CopyCited 23 times | Published | Court of Appeals for the Eleventh Circuit | 22 Fla. L. Weekly Fed. C 1468
...agreements to provide equipment and services to haul freight in interstate
commerce for Landstar System, Inc., et al., (“Landstar”) a motor carrier. The
Owner-Operators have appealed from the judgment entered against them rejecting
their claims that Landstar violated 49 C.F.R. § 376.12(d) and (h), provisions of the
Truth-in-Leasing regulations, 49 C.F.R....
...were computed, how much Landstar marks-up the charge-back item, or how much
profit Landstar makes from the charge-backs.
B
The Owner-Operators brought a class action lawsuit against Landstar
alleging that the leases violate § 376.12(d)3 and (h)4 of the Truth-in-Leasing
3
49 C.F.R. § 376.12(d) provides:
(d) Compensation to be specified....
...mutually agreed upon by the parties to the lease. The
compensation stated on the lease or in the attached addendum may
apply to equipment and driver's services either separately or as a
combined amount.
4
49 C.F.R. § 376.12(h) provides:
(h) Charge-back items....
...ctions for fees, like Powertrack,
before calculating the Owner-Operators’ compensation, and failed to disclose or
document mark-ups and profits made on charge-back items. In the complaint, the
Owner-Operators alleged that the leases (1) violate § 376.12(d) because it
“contained nothing regarding Landstar’s practice of reducing shipping revenues
before calculating [the Owner-Operators’] compensation,” and (2) violate §
376.12(h) because the lease “failed to clearly specify that charge-backs included
mark-ups for profits and fees and failed to disclose how the charge-backs were
computed.” Qualcomm filed a motion to intervene when it discovered that
Landstar intended to disclose Qualcomm’s confidential pricing information....
...Lease”), which purported to correct certain violations in the original lease (the
“Original Lease”). The Owner-Operators subsequently filed an amended
complaint. In the amended complaint, the Owner-Operators alleged that the New
Lease violated § 376.12(d) because, although the New Lease discloses “Landstar’s
practice of understating shipping revenues,” it “fails to provide the amount of the
deducted from the lessor's compensation at the time of payment or...
...The lessor shall be afforded copies of
those documents which are necessary to determine the validity of
the charge.
7
reductions or the method by which they are implemented.” The Owner-Operators
also alleged that the New Lease violated § 376.12(h) because it “fails to disclose
how charge-back items are computed.”
Pursuant to 49 U.S.C....
...On October 6, 2006, the District Court issued its ruling on the parties’ cross-
motions for partial summary judgment only on the issue of liability. First, the
District Court denied Landstar’s request to adopt a “substantial compliance”
standard of review regarding § 376.12(d), and instead used the “literal compliance”
standard.7 In applying the literal compliance standard, however, the District Court
ruled in favor of Landstar and determined that the leases complied with §
376.12(d)....
...t the literal compliance standard is the appropriate
standard to use.
9
AGR.” The District Court found that “[t]his unambiguously falls within the
myriad of possible compensation methods [under § 376.12(d)] upon which the
parties may agree.”
As to the Owner-Operators’ § 376.12(h) claim, the District Court ruled in
favor of Landstar that Landstar was allowed to profit from charge-back items. The
District Court ruled in favor of the Owner-Operators, however, in finding that
Landstar violated § 376.12(h) because it did not provide the Owner-Operators with
“access to documents under the Original or New Leases which allow them to
ascertain whether they are being properly charged.”
D
On November 17, 2006, the parties filed a joint waiver of jury trial....
...asking the District Court to seal its confidential pricing information it provided to
Landstar. On January 5, 2007, the District Court granted Qualcomm’s motion,
explaining that Landstar’s charge-back for Qualcomm’s services was “not a
charge-back item as anticipated by Section 376.12(h) for which lessors must be
afforded copies of Qualcomm’s confidential pricing information to determine the
validity of the charge.”
On January 12, 2007, the District Court issued an order to define the scope
of the bench trial....
...ed
more for a product or service than they paid a third-party
vendor is insufficient, standing alone, to establish that
Plaintiffs have sustained damages as a result of a
disclosure violation under Section 376.12(h).
Based on these findings of fact, the District Court entered judgment in favor
of Landstar on the issue of damages....
...§
14704(a)(2), “Defendants are [only] liable to Plaintiffs for ‘damages sustained . . .
as a result’ of [a] violation.” The District Court further explained:
The Court has unambiguously held that charge-back
items which include fees and profits are not unlawful
under Section 376.12(h) ....
...damages as a
result of that violation . . . . Accordingly, the Court finds
that Plaintiff’s have failed as a matter of law to establish
damages sustained as a result of Defendants’ violation of
Section 376.12(h).
