Owner Operator Indep. Drivers Ass'n v. Arctic Exp.

• Decision Date: 30 August 2001
• Docket Number: No. 97-CV-00750.,97-CV-00750.
• Citation: 159 F.Supp.2d 1067
• Court: U.S. District Court — Southern District of Ohio
• Parties: OWNER OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Plaintiffs, v. ARCTIC EXPRESS, INC. and D & A Associates, Ltd., Defendants.

159 F.Supp.2d 1067

OWNER OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Plaintiffs, v. ARCTIC EXPRESS, INC. and D & A Associates, Ltd., Defendants.

No. 97-CV-00750.

United States District Court, S.D. Ohio, Eastern Division.

August 30, 2001.

James Burdette Helmer, Jr., Helmer Martins & Morgan, Cincinnati, OH, Paul D. Cullen, Sr., Gregory Michael Cork, The Cullen Law Firm, Washington, DC, Thomas Patrick McCann, Joyce E. Mayers, Cullen Law Firm, Washington, DC, for Plaintiffs.

Thomas Leslie Long, A Charles Tell, Baker & Hostetler — 2, Columbus, OH, for Defendants.

OPINION AND ORDER

MARBLEY, District Judge.

I. INTRODUCTION

This matter is before the Court on the Plaintiffs' Motion for Partial Summary Judgment filed on September 6, 2000, and on the Defendants' Cross-Motion for Summary Judgment filed on September 29, 2000. The Plaintiffs originally brought suit on June 30, 1997, alleging that the agreements they entered into with the Defendants violated the Motor Carriers Act, 49 U.S.C. §§ 14101-02 and 14704, and the Regulations promulgated under the Act, 49 C.F.R. Part 376. For the following reasons, the Plaintiffs' Motion for Partial Summary Judgment is GRANTED, and the Defendants' Cross-Motion is DENIED.

II. FACTS AND PROCEDURAL HISTORY

A. Procedural History

On June 30, 1997, the Plaintiffs, Owner Operator Independent Drivers Association, Inc., Carl Harp, Garvin Keith Roberts and Michael Wiese, filed their Complaint against Arctic Express, Inc. and D & A Associates, alleging in Count I a violation of 49 C.F.R. § 376.12(i) (unauthorized deduction of purchase or rental payments), and in Count II a violation of 49 C.F.R § 376.12(k) (unauthorized deduction and non-return of escrow funds).

On September 5, 1997, the Defendants filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted, and on January 15, 1998, filed a Motion to Dismiss Under Doctrine of Primary Jurisdiction. By Order dated August 17, 1998, this Court stayed this action pending the Defendants' appeal to the Sixth Circuit. On appeal, this case was transferred to the Eighth Circuit Court of Appeals for consolidation with three other cases.

The Eighth Circuit issued the opinion of Owner-Operator Independent Drivers Association, Inc. v. New Prime, Inc., 192 F.3d 778 (8th Cir.1999), on August 10, 1999, and denied the petition for review of this case. By Order dated October 13, 1999, the Eighth Circuit denied the Petition for Rehearing and for Rehearing En Banc.

The stay was lifted early in 2000. On March 3, 2000, this Court issued Owner-Operator Independent Drivers Association v. Arctic Express, Inc., 87 F.Supp.2d 820 (S.D.Ohio 2000), in which the Court treated the Defendants' Motion to Dismiss as one for summary judgment and granted summary judgment to the Defendants as to Count I, but denied it as to Count II. The Court also denied the Defendants' Motion to Dismiss under the doctrine of primary jurisdiction.

This matter is now before the Court on the Plaintiffs' Motion for Partial Summary Judgment filed on September 6, 2000, and on the Defendants' Cross Motion for Summary Judgment filed on September 29, 2000.

B. Facts¹

The Plaintiff, Owner Operator Independent Drivers Association, Inc. ("OOIDA"), is a business association comprised of individuals and entities who own and operate motor vehicle equipment. The three individual Plaintiffs, Carl Harp, Garvin Keith Roberts and Michael Wiese ("Members"), are persons who have entered into a Lease Purchase Agreement with Defendant, D & A Associates, Ltd. ("D & A"), and a Motor Vehicle Lease Agreement with Defendant, Arctic Express, Inc. ("Arctic"). Arctic is a regulated motor carrier engaged in the business of providing transportation services to the shipping public. D & A is a non-carrier company engaged in the business of leasing truck tractor units to independent owner-operators. D & A and Arctic are under common ownership and control.

Owner-operators are small business men and women who own or control truck tractors used to transport property on the country's highways. Owner-operators either transport commodities exempt from Department of Transportation ("DOT") Regulations, or, as independent contractors, lease or provide their equipment and services to motor carriers who possess the legal operating authority under DOT regulations to enter into contracts with shippers to transport property. The relationship between independent truck owner-operators and regulated carriers is set forth in an agreement between the parties and regulated by DOT.² See 49 U.S.C. § 14102; 49 C.F.R. pt. 376.

