Opinion
No. CV-02-1059-PHX-PGR.
September 27, 2007
OPINION and ORDER
This action involves alleged violations of the federal Truth-in-Leasing regulations, 49 C.F.R. Part 376, which impose requirements and restrictions on lease agreements between federally regulated motor carriers and owner-operators. The plaintiffs' First Amended Class Action Complaint for Declaratory and Injunctive Relief [and] Damages (doc. #174), filed on September 26, 2003, seeks declaratory and injunctive relief, as well as damages, pursuant to the private right of action afforded by the Interstate Commerce Commission Termination Act of 1995, 49 U.S.C. § 14704(a). The plaintiffs named in the amended complaint are the Owner-Operator Independent Drivers Association, Inc. ("OOIDA"), and twelve individual owner-operators: Marc Mayfield, Frank Belcher, David Hayes, Gerald Webb, David Rush, Valerie Helton, John Nunn, Sr., Wayne Bibicoff, Roy Sparks, Olin Sparks, Paul Hawkins, and Frank Carter. The named defendants are Swift Transportation Co., Inc. (AZ) ("Swift"), Swift Transportation Co., Inc. (NV), Interstate Equipment Leasing Co., Inc., M.S. Carriers, Inc., and M.S. Carriers Warehouse Distribution, Inc.
The Court denied the plaintiffs' motion for class certification on March 30, 2006.
The Court stayed the plaintiffs' claims against M.S. Carriers, Inc. and referred those claims to arbitration pursuant to the Federal Arbitration Act on September 26, 2003, dismissed the plaintiffs' claims against M.S. Carriers Warehouse and Distribution, Inc. and dismissed its counterclaims on July 28, 2004, and dismissed, pursuant to stipulation, the plaintiffs' claims against Interstate Equipment Leasing Co., Inc. on February 12, 2007.
Among the motions pending before the Court are the Motion for Partial Summary Judgment of Defendant Swift Transportation Co., Inc. (AZ) on Counts I II of the First Amended Complaint and Plaintiffs' Motion for Partial Summary Judgment on Liability, simultaneously filed on December 29, 2006. Having considered the parties' memoranda in light of the evidence of record, the Court finds that the cross-motions should be granted in part and denied in part pursuant to Fed.R.Civ.P. 56.
The Court notes that it construes the plaintiffs' summary judgment motion as also being brought in the name of Gerald Webb. Although the named moving plaintiffs are limited to Belcher, Hayes, Helton, and Mayfield, the record establishes that Webb was also a Swift owner-operator for some three months in 2002. While the plaintiffs' counsel moved to withdraw as counsel for Webb on February 23, 2007, on the ground that they had lost contact with him, those counsel were still counsel of record for Webb pursuant to LRCiv 83.3(a) at the time the plaintiffs' summary judgment motion was filed on December 29, 2006 and the plaintiffs' motion should have included Webb.
The Court also notes that it does not construe Swift's motion as being directed at plaintiff Wayne Bibicoff, who is currently representing himself in this action. Although Swift's motion lists Bibicoff as a former Swift driver, that was apparently done in error, notwithstanding the plaintiffs' failure to dispute it, as there is nothing in the summary judgment record establishing that Bibicoff ever signed a lease with Swift.
The Court further notes that it has considered the parties' exhibits in resolving the summary judgment motions, notwithstanding the parties' improper failure to authenticate the exhibits, as neither side has objected to any of the exhibits. See Orr v. Bank of America, NT SA, 285 F.3d 764 (9th Cir. 2002). The Court has not, however, searched the record for evidence not properly and/or specifically identified in the parties' statements of facts as required by LRCiv 56.1. See Clarr v. Burlington Northern R. Co., 29 F.3d 499, 504 (9th Cir. 1994) ("It is not the district court's job to sift through the record to find admissible evidence in support of a non-moving party's case."); accord, Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996).
The Court additionally notes that it has intentionally not discussed every argument raised by the parties and that those arguments not discussed were considered by the Court to be unnecessary to the resolution of the pending motions.
A. Standard for Regulatory Compliance for Liability Purposes
B. Liability
Count I, in its current posture, alleges that Swift is engaging in the unlawful provision of transportation services in equipment that it does not own because the leases governing its use of the equipment fail to conform to the Truth-in-Leasing regulations, by either failing to contain provisions required by 49 C.F.R. § 376.12, or by containing provisions that conflict with § 376.12. The count seeks economic damages allegedly suffered by the plaintiffs as a result of Swift's violation of federal law, and injunctive relief barring Swift from providing transportation in leased equipment until it executes leases conforming to the Truth-in-Leasing regulations.
