CRST defendants also share the same registered agent in Des Moines, upon whom plaintiff served this lawsuit at the same time for each of the three companies. (See Docs. 4, 5, & 6). Specialized does not have any employee drivers; instead, it contracts with independent contractor drivers. (Doc. 28-2, at 2). New contractors attend a week-long “onboarding program” at Specialized’s headquarters in Fort Wayne before driving under Specialized’s name. (Id.). During the onboarding program, the contractors sign their contracts, and, if the contractor elects to lease their equipment through Lincoln Sales,

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