Owner-Operator Independent Drivers Ass'n v. New Prime, Inc.

213 F.R.D. 537, 2002 U.S. Dist. LEXIS 25990, 2002 WL 32054709
CourtDistrict Court, W.D. Missouri
DecidedFebruary 25, 2002
DocketNo. 97-3408-CV-S-1
StatusPublished
Cited by11 cases

This text of 213 F.R.D. 537 (Owner-Operator Independent Drivers Ass'n v. New Prime, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Missouri 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. New Prime, Inc., 213 F.R.D. 537, 2002 U.S. Dist. LEXIS 25990, 2002 WL 32054709 (W.D. Mo. 2002).

Opinion

ORDER

WHIPPLE, Chief Judge.

Pending before the Court is Plaintiffs’ Motion for Class Certification. Defendants [539]*539have filed suggestions in opposition and the Plaintiffs replied thereto. For the following reasons, the Court DENIES Plaintiffs’ Motion for Class Certification.

I. Background1

Plaintiffs are individual owner-operators who own or control truck tractors, and sometimes truck trailers for use in interstate transportation. Defendant New Prime, Inc., (“Prime”), is a motor carrier providing transportation services to the public under authority of the Department of Transportation (“DOT”). Defendant Success Leasing, Inc., (“Success”), is an alter-ego or affiliate of Prime which enters into lease-purchase agreements with independent owner-operators that lease, with the option to purchase, truck tractor units to the owner-operators.

Generally, owner-operators are independent contractors that lease their services and equipment to carriers authorized to transport goods by the DOT. The relationship between carriers and owner-operators and the lease that governs it are regulated by the federal government. Plaintiffs bring the pending action to recover damages for violations of the federal Truth-in-Leasing regulations codified at 49 C.F.R. § 376.12.

According to Plaintiffs’ first amended class complaint, Plaintiffs entered into a contract called the “Service Contract” whereby the plaintiff owner-operator leased a truck tractor unit and driving services to defendant Prime for the transport of property. Plaintiffs contend that this is a lease to which the Truth-in-Leasing regulations apply. The plaintiff owner-operators were generally compensated on a per-load basis, and were entitled to percentage of the revenues paid to defendant Prime by shippers. The plaintiff owner-operator would receive his or her compensation in a “settlement check” on a weekly basis.

The Service Contract required owner-operators to furnish to defendant Prime a “Security Deposit” in the sum of $1,000.00 “as security for the full performance ... of all obligations under the contract.” The Service Contract provided that defendant Prime was entitled to set-off against the Security Deposit any “reserve claims which [defendant Prime had] reason to believe should be rightfully charged to the [plaintiff owner-operators].” The Service Contract provided that the Security Deposit was forfeited if the plaintiff owner-operator did not comply with the provisions of the Service Contract requiring the return of licenses, placards and other authorizations within seven days of termination.

According to Plaintiffs, each plaintiff owner-operator then entered into a second agreement with either defendant Prime or defendant Success Leasing known as the “Lease Purchase Agreement.” The Lease Purchase Agreement is a contract pursuant to which each plaintiff owner-operator leased from defendant Prime or defendant Success Leasing, with the option to purchase, one or more truck tractor units. The unit was to be used in providing services to “a trucking company approved [by one of the defendants].” The company to which services were provided was defendant Prime in every instance. The rental payments owing under the Lease Purchase Agreements were deducted directly from each plaintiff owner-operators weekly Service Contract settlement check. Plaintiffs maintain that the Lease Purchase Agreement is an “equipment purchase or rental contract” regulated by the Truth-in-Leasing regulations codified at 49 C.F.R. § 376.12.

Pursuant to the Lease Purchase Agreements, the plaintiff owner-operators are required to furnish funds for maintenance and repair which are maintained in the following accounts: an “Excess Mileage Rental Account”; a “Repair Reserve” and; a “Tire Replacement Reserve.” The amounts to be deposited in these accounts are directly deducted from the plaintiff owner-operator’s Service Contract settlement check. Plaintiffs maintain that these accounts constitute regulated escrow funds pursuant to the Truth-in-Leasing regulations.2

[540]*540Under the terms of the Lease Purchase Agreements, if the agreement is terminated before the end of its term and the owner-operator does not purchase the truck equipment, the plaintiff owner-operator forfeits the money accumulated in all of the above-referenced escrow accounts. Furthermore, if the owner-operator completes the lease and does purchase the equipment, half of the “Repair Reserve” and “Tire Replacement Reserve” is forfeited.

In Count I of their complaint, Plaintiffs maintain that the Service Contract does not adequately specify the items defendant Prime will deduct from the plaintiff owner-operator’s compensation at the time of settlement. Plaintiffs also complain that the Service Contract does not indicate how the amounts will be calculated. Plaintiffs maintain that the Service Contract violates 49 C.F.R. § 376.12(h) which reads as follows:

Charge Back Items. The lease shall clearly specify all items ... ultimately deducted from the lessor’s compensation at the time of payment or settlement, together with a recitation as to how the amount of each item has been computed. The lessor shall be afforded copies of those documents which are necessary to determine the validity of the charge.

49 C.F.R. § 376.12(h).

In Count II, Plaintiffs maintain that the Service Contract fails to reference the terms of the direct deduction for rental payments or escrow withholdings made pursuant to the Lease Purchase Agreement. Plaintiffs contend that this violates 49 C.F.R. § 376.12(i) which reads:

Products, equipment, or services from authorized carrier. The lease shall specify that the lessor is not required to purchase or rent any products, equipment, or services from the authorized carrier as a condition of entering into the lease arrangement. The lease shall specify the terms of any agreement in which the lessor is a party to equipment purchase or rental contract which gives the authorized carrier the right to make deductions from the lessor’s compensation for purchase or rental payments.

49 C.F.R. § 376.12(i).

In Count III, Plaintiffs allege that Defendants’ direct deductions for escrow funds from the plaintiff owner-operators’ Service Contract compensation and Defendants’ retention and failure to return escrow funds are unlawful according to 49 C.F.R. § 376.12(k). That section states that if escrow funds are required under a lease, the lease must specify the following:

(1) The amount of any escrow fund or performance bond required to be paid by the lessor to the authorized carrier or to a third party.
(2) The specific items to which the escrow fund can be applied.

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Cite This Page — Counsel Stack

Bluebook (online)
213 F.R.D. 537, 2002 U.S. Dist. LEXIS 25990, 2002 WL 32054709, Counsel Stack Legal Research, https://law.counselstack.com/opinion/owner-operator-independent-drivers-assn-v-new-prime-inc-mowd-2002.