Mervyn v. Atlas Van Lines, Inc.

• Decision Date: 14 February 2018
• Docket Number: No. 17-2036,17-2036
• Citation: 882 F.3d 680
• Parties: Thomas MERVYN, on behalf of himself and all others similarly situated, Plaintiff–Appellant, v. ATLAS VAN LINES, INCORPORATED, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

882 F.3d 680

Thomas MERVYN, on behalf of himself and all others similarly situated, Plaintiff–Appellant,

v.ATLAS VAN LINES, INCORPORATED, et al., Defendants–Appellees.

No. 17-2036

United States Court of Appeals, Seventh Circuit.

Argued December 7, 2017

Decided February 14, 2018

Kevin Peter Roddy, Attorney, Wilentz, Goldman & Spitzer, Woodbridge, NJ, Andrew Szot, Attorney, Marvin A. Miller, Attorney, Miller Law LLC, Chicago, IL, Edward D. McNamara, Jr., Attorney, McNamara & Evans, Springfield, IL, for Plaintiff–Appellant.

Michael G. Pattillo, Jr., Attorney, Sarah Justine Newman, Attorney, Washington, DC, Justin Weiner, Attorney, Joel D. Bertocchi, Attorney, David H. Levitt, Attorney, Hinshaw & Culbertson LLP, Chicago, IL, Thomas Joseph Wiegand, Attorney, New York, NY, Mololamken LLP, for Defendants–Appellees.

Before Bauer, Manion, and Sykes, Circuit Judges.

Bauer, Circuit Judge.

Atlas Van Lines ("Atlas"), an authorized interstate transporter of household goods, contracts with agents to perform its shipments. One of its many agents, Ace World Wide Moving, Inc.¹ ("Ace"), leases trucks and driving services from owner-operators. In 2009, owner-operator Thomas Mervyn entered into a lease agreement with Ace to haul shipments for Atlas. Mervyn brought a lawsuit in 2013 against Atlas and Ace alleging breach of contract and violations of the federal Truth–In–Leasing regulations under 49 C.F.R. § 376.12(d). Atlas and Ace moved for summary judgment and the district court granted it in their favor. We affirm.

I. BACKGROUND

A. Regulatory Background

The Motor Carrier Act authorizes the Department of Transportation to regulate "carriers," including trucking companies, which transport goods interstate. 49 U.S.C. § 14104(a). Often carriers contract with "hauling agents" to transport the goods. In turn, the hauling agent may contract with an individual truck owner, an "owner-operator," who leases his truck and services to the agent and carrier. Owner-operators may bring civil actions against carriers or agents for violations of legal rights established under the statute or regulations. See 49 U.S.C. § 14704(a)(2).

The lease agreements between owner-operators and the agent or carrier are governed by the Truth–In–Leasing regulations. 49 C.F.R. § 376.1. The regulations require that the lease be in writing and contain specific provisions. See 49 C.F.R. § 376.11 ; 49 C.F.R. § 376.12. Relevant to this dispute, "[t]he amount to be paid by the authorized carrier for equipment and driver’s services shall be clearly stated on the face of the lease or in an addendum which is attached to the lease." 49 C.F.R. § 376.12(d). That amount "may be expressed as a percentage of gross revenue, a flat rate per mile ... or by any other method of compensation mutually agreed upon by the parties to the lease." Id.

B. Atlas’ and Ace’s Contract with Mervyn

Atlas is an agent-owned company, and Ace is one of its many agents. Generally, when a customer contracts with Atlas for a shipment, Atlas passes the job onto a hauling agent, like Ace, who in turn contracts out the driving portion of the job to an owner-operator. Mervyn is an independent owner-operator who leased his trucks and driving services to Ace.

Federal law requires carriers like Atlas to publish tariffs showing the rates for each task in the shipment of household goods. 49 U.S.C. § 13702(b)(1). One of the tariff rates is for "linehaul," which is based on the weight of the goods and the distance they are shipped. These rates are only ceilings of what Atlas may charge a customer in a given shipment, and Atlas often negotiates discounts of the tariff rates with its customers in order to secure their business. After the shipment is complete, Atlas collects payment from the customer and distributes the revenue to its agents. An agent is entitled to revenue based on the services it performed. Thus, a hauling agent like Ace is entitled to receive a portion of the linehaul revenue. If the hauling agent used an owner-operator in the shipment, the hauling agent pays the owner-operator according to the terms of their lease agreement.

According to Atlas, because it needed a way to distribute the costs of providing customer discounts across the various agents involved in a shipment, it instituted the "effective bottom line discount" ("EBLD"). Atlas also used the "predetermined effective bottom line discount" which is an estimate of what the EBLD will be over a series of shipments. Under these policies, Atlas divides the total value of the discounts provided to the customer, including services it provided for free, by the total maximum value of that shipment using the tariff rates. The resulting percentage is the EBLD. Atlas then applies that EBLD percentage to the tariff charges to determine how much an agent will receive.

