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OOIDA vs C.R. England ...
Case Name: OOIDA v. C.R. England, Inc.
Court Filed: U.S. District Court for District of Utah
Date Filed: June 8, 2002 (transferred from Eastern District of California)
Synopsis:OOIDA alleges that neither C. R. England’s lease agreement nor its conduct complied with the Truth-in-Leasing regulations. Violations include the forced purchase of goods and services, including Qualcomm and various bookkeeping, as well as undisclosed markups of parts and tires sold to owner-operators. OOIDA alleged that C.R. England unlawfully commingled escrow funds, and used them to pay debts not associated with the stated reason for the escrow, including debts to Opportunity Leasing, which leased trucks to owner-operators.
Class Certification: The Court certified the case as appropriate for class treatment in August of 2005.
Class Definition: All owner-operators who entered into a lease agreement with C.R. England from August 1998 to October 2006.
Class Notice: Notice was thereafter sent to the class. There are approximately 6,000 class members.
Status...
The class action lawsuit was first filed in 2002 and went to trial in federal court in 2006. The takeaway for OOIDA and trucker plaintiffs was a benchmark truth-in-leasing victory for truckers.
Following the decision in Salt Lake City, U.S. District Court Judge Ted Stewart referred the case to Magistrate Judge David Nuffer to oversee the disposition of individual class members’ escrow claims.
One issue before Judge Nuffer was whether Utah-based motor carrier C.R. England could assert set-offs for alleged repair and maintenance costs against individual class members’ escrow accounts in the damages phase of the case. OOIDA and the truckers had moved to exclude these set-offs from consideration on the grounds that the court required C.R. England to deduct any repair and maintenance charges from class members’ escrow funds when the motor carrier filed its final accounting in November 2008. The company opposed OOIDA’s motion on the grounds that these repair and maintenance charges were “newly discovered” and were “legitimate set-offs.”
The magistrate judge rejected C.R. England’s arguments and ruled that it could not assert any claim for repair or maintenance charges against class members during the current damages phase of the case.
He said that the plain language of the court’s ruling prohibited the consideration of these set-offs during the damages phase.
“Essentially, Judge Nuffer said that C.R. England missed the boat by not identifying these set-offs in its final accounting,” said David A. Cohen, attorney for The Cullen Law Firm, OOIDA’s litigation counsel. “The judge also said that letting C.R. England assert these claims at this late date would only serve to prolong a case that has been pending for many years.”
Cohen called this latest ruling another big win for OOIDA and members of the class action.
“It takes over $600,000 in alleged set-offs against individual class members off the table. Many of the affected class members (roughly half) are entitled to 18 percent interest per year on their unlawfully retained escrow funds. My preliminary calculations are that, based on this ruling and the 18 percent ruling, C.R. England will owe the class roughly $1 million just on these repair and maintenance set-offs.”
Cohen said the $1 million does not include additional damages owed to class members based on the court’s prior exclusion of refurbishment claims.
Cohen said C.R. England may appeal Judge Nuffer’s ruling.
sandi_soendker@landlinemag.com
In the case of OOIDA, et al. v. C.R. England, Inc., a federal judge in Utah ruled two years ago that the lease agreement C.R. England used with its owner-operators between the years 1998 through the summer of 2002 violated federal regulations in several respects, including by failing to specify mark-ups on charge-back items and by forcing owner-operators to purchase administrative services from the carrier.
Judge Ted Stewart also held that the C.R. England’s lease violated the escrow provisions of the leasing regulations, and specifically found that the motor carrier had improperly managed thousands of truckers’ escrow accounts.
The court ruled that the motor carrier must provide an accounting of what happened to those funds. In October 2008, Judge Stewart held that individual class members would be entitled to restitution, along with "payment of reasonable interest," if they had positive escrow balances, after consideration of any allowed set-offs. The judge then referred the case to Magistrate Judge David Nuffer to oversee the disposition of individual class member’s escrow claims.
One of the big issues facing the magistrate judge is exactly how much that rate of interest should be. OOIDA suggested that Utah’s statutory legal interest rate of 10 percent be used. C. R. England argued that the 91-day Treasury bill rate should apply.
The magistrate judge used neither in his final decision. Judge Nuffer cited a paragraph included in a number of the motor carrier’s own leases that uses an 18 percent annual “finance charge” on balances overdue in the event that either party to the lease, (the driver and C.R. England) defaulted on any amount due. Judge Nuffer ruled that class members who did not enter into leases containing an 18-percent default interest rate are entitled to the regulatory interest rate, or 91-day Treasury bill rate.
Those whose leases did contain the 18-percent default rate are entitled to restitution at the rate of 18 percent or 1.5 percent per month on escrow funds.
According to court order filed in late May, C.R. England asserted that the 18 percent rate was “not reasonable.”
