Carter v. Paschall Truck Lines, Inc.

• Decision Date: 19 June 2018
• Docket Number: CIVIL ACTION NO. 5:18–CV–041–TBR
• Citation: 324 F.Supp.3d 900
• Parties: Gale CARTER, et al., Plaintiffs v. PASCHALL TRUCK LINES, INC., et al., Defendants
• Court: U.S. District Court — Western District of Kentucky

324 F.Supp.3d 900

Gale CARTER, et al., Plaintiffs

v.PASCHALL TRUCK LINES, INC., et al., Defendants

CIVIL ACTION NO. 5:18–CV–041–TBR

United States District Court, W.D. Kentucky, At Paducah.

Signed June 19, 2018

Filed June 20, 2018

Manali Arora, Joshua S. Boyette, Travis Martindale–Jarvis, Justin L. Swidler, Swartz Swidler LLC, Cherry Hill, NJ, for Plaintiffs.

Adam J. Eakman, Christopher J. Eckhart, Elizabeth A. Paynter, Scopelitis, Garvin, Light, Hanson & Feary PC, Indianapolis, IN, Delia A. Clark, Rawle & Henderson LLP, Philadelphia, PA, Van F. Sims, Boswell Sims & Vasseur, PLLC, Paducah, KY, Kyle D. Johnson, Frost Brown Todd LLC, Louisville, KY, Richard L. Etter, Frost Brown Todd LLC, Pittsburgh, PA, for Defendants.

ECN Financial LLC, pro se.

MEMORANDUM OPINION AND ORDER

Thomas B. Russell, Senior JudgeThis matter is before the Court on Defendant Element Transportation, LLC's ("Element Transportation") Motion to Dismiss, [R. 32], and Defendant Paschall Truck Lines, Inc.'s ("PTL") Motion to Dismiss, [R. 55]. Plaintiffs Gale Carter and Forbes Hayes (hereinafter "Plaintiffs") responded to both motions. [R. 59; R. 76.] Element Transportation and PTL both replied. [R. 70; R. 78.] Fully briefed, this matter is now ripe for adjudication. For the reasons stated herein, Element Transportation's Motion to Dismiss, [R. 32], is DENIED and PTL's Motion to Dismiss, [R. 55], is DENIED .

BACKGROUND

The factual allegations as set out in the First Amended Complaint, [R. 19 (First Amended Complaint) ], and taken as true are as follows. See Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield , 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf , 716 F.2d 1101, 1105 (6th Cir. 1983) ). This case arises out of Gale Carter and Forbes Hayes's previous employment as truck drivers for PTL. [R. 19 at 12.] Plaintiffs allege that Carter worked for the defendants as a commercial truck driver from "in or around October of 2015 to in or around December of 2015," and Hayes worked for the defendants from "in or around March of 2016 to in or around June of 2016." [Id. ] Upon PTL hiring Carter and Hayes, they were required to attend an orientation, which lasted several days. [Id. at 14.] After completing orientation, Plaintiffs state that PTL required each of them to sign an Independent Contractor Service Agreement ("ICS Agreement") with PTL and an Individual Program Lease Agreement, ("Lease Agreement"), with ECN.¹ [Id. ] In or around September of 2016, Element Transportation purchased "certain leasehold assets" from ECN, including the leases of the Plaintiffs. [Id. at 6.] Plaintiffs contend this makes Element Transportation a successor in interest to ECN. [Id. ]

In short, ECN leased tractor trailers to Plaintiffs who then subleased the tractor trailers and their driving services to PTL. [Id. at 4.] Plaintiffs claim that this arrangement was represented to them as a "Lease–Purchase Program." [Id. at 13.] Plaintiffs allege that the "extensive restrictions" placed on them through both agreements allowed ECN and PTL such control over Plaintiffs that ECN and PTL functioned as Plaintiffs' joint employers. [Id. at 6.] Specifically, Plaintiffs claim that as a condition of their employment for PTL, PTL required Plaintiffs to lease tractors from ECN, and, under the lease agreement with ECN, Plaintiffs could only drive for PTL. [Id. at 5.] If they did not drive for PTL, the Plaintiffs claim that they would default on their Lease Agreements, "subjecting Plaintiffs to an acceleration clause whereby Plaintiffs would be required to pay the entire balance of the lease immediately." [Id. ] The Lease Agreement states that "Lessee shall use the Vehicle(s) only for providing transportation services for the Carrier identified herein ...." [R. 32–2 at 3 (Lease Agreement).] On the page labeled "Schedule AB," PTL is documented as being the "Carrier." [Id. at 13.] Furthermore, the Lease Agreement reads:

EVENTS OF DEFAULT. The occurrence of one or more of the following shall constitute an Event of Default: (a) Lessee shall cease using the Vehicle(s) for providing transportations services for the Carrier identified herein; (b) Lessee fails to pay when due any lease payments or any other payment under this Agreement; (c) Lessee fails to perform any other term or condition of this Agreement and such failure remains unremedied for more than ten (10) days after Lessor has requested Lessee to perform ....

