Feb. 17, 1999 - Motion for Partial Summary Judgement on Issue of Liability and Plaintiff's Memo of Support

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA

Plaintiffs, OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC. ("OOIDA"), GARY JONES, and DON C. HOLLY, d/b/a HOLLY TRUCKING, Individually and On Behalf of All Others Similarly Situated, complain against Defendant Rocor International, Inc., d/b/a Donco Carriers ("Rocor") as follows:

Jurisdiction of this claim is granted to this court by 28 U.S.C. §§ 1331 (federal question jurisdiction), 1337 (proceedings arising under an act of Congress regulating commerce) and 1367 (supplemental jurisdiction). The causes of action alleged in this complaint arise under the laws and regulations of the United States regulating commerce and the activities of motor carriers engaged in the transport of property in interstate and foreign commerce, including 49 U.S.C. §§ 13501, 14102 and 14704(a)(1) and (2), and 49 C.F.R. § 376 et seq., or are state law claims so related to the federal law claims that they form part of the same case or controversy under Article III of the United States Constitution.

Venue is based upon 28 U.S.C. § 1391(b) because Rocor maintains a place of business within this judicial district, and a substantial part of the events giving rise to the claims raised herein occurred within this district.

Plaintiff OOIDA is a business association of persons and entities, commonly known as "owner-operators," who own and operate motor carrier equipment. OOIDA is a not-for-profit corporation incorporated in the State of Missouri, with its headquarters located at 311 Mize Road, P.O. Box L, Grain Valley, Missouri 64029. OOIDA was founded in 1973 and now has over 40,000 members residing in all fifty (50) states and in Canada. Owner-operators are typically small business men and women who own and operate Class 7 and 8 trucks (large tractor-trailers) in interstate commerce, and account for an estimated forty (40%) percent of all inter-city truck traffic in the United States. The number of owner-operators nationwide totals in the hundreds of thousands. Plaintiff OOIDA files this action in a representative capacity on behalf of its members and seeks only declaratory and injunctive relief.

Named Plaintiff Gary Jones ("Jones") is an owner-operator who, while leased to Rocor, was charged by Rocor for premiums for Workers’ Compensation Insurance. Jones is an individual and a resident of the State of Florida.

Named Plaintiff Don C. Holly, d/b/a Holly Trucking ("Holly") is an owner-operator who, while leased to Rocor, was charged by Rocor for premiums for Workers’ Compensation Insurance for his employee driver. Holly is an individual and a resident of the State of Texas.

Jones and Holly bring this action on behalf of themselves and all others similarly situated, and seek monetary damages as well as declaratory and injunctive relief. Jones and Holly individually, and other similarly situated owner-operators, are "owners" within the meaning of 49 CFR § 376.2(d).

Jones and Holly individually, and other similarly situated owner-operators, are "lessors" within the meaning of 49 CFR § 376.2(f).

Rocor is a Nevada corporation, doing business in the State of Oklahoma as "Donco Carriers," with offices located at 4350 Will Rogers Parkway, Oklahoma City, Oklahoma 73108.

Rocor is an "authorized carrier" within the meaning of 49 CFR § 376.2(a), and a "lessee" within the meaning of 49 CFR § 376.2(g). As such, its lease agreements with owner-operators are "leases" within the meaning of 49 CFR § 376.2(e), and are subject to the strictures of the federal leasing regulations found at 49 CFR § 376 et seq.

Jones and Holly bring this action on behalf of a class that consists of owner-operators who, like Jones and Holly, are or were leased to Rocor and have been charged premiums for workers’ compensation insurance coverage. On information and belief, there are at least several hundred persons making up this potential class, thus making joinder of all such persons impracticable. The potential class is composed of both residents of Oklahoma and residents of other states.

Title 85 of the Oklahoma code ("the Workers’ Compensation Act") defines the term "employees." In relevant part, 85 Okla. Stat. § 3 (1997) states :

…‘employee’ shall not include a person, commonly referred to as an owner-operator, who owns or leases a truck-tractor or truck for hire, if the owner-operator actually operates the truck-tractor or truck and if the person contracting with the owner-operator is not the lessor of the truck-tractor or truck. Provided however, an owner-operator shall not be precluded from workers’ compensation coverage under the Workers’ Compensation Act if the owner-operator elects to participate as a sole proprietor.

Some members of the potential class are sole proprietors. These plaintiffs should be considered "employees" for purposes of the Workers’ Compensation Act. Jones is such an "employee." Some members of the potential class are not sole proprietors, by virtue of having partners, having become incorporated, or having employees themselves. These plaintiffs are not "employees," for purposes of the Workers’ Compensation Act, or otherwise. Holly is such a "non-employee" owner-operator.

