Owner-Operator Independent Drivers Ass'n v. Landstar System, Inc.

541 F.3d 1278, 2008 U.S. App. LEXIS 18803, 2008 WL 4058042
CourtCourt of Appeals for the Eleventh Circuit
DecidedSeptember 3, 2008
DocketNo. 07-11866
StatusPublished
Cited by14 cases

This text of 541 F.3d 1278 (Owner-Operator Independent Drivers Ass'n v. Landstar System, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Owner-Operator Independent Drivers Ass'n v. Landstar System, Inc., 541 F.3d 1278, 2008 U.S. App. LEXIS 18803, 2008 WL 4058042 (11th Cir. 2008).

Opinion

ALARCÓN, Circuit Judge:

The Owner-Operator Independent Drivers Association, et al., (“Owner-Operators”) represents truck owners and truck drivers who enter into lease agreements to provide equipment and services to haul freight in interstate commerce for Lands-tar System, Inc., et al., (“Landstar”) a motor carrier. The Owner-Operators have appealed from the judgment entered against them rejecting their claims that Landstar violated 49 C.F.R. § 376.12(d) and (h), provisions of the Truth-in-Leasing regulations, 49 C.F.R. § 376.1 et seq., by failing to disclose in their lease agreements that banking fee charges would be deducted from compensation paid to the truck owners and drivers, and by failing to provide documentation regarding the computation of charge-back items including pricing information submitted by Qual-comm Incorporated (“Qualcomm”). The Owner-Operators also seek reversal of the District Court’s ruling that they are not entitled to restitution or disgorgement.

We vacate the judgment because we conclude that the District Court erred in finding that Landstar was not required to disclose banking fee charges and document charge-back items. We also hold that the District Court erred in granting an injunction sealing the pricing information Qual-comm provided to Landstar.

I

A

The District Court granted in part, and denied in part, the parties’ cross-motions for summary judgment as to the issue of liability. The facts set forth in the parties’ oppositions demonstrate that Landstar is a motor carrier that hauls freight in interstate commerce under the authority of the United States Department of Transportation (“DOT”). The individuals who drive trucks under the Landstar name are represented in this case by the Owner-Operators who are independent truck owners and truck drivers who lease their equipment and driving services to Landstar. Landstar compensates the Owner-Operators by giving them a specific percentage of the revenue on the hauled freight.

As a DOT-authorized motor carrier, Landstar is required to enter into written leases with the Owner-Operators.1 As part of the written lease agreement, [1282]*1282Landstar charges the Owner-Operators fees. For example, the record shows that Landstar is required to use “Powertrack” for military loads. Powertrack is an electronic billing and payment system at U.S. Bank. U.S. Bank charges Landstar a payment processing fee to use the Powertrack system. Landstar charges the Owner-Operators for this fee, but nowhere in the lease is this specific banking charge listed. Rather, the lease provides that the Owner-Operators’ compensation is subject to adjustment due to fees owed to “third parties.” Lease, Appendix A, ¶ (a)(2).

Landstar also offers programs to the Owner-Operators so that they have the opportunity to purchase products and services they need to run their businesses. For example, Landstar’s programs include the “LCAPP Tire Program”2 under which the Owner-Operators can opt to purchase tires for their tractors or trailers from Landstar. Landstar charges the Owner-Operators an administrative fee for processing the purchase.

Landstar also offers the Owner-Operators an opportunity to purchase Qual-comm’s services. Qualcomm, Landstar’s third-party vendor, has a written agreement with Landstar under which it provides satellite communication and equipment services to the Owner-Operators. Qualcomm negotiated the terms of its agreements with Landstar. As part of those negotiations, Qualcomm required that Landstar keep confidential the terms of its agreement with Qualcomm, including pricing. Landstar charges a flat-fee to the Owner-Operators who opt to use Qual-comm’s services, but Landstar does not disclose the amount it pays to Qualcomm for the services.

The Owner-Operators may voluntarily purchase the LCAPP Tire Program and Qualcomm’s services from Landstar through pre-compensation advances. These advance and subsequent deductions from the revenue are referred to as “charge-backs.” Landstar repays the advances when the Owner-Operators’ compensation is settled. Landstar settles with the Owner-Operators by providing written descriptions of the revenue earned and the charge-backs on weekly “settlement statements,” which the parties reference as a receipt similar to a “pay slip.” The settlement statements list the amount the Owner-Operators paid for the charge-backs. The settlement statements do not show how the charge-back items were computed, how much Landstar marks-up the charge-back item, or how much profit Landstar makes from the charge-backs.

B

The Owner-Operators brought a class action lawsuit against Landstar alleging that the leases violate § 376.12(d)3 and (h)4 [1283]*1283of the Truth-in-Leasing regulations because Landstar did not disclose reductions for fees, like Powertrack, before calculating the Owner-Operators’ compensation, and failed to disclose or document markups and profits made on charge-back items. In the complaint, the Owner-Operators alleged that the leases (1) violate § 376.12(d) because it “contained nothing regarding Landstar’s practice of reducing shipping revenues before calculating [the Owner-Operators’] compensation,” and (2) violate § 376.12(h) because the lease “failed to clearly specify that charge-backs included mark-ups for profits and fees and failed to disclose how the charge-backs were computed.” Qualcomm filed a motion to intervene when it discovered that Landstar intended to disclose Qualcomm’s confidential pricing information. The District Court granted the motion.

After the complaint was filed, Landstar executed a new lease (the “New Lease”), which purported to correct certain violations in the original lease (the “Original Lease”). The Owner-Operators subsequently filed an amended complaint. In the amended complaint, the Owner-Operators alleged that the New Lease violated § 376.12(d) because, although the New Lease discloses “Landstar’s practice of understating shipping revenues,” it “fails to provide the amount of the reductions or the method by which they are implemented.” The Owner-Operators also alleged that the New Lease violated § 376.12(h) because it “fails to disclose how charge-back items are computed.”

Pursuant to 49 U.S.C. § 14704(a)(2),5 the Owner-Operators sought damages and equitable relief, including restitution, disgorgement of Landstar’s profits, and in-junctive relief.

Landstar moved to dismiss the complaint on the ground that the statute of limitations had run. Landstar argued that the Owner-Operators’ claims were governed by a two-year statute of limitations as opposed to the four-year statute asserted by the Owner-Operators. On June 4, 2004, the District Court ruled in favor of the Owner-Operators finding that the four-year statute of limitations applied to the Owner-Operators’ claims.6

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Cite This Page — Counsel Stack

Bluebook (online)
541 F.3d 1278, 2008 U.S. App. LEXIS 18803, 2008 WL 4058042, Counsel Stack Legal Research, https://law.counselstack.com/opinion/owner-operator-independent-drivers-assn-v-landstar-system-inc-ca11-2008.