Count II, in its current posture, alleges that Swift does not adhere to or perform the obligations established by the Truth-in-Leasing regulations set forth in 49 C.F.R. Part 376. The count seeks damages for Swift's alleged violation of the Truth-in-Leasing regulations, and seeks to enjoin Swift from engaging in business practices that violate the Truth-in-Leasing regulations.
It is not clear to the Court whether the limited nature of the plaintiffs' motion means that the plaintiffs have abandoned their other allegations of liability in Counts I and II not related to charge-backs, or whether they simply believe that the unmentioned grounds are not suitable for resolution by summary judgment.
It also is not clear to the Court whether Swift's reference to seeking judgment against the "plaintiffs" in Counts I and II is meant to include just the individual plaintiffs who ever signed leases with Swift, or whether it also includes OOIDA (assuming that OOIDA is meant to be a plaintiff in Counts I and II, which is not clear from the amended complaint).
Another problem with Swift's motion is that it seeks judgment as to the entirety of Count I, it does not specifically discuss all of the grounds for liability raised in Court I, e.g. the alleged violations of § 376.12(d), (e), (g), (j) and various subparts of (k).
(1) Violation of § 376.12(h)
The charge-back regulation, § 376.12(h), provides that
[t]he 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.
The parties separate the Swift leases into "old form" leases, i.e. those before 2003, and "revised" leases, i.e. those entered into on or after January 1, 2003. For purposes of the individual plaintiffs' liability claims, the relevant revised leases only go through 2005, as that is when the last individual plaintiff stopped driving for Swift.
It is the position of both parties that, for purposes of the summary judgment motions, the old form leases are materially uniform to each other and the revised leases are materially uniform to each other.
(a) Old Form Leases
While Swift concedes that its old form leases did not literally comply with § 376.12(h) in some material respects, it disputes the plaintiffs' contention that the old form leases did not even substantially comply with the charge-back regulation. Swift's general contention is that it has substantially complied with the regulation because the plaintiffs were always provided an identification of all charge-back items and either the amount of the charge-back or a calculation of the charge-back before they executed the leases. Swift has supported its summary judgment motion with an affidavit from Randall H. Eslick, who since 1995 has been in charge of overseeing Swifts' owner-operators, including their training. The gist of Eslick's affidavit is that Swift has made the charge-back disclosures required by the Truth-in-Leasing regulations to owner-operators since at least June 1, 1998 during the orientation program or by other means prior to the execution of the lease agreements.
The Court concludes that the evidence of record establishes that Swift's old form leases, under any standard of liability, violated the charge-back regulation at least to the extent that those leases did not disclose the fact that certain of the charge-backs included a "mark-up", i.e., a sum added by Swift as compensation for its administrative costs in supplying the products or services to the owner-operators and/or to provide it with a profit on those products and services.
(i) Existence of Mark-ups
The plaintiffs contend that Swift violated the Truth-in-Leasing regulations in part because it charged-back more for certain services and products than it paid to third-party vendors; they argue, for example, that Swift "illegally profited" on fuel charge-backs and on insurance premium charge-backs. The Court disagrees. While there is some scant case law supporting the plaintiffs' position, see e.g., Owner-Operator Independent Drivers Ass'n v. Ledar Transport, 2004 WL 5249148, at *6 n. 36 (W.D.Mo. Dec. 30, 2004) (Court, referring to an ICC report issued the year before the current version of the Truth-in-Leasing regulations was adopted, briefly stated in a footnote that the regulatory history of § 376.12(h) indicates that charge-backs that exceed the actual amount advanced by the motor carrier are unlawful), the majority of the few courts that have specifically dealt with the issue have much more persuasively concluded that it is not unlawful for a charge-back to consist of more than the actual amount advanced by the carrier. See e.g., Owner-Operator Independent Drivers Ass'n v. Landstar System, Inc,, 2006 WL 4069044, at *6-7 (M.D.Fla. Oct. 6, 2006) (Noting that the Truth-in-Leasing regulations are silent regarding the ability of a motor carrier to include administrative fees or profits on charge-backs, the court concluded that it is not unlawful for carriers to charge more for products and services that they pay third-party vendors because the legislative history of the regulations makes clear that the ICC considered a total ban on profits and rejected it before adopting the current version of the regulations); Owner-Operator Independent Drivers Ass'n v. C.R. England, Inc., 2007 WL 1795768, at *7 (D.Utah June 20, 2007) (Court concluded that "charge-backs that include profits and fees are not per se unlawful under § 376.12(h); the [Truth-in-Leasing] Regulations do not preclude Defendant from making a profit.") The Court concludes that Swift did not violate § 376.12(h) by including a mark-up on some of the charge-backs.
