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

OOIDA pierces corporate veil in case against Ledar; Court finds carrier and its officers liable to drivers for multiple violations of truth-in-leasing regulations

Jan. 4, 2005, Grain Valley, MO - The Owner-Operator Independent Drivers Association (OOIDA) announces that a U.S. District Court has declared that Ledar Transport and Hawthorn Leasing, along with company officers Carl Higgs, Norma Higgs, and Scott Higgs are all liable to a class of drivers for violations of federal truth-in-leasing regulations.

The ruling on Dec. 30, 2004, by U.S. District Court Judge Fernando Gaitan Jr. (for the Western District of Missouri in Kansas City) followed a three-day trial in August 2004. The court ruled in favor of OOIDA and the other plaintiffs on ALL counts that the defendants are liable to the drivers; it must now determine the amount of their liability.

OOIDA, with members Daniel Day, David Horn, Kenneth Reinsch, and Jason Buckallew filed the lawsuit against Ledar in March 2000 claiming numerous violations of the federal truth-in-leasing regulations and failure to include certain required provisions in their lease agreements. The complaint was granted class certification in April 2002 to include all drivers who entered into lease agreements with Ledar Transport from June 1996 through January 2001.

The drivers claimed that Ledar Transport violated the truth-in-leasing regulations in the way it obtained and accounted for escrow funds, including security deposits and maintenance reserves. Specifically, they claimed that Ledar did not specify what would be treated as escrow funds, did not pay interest on those funds and did not provide an accounting for or return of those funds at the end of the leases. The drivers also claimed that Ledar was liable for improper charge-backs for insurance, repairs, taxes, Comdata fees and other miscellaneous charges. Furthermore, it was claimed that Ledar wrongfully required that certain purchases be made from or through it and that Ledar failed to pay compensation that had been earned. The court agreed with all the plaintiffs' complaints.

The claims were not only against Ledar Transport and Hawthorn Leasing, but also against the companies' three corporate officers, Carl, Norma and Scott Higgs. In its "piercing the corporate veil" claim, OOIDA alleged that because of the way that the Higgs both dominated and ignored the corporations they created, and worked together to do so, that they were individually liable for Ledar's violations of the truth-in-leasing regulations. Judge Gaitan agreed. In doing so, he determined that the Higgs' companies Ledar Transport, Hawthorn Leasing, and a third non-defendant company, Jayco, were corporations "in form only, not in substance" and were used to perpetrate violations of the truth-in-leasing regulations.

Finally, Carl Higgs and Scott Higgs were found by the court to be personally liable not only under the "piercing the corporate veil" claim, but under an "affiliated entity" claim as well.

The affiliated entities claim was based on the fact that trucks leased to drivers pursuant to lease-purchase agreements were titled to Carl Higgs and Scott Higgs personally. The father and son manipulated the relations between their companies for their own personal benefit and therefore, the plaintiffs claimed, they were "affiliated" with the corporations that violated truth-in-leasing regulations. The court found that, with respect to the trucks titled in their names, they are "affiliated entities" and, as such would be personally liable for the violations committed through their corporations.

OOIDA President and CEO Jim Johnston said the importance of the court finding the individual company owners personally liable could not be understated.

"This decision by the court to hold owners and officers of companies liable for violations of the federal regulations will go a long way in helping us recover driver accounts from carriers, especially those that hide behind bankruptcy protection filings and the quick sale or manipulation of corporate assets," Johnston said.

The next stage of the litigation will determine the amount owed by these five defendants to the class. The date for that action is still to be set.

Contact:
Michael Schermoly, OOIDA (816) 229-5791
Randall Herrick-Stare, Cullen Law Firm (202) 944-860

Founded in 1973, the Owner Operator Independent Drivers Association (OOIDA) is composed of more than 118,000 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.