[R. 32–2 at 6 (Lease Agreement).] Upon the event of default, ECN could

at its option and without demand or notice to Lessee, do any one or more of following: (a) pay all amounts required to be paid or perform or cause to be performed all obligations required to be performed by Lessee hereunder and charge Lessee as additional rent the amount paid or the reasonable value of all services performed therefore; (b) take immediate possession of the Vehicles in accordance with the provisions of Section 14; (c) declare the entire balance of lease payments for the remainder of the Lease Term and the End of Term value as set forth in Schedule AB immediately due and payable by acceleration and recover such amount as liquidated damages, the reasonableness of such damages being acknowledged by Lessee; or (d) terminate the Agreement and Lessee's rights hereunder and require Lessee at its sole cost to promptly return the Vehicle(s) to Lessor at such locations as Lessor may designate.

[Id. ] Plaintiffs allege that this clause in the Lease Agreement subjected them to "more than $100,000 in liability" if they defaulted on the Lease Agreement. [R. 19 at 13.]

Under the ICS Agreement with PTL, Plaintiffs concede that they were purported to be independent contractors, but they make allegations that suggest otherwise. [Id. at 19.] Plaintiffs allege that the reality of their relationship with ICS contradicted several of the provisions of the ICS Agreement. [Id. ] For instance, § 2.13 of the ICS Agreement states that Plaintiffs could have used the leased equipment for other purposes when not in service to PTL if, within twenty-four hours of that use, Plaintiffs notified PTL, cover any PTL logos, and confirm appropriate insurance coverage was in place. [R. 59–2 at 4, ¶ 2.13 (ICS Agreement).] However, Plaintiffs allege they were not permitted to "use the commercial vehicles leased to them for any carrier other than Defendant PTL" and "[d]uring orientation, Defendant PTL instructed Plaintiffs that their employment and lease agreements would be terminated if they accepted work from any carrier other than Defendant PTL." [R. 19 at 14.] Furthermore, Plaintiffs allege that the defendants' "pay structure and wage deduction practices and policies regularly caused Named Plaintiffs' wages to drop below the federal minimum wage of $7.25 per hour for all hours worked during a workweek." [R. 19 at 16.]² Plaintiffs provide an example in which Hayes performed significant work during the week but was issued a pay stub on May 18, 2016 that provided no wages and lowered him further into debt due to the defendants' deductions for business expenses. [Id. at 16–17.] Also, the ICS Agreement allowed PTL to deduct an "early termination" fee of $5000.00 in liquidated damages if Plaintiffs ceased "providing services when required by PTL on a continuing basis within nine (9) months after the Effective date ...." [R. 59–2 at 8 (ICS Agreement).]³ Overall, Plaintiffs contend that the defendants designed a "scheme" involving both agreements in order to "force continued labor of Plaintiffs by using threats of serious financial harm through explicit threats to impose, enforce, and collect significant debts." [Id. ]

On December 19, 2017, Gale Carter and Forbes Hayes, on behalf of themselves and those similarly situated, filed the First Amended Complaint against PTL, ECN (as successor to EFC), and Element Transportation, LLC (as successor to ECN). [R. 19.] On February 14, 2018, Element filed a Motion to Dismiss, [R. 32], and on April 3, 2018, PTL filed a Motion to Dismiss, [R. 55]. Both motions to dismiss are currently before the Court.

STANDARD

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In order to survive a motion to dismiss under Rule 12(b)(6), a party must "plead enough ‘factual matter’ to raise a ‘plausible’ inference of wrongdoing." 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B. , 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield , 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf , 716 F.2d 1101, 1105 (6th Cir. 1983) ). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken , 829 F.2d 10, 12 (6th Cir. 1987) ). Should the well-pleaded facts support no "more than the mere possibility of misconduct," then dismissal is warranted. Iqbal , 556 U.S at 679, 129 S.Ct. 1937. The Court may grant a motion to dismiss "only if, after drawing all reasonable inferences from the allegations in the complaint in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief." Garceau v. City of Flint , 572 F. App'x. 369, 371 (6th Cir. 2014) (citing Iqbal , 556 U.S. at 677–79, 129 S.Ct. 1937 ).

DISCUSSION

In the First Amended Complaint, Plaintiffs bring...