(ii) Recitation of the Manner of the Calculation
The plaintiffs also contend that Swift has violated that portion of the charge-back regulation that requires that there be "a recitation as to how the amount of each item is to be computed." Swift argues that what it perceives as an ambiguity in the regulation concerning what "recitation" means can only be resolved by concluding that the required disclosure is achieved by either a statement of the amount of the charge-back or if that amount is not available at the time of the execution of the lease, by a statement as to how the charge-back is to be computed. Swift's general position is that while it did not always include this information in its pre-2003 leases, the plaintiffs were informed of the amount of the charge-backs or their calculation during their orientation before they executed their leases. Examples of this dispute include the charge-backs for fuel and insurance premiums — while it is undisputed that Swift informed its owner-operators that they would be charged for fuel they purchased at Swift's terminals at the posted fuel price and informed them of the amount of the premiums for insurance purchased through Swift, it is also undisputed that Swift never disclosed to the owner-operators how those costs were calculated, i.e. never disclosed the existence of various mark-ups over the prices Swift paid for the fuel and insurance.
The plaintiffs do not dispute the following costs were in fact disclosed by Swift with regard to the pre-2003 leases for purchasing services and products from Swift:
Insurance — that physical damage insurance was 2.5% per $1,000 of tractor value per week, that non-trucking use liability insurance was $8.08 per week, and that occupational accident insurance was $36.92 per week.
Qualcomm service — was $26.42 per week.
Accounting services — was $15.00 per week.
Comdata cash advances — was a $3.00 fee for each cash advance.
Fuel — would be charged posted price.
To the extent that the plaintiffs are arguing that this "recitation" provision requires that the actual amount of any mark-up be disclosed to owner-operators, the Court is not persuaded and concludes otherwise. See e.g., OOIDA v. Landstar System, Inc., 2006 WL 4069044, at *8 (M.D.Fla. Oct. 6, 2006) ("The legislative history makes clear that the [charge-back] regulation does not require the lease to state on the face of the lease the amount of . . . the mark-ups[.]") (Footnote omitted).
However, while the actual amount of the mark-up need not be disclosed, the Court rejects Swift's argument that the fact that a charge-back includes a mark-up need not be disclosed. The Court concludes that it is a violation of the charge-back regulation for a carrier to fail to disclose the existence of a mark-up included in a charge-back. See e.g., OOIDA v. C.R. England, Inc., 2007 WL 1795768, at *4 (D.Utah June 20, 2007) (Court found that the carrier violated § 376.12(h) in part by failing to disclose certain mark-ups.); OOIDA v. Landstar System, Inc., 2006 WL 4069044, at *7-8 (M.D.Fla. Oct. 6, 2006) (Court rejected carrier's argument that § 376.12(h) doesn't require charge-back mark-ups to be disclosed.)
(iii) Documentation of Charge-backs
The plaintiffs further contend that Swift has violated that portion of the charge-back regulation that provides that the owner-operator "shall be afforded copies of those documents which are necessary to determine the validity of the charge." Nothing in the Truth-in-Leasing regulations explains what "afforded" means, and the parties have done very little to bring any enlightenment to this issue. It is apparently the plaintiffs' position that all of Swift's leases at issue failed to comply with this requirement because they did not disclose the right of the owner-operators to receive documentation supporting the amount of the charge-backs. Swift, while otherwise essentially ignoring the documentation issue, contends only that "afford" means to "make available" and that the plaintiffs have not submitted any evidence that they were refused documents by Swift to determine the validity of the charge-backs; Swift does not argue that any of its leases informed the owner-operators that they could see the underlying documentation.
The plaintiffs, in an argument not responded to by Swift, assert that it is clear that Swift never provided the required documentation necessary for them to determine the validity of the charge-backs because Swift "claims confidentiality for the very information and documentation which § 376.12(h) commands it to provide to owner-operators to allow them to determine the validity of the chargebacks" — the basis for this argument is that Swift has refused to disclose documentation during discovery, without a protective order, regarding its costs related to fuel charges, insurance charges, and transaction fees on the ground that such information constitutes confidential, proprietary business information, and has refused to produce at all documentation related to its Qualcomm costs on the ground that it constitutes confidential, proprietary business information and is protected by a confidentiality agreement with Qualcomm.
