Montoya v. CRST Expedited, Inc.

• Decision Date: 06 September 2019
• Docket Number: Civil Action No. 16-10095-PBS
• Citation: 404 F.Supp.3d 364
• Parties: Juan Carlos MONTOYA, on behalf of himself and all others similarly situated, Plaintiff, v. CRST EXPEDITED, INC. and CRST International, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

404 F.Supp.3d 364

Juan Carlos MONTOYA, on behalf of himself and all others similarly situated, Plaintiff,

v.CRST EXPEDITED, INC. and CRST International, Inc., Defendants.

Civil Action No. 16-10095-PBS

United States District Court, D. Massachusetts.

Filed September 6, 2019

Hillary A. Schwab, Rachel J. Smit, Fair Work, P.C., Boston, MA, Andrew Schmidt, Pro Hac Vice, Peter G. Mancuso, Pro Hac Vice, Andrew Schmidt Law PLLC, Portland, ME, for Plaintiff.

Elizabeth A. Olivier, Pro Hac Vice, Gregory P. Hansel, Pro Hac Vice, Randall B. Weill, Pro Hac Vice, Preti, Flaherty, Beliveau & Pachios, LLP, Portland, ME, Wesley S. Chused, Daniel R. Sonneborn, Preti, Flaherty, Beliveau & Pachios, LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

Saris, C.J.

INTRODUCTION

Juan Carlos Montoya, a long-haul truck driver, alleges that Defendants CRST Expedited, Inc. and CRST International, Inc. underpaid their drivers, misled drivers regarding the costs of driver training, and imposed excessive charges to recoup those costs in violation of the federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"), and Iowa law. Montoya brings claims under the FLSA (Count I), Iowa wage law (Count II), the Iowa Consumer Frauds Act (Count III), and Iowa usury law (Count IV). The Court has certified a collective action under the FLSA and three Rule 23 classes for the state-law claims (Docket No. 131). The parties now cross-move for partial summary judgment. Defendants seek summary judgment in part on Counts II, III, and IV, and move to narrow the scope of Count I. Montoya moves for summary judgment as to liability on Counts I, II, and III. After hearing, the Court ALLOWS IN PART and DENIES IN PART CRST's motion for summary judgment (Docket No. 146) and ALLOWS IN PART and DENIES IN PART Montoya's motions for summary judgment (Docket Nos. 150 and 153).

BACKGROUND

Unless otherwise noted, the following facts are undisputed.

I. CRST's Business Model

CRST Expedited, Inc., CRST International, Inc., and the North American Driver Training Academy ("NADTA") are part of a family of companies that provide trucking services across North America. CRST International, Inc. is a shared services company which provides management services to other CRST companies, while CRST Expedited, Inc. is a long-haul truck carrier which trains people who have never driven a truck before (collectively, "CRST"). NADTA is CRST's own truck driver training school. CRST is incorporated in Iowa and headquartered in Cedar Rapids, Iowa. CRST's human resources and payroll functions are conducted out of Cedar Rapids. CRST is a profitable company.

CRST uses a team-driving approach in which two drivers are assigned to each truck. The United States Department of Transportation ("DOT") regulations specify that a driver may only drive during a period of fourteen consecutive hours after coming on duty following ten consecutive hours off duty. See 49 C.F.R. § 395.3(a). A driver may drive a total of eleven hours during the fourteen-hour period. Id. Under a team-driver approach, driver A drives or performs other work duties while driver B is off duty and resting in the sleeper berth or passenger seat. After driver A has exhausted his on-duty or driving time, the drivers switch and this cycle continues until the truck gets from its origin to its destination. Thus, the team-driver approach allows CRST "to run goods all the way across the country in half the time it takes either a solo team ... or a company that only assigns one driver to the truck" without violating DOT regulations. Docket No. 151-5 at 12:12-25.

Team driving is "very arduous." Docket No. 151-2 at 65:5. Drivers are in close contact with another person for a long period of time, they do not have much privacy, the truck is in close-to-continuous motion, and the drivers typically go home only once every three weeks or so (whereas, for other trucking companies, drivers can be home at least every week). CRST has difficulty recruiting experienced truck drivers. CRST also has a high employee turnover rate of approximately 160% per year, i.e., for every one hundred truck driving jobs CRST needs to fill each year, it must hire one hundred and sixty drivers. Docket No. 151- 2 at 73:12-73:24. To ensure that it has a sufficient supply of drivers, CRST operates a driver training program.

This program only trains drivers who have the intention of becoming employees with CRST. Without the driver training program, CRST likely could not operate as currently configured because it would not have a large enough supply of experienced drivers willing to do team-driving.

