by Richard Prior
Staff Writer
The U.S. District Court in Jacksonville is allowing a class action suit to continue against one of the nation’s largest motor carriers for alleged violations of truth-in-leasing regulations.
As of December 2002 when the suit was filed against Landstar System Inc., class-wide damages totaled $57 million plus interest, said plaintiffs’ attorney Michael Freed of Brennan, Manna & Diamond.
“The violations are continuing, so the total amount of injuries continues to grow,” Freed said.
Named in the suit in addition to Landstar System are its subsidiaries Landstar Express America Inc., Landstar Gemini Inc., Landstar Inway Inc., Landstar Ligon Inc., Landstar Logistics Inc. and Landstar Ranger Inc.
The suit was filed by the Owner-Operator Independent Drivers Association Inc. (OOIDA) and seven of its owner-operator members.
OOIDA alleges Landstar overcharges its drivers for discount fuel, base plates and permits. In addition, the company allegedly underpays on military shipments.
“These types of problems are not unique to Landstar,” said Freed. “This type of lawsuit has been brought successfully all over the country by our client, and Landstar is one of the latest of the defendant groups.”
Despite Landstar’s policy of not discussing pending legislation, the company said in a press release that it was “pleased by the recent ruling issued by the Federal District Court. The Court not only dismissed the entire case of one of the plaintiff’s against all of the Landstar defendants, it took the additional step of dismissing four of the seven Landstar companies named as defendants in the complaint.”
Adams had ruled that one plaintiff’s claims do not apply retroactively to his agreement with the company. He also dropped Landstar System, Express America, Gemini and Logistics as defendants.
In arguing for dismissal of the action, Landstar’s attorneys said there is no “private right of action” under the regulations, that the regulations give the Federal Motor Carrier Safety Administration primary jurisdiction over suits by owner-operators and the court could not order the payment of damages.
The company also argued that the statute of limitations was two years, not four, as OOIDA contended. Those two years had expired, defense attorneys told the court.
U.S. District Court Judge Henry Lee Adams Jr. rejected all those arguments in his June 4 decision.
Landstar also lost an earlier motion to require the claims go to arbitration.
The defense had argued that, in enacting the statutes the plaintiffs sued under, Congress had intended only to prohibit certain actions and had not intended to give individuals the right to bring lawsuits. Remedies would have to come from administrative bodies.
Adams rejected that interpretation, citing earlier decisions made in the Eighth Circuit that “authorizes private actions for damages and injunctive relief to remedy at least some violations of the Motor Carrier Act and its implementing regulations.”
Landstar itself has no truck fleet, said Freed. Instead, the company enters into lease agreements with drivers who own their own trucks.
“Under those agreements,” he said, “those drivers carry the freight that Landstar is contracted to ship all over the country.”
Landstar uses Illinois as the base to buy its license plates, Freed said. The company charged owner-operators $1,500 per plate before April 1 and $1,600 after that date, he said.
“We believe and allege that Landstar itself only pays $1,300 for the base plates; they’re not supposed to profit from these costs,” he said.
Freed estimated the “current annual injury” for the “improper” sale of base plates and permit fees to be roughly $1.8 million.
Drivers, Freed said, are also due refunds for Department of Defense shipments, which are paid through the U.S. Bank’s Power Track system.
The suit charges that Landstar reduces the freight bill by 2 percent before calculating the payments due the drivers. The bank reportedly charges Landstar 1 percent for those transactions.
“Going forward, we’re seeking injunctive relief requiring Landstar and its affiliate companies to follow the law; stop doing what they’ve been doing,” Freed said. “Looking backwards, we want Landstar to compensate the drivers for the erroneous and improper charges.”
Landstar, for its part, is anticipating a favorable decision.
“OOIDA’s suit is believed to be based on its own self-serving suppositions rather than any meaningful or careful information gathering from its members that are Landstar BCOs,” according to the press release. “The Court’s ruling did not address whether there was any merit to the portion of the lawsuit that was not dismissed at the outset.
“As to the merits and the remaining portion of the lawsuit, Landstar is confident of its defense.”
Landstar reportedly has operating agreements with more than 8,000 owner-operators.
OOIDA’s membership includes more than 89,000 owner-operators, professional drivers and small-business truckers from all 50 states and Canada. The association represents the membership with state and federal governments, and in suits such as the one against Landstar.
Freed said he expects to receive a scheduling order “shortly” from the court, which will lay out the timetable for taking certain types of discovery, filing motions and setting a pre-trial conference.
The suit is expected to go to trial in April.