OOIDA wins appeal against Prime and Arctic

Eighth Circuit upholds private right to action; affirms Congress' intent to

August 12, 1999 - In a forceful opinion with far-reaching implications for the motor carrier transportation industry, the U.S. Court of Appeals for the Eighth Circuit published a decision on Aug. 10, 1999, granting parties (leased owner-operators) a private right of action by which to seek enforcement of the federal truth-in-leasing regulations. The Court’s decision is the culmination of nearly two years of appellate court proceedings involving a claim by the Owner-Operator Independent Drivers Association. OOIDA and its members claimed that motor carriers New Prime, Inc. ("Prime"), and Arctic Express, Inc. ("Arctic"), violated the truth-in-leasing regulations by unlawfully retaining leased owner-operators’ escrow funds.

Following the filing of the owner-operator actions against Prime (in Missouri) and Arctic (in Ohio) in 1997, both motor carriers filed motions to dismiss the respective owner-operator complaints by arguing that federal law does not allow aggrieved parties to file leasing regulation-related actions in federal court. In their motions, Prime and Arctic asserted that owner-operators must take their regulatory disputes to the Federal Highway Administration (FHWA), an agency of the U.S. Department of Transportation (DOT). In opposing the motor carriers’ motions, OOIDA and its members cited the ICC Termination Act of 1995, arguing that this landmark federal law expressly granted parties the right directly to challenge motor carrier leasing practices in the federal courts.

"The courts have reaffirmed that leased owner-operators should have recourse against carriers over contract provisions and violations of the truth-in-leasing rules." - Jim Johnston, OOIDA President

In a decision rendered in November 1997, the U.S. District Court for the Western District of Missouri — the trial court in which OOIDA and its members had filed their action against Prime — unexpectedly ruled that owner-operators must bring their leasing disputes before the FHWA rather than in federal court.

OOIDA disagreed. A lengthy period of appellate brief filing by all interested parties and an April 1999 argument before a three-judge panel ensued. On Aug. 10, 1999, the Eighth Circuit handed down a decision, reversing the lower Missouri court.

Numerous parties were involved in this complex appeal. In addition to OOIDA, whose position was argued by OOIDA general counsel Paul D. Cullen, Sr., the U.S. Department of Justice, acting on behalf of the DOT and the FHWA, filed a brief and argued in support of the private right of action. Joining Prime and Arctic in opposing the private right of action was the American Trucking Associations, Inc. (ATA), which submitted an amicus curiae brief to the Eighth Circuit. After considering all of the various parties’ presentations, the court specifically stated in its opinion that it "reject(ed) the motor carriers’ contention," and found that the ICC Termination Act "authorizes private actions for damages and injunctive relief" to remedy violations of the federal motor carrier leasing statutes and regulations.

While the Eighth Circuit’s decision is welcome news to owner-operators, it does not mark the end of OOIDA’s disputes with motor carriers Prime and Arctic. Their right to seek enforcement of the leasing regulations through the federal courts having been confirmed today by the Court of Appeals, OOIDA and its members now must return to the federal District Courts to resume their actions against Prime and Arctic. Nevertheless, the Eighth Circuit’s ruling effectively equips OOIDA and its members with the legal means of vindication they’ve sought for nearly 20 years.

"The significance of this decision goes far beyond Prime and Arctic," said Jim Johnston, OOIDA president. "The courts have reaffirmed that leased owner-operators should have recourse against carriers over contract provisions and violations of the truth-in-leasing rules."

Johnston said that the decision signifies the "beginning of the process of leveling the playing field for small business truckers leased to carriers."