Since the Court has concluded that the actual amount of any mark-up need not be disclosed, the Court further concludes that Swift is not required by the charge-back regulation to provide its owner-operators with confidential and proprietary business information underlying its mark-ups. See Owner-Operator Independent Drivers Ass'n v. Landstar Inway, Inc., 2007 WL 958284, at *7 (M.D.Fla. March 29, 2007) (Court concluded that the carrier's charge-back for Qualcomm's services was not a charge-back for § 376.12(h)'s purposes for which the owner-operators had to be afforded copies of Qualcomm's confidential pricing information to determine the validity of the charge-back.)
The purpose of the documentation provision is to allow owner-operators to ascertain whether they are being properly charged for the products and services advanced to them by the carrier. While it does not appear that Swift's old form leases actually informed the owner-operators that they could view documentation from which the validity of the charge-backs could be determined, the plaintiffs do not dispute that Swift provided them with weekly settlement sheets detailing the charge-backs, and they have not cited the Court to any evidence establishing that those settlement sheets did not provide sufficient information to allow them to determine whether or not the charge-back rates previously disclosed to them were being used to determine their charge-backs. See id. (Court concluded that the carrier's settlement statements to the owner-operators constituted sufficient documentation under the literal compliance standard to determine the validity of charge-back items.) While Swift would have violated § 376.12(h) if it refused to provide an owner-operator with non-confidential documentation of the charge-backs upon request, see e.g., OOIDA v. C.R. England, 2007 WL 1795768, at *3 (D.Utah June 20, 2007), the plaintiffs have not controverted Swift's argument that none of them ever asked for any additional underlying documentation of the charge-backs.
The Court thus concludes that the moving plaintiffs are entitled to a declaration that Swift violated § 376.12(h) to the extent that Swift never disclosed to them prior to 2003 the fact that the amount of certain of the deductions from their compensation for products and services purchased from or through Swift included an amount over and above the price that Swift paid to third-party vendors for those products and services.
(b) Revised Leases
Swift revised its owner-operator leases starting in January 1, 2003, apparently as a result of this litigation. Swift's basic position is that the revised leases at issue complied with the Truth-in-Leasing regulations even under the literal compliance standard because the charge-backs and their amounts not itemized in the body of the revised lease were itemized in a Schedule B attached to each lease, and that the information provided in the revised lease form specified whether the charge-back was the actual charge to Swift or included a mark-up. The actual amounts of the mark-ups, whether profit, administrative fees, etc., were not disclosed in the revised leases.
The evidence of record establishes that only plaintiffs Belcher and Hayes entered into leases with Swift that used the revised form of the lease. Belcher stopped driving for Swift in 2004 and Hayes stopped driving for Swift in 2005.
For example, Belcher's January 1, 2003 lease states in ¶ 4 that the deduction for the owner-operator's purchase or rent of company furnished products, equipment or services "may include amount's to cover COMPANY's administrative costs or offering and maintaining such products, equipment or services[,]" it states in ¶ 14 regarding Comdata card cash advances that the charge-back will include "three dollars ($3.00) to cover costs and administrative expenses[,]" and it states in ¶ 15 regarding fuel purchases that the "posted pump price may include the cost of the fuel, taxes, other government fees and charges, delivery/freight costs and administrative expenses."
Schedule B to Belcher's January 1, 2003 lease supplements the lease provisions by stating:
Account Amount Schedule
While the plaintiffs concede that the revised leases disclosed the charge-back items and the amount of the individual charge-backs, they contend that the revised leases still violated the Truth-in-Leasing regulations because they did not disclose how the charges were calculated and they failed to disclose that the owner-operators were entitled to receive documentation supporting the validity of the charges.
(i) Recitation of the Manner of the Calculation
Although the plaintiffs repeatedly, and entirely conclusorily, assert that the disclosures in the revised leases regarding the mark-ups were "patently inadequate" to comply with the charge-back regulation, the Court disagrees and concludes that Swift's revised leases sufficiently disclosed how the charge-backs were calculated because it is specified within the lease itself whether the basis of the computation was the actual cost to Swift, or on its cost plus a mark-up in the form of an administrative fee, etc. See OOIDA v. Ledar Transport, 2000 WL 33711271, at *7 (W.D.Mo. Nov. 3, 2000) (Court noted that the recitation of how the amount of the charge-back is to be computed includes "whether Defendant will deduct simply the actual cost of the charge, or the cost plus administrative fees, etc.") See also, OOIDA v. Landstar Inway, Inc., 2007 WL 958284, at *7 (M.D.Fla. March 29, 2007) (Court, using a literal compliance standard, concluded that a lease properly recited how a charge-back was computed because the lease specified that when an exact amount of a charge-back would not be known until liability is incurred, the owner-operators would be charged a "variable" cost — the Court noted, for example, that the lease disclosure specifying that the amount of a tire purchase would be "variable, plus $6 per tire" complied with the computation disclosure requirement of § 376.12(h).)
