Goodwin v. Am. Marine Express, Inc.

• Decision Date: 05 March 2021
• Docket Number: CASE NO. 1:18-CV-01014
• Parties: GLENN GOODWIN, et al., Plaintiffs, v. AMERICAN MARINE EXPRESS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

GLENN GOODWIN, et al., Plaintiffs, v. AMERICAN MARINE EXPRESS, INC., et al., Defendants.

CASE NO. 1:18-CV-01014

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION

March 5, 2021

JUDGE PAMELA A. BARKER

MEMORANDUM OF OPINION AND ORDER

This matter comes before the Court upon the following motions of Plaintiffs Glenn Goodwin ("Goodwin") and Ronald King ("King") (collectively, "Plaintiffs") and Defendants American Marine Express, Inc., ("AMX"), Gurai Leasing Company, LLC ("GLC"), Intermodal Facilities Group, Ltd. ("IFG"), Daniel Cain ("Cain"), Harjit S. Dhillon ("Dhillon"), Kuldip S. Gurai ("Gurai"), and Billy Lee Kyle ("Kyle") (collectively, "Defendants"): (1) Plaintiffs' Motion for Partial Summary Judgment (Doc. No. 61); (2) Omnibus Motion for Summary Judgment of All Defendants Except Gurai Leasing Company, LLC ("Defendants' Omnibus Motion for Summary Judgment") (Doc. No. 75); (3) Motion for Summary Judgment of Defendant Gurai Leasing Company, LLC ("GLC's Motion for Summary Judgment") (Doc. No. 76); (4) Defendants' Motion to Strike Affidavit and Expert Report of Heinz E. Ickert ("Motion to Strike Ickert Report") (Doc. No. 79); (5) Defendants' Motion to Strike Affidavit and Report of Edward Brady¹ ("Motion to Strike Brady Report") (Doc. No. 80);and (6) Plaintiffs' Motion to Exclude Testimony of Belinda Glavic Grassi ("Motion to Exclude Grassi Testimony") (Doc. No. 95). All motions have been fully briefed. (See Doc. Nos. 81, 84-90, 97, 98.)

For the following reasons, Plaintiffs' Motion for Partial Summary Judgment (Doc. No. 61) is DENIED, Defendants' Omnibus Motion for Summary Judgment (Doc. No. 75) is GRANTED IN PART and DENIED IN PART, GLC's Motion for Summary Judgment (Doc. No. 76) is GRANTED IN PART and DENIED IN PART, Defendants' Motion to Strike Ickert Report (Doc. No. 79) is GRANTED IN PART and DENIED IN PART, Defendants' Motion to Strike Brady Report (Doc. No. 80) is GRANTED IN PART and DENIED IN PART, and Plaintiffs' Motion to Exclude Grassi Testimony (Doc. No. 95) is GRANTED IN PART and DENIED IN PART.

I. Background

a. Factual Background

i. Formation and Operation of AMX, GLC, and IFG

In 1986, Harjit S. Dhillon ("Dhillon") obtained a commercial driver's license, purchased a truck, and began transporting freight as an owner-operator. (Doc. No. 75-1 at ¶¶ 2-3.) Owner-operators own their trucks and lease them, along with their services as a driver, to a motor carrier that has federal operating authority to move freight in interstate commerce for the motor carrier's customers. (Id. at ¶ 4.) An owner-operator typically works as a subcontractor of the carrier to deliver the freight. (Id.) To wit, Dhillon received an agreed amount from the motor carrier to which he leased his truck for each load that he delivered under the carrier's operating authority. (Id.) In contrast to an owner-operator, a fleet operator owns multiple trucks that are leased to a carrier. (Id. at ¶ 8.) Because a fleet operator can only drive one truck by him- or herself, a fleet operator pays others to drive the trucks owned by the fleet operator. (Id.)

In January 2007, Dhillon formed his own motor carrier company, American Marine Express, Inc. ("AMX"), and became its sole shareholder. (Id. at ¶ 22.) Dhillon did not want to take part in the day-to-day operation of the company, however, and instead set it up to run without his daily supervision. (Id. at ¶ 17.) Dhillon hired salaried employees to manage AMX and its various departments, including Daniel Cain ("Cain") to serve as AMX's general manager, Billy Lee Kyle ("Kyle") (Cain's brother) to be in charge of dispatch, and Cathy Behringer ("Behringer") to be in charge of safety. (Id. at ¶¶ 18, 24, 31.) Cain reported to Dhillon, but Dhillon continued to drive his truck to deliver freight during the day. (Id. at ¶¶ 17, 31.) Shortly after its formation, AMX obtained the authority to operate as a motor carrier transporting goods for hire in interstate commerce and began leasing trucks from owner-operators and fleet operators to deliver freight for AMX's customers. (Id. at ¶¶ 22, 28.) Owners of the trucks provided drivers as part of the leases, but before being permitted to drive a truck under AMX's operating authority, the drivers had to be qualified by AMX's safety department as being fit to drive a commercial vehicle. (Id. at ¶ 27.) One of the owner-operators that leased his truck to AMX was Dhillon's brother-in-law, Kuldip Gurai ("Gurai"). (Id. at ¶¶ 9, 24.)