14
The District Court also ruled on the scope of the Owner-Operators’ claim for
injunctive relief. The District Court determined that “[Landstar’s] violation of
Section 376.12(h) only applies to the LCAPP Tire Purchase Program.” The
District Court further explained:
For all other programs at issue in this case [except the
LCAAP Tire Purchase Program], Appendix C to the New...
...issuance of the New Lease in June 2004 and their
considerable efforts to compile an elaborate disclosure
plan subsequent to the Court’s summary judgment Order
....
The District Court concluded that, although Landstar violated § 376.12(h),
“Defendants have, nonetheless, demonstrated that they have discontinued the
violation of the regulation.” The District Court explained its conclusion:
this Court finds that Defendants have expressed a sincere
intent to comply with regulations....
...G
The Owner-Operators appeal from seven of the District Court’s rulings.
First, the Owner-Operators appeal from the District Court’s grant of summary
judgment in favor of Landstar on the grounds that Landstar complied with §
376.12(d) and that Landstar is allowed to make profit from charge-back items
under § 376.12(h). Second, the Owner-Operators appeal from the District Court’s
finding that Landstar complied with the requirements of § 376.12(h) because
Landstar provided settlement statements to the Owner-Operators....
...ct Court’s denial of their motion
for partial summary judgment. They argue that the District Court erred in two
ways. First, the Owner-Operators assert that the District Court erred in finding that
Landstar had complied with the requirements of § 376.12(d). Second, the Owner-
Operators contend that the District Court erred in finding that § 376.12(h) allows
Landstar to make profits on charge-back items.
“We review a grant of summary judgment by a district court de novo.”
Shuford v....
...2004).
A
17
The Owner-Operators contend that the District Court erred in granting
partial summary judgment in favor of Landstar on the ground that the Original
Lease10 had complied with the requirements of 49 C.F.R. § 376.12(d).
Specifically, the Owner-Operators maintain that the Original Lease violates §
376.12(d) because it fails to state that the Powertrack fee would be deducted from
the driver’s compensation....
...third parties.” Original Lease, Appendix
10
The Owner-Operators are raising this issue concerning only the Original Lease, as
opposed to the New Lease.
18
A, ¶ (a)(2) (emphasis added). Landstar maintains that this language meets the
requirements of § 376.12(d) because it sets forth a compensation method mutually
agreed upon.
Section 376.12(d) provides, in relevant part:
The amount to be paid by the authorized carrier for
equipment and driver's services shall be clearly stated on
the face of the lease or in an addendum which is attached
to the lease ....
...ains that the
AGR will be reduced, it does so in broad terms, referring to “third party” fees.
Such language does not “clearly” state that the computation of the amount to be
paid may be reduced by payment processing fees like Powertrack. §
376.12(d). It
is only fair that the Owner-Operators be put on notice how their compensation is
specifically being reduced. The catch-all phrase of “third party” fees is insufficient
to satisfy §
376.12(d) because it does not give adequate notice of any specific
charges. Some district courts have ruled that §
376.12 requires more specificity.
See, e.g., Owner-Operator Indep. Drivers Ass’n v. Bulmatic Tr. Co.,
503 F. Supp.
19
2d 961, 969 (N.D. Ill. 2007) (finding that a lease was ambiguous under §
376.12(d)
because it failed to define the meaning of “gross revenue” or “specifically state
which items, if any, may be excluded from gross revenue before calculating owner-
operator compensation”); Owner-Operator Indep. Drivers Ass’n v. Arctic Express,
Inc.,
159 F. Supp. 2d 1067, 1078 (S.D. Ohio 2001) (finding a violation of §
376.12(k) because language in the agreement of “‘specific items’ are . . . not
‘specific,’ since in practice they include any and all conceivable costs”).
To meet the requirements of §
376.12(d), it is sufficient for the lease to
provide a specific category which would encompass deductions like Powertrack
fees....
...e Original Lease was
defective. However, Landstar’s argument fails to address the problem that the
20
broad reference to “third party” fees in the Original Lease does not literally comply
with § 376.12(d). Therefore, the District Court erred in ruling on summary
judgment in favor of Landstar that the Original Lease meets the requirements of §
376.12(d).
B
On summary judgment, the District Court found that, as a matter of law, §
376.12(h) allows motor carriers to include administrative fees and to make profits
on charge-backs. On appeal, the Owner-Operators contend that § 376.12(h) creates
a flat ban on profits from charge-backs....
...The lessor shall be afforded
copies of those documents which are necessary to
determine the validity of the charge.
ICC, Lease & Interchange of Vehicles, 47 Fed. Reg. 51136-02, 51140 (proposed
Nov. 12, 1982) (codified at 49 C.F.R. §
376.12(h)) available at
1982 WL 146684.
See also supra note 4....