According the plaintiffs, Swift amended its latest lease form, effective in January 2007, to disclose for the first time that the Qualcomm weekly charge included an administrative fee mark-up. They argue that this recent disclosure, accomplished by adding the Qualcomm charge to the footnote in Schedule B denoting a mark-up, while still insufficient, serves to confirm that the pre-2007 revised leases "completely hid such charges." The plaintiffs' statements of fact, however, do not cite to any evidence that Swift included any administrative fee mark-up for the Qualcomm charges assessed against Belcher and Hayes during the period covered by their revised leases.
(ii) Documentation of Charge-backs
While the plaintiffs contend that the revised leases still violated the charge-back regulation's requirement that they be afforded the documents necessary to determine the validity of the charge-backs, the Court disagrees to the extent that the revised leases stated that the deductions from the owner-operators' compensation for advances and charges would be itemized on their settlement statements and the plaintiffs have failed to cite to any evidence in their statements of fact showing that Swift's weekly settlement statements were insufficient to comply with the documentation requirement. See OOIDA v. Landstar Inway, Inc., 2007 WL 958284, at * 7 (M.D.Fla. 2007) (Court concluded that appropriate documentation for charge-backs that the lease disclosed were calculated based on a "variable" cost were satisfied by a settlement statement issued to the owner-operators that reflected the total charge, and that for charge-backs that were disclosed as being calculated with a fixed rate with a mark-up, "the only documents necessary to determine the validity of those charges are documents showing that the owner-operators were in fact charged the amounts that are stated in the lease", and that settlement statements to the owner-operators reflecting the amount that was charged-back were sufficient documentation.)
The Court thus concludes that Swift is entitled to summary judgment on all claims against it in the amended complaint that its post-January 1, 2003 leases with plaintiffs Belcher and Hayes violated § 376.12(h).
(2) Violation of § 376.12(i)
Count II of the amended complaint alleges in part that Swift has "required owner-operators to purchase insurance and other products as a condition to entering into lease agreements in violation of 49 C.F.R. § 376.12(i)." Swift specifically argues in its summary judgment motion that it is entitled to judgment on all claims against it alleging forced purchases because the plaintiffs have not offered any evidence that any owner-operator was forced to purchase any goods or services, including insurance, from or through it, and because the plaintiffs do not dispute that all of its leases have at all relevant times unequivocally stated that the owner-operators were not required to purchase or rent equipment or services from it.
The Court concurs, as the plaintiffs have not in fact cited to any evidence of record establishing any violation by Swift of § 376.12(i). The plaintiffs' only response to Swift's argument regarding alleged forced purchases is a totally conclusory contention that the fact that the Swift leases recited the language of § 376.12(i) is not conclusive of the issue. The plaintiffs' sole elaboration of their contention is a mere citation to Tayssoun Transportation, Inc. v. Universal Am-Can, Ltd., 2005 WL 1185811 (S.D.Tex. April 20, 2005), wherein the court concluded that a carrier's lease violated § 376.12(i) notwithstanding that it expressly stated that the owner-operator was not required to purchase items from the carrier because another portion of the lease expressly required the owner-operator to purchase cargo insurance from the carrier. 2005 WL 1185811, at *19. The Tayssoun case is factually inapposite because the plaintiffs have not cited to any evidence of record showing that anything similar occurred to them.
The Court thus concludes that Swift is entitled to summary judgment on all claims against it in the amended complaint that it violated § 376.12(i).
(3) Violation of § 376.12(k)
Counts I and II of the amended complaint allege in part that Swift violated various subparts of 49 C.F.R. § 376.12(k), which deals with escrow funds. Swift argues that it is entitled to summary judgment on all of the plaintiffs' claims that it violated § 376.12(k)(2) by making improper deductions from their escrow accounts, and all of their claims that it violated § 376.12(k)(6) by failing to return unused escrow accounts within 45 days of lease termination. Swift's contention is that the plaintiffs' discovery responses have not provided any substance to the conclusory escrow-related allegations in the amended complaint, nor have they provided any support for those allegations by, e.g., identifying a single improper deduction. Swift also contends that the plaintiffs have not set forth any damages they have sustained as a result of any violation of the escrow regulation.
