Carter v. Paschall Truck Lines, Inc.
| Decision Date | 23 January 2023 |
| Docket Number | 5:18-cv-41-BJB |
| Parties | Gale Carter, ET AL. Plaintiffs v. Paschall Truck Lines, Inc., ET AL. Defendants |
| Court | U.S. District Court — Western District of Kentucky |
This is a case about truckers and their contracts with the motor carriers that hire them. Truck drivers entered into contracts with Paschall Truck Lines, a national motor carrier, to haul loads in interstate commerce. The agreements with PTL required the drivers to possess a truck to fulfill their obligations. So some drivers leased trucks from Element Financial Corporation with the help of Quality Equipment Leasing.
The drivers claim that PTL's inclusion of a $5,000 “early termination fee” in its contracts constituted a “threat of serious harm” forcing them to labor for PTL against their will in violation of the Trafficking Victims Protection Act. The drivers say that PTL directed them to Quality and EFC to sign lease agreements containing an acceleration clause that coerced them into remaining in their jobs longer than they wanted. On top of that, the drivers claim that PTL's contracts violated a host of federal leasing regulations promulgated under the Motor Carrier Act of 1980. And they assert that PTL and Element Fleet Management Corp. (EFMC, not to be confused with EFC) were unjustly enriched at the drivers' expense in violation of Kentucky law.
PTL and EFMC moved for partial and complete summary judgment respectively, on named-plaintiff Gale Carter's claims. Carter then moved to certify a putative class of similarly situated truckers.
The Court grants in part PTL's partial motion for summary judgment with respect to Carter's claims under the Trafficking Victims Protection Act and 49 C.F.R. §§ 376.12(a), (c), (e)-(f), (h)-(i). But the Court denies that motion with respect to claims under §§ 376.12(d) (g) and denies Carter's motion for class certification. During the telephonic hearing that preceded this opinion, the Court orally granted EFMC's motion with respect to Carter's unjust-enrichment claim, denied EFMC's motion with respect to Carter's TVPA claim, and granted Carter's Rule 56(d) motion to extend discovery. Since that hearing, EFMC has filed a notice of settlement with the plaintiffs. See DN 259. So those issues are now moot to the extent the Court hasn't already resolved them.
Plaintiff Gale Carter drove trucks for Paschall Truck Lines, a motor carrier authorized by the Department of Transportation to haul freight. PTL Response to Request for Admissions (DN 218-3) ¶ 28. Carter and other drivers hired by PTL attended orientation in Murray, Kentucky and signed “Independent Contractor Service Agreements” with PTL. Carter Dep. (DN 217-5) at 47, 81; Hays Decl. (DN 218-5) ¶¶ 9-11; Agreement (DN 177-2 Exhibit 3). The Service Agreements required drivers to provide a truck (apparently often leased from Quality) that they would use to haul loads for PTL. See Agreement at 90; Response to PTL MSJ (DN 217) at 7; Carter Dep. at 77; Hays Decl. ¶¶ 9-11.
The Service Agreements also required drivers to pay a $5,000 “early termination fee” if they quit within nine months of signing. Agreement at 97. Even though he reviewed the Agreement and was aware of the early-termination fee before signing it, Carter left PTL after working for only two months. Carter Dep. at 183-84.
Carter, like others, leased a truck from EFC. Carter Dep. at 107-08; Lease (DN 177-2) at 109; see also Hays Dep. (DN 177-3) at 128-32; Bates Dep. (DN 218-4) at 26. The lease included an acceleration clause that would be triggered upon “default”-that is, when Carter “cease[d] using the Vehicle(s) for providing transportation services” for PTL. Lease at 113. The acceleration clause allowed EFC to repossess the truck, declare the balance of the lease payments immediately payable, or terminate the lease and require the lessee at his own costs to return the vehicle to a designated location. Id. Carter says that he was forced to continue laboring for PTL because he would have incurred “massive debt” if he had triggered the acceleration clause. Response to PTL MSJ at 33.
At some point EFC undertook a significant corporate reorganization. Although the papers are hardly clear, they appear to indicate that EFC split into two publicly traded companies. EFMC, one of the two EFC progeny, allegedly inherited those leases, or at least the liability for them. Second Am. Compl. (DN 103) ¶¶ 18-22; Element News Release (DN 110-9).