II. Recruitment

CRST recruits drivers from across the country. CRST's advertisements and recruiting materials advertise "sponsored" or "covered" truck driver training to receive a commercial driver's license ("CDL") and job placement. One advertisement states: "No experience? No Problem! Get paid to train. In as little as three weeks of sponsored training at an approved CRST facility, you'll be on the road, traveling the country, as a professional truck driver." Docket No. 151-7 at 1. Another states: "See the country on our dime. And we'll even cover training." Docket No. 151-7 at 6. In 2013, Montoya received a handwritten postcard from a CRST recruiter which stated in part: "Free CDL training & sign on bonuses!" Docket No. 148-4.

When a potential driver expresses interest in the CRST program, the company sends the individual a welcome packet. The welcome packet states that CRST "has opportunities for everyone, including: Individuals who need training in order to obtain a Class A CDL." Docket No. 151-9 at 1. Under the heading "Summary of Benefits of Driving for CRST Expedited" the packet states, "CRST will pay the fee for your CDL license – CDL A permit and CDL A License." Id. at 4. Additionally, it states:

CRST will pre-pay all your school expenses – CRST will pre-pay your tuition and as long as you work for CRST for 10 months, you will not have to repay that tuition! CRST will also prepay your transportation, lodging, physical, and drug-screen. After you have been employed for 6 weeks, you repay these expenses over time as a payroll deduction of $40 per week.

Id. The packet does not disclose the cost of tuition, repayment terms, or the required non-competition provision if a student does not drive with CRST for ten months.

Under the heading "How to Get Your Class A CDL With CRST," the welcome packet lays out two ways for new drivers to pay for training: (1) "Company-sponsored training to get your CDL with an [sic] 10-month contract" or (2) "Prepayment plan to get your CDL with no contract and a higher starting rate of pay." Id. at 5. The packet describes the first option as follows:

If you need to obtain your class A CDL, but lack the funds to do so, we offer an outstanding company-sponsored training program. With no credit checks! In return, we ask that you work for CRST Expedited for ten months. At the end of ten months, you are free to stay or leave, it's that simple. You will sign an [sic] 10-month contract and be what we call a "contract" student. CRST will not deduct the cost of your training from your paychecks.

Id. The packet proceeds to list payroll deductions drivers should expect if they choose this option, including the cost of the bus ticket to school, the DOT-required physical and drug screen, lodging, and a $50 processing fee. The packet explains that the items listed are "paid for by CRST up front," "[p]aycheck deductions will begin after your sixth week of employment with CRST," and "total payroll deductions will not exceed $40 per week for all of these items combined." Id. With respect to the second, prepayment option, the packet explains that the student pays $6,500 prior to starting driver school and "[i]n return, [the driver does] not have to sign any contract and ... will start driving at a higher rate of pay than a contract student." Id.

III. Driver Training Program

CRST requires most prospective hires to complete its four-phase driver training program.¹ As an overview, Phase 1 consists of a two-to-three day course for drivers to receive their commercial learner's permits (for those who do not already have one) and then approximately two-and-a-half more weeks of school to earn their CDLs. During Phase 2, drivers attend a CRST-run orientation at a CRST facility, conducted by CRST employees. The orientation, which lasts two-and-a-half to three-and-a-half days, covers CRST policies and procedures, including a road test. Drivers are not compensated for time spent in either Phase 1 or Phase 2. Upon successful completion of Phases 1 and 2, CRST puts the driver on payroll, which initiates Phase 3. Phase 3 consists of approximately twenty-eight days of team-driving where a new driver is matched with a "lead driver" who has at least six months of driving experience. When the lead driver determines that the student driver is ready, the student driver advances to Phase 4 and is matched with a co-driver. Phase 4 consists of an additional (approximately) nine months of team-driving under contract with CRST. Overall, from November 11, 2013 through March 31, 2017, 25,796 drivers started Phase 1 and only 5,360 drivers completed Phase 4 of the driver training program.

A. Phase 1: Driver Training School

Before a driver starts Phase 1, CRST initiates several hiring checks pursuant to DOT and internal hiring guidelines, including a motor vehicle check, an employment history check, and a criminal background check. Drivers then attend Phase 1 training at either the CRST-affiliated NADTA in Cedar Rapids, Iowa, or at an independent certified driver training school with whom CRST partners. Drivers are most frequently sent to NADTA.

Regardless of whether the prospective drivers attend NADTA or the independent driver training schools, CRST recruiters arrange for and pay to transport drivers to Phase 1 training. CRST also provides and pays for drivers' housing during Phase 1. As explained in the...