The plaintiffs' only argument as to why Swift is not entitled to summary judgment on their escrow-related allegations, which argument is directed only to the issue of liability and not damages, is that the performance bond requirement of some unidentified Swift lease was so broad that it violated § 376.12(k)(2). The plaintiffs do not, however, make any effort to controvert Swift's argument regarding alleged violations of § 376.12(k)(6), or to establish that any improper deductions were in fact made from their escrow funds.
The Court agrees with the plaintiffs that the performance bond requirement in Swift's old form leases violated the escrow disclosure regulation because the provision did not specify the specific items to which the performance bond could be applied. See Owner-Operator Independent Drivers Ass'n v. Arctic Express, Inc., 159 F.Supp.2d 1067, 1077-78 (S.D.Ohio 2001) (Court concluded that a purported maintenance fund that permitted the withholding of the owner-operator's escrow funds for almost any conceivable obligation that could be incurred by the owner-operator during the term of the lease was in fact a general fund that violated both the letter and the spirit of § 376.12(k) because when the defendants "provided for everything to be covered by the maintenance fund, they, in reality, specified nothing.") Accord, OOIDA v. Ledar Transport, 2004 WL 5429148, at *2 (W.D.Mo. Dec. 30, 2004) (Court, citing to Arctic Express, concluded that a security deposit lease provision violated § 376.12(k)(2) because its failure to specify the items that could be deducted from it turned it into an impermissible general fund that could be used to satisfy any obligation incurred by the owner-operator.)
The Court thus concludes that the plaintiffs are entitled to a declaration that Swift violated § 376.12(k)(2) to the extent that the performance bond provision of Swift's old form leases failed to properly specify the items that could be deducted from the bond, and that Swift is entitled to summary judgment on all other claims against it in the amended complaint that it violated § 376.12(k)(2) by making improper deductions from the plaintiffs' escrow accounts and all claims against it that it violated § 376.12(k)(6) by failing to timely return unused escrow accounts to the plaintiffs.
C. Damages
The relief sought by the plaintiffs in their amended complaint for Swift's alleged violations of the Truth-in-Leasing regulations includes damages pursuant to 49 U.S.C. § 14704(a)(2), which provides in relevant part that an authorized motor carrier "is liable in damages sustained by a person as a result of an act or omission of that carrier . . . in violation of this part." See Owner-Operator Independent Drivers Ass'n v. New Prime, Inc., 339 F.3d 1001, 1012 (8th Cir. 2003), cert. denied, 541 U.S. 973 (2004) (Court noted that § 14804(a)(2) provides a right to recover only to persons who have sustained damages as a result of a carrier violation.); see also, OOIDA v. Landstar Inway, 2007 WL 958284, at *5 (M.D.Fla. March 29, 2007) (Court concluded that in order to establish damages, the plaintiffs were required to present evidence that they sustained damages "as a result" of the defendants' failure to disclose pursuant to § 376.12(h).) Courts have required actual damages, concluding that a mere violation of the Truth-in-Leasing regulations is an insufficient basis on which to recover monetary damages. See e.g., Robertson v. North American Van Lines, Inc., 2004 WL 5026265, at *4 (N.D.Cal. April 19, 2004) (Court concluded that "[a] carrier's violation of federal regulations does not, in and of itself, entitle a plaintiff to recovery, as the plaintiff must still prove damages.") The plaintiffs bear the burden of proving damages under § 14704(a)(2). OOIDA v. Landstar Inway, Inc., 2007 WL 958284, at * 5 (M.D.Fla. March 29, 2007).
As part of its motion, Swift specifically argues that it is entitled to summary judgment on all of the plaintiffs' claims for damages because the plaintiffs have no evidence that they sustained damages as a result of any alleged violation by Swift of the Truth-in-Leasing regulations. The plaintiffs, however, in an inexplicable refusal to recognize that Swift has properly placed the existence of damages at issue at the summary judgment stage, heedlessly assert that the pending motions only concern the issue of liability and that they will put on evidence of their damages at trial. There has not in fact been any bifurcation of the issues of liability and damages in this action and the plaintiffs, as the party with the burden of proving that they have suffered monetary damages resulting from any violation by Swift of the Truth-in-Leasing regulations, can only survive summary judgment as to the issue of damages by producing significant probative evidence of their damages. The Court concurs with Swift that the plaintiffs have clearly not done so.
