Butler v. ATS Inc.

Decision Date13 April 2021
Docket NumberCase No. 20-CV-1631 (PJS/LIB)
PartiesJ. RUBIN BUTLER, on behalf of himself and those similarly situated, Plaintiff, v. ATS INC.; ATS SPECIALIZED, INC.; JOHN DOES 1-20; and COMPETITIVE EQUIPMENT SALES, Defendants.
CourtU.S. District Court — District of Minnesota

Justin L. Swidler, Manali Arora, Joshua Boyette, and Travis Martindale-Jarvis, SWARTZ SWIDLER LLC; E. Michelle Drake and Joseph Hashmall, BERGER & MONTAGUE, P.C., for plaintiff.

Christopher Eckhart, Elizabeth M. Bolka, and James A. Eckhart, SCOPELITIS, GARVIN, LIGHT, HANSON & FEARY, P.C.; Brian A. Wood and Matthew D. Sloneker, LIND JENSEN SULLIVAN & PETERSON, PA, for defendants.

Plaintiff J. Rubin Butler worked as a truck driver for defendant ATS Inc. ("ATS") from May 2017 until about March 2019. Butler was designated as an independent contractor and participated in ATS's lease-purchase program, through which he leased a truck from defendant Competitive Equipment Sales ("Competitive"). In order to become a lease-purchase driver, Butler had to sign contracts with ATS and Competitive (which are affiliates), and those contracts contained arbitration clauses. Butler ultimately discovered that working as an independent contractor for ATS was not as lucrative as he was (allegedly) promised. Butler now brings this putative class and collective action against defendants ATS, ATS Specialized, Inc.,1 and Competitive. Butler alleges that defendants violated the Fair Labor Standards Act ("FLSA"), the Truth in Leasing Act, the Federal Forced Labor Statute, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), multiple Minnesota statutes, and Minnesota common law.

This matter is before the Court on defendants' second motion to compel arbitration.2 For the reasons that follow, defendants' motion is granted, and the parties are ordered to arbitrate Butler's claims.


ATS is a truckload carrier that operates throughout the United States and Canada. Am. Compl. ¶ 17. To attract drivers, ATS runs print and digital advertisements describing a variety of work opportunities. Goering Decl. ¶ 2 & Exs. 1, 2. Drivers can choose to operate as an employee or as an independent contractor and to drive a van or a flatbed truck. Id. Ex. 2; Arradizadeh Decl. ¶ 2. If a driver wants to work for ATS as an independent contractor and drive a truck—but does not own atruck—the driver can lease a truck3 from Competitive through the lease-purchase program. Goering Decl. ¶ 4; Schaffler Decl. ¶¶ 2-3. In the lease-purchase program, a driver signs a year-long lease, with the option to purchase the leased truck for a stipulated amount at the end of the lease period. Goering Decl. Ex. 2; Schaffler Decl. Ex. 3 ¶ 3. Alternatively, a driver can choose to lease a truck from an unaffiliated third party or to use his own truck (if he owns one). Schaffler Decl. ¶¶ 2-3.

In May 2017, Butler saw one of ATS's advertisements on craigslist.com.4 Butler Decl. ¶ 4. The exact contents of the advertisement are disputed. According to Butler, the advertisement said that if he joined the lease-purchase program, he would receive a $2,5005 sign-on bonus and a $4,000 lease-completion bonus, and that drivers could earn $2,500 each week. Id. ¶ 5. According to ATS, however, its records show that Butler clicked on and applied from an advertisement that said that he would receive a $1,500sign-on bonus and a $4,000 lease-completion bonus, and that the top 10% of independent contractors averaged $250,000 annual gross earnings. Goering Decl. ¶ 17 & Exs. 2, 5.

In any event, Butler clicked on the advertisement, applied online to drive a van as an independent contractor through the lease-purchase program, and then spoke with a recruiter. Id. ¶ 18 & Ex. 5; Butler Decl. ¶ 6. Butler alleges that the recruiter made six representations to him about ATS's program: (1) "all drivers make 'good cash'"; (2) Butler "would not experience any 'zero pay' weeks"; (3) ATS would keep him moving, meaning "loaded and/or under dispatch"; (4) he "would be able to choose to either continue leasing any truck or walk away from any truck lease after one year['s] service"; (5) he "would receive a lease completion bonus after one year of service"; and (6) he "could receive home time whenever [he] wished." Butler Decl. ¶ 6. Butler says that he relied on these representations in deciding to join the lease-purchase program. Id. ¶ 11.