Mervyn entered into a lease agreement with Ace on February 1, 2009. The lease specified that Wisconsin state law would govern. As relevant here, under the "Payments to Contractor" section of the lease, Mervyn was to "earn compensation as provided in the schedule of compensation included in Schedule B." Mervyn hauled interstate shipments of household goods which were governed by Schedule B–1. The top of Schedule B–1 listed numerous "definitions and general rules" for determining Mervyn’s compensation. Atlas did not instruct Ace how to compensate its owner-operators, but the lease agreement adopted Atlas’ EBLD method for the linehaul charge: "Linehaul and accessorial service charges shall be determined by applying the applicable effective or predetermined effective bottom line discount (determined under Atlas’ rules) to the transportation and accessorial charges for each shipment." The bottom of Schedule B–1 included percentages to be paid out for certain categories of service. For the linehaul charge, the lease read "Linehaul 58%."

The bottom of Schedule B–1 also specified that Mervyn was to receive 100% of the fuel surcharge ("Fuel Surcharge 100%"). Atlas would often negotiate with its customers a discount from the tariff rate for the fuel surcharge, but during Mervyn’s lease with Ace, whatever amount the customer paid to Atlas in fuel surcharge was paid in full to Ace, and in turn, paid in full to Mervyn.

Atlas and Ace maintained financial documentation for individual shipments in a computer system called the Rating Invoice and Distribution System ("RTDS"). Mervyn received documentation from Ace displaying two different screens: (1) the amounts billed to the customer; and (2) the amounts distributable to him after applying the EBLD. Mervyn also received a "Settlement Sheet" displaying his compensation for each of the services he provided.

An example of a shipment Mervyn completed for Ace under the lease illustrates how Mervyn was compensated. Mervyn’s RTDS screen for the "Evans Shipment" showed that the customer was billed $7,416.79 for the linehaul charge, a 60% discount from the tariff rate of $18,541.98. Atlas also subtracted certain items from the invoice amount that were offered to the customer at a 100% discount, such as $258.00 for full value protection services, $52.03 for hauling bulky articles, and $166.31 for a booking rebate. After applying the EBLD percentage, the linehaul charge was reduced to $6,652.29 in distributional charges to Mervyn. Since Schedule B–1 of the lease stated that Mervyn was to receive 58% of the linehaul charge, he received 58% of $6,652.29, or $3,858.33. For the fuel surcharge, the tariff rate of $2,039.61 was billed to the customer at a 60% discount, or $815.84. Mervyn received 100% of the fuel surcharge the customer paid. All of these figures in the Evans Shipment were produced to Mervyn in the Settlement Sheet and the RTDS Screen.

Critically, Paragraph 11(f) under the "Payments to Contractor" section of the lease specified that the financial entries made by Ace on the payment documents "shall be conclusively presumed correct and final if not disputed by [Mervyn] within 30 days after distribution." Although Mervyn had made prior complaints regarding certain financial entries in the payment documents, he never took any action with respect to the linehaul and fuel surcharge financial entries during the 2009 lease with Ace until the filing of this lawsuit.

C. Procedural History

Mervyn brought a purported class action lawsuit in the Northern District of Illinois against Atlas and Ace on May 14, 2013. He alleged state law breach of contract, claiming that he was not fully compensated according to the plain terms of the lease; as well as violations of the Truth–In–Leasing regulations under 49 C.F.R. § 376.12(d), claiming that his compensation for the linehaul and fuel surcharge were not "clearly stated" in the lease. The case was assigned to Judge Ronald J. Guzmán.

Mervyn had brought a purported class action suit in 2011 raising virtually identical claims against Atlas and another one of its agents. That case was filed in the Northern District of Illinois and assigned to Judge Gary Feinerman. Before a class was certified, Judge Feinerman granted a motion for summary judgment in favor of the defendants on March 31, 2016. See Mervyn v. Nelson Westerberg, Inc. , No. 11 C 6594, 2016 WL 1270416 (N.D. Ill. Mar. 31, 2016).

Shortly after Judge Feinerman issued his opinion, Judge Guzmán suspended briefing on class certification and ordered briefing on Atlas’ and Ace’s motion for summary judgment. On April 20, 2017, Judge Guzmán granted summary judgment in favor of Atlas and Ace.

The district court held that Mervyn’s failure to comply with Paragraph 11(f) barred the breach of contract claims. Because the financial entries are presumed correct if not disputed within 30 days according to the lease, Mervyn could not challenge their accuracy. Moreover, the court found that even if Paragraph 11(f) did not bar Mervyn’s breach of contract claims, they still would fail because Mervyn was paid according to the terms of the lease agreement. The court also ruled that the claims under the...