Class Description. Pursuant to Rule 23, Fed. R. Civ. P., Jones and Holly bring this action on behalf of themselves and all others who are similarly situated, to wit, independent truck owner-operators who have leased their equipment and services to Rocor, with leasing agreement contracts which are in violation of federal leasing regulations, and while so leased have been illegally and/or fraudulently charged for premiums for workers’ compensation insurance in violation of 85 Okla. Stat. § 46 (1997), 36 Okla. § Stat. 1425(J)(6) (1997), and/or 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997)).

Impracticability of Joinder. On information and belief, there are potentially several hundred independent owner operators who fall into this potential class. Joinder of all potential class members, therefore, would be impracticable.

Commonality. Rocor has acted toward class members in a way which affects all members of each sub-class similarly and, accordingly, any questions of fact are common to each sub-class, as are questions of the liability of Rocor, or the appropriate nature of injunctive relief with respect to the potential class as a whole. Every question of law and fact is common to the members of each sub-class, apart from the exact amounts owed to each individual plaintiff.

Typicality. Jones’ and Holly’s claims are typical of the claims of the potential class as a whole.

Fair and Adequate Representation. The named plaintiffs are capable of fairly and adequately protecting the interests of the class.

Appropriate Nature of Class Action. The questions of law, enumerated in the counts below, are common to all members of each sub-class, and predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the claims herein.

Other factors favoring the maintenance of this suit as a class action include:

(a) the amount in controversy for individual class members is small enough that individual members of the potential class would not find it cost-effective to bring individual claims;

(b) requiring individuals to prosecute separate actions would substantially impair or impede the individual members’ ability to protect their interests;

(c) on information and belief, no litigation has been brought by class members concerning this controversy;

it is desirable to concentrate the individual members’ claims in one forum, because given the amount in controversy, to require these claims to be brought in separate forums would effectively prevent individuals from bringing claims to recover their funds; and no substantial difficulties are likely to be encountered in managing this class action.

21. Federal motor carrier leasing regulations provide that

the lease shall clearly specify all items that may be initially paid for by the authorized carrier, but ultimately deducted from the lessor’s compensation at the time of payment or settlement, together with a recitation as to how the amount of each item is to be computed. The lessor shall be afforded copies of those documents which are necessary to determine the validity of the charge.

49 CFR § 376.12(h).

22. Further, Federal motor carrier leasing regulations also provide that

If the lessor purchases any insurance coverage for the operation of the leased equipment from or through the authorized carrier, the lease shall specify that the authorized carrier will provide the lessor with a copy of each policy upon the request of the lessor. Also, where the lessor purchases such insurance in this manner, the lease shall specify that the authorized carrier will provide the lessor with a certificate of insurance for each such policy. Each certificate of insurance shall include the name of the insurer, the policy number, the effective dates of the policy, the amounts and types of coverage, the cost to the lessor for each type of coverage, and the deductible amount for each type of coverage for which the lessor may be liable.

49 CFR § 376.12(j)(2).

23. Rocor’s lease agreements, however, typically provide, in relevant part, as follows:

13. The Carrier obligations thereunder shall be assumed by, the Contractor who shall provide and maintain Workers’ Compensation insurance coverage and give Carrier a certificate thereof unless the Contractor shall elect to take advantage of Carrier’s insurance program… [emphasis added].

This provision neither states nor implies that in the event that the owner-operator should elect to take advantage of Rocor’s Workers’ Compensation Insurance program, the premium cost will be charged back through trip settlement sheets, although the lease makes plain, under other provisions referring to insurance, that premiums for other types of coverage will be charged back. For example, the lease outlines the requirements for physical damage insurance in paragraph 17d and the requirements for public liability and property damage insurance in paragraph 17e. Then, in paragraph 17h, the lease states that

if Contractor participates in the program for insurance coverage described in Paragraphs d and e above, Carrier shall cause its insurance company to provide a copy of the policy when requested by Contractor and a Certificate of Insurance for such policies. Carrier may deduct the cost of such program from Contractor’s settlements [emphasis added].

Rocor’s failures, to state with sufficient specificity that premium amounts will be charged back, to state with sufficient specificity the exact amounts that will be charged back, and to state with sufficient specificity that a copy of the policy will be provided upon the owner-operator’s request, all with regard to Workers’ Compensation Insurance but no other type of insurance, constitute violations of the federal leasing regulations.

Rocor’s practice of charging back premium amounts to those owner-operators who choose to participate in its Workers’ Compensation Insurance program through trip settlement sheets without stating in the lease that such chargebacks will occur is an additional, separate violation of the federal leasing regulations.

