For Immediate Release

Owner-Operator Independent Drivers Association

1 NW OOIDA Drive, Grain Valley, MO       
E-mail:ooida@ooida.com              
Web site: www.ooida.com
Phone: (816) 229-5791           Fax: (816) 427-4468 

Court rules in favor of OOIDA on C.R. England
violations of truth-in-leasing regulations

Orders class-wide accounting of escrow funds

June 22, 2007, Grain Valley, MO – A federal district court judge has ruled that C.R. England violated the federal truth-in-leasing regulations with respect to its failure to specify charge-back items in its leases with owner-operators, the forced purchase of services and improper management of escrow accounts.

U.S. District Court Judge Ted Stewart for the District of Utah, Central Division, issued his declaratory judgment on June 20 in favor of the Owner-Operator Independent Drivers Association (OOIDA) and the class, which included a group of owner-operators who were leased to the Salt Lake City-based motor carrier. The judgment came about six months after the conclusion of a two-week trial in October 2006. The ruling relates to lease agreements entered into with owner-operators between June 1998 and August 2002.

In his written opinion, Judge Stewart found that C.R. England’s Independent Contractor Operating Agreement (“ICOA”) pervasively violated the charge-back, forced-purchase and escrow provisions of the leasing regulations. Rejecting C.R. England’s argument that the lease in question substantially complied with the regulations, Judge Stewart determined that the appropriate standard in determining violations was one of strict compliance with the language of the regulations.

Responding to the court’s ruling, OOIDA President and CEO Jim Johnston commented, “I think all truckers and motor carriers should take note of this victory and its affirmation that strict compliance of the regulations is the only acceptable alternative. After five years of hard-fought litigation, the court found that the leasing regulations mean what they say and that motor carriers must come clean in their lease agreements and disclose all mark-ups, profits, and any administrative fees.”

The judge ruled that C.R. England’s ICOA failed to disclose that the motor carrier was marking up tires and parts purchased by owner-operators by 30 percent and that the company charged owner-operators a 60 percent mark-up on fuel discounts it received from truck stops.

According to Judge Stewart, while the leasing regulations do not prohibit a motor carrier from making a profit on charge-backs, these mark-ups and profits must be disclosed in the owner-operators’ lease agreements in order to comply with the federal leasing regulations.

Judge Stewart also found that C.R. England charged owner-operators for undisclosed repair-related “administrative charges,” as well as an undisclosed $500 “termination fee” and an undisclosed $10 “termination letter” charge, all of which violated the leasing regulations.

The judge also determined that C.R. England unlawfully forced owner-operators to purchase satellite communications and administrative services as a condition of entering into the ICOA with C.R. England.

OOIDA originally filed the case against C.R. England in June 2002 along with five of its owner-operator members. It was certified as a class action in August 2005. In its complaint, OOIDA asked the court to declare C.R. England’s practices unlawful, to make C.R. England disgorge its ill-gotten gains, make restitution, provide accountings for owner-operator escrow funds and to order the return of escrow funds improperly retained by the motor carrier.

Within months after OOIDA filed this case, C.R. England scrapped the ICOA and required all of its owner-operators to sign a new agreement, one that disclosed all of the mark-ups, administrative and transaction fees. Judge Stewart found that the new lease, which the company has used since August 2002, complies with the leasing regulations in all respects.

In his written ruling on June 20, Judge Stewart further ordered that C.R. England undertake a class-wide accounting of its escrow funds for its violation of 49 C.F.R.§376.12 of the federal regulations and file a written proposal regarding the accounting with the court within thirty days.

Judge Stewart noted that the ICOA failed to comply with the most basic requirements of the leasing regulations – namely, that the lease must set forth the specific items to which the escrow funds may be applied. C.R. England’s ICOA failed to specify the items which could be deducted from the maintenance escrow, the security deposit/performance bond, and the fuel/road tax escrow.

OOIDA produced evidence at trial that C.R. England retained more than $6.3 million in owner-operator escrow funds under the ICOA. OOIDA will seek the return of all improperly retained escrow funds during the accounting phase of this case.

Johnston said he was encouraged by the fact that the judge has ordered C.R. England to account for every penny of every escrow fund, saying the Association would continue to fight for the return of all unlawfully retained escrow funds during the remaining phase of this case.

Johnston indicated that there were some issues that OOIDA would probably look to the appeals courts to revisit, specifically the decision to deny OOIDA’s request that C.R. England be ordered to return the undisclosed mark-ups and administrative fees as restitution for violations of federal law. The trial judge disagreed with OOIDA’s position, concluding instead that plaintiffs and class members were limited to “damages sustained” by the drivers.