Owner-Operator Indep. Drivers Ass'n v. New Prime

• Decision Date: 21 August 2003
• Docket Number: No. 02-3289.,No. 02-3482.,02-3289.,02-3482.
• Citation: 339 F.3d 1001
• Parties: OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., Individually and on behalf of all others similarly situated; Marshall Johnson; Jerry Vanboetzelaer, Appellants/Cross-Appellees, v. NEW PRIME, INC., doing business as Prime Inc.; Success Leasing, Inc., Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1001

339 F.3d 1001

OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., Individually and on behalf of all others similarly situated; Marshall Johnson; Jerry Vanboetzelaer, Appellants/Cross-Appellees, v. NEW PRIME, INC., doing business as Prime Inc.; Success Leasing, Inc., Appellees/Cross-Appellants.

No. 02-3289.

No. 02-3482.

United States Court of Appeals, Eighth Circuit.

Submitted: May 15, 2003.

Filed: August 21, 2003.

COPYRIGHT MATERIAL OMITTED

Paul D. Cullen, argued, Washington, DC (David A. Cohen and Thomas A. Sheehan, on the brief), for appellant.

James C. Sullivan, argued, Kansas City, MO (R. Lawrence Ward, William E. Quirk and Richard M. Paul, III, on the brief), for appellee.

Before WOLLMAN, MAGILL, and BEAM, Circuit Judges.

MAGILL, Circuit Judge.

Plaintiffs-Appellants Owner-Operator Independent Drivers Association, Inc. ("OOIDA"), Jerry Vanboetzelaer ("Vanboetzelaer"), and Marshall Johnson ("Johnson") (collectively "Appellants") appeal the district court's¹ grants of summary judgment in favor of Defendants-Appellees New Prime, Inc. ("Prime") and Success Leasing, Inc. ("Success"). Appellants also appeal the district court's denial of class certification. Prime and Success cross-appeal the district court's dismissal of their state-law counterclaim against Johnson, asking for relief only if this court reverses.

Our jurisdiction is proper pursuant to 28 U.S.C. § 1291 (2000). We find that the Interstate Commerce Commission Termination Act of 1995 ("ICCTA"), Pub.L. No. 104-88, 109 Stat. 803 (1995), is not retroactive and therefore does not grant a private right of action to parties of leases executed prior to the effective date of the ICCTA. Accordingly, we affirm.

I.

OOIDA is a business association of owner-operators: individuals who own or control motor carrier equipment, such as a tractor unit, and lease the equipment, along with driving services, to a trucking company. Vanboetzelaer and Johnson are owner-operators and members of OOIDA. Prime is a regulated motor freight carrier, headquartered in Missouri and operating in forty-eight states. Success leases tractor units to independent owner-operators. Owner-operators lease tractor units from Success, and then lease the units, along with their services, back to Prime. Prime and Success have the same officers, directors, and shareholders.

An owner-operator ("Owner-Operator") who leases a tractor unit from Success signs a lease agreement ("Lease Agreement"), under which the Owner-Operator makes weekly rental payments and has an option to purchase the leased tractor. Prior to 1997, the Lease Agreement contained three provisions at issue in this appeal: (1) a Repair Reserve, under which Success retained $.035 per mile for tractor repairs in excess of $500; (2) a Tire Replacement Reserve, under which Success retained $.015 per mile for the purchase of tires; and (3) an Excess Mileage Account, under which Success retained $.05 per mile for mileage in excess of 2900 miles per week. The Lease Agreement provided that if the lease was terminated early, the amount retained in the Repair Reserve and the Tire Replacement Reserve became the sole property of Success, and if the Owner-Operator completed the lease, exercised its option to purchase the tractor, or sold it to a third party, the unused funds would be divided equally between Success and the Owner-Operator. As to the Excess Mileage Account, the Lease Agreement provided that if the lease was terminated early, the amount retained became the sole property of Success, and if the Owner-Operator completed the lease, exercised its option to purchase the tractor, or sold it to a third party, Success would pay the Owner-Operator the entire amount retained for excess mileage.

In April 1997, Success amended the Lease Agreement by (1) eliminating the Repair Reserve; (2) providing that at the end of the lease or upon termination, the entire amount withheld in the Tire Replacement Reserve would be returned to the Owner-Operator, less costs attributable to wear on the tires; and (3) replacing the Excess Mileage Account with an excess mileage charge ("Excess Mileage Charge"), which requires an Owner-Operator to pay an additional sum for mileage over a certain amount, unless the Owner-Operator purchases the tractor unit or completes the lease, in which case an amount equal to the Excess Mileage Charge shall be paid back to the Owner-Operator.

In addition to the Lease Agreement, Owner-Operators sign a "Service Contract"² to lease their driving services to Prime. The Service Contract requires the Owner-Operator to provide a $1000 security deposit to ensure full performance of the lease obligations.