Rocor is authorized by the State of Oklahoma to self-fund a Workers’ Compensation Insurance program for its own employees, as per 85 Okla. Stat. § 61. However, charging employees for premiums for workers’ compensation insurance through deductions from trip settlement sheets is a misdemeanor under 85 Okla. Stat. § 46 (1997), and also constitutes the separate offense of Workers’ Compensation fraud under 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997)).

Rocor has no authorization or license from the State of Oklahoma to sell Workers’ Compensation Insurance policies to non-employees. The sale of Workers’ Compensation Insurance policies to non-employee owner-operators therefore constitutes the unlawful sale of insurance under 36 Okla. Stat. § 1425(J)(6) (1997), and/or a violation of 85 Okla. Stat. § 61, and/or Workers’ Compensation fraud under 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997)).

Rocor provides each owner-operator with the opportunity to accept or decline insurance coverage through a form separate from the actual lease contract, but filled out by Rocor and the owner-operator at the same time as the signing of the lease contract. This form sets forth the types of coverages that may be elected, including Workers’ Compensation Insurance.

On the section of this form specifically dealing with Workers’ Compensation Insurance, the owner-operator is instructed to check the box (there is only one box) if either (a) the owner-operator is electing to participate in Rocor’s own-risk program or (b) the owner-operator will be providing a certificate of Workers’ Compensation Insurance. Since one or the other must be true, every owner-operator checks the box.

Once the box is checked, Rocor uses this form as evidence of the owner-operator’s election to participate in Rocor’s own-risk program. No opportunity to present a certificate of Workers’ Compensation Insurance is ever given to the owner-operator. Rocor thus precludes the owner-operator from not being subject to the charge that Rocor imposes for the Workers’ Compensation Insurance.

The allegations contained in paragraphs 1 through 30 above are realleged and incorporated herein by reference as though fully set forth herein.

Notwithstanding the clear requirement of the regulation, Rocor’s standard lease contract does not state with sufficient specificity the fact that the cost of Workers’ Compensation Insurance may or will be charged back, in the event that the owner-operator should elect to take advantage of Rocor’s insurance program. Such failure constitutes a violation of 49 CFR § 376.12(h).

Notwithstanding the clear requirement of the regulation, Rocor’s standard lease contract does not state with sufficient specificity the exact amounts that will be charged back, in the event that the owner-operator should elect to take advantage of Rocor’s Workers’ Compensation Insurance program. Such failure constitutes a violation of 49 CFR § 376.12(h).

Notwithstanding the clear requirement of the regulation, Rocor’s standard lease contract does not provide that in the event that the owner-operator should elect to take advantage of Rocor’s Workers’ Compensation Insurance program, a copy of the policy will be provided to the owner-operator upon request. Such failure constitutes a violation of 49 CFR § 376.12(j)(2).

As a direct and proximate result of this illegal conduct, members of the class as a whole have suffered substantial damages.

The allegations contained in paragraphs 1 through 35 above are realleged and incorporated herein by reference as though fully set forth herein.

Notwithstanding the clear requirement of the regulation that all items to be charged back must be specified in the lease, Rocor engages in a practice of charging back to owner-operators the cost of Workers’ Compensation Insurance without stating in the lease either the fact that the chargebacks will occur or the amount that will be deducted, in violation of 49 CFR § 376.12(h).

As a direct and proximate result of this illegal conduct, the members of the potential class have suffered substantial damages.

The allegations contained in paragraphs 1 through 38 above are realleged and incorporated herein by reference as though fully set forth herein.

Rocor has charged members of the employee sub-class premiums for Workers’ Compensation Insurance. Such charges constitute violations of 85 Okla. Stat. § 46 (1997).

41. As a direct and proximate result of this illegal conduct, employee members of the potential class have suffered substantial damages.

The allegations contained in paragraphs 1 through 41 above are re-alleged and incorporated herein by reference as though fully set forth herein.

Rocor has provided Workers’ Compensation Insurance to the members of the non-employee sub-class and charged members of the non-employee sub-class premium amounts for Workers’ Compensation Insurance through deductions from their trip settlement sheets. This constitutes the unauthorized/illegal sale of insurance, in violation of 36 Okla. Stat. § 1425 (J)(6) (1997) and 85 Okla. Stat. § 61 (1997).

As a direct and proximate result of Defendants’ illegal conduct, non-employee members of the potential class have suffered substantial damages.

The allegations contained in paragraphs 1 through 43 above are realleged and incorporated herein by reference as though fully set forth herein.