Following their conversation, the recruiter arranged for Butler to travel from Lakeland, Florida to ATS's headquarters in St. Cloud, Minnesota to attend a four-day orientation. Id. ¶ 7. ATS provided Butler with a "free flight" and a "free hotel," but did not tell Butler whether it would provide return transit if he did not join the lease-purchase program. Id. ¶¶ 7-8. ATS says that its policy6 is to provide applicants with a bus ticket or funds to rent a car if they choose not to join the program. In fact, ATS provided transportation home for two individuals who attended Butler's orientation but decided not to sign onto the program. Goering Decl. ¶¶ 11, 20.

Butler arrived in Minnesota and began the four-day orientation on May 15, 2017. Id. ¶ 19; Arradizadeh Decl. ¶¶ 3-4. According to Butler, there were about 20 other aspiring lease-purchase drivers at the orientation. Butler Decl. ¶ 13. Butler says that he was provided with ATS's Independent Contractor Operating Agreement ("ICOA") and with Competitive's Equipment Lease Agreement ("lease") on a tablet. Id. ¶¶ 12, 16. He was not provided with a copy of either agreement before traveling to Minnesota, he did not receive paper copies at the orientation, the agreements were presented "on a 'take-it-or-leave-it' basis," and Butler was required to sign them "then and there" without sufficient time to read the agreements or consult with an attorney. Id. ¶¶ 14-21. Further, Butler says that he was not told how much his weekly lease payments would be for his truck—and he was not even allowed to choose a truck—before signing theagreements. Id. ¶¶ 24-26. When the drivers were finally allowed to select their trucks, there were not enough trucks available for all of them. Id. ¶ 27.

Defendants dispute much of Butler's version of events and point to business records that contradict many aspects of Butler's testimony. First, ATS's records show that eight potential van contractors (including Butler) and seven potential flatbed contractors were present at the orientation. Goering Decl. Ex. 6. Second, ATS's records show that Butler signed the agreements after selecting his truck. The schedule from Butler's orientation indicates that the drivers selected their trucks on May 15 and signed the agreements on May 17, and the agreements themselves show that they were signed on May 17. Dwyer Decl. Ex. 1 (showing orientation schedule, which had truck selection on Monday and signing the agreements on Wednesday); Arradizadeh Decl. Ex. 1 (showing Butler signed the ICOA on May 17, 2017); Schaffler Decl. Ex. 2 (showing Butler signed the lease on May 17, 2017). Third, the lease signed by Butler on May 17 identifies the make, model, base value, and weekly payment amount of the leased equipment, which would not be possible if Butler had to sign the lease before he selected the truck (as he claims), and seems to contradict Butler's claim that he did not know how much his lease payments would be at the time he signed the lease. Schaffler Decl. Ex. 2, Schedule A. Fourth, ATS states that, upon request, it provides drivers with paper copies of the agreements before and during orientation and gives drivers time toreview the agreements and speak with their attorneys. Id. ¶¶ 4-5; Arradizadeh Decl. ¶ 3. Finally, Competitive's policy is to provide at least one more truck than driver at each orientation, and Competitive's records show that there were 11 trucks from which Butler could choose when it was his turn to select a truck. Schaffler Decl. ¶¶ 7, 9 & Ex 1.

In any event, the parties agree that, by the end of the orientation session, Butler had signed both the ICOA and a year-long lease for a Freightliner truck. Butler Decl. ¶¶ 12, 30. Each agreement contained an arbitration provision that is relevant to this litigation. The ICOA's arbitration clause provides:

Any dispute arising out of or relating to this Agreement, including any allegation of breach thereof or alleged violation of any governmental regulation cited herein, shall be fully and finally resolved by arbitration in accordance with the commercial arbitration rules of the American Arbitration Association ("AAA"). A demand for arbitration . . . shall be filed no later than one (1) year after the dispute arises or the claim occurs. Failure to file the demand within the one (1) year period shall be deemed full waiver of the claim. . . . The parties shall share the cost of arbitration equally. Notwithstanding the above, WE may forego arbitration and pursue litigation against YOU to recover OUR property or any monies that are owed to US by YOU under this Agreement. The parties agree that no dispute may be joined with the dispute of another and agree that class actions under this arbitration provision are prohibited. This Agreement shall be deemed to have been drawn in accordance with the statutes and laws of the State of Minnesota and, in the event of any disagreement or litigation, the laws of this state shall apply.

Arradizadeh Decl. Ex. 1 ¶ 28. The arbitration clause in the lease provides:

(a) To the extent any disputes (including requests for preliminary relief) arise in connection with or relate to this Agreement, including any allegation of a tort, or of breach of this Agreement, or of violations of the requirements of any applicable government authorities, whether local, state, federal, or foreign, including but not limited to the Federal Truth-in-Leasing regulations (49 C.F.R. Part 376), Lessor and Lessee agree to submit such disputes to final and binding arbitration in accordance with (1) the Commercial Arbitration Rules (and

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