A substantial amount of litigation has already occurred in this case. It has primarily focused on the plaintiffs' Fair Labor Standards Act claims. The Court already conditionally certified an FLSA collective action, which seeks reimbursement from PTL for alleged unpaid wages. See Carter v. Paschall Truck Lines, Inc., No. 5:18-cv-41-TBR, 2019 WL 1576572, at *1 (W.D. Ky. Apr. 11, 2019). Five defendants have been dismissed along the way, leaving just PTL and EFMC at the time these motions were filed. With the FLSA claims in the rearview, the plaintiffs sought certification under Federal Rule of Civil Procedure 23(b)(3) to litigate on a classwide basis claims that (1) PTL's Service Agreements violated numerous provisions of the Truth in- Leasing regulations; (2) the contracts with PTL and EFMC forced drivers to labor on the companies' behalf, violating 18 U.S.C. § 1589; and (3) PTL and EFMC were unjustly enriched. Second Am. Compl. ¶¶ 153-62. PTL moved for partial summary judgment on named-plaintiff Carter's Truth in Leasing Act and forced-labor claims. PTL MSJ (DN 177).[1] And EFMC sought summary judgment on Carter's forced-labor and unjust-enrichment claims. EFMC MSJ (DN 241).
The Court held a hearing to discuss these pending motions. It orally denied the class-certification motion, granted in part PTL's summary-judgment motion, denied without prejudice EFMC's summary-judgment motion, and granted the plaintiffs' motion for discovery regarding EFC and EFMC. The Court also indicated a written opinion further explaining its rulings would follow. But before this opinion issued, EFMC and Carter (purportedly on behalf of “Plaintiffs”) filed a notice of settlement.
As to the remaining claims, this opinion first addresses which claims against PTL survive summary judgment and which remain ripe for certification, a question addressed below.[2]
Summary judgment is warranted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). While the Court must view the evidence in the light most favorable to the non-movant, Green v. Burton Rubber Processing, Inc., 30 Fed.Appx. 466, 469 (6th Cir. 2002), the “mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff,” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
In 1973, truckers declared a nationwide strike to “protest a host of economic problems” caused by “questionable industry practices.” Global Van Lines, Inc. v. Interstate Commerce Commission, 627 F.2d 546, 547-48 (D.C. Cir. 1980); see also In re Arctic Express Inc., 636 F.3d 781, 795 (6th Cir. 2011) (quotation omitted). After this “winter of discontent,” Congress and the Interstate Commerce Commission commenced hearings regarding the problems faced by independent truckers. In re Arctic Express Inc., 636 F.3d at 795. The ICC then promulgated the Truth in Leasing regulations, now 49 C.F.R. Part 376, in order to “protect [the] owner-operators” who drove the trucks. In re Arctic Express, 636 F.3d at 795 (quotations omitted). These regulations were designed to “promote ... a full disclosure between the carrier and the owner-operator of the elements, obligations, and benefits of leasing contracts signed by both parties,” and to “eliminate or reduce opportunities for skimming and other illegal or inequitable practices.” Id. at 796 (quotation omitted). After Congress dissolved the ICC in 1995, Congress enacted 49 U.S.C. § 14704(a), which enables owner-operators to bring private lawsuits under the regulations against motor carriers registered with the Department of Transportation. See Owner Operator Independent Drivers Ass'n, Inc. v. Swift Transp. Co., 367 F.3d 1108, 1110 (9th Cir. 2004) ().
PTL is an authorized carrier subject to those federal leasing regulations, several of which Carter claims it violated. Second Am. Compl. ¶¶ 153-55. If proven, PTL would be “liable for damages sustained by a person as a result of” the carrier's violation. See § 14704(a)(2). As multiple courts have held, this requires a plaintiff to establish that a violation caused him “actual damages.” Owner-Operator Independent Drivers Ass'n., Inc. v. Landstar Systems, Inc., 622 F.3d 1307, 1325 (11th Cir. 2010) (collecting cases); Rivas v. Rail Delivery Service, Inc., 423 F.3d 1079, 1083 (9th Cir. 2005) (). And it's not hard to see why: the statute's text refers to “damages sustained.” § 14704(a)(2) (emphasis added). So to survive PTL's motion for summary judgment, Carter must not only point to evidence that PTL violated the regulations, but also show how any leasing violation caused him actual harm. See PTL MSJ at 17; Landstar System, 622 F.3d at 1325 (owner-operators had to “show how they sustained damages because of the [carrier's] violations” of the leasing regulations).[3]
A. § 376.12(a): Ownership
Carter alleges that PTL prematurely entered into an agreement with him before he lawfully possessed his commercial truck. Seco...
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