But what is good for the goose is good for the gander is proverbial jurisprudence that has not gone out of style in Utah. Judge Nuffer wrote that “the Defendant should not be permitted to argue that its own form contract is unreasonable when that rate is applied to the Defendant.”
“Our analysis indicates that class members who leased on with C.R. England between 2000 and the summer of 2002 signed contracts containing the 18 percent default rate,” said David A. Cohen of The Cullen Law Firm, OOIDA’s litigation counsel. “To the extent these drivers have positive escrow balances they will be entitled to 18 percent interest on their unreturned escrow funds.”
Cohen cautioned, however, that C.R. England has indicated that it intends to appeal the magistrate judge’s ruling to Judge Stewart.
The appeal will be filed the week of June 15 and Judge Stewart is likely to issue a ruling later this summer. OOIDA President and CEO Jim Johnston said the Association will vigorously oppose any attempt by C.R. England to overturn the magistrate judge’s ruling that the company must pay 18 percent interest on improperly retained owner-operator escrow funds.
Johnston said that Judge Nuffer has issued an aggressive schedule on wrapping up the case, including a status report due in October 2009.
Lawyers representing the Utah-based motor carrier told U.S. District Court Judge Ted Stewart that they expect to have the accounting of the owner-operators’ escrow money done by March 20. A hearing is set for June 2, at which time the judge is likely to make additional rulings on whether C.R. England is required to return the funds to individual class members and, if so, in what amounts.
The case was originally filed in June 2002 and transferred to the U.S. District Court, District of Utah. On Oct. 3, 2006, Judge Ted Stewart issued favorable pretrial rulings for the truckers, marking the first time a federal court ruled that carriers’ leases must disclose markups and fees on chargebacks. The trial was in late October 2006.
On June 20, 2007, the judge ruled in the case, siding with the truckers on some issues. The judge found that the lease C.R. England used from 1998 until the summer of 2002 violated the leasing regulations. He also ruled that the new lease agreement the company has been using since the summer of 2002 is completely compliant with the federal leasing regulations.
Jim Johnston, president and CEO of OOIDA, said he was encouraged by the fact that the judge has ordered C.R. England to account for every penny of every escrow fund.
“The Association will continue to fight for the return of all unlawfully retained escrow funds during the remaining phase of this case,” Johnston said.
OOIDA’s initial analysis showed that several million dollars in owner-operator escrow funds are at issue under the old lease. The class includes about 3,000 owners or operators who had lease agreements with C.R. England from August 1998 through August 2002.
Judge Stewart noted that C.R. England’s leases 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.
– By Coral Beach, staff editor
coral_beach@landlinemag.com
On June 20, 2007, the judge issued findings of fact and conclusions of law that sided with the truckers on some issues. The judge found that the lease C.R. England used from 1998 until the summer of 2002 violated the leasing regulations. On the other hand, the judge ruled that the new lease agreement the company has been using since the summer of 2002 is completely compliant with the federal leasing regulations.
He ordered a classwide accounting of damages for owner-operators who were leased to the carrier under the old lease. Lawyers for OOIDA and the carrier are scheduled to discuss that accounting process at a Dec. 18 conference.
OOIDA’s initial analysis showed that there are $6.3 million in owner-operator escrow funds at issue under the old lease. The class includes about 3,000 owners or operators who had lease agreements with C.R. England from August 1998 through August 2002.
Bolstering crucial case law that should help ensure owner-operators’ rights in the future, Judge Stewart ruled that markups and profits must be disclosed in a carrier’s lease agreements in order to comply with the federal leasing regulations.
He 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 he ruled violated the leasing regulations.
The judge also determined that C.R. England illegally forced owner-operators to purchase satellite communications and administrative services as a lease condition.
Judge Stewart noted that C.R. England’s leases 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.
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. The OOIDA president said the Association would continue to fight for the return of all unlawfully retained escrow funds during the remaining phase of this case.
Sepcifically, the Court found that the ICOA:
The Court held a hearing on December 18, 2007 and ordered that C.R. England complete the class-wide accounting by March 20, 2008. C.R. England submitted its accounting in March 2008 but OOIDA objected to the accounting on the ground that the accounting undercounted Class members’ escrow funds by $1.8 million.
The Court rejected C.R. England’s accounting and C.R. England filed a revised accounting in July 2008, in which it correctly counted the amounts of Class members’ escrow funds.
At a hearing on October 22, 2008, Judge Stewart ordered CR England to file a “final accounting” within 30 days regarding all Class member escrows. The judge said that the Final Accounting must exclude C.R. England’s proposed set-offs. However, the court stated that after the Final Accounting is filed, the case will be referred to a Magistrate Judge for individual damage proceedings.
Judge Stewart ruled that, with one notable exception, C.R. England can assert its set-offs against Class members during the damages phase. The exception is “truck refurbishment charges.” Notably, the refurbishment charges were the single largest set-off category (approximately $7 million). Thus, C.R. England cannot deduct truck refurbishment costs from Class members’ escrow funds.
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