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 issues summary judgment on Landstar’s violations of truth-in-leasing regulations
Oct. 10, 2006, Grain Valley, MO – On Oct. 6, 2006, the federal court in Jacksonville, Fla., entered summary judgment in favor of the Owner-Operator Independent Drivers Association (OOIDA) and the class of owner-operators who were leased to Landstar System Inc. on claims that Landstar violated federal truth-in-leasing regulations by making undocumented markups to items charged-back to driver compensation.
The ruling from U.S. District Judge Henry Lee Adams Jr. in the middle district of Florida followed an earlier ruling by the federal court in Salt Lake City, which is hearing OOIDA’s case against C.R. England. That case holds that motor carriers may not impose undisclosed or undocumented markups on products or services charged-back on driver settlement sheets. Thus, while these courts would allow motor carriers to earn profits on charge back items, they may do so only if the amounts of such profits are fully documented and those documents are made available to drivers.
OOIDA filed the case against Landstar Systems and subsidiary companies in November 2002, claiming the carrier failed to disclose information required by the regulations in its lease agreement; overcharged owner-operators for fuel and transaction fees related to the purchase of fuel; unlawfully deducted amounts related to military shipments; and overcharged for base plates and permits issued by the states. The court later certified the class, which includes all owner-operators who were leased to Landstar operating companies Ranger, Ligon and Inway for any period of time from Nov. 1, 1998, through the present.
OOIDA President Jim Johnston said that, overall, he was pleased with the court’s rulings.
“While the court chose to disagree with some points in our original complaint, we are satisfied that the core items of disclosure of all chargebacks and strict compliance to the regulations were affirmed,” said Johnston. “The days of secret, undocumented profits are coming to an end following these rulings.”
In addition to the unlawful charge-back issue, the Jacksonville court firmly rejected Landstar’s “substantial compliance” defense. The motor carrier had taken the position that it need not make disclosures in its written lease agreement so long as it made disclosures outside of the agreement. The court rejected Landstar’s argument and sided with OOIDA and the truckers, holding that the regulations called for strict compliance in a motor carrier’s written lease agreement.
The court denied OOIDA’s motion for summary judgment on the compensation clause in Landstar’s lease holding that the lease clause was reasonably specific. OOIDA had argued that the lease did not identify all the reductions to adjusted gross revenue made before Landstar calculated the driver’s percentage share of the revenue. While the court did not grant summary judgment to OOIDA on this claim, neither did it award summary judgment to Landstar on this point. Thus, the question of whether Landstar’s conduct in calculating driver compensation was lawful appears to be an issue for trial.
The court is likely to schedule a trial for sometime in early 2007. Because of the court’s ruling on summary judgment, the trial will be largely devoted to the question of remedy. Expert reports prepared for the class calculate damages of $ 42,735,000 for chargeback items on which the court has ruled in favor of OOIDA and the class. Damages for items not yet ruled on are estimated to be an additional $ 5,500,000.
Contact: Mike Schermoly, OOIDA (816) 229-5791
Founded in 1973, the Owner Operator Independent Drivers Association (OOIDA) is composed of more than 144,000 owner-operators, professional drivers, and small business truckers from all 50 states, and Canada. OOIDA represents the interests of this nation's more than 350,000 small-business trucking professionals in the legislative and regulatory processes at both federal and state levels.