Rocor has precluded owner-operators from validly opting out of its own-risk program by using a form to evidence the owner-operators’ election to participate that does not clearly indicate whether the owner-operators’ election is to participate or not to participate. This form constitutes a "writing" within the meaning of 85 Okla. Stat. § 1663 (1997). Use of this form to evidence an election (which may or may not have occurred) in order to charge for coverage (which the owner-operator may or may not have intended to take), constitutes Workers’ Compensation Insurance fraud under 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997)).

Rocor has provided Workers’ Compensation Insurance to members of the non-employee sub-class, and has charged members of both sub-classes premium amounts for Workers’ Compensation Insurance through deductions from their trip settlement sheets. Provision of Workers’ Compensation Insurance to members of the non-employee sub-class, and charging members of the class as a whole for the premiums, constitutes Workers’ Compensation Insurance fraud under 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997)).

As a direct and proximate result of this illegal and fraudulent conduct, the members of the potential class have suffered substantial damages.

The allegations contained in paragraphs 1 through 48 above are realleged and incorporated herein by reference as though fully set forth herein.

Rocor has violated the Workers’ Compensation Act in several respects, as set forth above.

The Workers’ Compensation Act is an implied provision in every contract for employment in the State of Oklahoma.

To the extent that the owner-operators are employees, the lease contracts entered into by Rocor and the owner-operators are contracts for employment.

Rocor’s violations of the Workers’ Compensation Act therefore constitute multiple breaches of the lease contracts with the owner-operators.

As a result of these multiple breaches of contract, the members of the potential class have suffered substantial damages.

WHEREFORE, Plaintiffs Owner-Operator Independent Drivers Association, Inc., Gary Jones, and Don C. Holly, d/b/a Holly Trucking, individually and on behalf of all others similarly situated, respectfully request that this Court:

declare that those Plaintiffs who are sole proprietors are "employees" for purposes of the Oklahoma workers’ compensation statute, and therefore Rocor’s practice of charging such Plaintiffs premiums for workers’ compensation statute is illegal pursuant to 85 Okla. Stat. § 46 (1997);

declare that those Plaintiffs who are not sole proprietors, by virtue of having partners or having become incorporated, are not "employees" for purposes of the Oklahoma workers’ compensation statutes, and therefore Rocor’s practice of providing workers’ compensation insurance to these Plaintiffs and charging them for premiums through deductions from their trip settlement sheets constitutes the unauthorized/illegal sale of insurance in violation of 36 Okla. Stat. § 1425(J)(6) (1997);

declare that charging both sub-classes of Plaintiffs for premiums through deductions from their trip settlement sheets constitutes workers’ compensation fraud in violation of 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. 16 (1997));

declare that Rocor’s use of an election form which does not allow for a true election constitutes workers’ compensation fraud in violation of 21 Okla. Stat. § 1663 (1997) (a Schedule G felony under 21 Okla. Stat. § 16 (1997));

declare that Rocor’s failure to provide a clear statement of its policies as to chargebacks and provision of insurance policies upon request with regard to Workers’ Compensation Insurance constitutes a violation of federal law, pursuant to 49 CFR § 376.12(h) and (j)(2);

permanently enjoin Rocor from continuing to charge owner-operators for workers’ compensation insurance by deductions from their trip settlement sheets or otherwise (under any alternative theory of liability under the laws of the State of Oklahoma and/or federal law);

permanently enjoin Rocor from violation of the federal leasing regulations with regard to chargebacks and provision of insurance policies upon request;

award to Plaintiffs their actual damages, including the return of all premiums paid, for Rocor’s improper and illegal conduct (under any alternative theory of liability under the laws of the State of Oklahoma and/or federal law);

create a common fund made up of all damages owed by Rocor to individual class members;

award class counsel a sum for reasonable attorney’s fees to be paid out of the common fund;

award to Plaintiffs a reasonable attorney’s fee pursuant to 49 U.S.C. § 14704(e); and

award such other relief as this Court may deem just and proper.

Plaintiffs hereby demand a trial by jury on all issues so triable.

Respectfully submitted,

HENRY A. MEYER, III
PRAY, WALKER, JACKMAN,
WILLIAMSON & MARLAR

One Leadership Square
211 North Robinson
Oklahoma City, OK 73102
(405) 236-8911
(405) 236-0011 (facsimile)

PAUL D. CULLEN, SR.
JOSEPH A. BLACK
DIANA E. STEIN
AMY I. WASHBURN
THE CULLEN LAW FIRM

1101 30^th Street, NW
Suite 300
Washington, DC 20007
(202) 944-8600
(202) 944-8611 (facsimile)