Arctic entered into a "Independent Contractor Motor Vehicle Lease Agreement" ("Lease Agreement"), with each owner-operator whereby the owner-operator leased a truck unit and provided, in return, the services of a qualified driver to Arctic.³ Under the contract between D & A and the owner-operators, entitled the Lease/Purchase Option at Termination ("Lease/Purchase Option"), Members leased from D & A truck tractor units. Under this Lease/Purchase Option, Members were obligated to make weekly equipment rental payments to D & A and also were obligated to make payments based on mileage to a maintenance fund.

Under Paragraph 5A of the Lease Agreement, captioned "LEASE AND MAINTENANCE OBLIGATIONS," the Member agreed to have deducted a certain sum per week to pay D & A for his or her rental obligation; under Paragraph 5B, the Member agreed to have withheld nine cents per mile, also payable to D & A, "for the sole purpose of satisfying any maintenance obligations imposed upon Contractor by lessor of Contractor's equipment." Under Paragraph 9A of the Lease/Purchase Option entered into between D & A and the owner-operators, each Plaintiff who leased a motor vehicle was required to make maintenance payments at the rate of nine cents per mile. The maintenance payments were collected in a "maintenance fund." Arctic deducted the "maintenance fund" payments directly from the Member's compensation on a weekly basis.

Under Paragraph 9B of the Lease/Purchase Option, the maintenance fund balances were refundable if the lease ran its term. The fund balance was not refundable if the lease was terminated mid-term without the Member exercising his or her purchase option. None of the named Members in the present case exercised his purchase option, and therefore the maintenance fund balances were not refunded to the Members under the D & A Lease/Purchase Option.⁴

When the commercial driver's licenses of two of the Members, who are Plaintiffs to this suit, were canceled or suspended, they notified Arctic and their equipment leases were terminated.⁵ The Plaintiff voluntarily terminated his equipment lease with Arctic. The Plaintiffs could have hired other drivers for the vehicles they leased from D & A; however, they did not, and as a result their Lease/Purchase Options with D & A were terminated before the end of the specified lease term. Their maintenance fund monies were not returned to them.

The maintenance fund, according to Steven R. Russi, Executive Vice President of Arctic and D & A, was established based on a "projected per mile cost" of maintaining a truck over the term of the lease. D & A contends that it costs nine cents per mile to maintain a truck through the first 500,000 miles of operation; though during the first 100,000 to 200,000 miles, the per-mile cost is much less than nine cents. When the truck is new, maintenance costs are minimal; the maintenance costs eventually increase as the truck ages. The Defendants charged the Members a flat rate of nine cents per mile to cover the total maintenance costs over lease term. The Defendants use the "savings" from the escrow fund during the first part of the lease to apply to the "deficit" that occurs toward the end of the lease.

For example, according to the September 28, 2000 Russi declaration, Plaintiff Wiese entered into a lease on June 11, 1996, for a term of 199 weeks. On March 27, 1997, less than ten months later, Plaintiff Wiese terminated his equipment lease. Prior to termination, Wiese drove 90,894 miles and spent $972.31 on maintenance of the truck, approximately 1 cent per mile. For the remaining thirty months, the truck was operated an additional 281,626 miles and D & A spent $30,467.80 to maintain the truck, at approximately 10.8 cents per mile. During the 155 weeks between the time Wiese terminated the lease and the ending date contemplated by the lease, Wiese made no further payments. Due to the alleged breach, Defendants claim that Wiese owed $67,062.74 in rental payments, in addition to the cost of maintenance for the life of the truck.⁶

Having been deprived of their escrow funds and other funds deposited with the Defendants during the terms of their Lease Agreement and Lease/Purchase Option, the Plaintiffs are seeking monetary damages and declaratory and injunctive relief, for themselves and on behalf of other similarly situated independent truck owner-operators.

III. STANDARD OF REVIEW

In reviewing cross-motions for summary judgment, courts should "evaluate each motion on its own merits and view all facts and inferences in the light more favorable to the non moving party." Wiley v. United States, 20 F.3d 222, 224 (6th Cir.1994). Significantly, "[t]he filing of cross-motions for summary judgment does not necessarily mean that the parties consent to resolution of the case on the existing record or that the district court is free to treat the case as if it was submitted for final resolution on a stipulated record." Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991) (citing John v. State of La. (Bd. of Tr. for State Colleges & Univ.), 757 F.2d 698, 705 (5th Cir.1985)).

The standard of review for cross-motions for summary judgment does not differ from the standard applied when a motion is filed by one party to the litigation. Taft Broad., 929 F.2d at 248. Summary judgment is therefore appropriate "[i]f...