Swift argues that it is entitled to summary judgment on all of the plaintiffs' claims for monetary loss in Counts I and II in part because the legal theory underlying the plaintiffs' claimed damages is fatally flawed as a matter of law inasmuch as the damages they are seeking to recover consist only of Swift's mark-ups on charge-back items. The Court concurs since the majority of the courts that have specifically dealt with the issue of damages related to undisclosed mark-ups for charge-backs have concluded that an owner-operator has not suffered damages for purposes of § 14704(a)(2) merely because a motor carrier charged-back more that it actually paid a third-party vendor for a product or service advanced to the owner-operator. See e.g.,OOIDA v. C.R. England, Inc., 2007 WL 1795768, at *7 (D.Utah June 20, 2007) ("Simply proving that Defendant charged more to Plaintiffs for a product or service that it paid to a third-party vendor is insufficient, without more, to establish that Plaintiffs have sustained damages as a result of a disclosure violation under § 376.12(h)."); OOIDA v. Landstar Inway, Inc., 2007 WL 958284, at *5 (M.D.Fla. March 29, 2007) ("The Court finds that proof of the difference between Defendants' third-party costs and the prices they charged Plaintiffs does not, standing alone, establish that Plaintiffs sustained damages as a result of the violation [of § 376.12(h)'s disclosures requirements.]")
While the plaintiffs have established as a matter of law that Swift's old form leases violated § 376.12(h) by failing to disclose the existence of mark-ups and violated § 376.12(k)(2) by failing to disclose the specific items that could be deducted from the performance bond, the plaintiffs have not established that they suffered any actual damages therefrom under any theory of damages. Swift has established through the affidavit of Randall Eslick, its owner-operator manager, that the actual charge-backs to the plaintiffs driving for Swift did not exceed the amounts disclosed to them either in their leases, orientation materials, driver's manuals, etc., and the plaintiffs do not make any attempt to argue otherwise.
The Court thus concludes that Swift is entitled to summary judgment on all claims for damages against it in Counts I and II of the amended complaint.
D. Injunctive Relief
Swift also argues in its motion that it is entitled to summary judgment on the plaintiffs' request in the amended complaint that Swift be enjoined pursuant to 49 U.S.C. § 14704(a)(1) "from performing authorized transportation in equipment it does not own until it enters into written lease agreements that meet the requirements of the Truth-in-Leasing regulations found at 49 C.F.R. § 376.12." Swift contends that injunctive relief is not appropriate because its current 2007 lease form fully complies with the Truth-in-Leasing regulations and there is no reasonable expectation that it will reinstate an unconforming lease form. The plaintiffs argue that injunctive relief is the only way to make Swift comply with the Truth-in-Leasing regulations because the current lease still does not comply with the charge-back disclosure rule regarding mark-ups and because Randall Eslick states in his affidavit that "Swift has no intention to change the terminology of this [2007] Contractor Agreement absent an order from this Court to do so or to meet future interpretations of or changes to the leasing regulations."
The Court agrees with Swift that no basis for injunctive relief remains in this action. First, with regard to the individual plaintiffs, no injunctive relief is possible since none of them have driven for Swift for several years now (with the last one, Hayes, having stopped in 2005) and they have not presented any evidence that there is any reasonable expectation that any of them will ever again enter into an owner-operator lease agreement with Swift. Second, to the extent that OOIDA has any surviving claims against Swift and/or retains its associational standing to challenge the compliance of Swift's current owner-operator lease with the Truth-in-Leasing regulations, no showing has been made that Swift's current lease does not sufficiently comply with the regulations.
Therefore,
IT IS ORDERED that Plaintiffs' Motion for Partial Summary Judgment on Liability (doc. #337) is granted in part and denied in part. It is granted solely to the extent that the Court declares as follows:
(1) That defendant Swift Transportation Co., Inc. (AZ) violated 49 C.F.R. § 376.12(h) by failing to disclose to plaintiffs Marc Mayfield, Frank Belcher, David Hayes, Valerie Helton, and Gerald Webb prior to January 1, 2003 that certain of its deductions from their compensation for services and products it advanced to them were in excess of its costs;
(2) That defendant Swift Transportation Co., Inc. (AZ) violated 49 C.F.R. § 376.12(k)(2) by failing to disclose in the performance bond requirement in its contractor agreements with plaintiffs Marc Mayfield, Frank Belcher, David Hayes, Valerie Helton, and Gerald Webb prior to January 1, 2003, the specific items to which deductions from the bond could be applied.