A.

Appellants claim that these three reserve accounts and the security deposit violate the Truth-in-Leasing regulations, see 49 C.F.R. Part 376 (2003). Specifically, Appellants claim that the withholding and retention of funds in these accounts and in the security deposit: (1) are improper because the lease documents fail to identify and provide an accounting of these "charge back items," in violation of 49 C.F.R. § 376.12(h); (2) are unauthorized deductions from compensation, in violation of § 376.12(i); and (3) are unauthorized deductions of escrow funds, in violation of § 376.12(k). We discuss the specifics of the parties' agreements below.

1. Vanboetzelaer

Vanboetzelaer entered two sets of agreements at issue in this appeal. On October 5, 1992, Vanboetzelaer entered a Lease Agreement with Success and a Service Contract with Prime ("October 1992 Lease"). Under the Lease Agreement, Vanboetzelaer leased a tractor unit from Success for a period beginning on October 5, 1992, and ending January 18, 1994. Under the Service Contract, Vanboetzelaer leased the tractor unit back to Prime, along with his driving services.

Under the October 1992 Lease, Success withheld (1) $2894 for the Repair Reserve; (2) $1240 for the Tire Replacement Reserve; and (3) $866 for the Excess Mileage Account. Vanboetzelaer terminated this lease on February 20, 1993, and as a result, Success retained all of these withholdings, in accordance with the Lease Agreement. Success made no interest payments on any of these funds.

Upon termination of the October 1992 Lease, Vanboetzelaer entered a second Lease Agreement and Service Contract, covering a different tractor unit ("February 1993 Lease"). This agreement ran from February 20, 1993, until February 20, 1995, with an automatic one-year extension until February 20, 1996.

Under the February 1993 Lease, Success withheld (1) $20,184 for the Repair Reserve; (2) $2886 for the Tire Replacement Reserve; and (3) $7282 for the Excess Mileage Account. Vanboetzelaer completed his obligations under the lease on February 16, 1996, and subsequently exercised his right to purchase the tractor. In accordance with the Lease Agreement, Success returned to Vanboetzelaer half of the funds from the Repair Reserve and Tire Replacement Reserve and all of the funds from the Excess Mileage Account. Success made no interest payments on any of these funds. In addition, Prime retained Vanboetzelaer's $1000 security deposit, which he paid pursuant to the Service Contract.

2. Johnson

Johnson also entered two sets of agreements at issue in this appeal. On July 12, 1994, Johnson entered a Lease Agreement to lease a tractor unit from Success and a Service Contract with Prime to provide driving services from July 12, 1994, until August 16, 1995 ("July 1994 Lease"). Johnson terminated the July 1994 Lease on October 18, 1994, and Success retained all of the funds withheld for the Repair Reserve, the Tire Replacement Reserve, and the Excess Mileage Account; a total of $6469.

Upon termination of the July 1994 Lease, Johnson entered a second Lease Agreement, leasing a different tractor unit from Success, and a second Service Contract, leasing this tractor unit, along with his driving services, to Prime for a period from October 18, 1994, until October 18, 1996, with an automatic one-year extension until October 18, 1997 ("October 1994 Lease"). Johnson claims that he received a letter from Success written on Prime letterhead, terminating the October 1994 Lease, effective August 20, 1996. Prime and Success claim that Johnson prematurely terminated the October 1994 Lease on August 20, 1996. Upon termination, Success retained all funds withheld for the Repair Reserve, the Tire Replacement Reserve, and the Excess Mileage Account, a total of $17,945. Johnson received no interest for the funds retained under the July 1994 Lease or the October 1994 Lease.

B.

On August 14, 1997, Vanboetzelaer, Johnson, and OOIDA filed a class-action complaint against Prime and Success, alleging violations of the Truth-in-Leasing regulations. The district court dismissed the complaint, concluding that the Federal Highway Administration ("FHWA") had primary jurisdiction because the claim involved matters within the agency's expertise. This court reversed and remanded, finding, inter alia, that the FHWA did not have exclusive jurisdiction over the claim. Owner-Operator Indep. Drivers Ass'n Inc. v. New Prime, Inc., 192 F.3d 778, 783-85 (8th Cir.1999).

On remand, the district court denied Appellants' request for class certification, holding that certification under Federal Rule of Civil Procedure 23(b) was inappropriate because questions affecting individual members predominated over common questions of law or fact. Subsequently, the district court denied Appellants' request to file an interlocutory appeal challenging the denial of certification.

On January 22, 2002, the district court granted partial summary judgment for Prime and Success, holding that the ICCTA does not provide a private right of action for claims based on lease agreements that terminated before January 1, 1996, the effective date of the ICCTA. On August 2, 2002, the district court extended its holding, finding that the ICCTA could also not be applied retroactively to grant a...