AMX provided fuel cards to the owners of the trucks that it leased that could be used to purchase fuel and receive preauthorized cash advances on the carrier's credit, which, according to AMX, is customary in the industry. (Id. at ¶ 29.) In exchange for the provision of trucks and drivers, AMX paid the owner-operators and fleet operators that leased trucks to it on a weekly basis and provided a settlement statement for each truck being leased. (Id. at ¶ 28.) Owner-operators and fleet operators received a mileage-based freight rate for loads delivered, as well as any applicable fuel surcharge. (Id. at ¶ 25, 28.) AMX used a standard rate chart that specified what the owner-operatoror fleet operator would be paid for moving a container, which was uniform for all owner-operators and fleet operators. (Id. at ¶¶ 25, 26). The weekly settlements provided by AMX showed the freight rate and fuel surcharge as payables and any fuel purchases or cash advances as deductions. (Id. at ¶ 28.) AMX then provided a check for the net amount to the owner-operator or fleet operator that owned the truck. (Id.) AMX also established its own fuel pump and maintenance and repair garage for its owner-operators and fleet operators to use. (Id. at ¶¶ 24, 30.)

Within the year, AMX outgrew its original location. (Id. at ¶ 32.) As a result, in December 2007, at the advice of counsel, Dhillon formed a separate real estate holding company named Intermodal Facilities Group, Ltd. ("IFG") with Dhillon as its sole member. (Id. at ¶ 33.) IFG then leased a larger area of land, with the option to purchase it, and subleased it to AMX to serve as AMX's new location. (Id.)

In AMX's early years, in addition to leasing trucks from owner-operators and fleet operators, AMX also purchased its own trucks and hired independent contractors to drive them to deliver freight. (Id. at ¶ 34.) In 2010, however, AMX made the decision to exclusively use owner-operators and fleet operators to move freight. (Id. at ¶ 36.) Because Dhillon did not want AMX to lose access to its trucks and drivers, Dhillon wanted to sell them to someone that was loyal to him. (Id.) Dhillon considered selling the trucks to his brother, Daljit Dhillon, but instead chose to sell them to his brother-in-law, Gurai. (Id. at ¶ 37.)

Gurai then formed Gurai Leasing Company, LLC ("GLC") to purchase the trucks from AMX. (Id.) There is some dispute, however, regarding the circumstances of these transfers. Defendants contend that GLC agreed to lease purchase the twelve trucks that AMX owned outright for $55,500 payable over thirty-six months, as memorialized in a lease purchase agreement from September 2010.(Id. at ¶ 38, Ex. A-2.) For the trucks that AMX owned that were subject to finance liens, Defendants assert that GLC agreed to make all of the remaining payments and that when the lien for a truck was removed from the title, AMX would endorse the title over to GLC. (Id. at ¶ 39.) In challenging this characterization of the transfers, Plaintiffs point out that Defendants failed to produce a single document evidencing any payments made by GLC to AMX for the acquisition of any trucks and that Dhillon initially testified that he did not enter into any formal arrangements with Gurai regarding the purchase of AMX's trucks. (Doc. No. 72-1 at 87:12-22.)²

Nonetheless, it is undisputed that after agreeing to the transfer of the trucks, GLC and AMX entered into Independent Contactor Agreements for GLC to lease back to AMX each of the trucks GLC was purchasing. (Doc. No. 75-1 at ¶ 40.) In doing so, GLC became the largest fleet operator that leased trucks to AMX. (Doc. No. 65-1 at 37:11-23.) And while the numbers varied throughout the years, GLC eventually was leasing thirty to forty trucks to AMX, accounting for a large part of the eighty to ninety trucks total being driven under AMX's operating authority. (Doc. No. 73-1 at 58:13-59:21.) Under the leases to AMX, GLC was responsible for providing a qualified driver and maintaining its trucks in compliance with Department of Transportation ("DOT") regulations. (Doc. No. 75-1 at ¶ 40.) GLC also was responsible for paying all costs of operating the trucks, except for motor carrier public liability insurance that AMX provided. (Id.) However, AMX's mechanical and safety departments continued to monitor the condition of the trucks and fitness of the drivers provided by GLC. (Id. at ¶ 45.) In addition, managers of AMX's mechanical and safety departments had the authority to disqualify any driver deemed to be unsafe. (Id.)

After forming GLC, Gurai continued to deliver freight each day as an owner-operator. (See Doc. No. 73-1 at 93:13-15.) In order to provide drivers for the other trucks that GLC leased to AMX, however, GLC hired what it deemed to be independent contractors. GLC offered to pay its drivers 40% of the freight rate it received from AMX, but did not pay drivers any percentage of the fuel surcharge it received from AMX. (Doc. No. 76-1 at ¶ 15.) GLC did not withhold any taxes for its drivers, and drivers had to register with Ohio's Bureau of Workers' Compensation as being self-employed. (See id. at ¶¶ 12, 29, 44.) GLC's drivers also had to complete IRS Form W-9s and were issued IRS Form 1099s for compensation received from GLC. (Id.) Upon hiring, drivers were assigned a truck and instructed to contact AMX dispatch for loads. (Id. at ¶ 23.) However, the drivers were free to set their own hours and could not be forced to accept a load. (Id. at ¶ 24.)

Gurai's wife, ...