IT IS FURTHER ORDERED that the Motion for Partial Summary Judgment of Defendant Swift Transportation Co., Inc. (AZ) on Counts I II of the First Amended Complaint (doc. #333) is granted in part and denied in part. It is granted to the extent that the following claims in Count I and/or Count II of the First Amended Complaint against defendant Swift Transportation Co., Inc. (AZ) are dismissed with prejudice:
(1) That defendant Swift Transportation Co., Inc. (AZ) violated 49 C.F.R. § 376.12(h) with regard to the contractor agreements entered into with plaintiffs Frank Belcher and David Hayes on or after January 1, 2003;
(2) That defendant Swift Transportation Co., Inc. (AZ), violated 49 C.F.R. § 376.12(i) with regard to its dealings with plaintiffs Marc Mayfield, Frank Belcher, David Hayes, Valerie Helton, and Gerald Webb;
(3) That defendant Swift Transportation Co., Inc. (AZ) violated 49 C.F.R. § 376.12(k)(2) by making improper deductions from the escrow accounts of plaintiffs Marc Mayfield, Frank Belcher, David Hayes, Valerie Helton, and Gerald Webb, and violated 49 C.F.R. § 376.12(k)(6) by failing to timely return unused escrow accounts to those plaintiffs upon the termination of their contractor agreements;
(4) That plaintiffs Marc Mayfield, Frank Belcher, David Hayes, Valerie Helton, and Gerald Webb are entitled monetary damages for any violations of the Truth-in-Leasing regulations by defendant Swift Transportation Co., Inc. (AZ);
(5) That any named plaintiff is entitled to injunctive relief stemming from any violation of the Truth-in-Leasing regulations by defendant Swift Transportation Co., Inc. (AZ).
IT IS FURTHER ORDERED that the Swift Defendants' Motion for Summary Judgment on Counts III and IV (doc. #335) is granted to the extent that any and all claims set forth in Counts III and IV of the First Amended Complaint against defendant Swift Transportation Co., Inc. (AZ) and all claims in the First Amended Complaint against defendant Swift Transportation Co., Inc. (NV) not otherwise terminated with prejudice by the Stipulation of Dismissal of Counts II and IV of the First Amended Complaint (doc. #363) are dismissed with prejudice.
IT IS FURTHER ORDERED that the Plaintiffs' Motion for Clarification of July 26, 2006 Order (docs. #325 and #326) is granted solely to the extent that the Court's order (doc. #319), entered on July 27, 2006, is vacated.
IT IS FURTHER ORDERED that Plaintiffs' Motion to Withdraw as Attorney of Record for Plaintiff Gerald Webb Pursuant to LRCiv 83.3 (doc. #351) is granted pursuant to LRCiv 83.3 and LRCiv 7.2(i) and that Paul D. Cullen, Sr., Joyce E. Mayers, and Daniel E. Cohen of the Cullen Law Firm, PLLC and Randall D. Wilkins and Brian Campbell of Bonn Wilkins, Chartered are withdrawn as counsel for plaintiff Gerald Webb.
IT IS FURTHER ORDERED that the parties, after the consultation of their counsel, shall file a joint report no later than November 2, 2007 that sets forth the parties' positions as to what, if any, claims of the First Amended Complaint remain to be resolved in this action, as well as a proposed schedule for resolving any such claims.
Performance Bond $100 Weekly (maximum $1,500.00) Single Rate Registration $25.00 Weekly (maximum $250.00) Qualcomm $26.42 Weekly O/O Nontrucking Liability $8.08 Weekly Insurance[*] O/O Collission [sic] An equal amount Weekly Insurance[*] of $25 to $1000 of stated value of the vehicle divided by 52 Qualcomm Insurance $1.96 Weekly Occupation Accident $36.92 Weekly Insurance[*] Accounting Services $15.00 Weekly Medical Insurance $52.03 (single) Weekly $145.65 (family) Weekly Workers' Compensation $40.38 Weekly for Contractor Employees [*] The charge for this item includes the cost of the item, plus administrative costs associated with offering and maintaining the item.According the plaintiffs, Swift amended its latest lease form, effective in January 2007, to disclose for the first time that the Qualcomm weekly charge included an administrative fee mark-up. They argue that this recent disclosure, accomplished by adding the Qualcomm charge to the footnote in Schedule B denoting a mark-up, while still insufficient, serves to confirm that the pre-2007 revised leases "completely hid such charges." The plaintiffs' statements of fact, however, do not cite to any evidence that Swift included any administrative fee mark-up for the Qualcomm charges assessed against Belcher and Hayes during the period covered by their revised leases.