...(citing to Lease & Interchange of
24
Vehicles, 46 Fed. Reg. 44013 (proposed Sept. 2, 1981)). Thus, the Owner-
Operators’ reliance on Ledar is misplaced.
III
The District Court ruled on summary judgment that, under § 376.12(h),
Landstar must disclose the validity of charge-back items. The Owner-Operators do
not dispute this ruling. Instead they argue that this ruling was eroded by
subsequent rulings from the District Court. They assert that “[u]ltimately, the
court ruled that the only documentation required by Section 376.12(h) was
verification in Plaintiffs’ settlement statements that the amount Landstar charged
corresponded to the dollar amount specific in the written lease.”
The District Court determined, as part of its findings of fact at trial, that
Landstar’s New Leases, with the exception of the LCAPP Tire Purchase Program,
met the § 376.12(h) requirement because it provided “settlement statements” to the
Owner-Operators “reflecting the amount that was charged back to
owner-operators.” The Owner-Operators assert that Landstar failed to comply with
the requirements of § 376.12(h) because the settlement statements, which the
parties refer to as “pay slips,” do not meet the requirements of § 376.12(h).
Landstar asserts that the regulation “requires only that the method for determining
the charge be disclosed,” which the settlement statements satisfy. Landstar
25
maintains that nothing in § 376.12(h) requires Landstar to provide documents that
would reveal its profits on charge-backs.
We review the District Court’s entry of judgment in favor of Landstar, after
the bench trial, de novo....
...Hillsborough County,
468 F.3d 1276, 1282
(11th Cir. 2006). We review a district court’s findings of fact for clear error. Id.
However, a district court’s interpretation of the federal regulations are reviewed de
novo. Murrell,
368 F.3d at 1285.
Section
376.12(h) imposes two disclosure requirements on the use of charge-
backs in a motor carrier’s leasing agreements....
...n as to how the amount of
each item is to be computed.” Second, the motor carrier must also “afford [ ]
copies of those documents [to the lessor] which are necessary to determine the
validity of the charge.”
The Owner-Operators argue § 376.12(h) requires Landstar to disclose its
actual, third-party costs because they are necessary both for an accurate “recitation
as to how each item is to be computed” and a determination of the “validity of the
charge.” Landstar admits that § 376.12(h) mandates the disclosure of the motor
26
carrier’s third-party, actual costs for variable-rate charge-backs....
...it must provide its
actual costs for the LCAPP Tire Program, which specifies in the lease that the
charge-back is “Landstar’s vendor cost + $6 administrative fee.” Landstar argues,
however, that, “if the method is to charge a flat fee,” §
376.12(h) requires them to
provide only a settlement statement because the lease itself explains how each
charge-back is computed (such as $1,650 per tractor per year for a base plate).
Thus, the settlement statement is enough to allow the Owner–Operators to
determine the “validity of the charge.” Landstar further maintains that “[n]othing
in Section
376.12(h) requires Landstar to disclose what it [actually] paid,” which
would reveal its profit. Id.
The issue before us, therefore, is whether the settlement statements satisfied
Landstar’s obligation to disclose the manner in which it computed flat-fee charge-
backs. We conclude that
376.12(h) does not require Landstar to do more than
disclose the flat-fee in the lease and follow up with settlement statements that
explain the final amount charged back.
Because the parties both make sensible arguments about the plain language
of §
376.12(h), our conclusion rests on “‘the executive department’s construction
27
of a statutory scheme.’” Lyons,
221 F.3d at 1246 (citation omitted)....
...In many cases, the exact amount is not known until after the
liability is incurred, as with fuel and other operating expenses.
Lease & Interchange of Vehicles, 47 Fed. Reg. 51136, 51139 (Nov. 12, 1982).
The ICC explained that it had incorporated these concerns into § 376.12(h).
For the section outlining the disclosure provisions for the lease, the ICC explained
28
that it was rejecting the requirement that the lease “state with specificity the
amount of charge-...
...This explanation clearly shows that cost concerns led
the ICC to abandon a proposed requirement that motor carriers disclose their actual
costs on the face of the lease. See Cardoza Fonseca,
480 U.S. at 442-42. Thus,
the Owner-Operators’ argument that §
376.12(h) requires the disclosure of
Landstar’s actual costs in the lease fails; disclosing the flat fee for a charge-back in
the lease sufficiently allows the Owner-Operator to determine how each item is to
be computed.
The ICC also explained that it was adding a supplemental disclosure
requirement to §
376.12(h)....
...are “necessary” to determine the “validity of the charge.” Id. “[S]uch
information,” the ICC continued, would allow Owner-Operators “to ascertain
whether these charges have been computed correctly.” Id. The Owner-Operators
are correct in arguing that this part of § 376.12(h) requires the disclosure of a
motor carrier’s actual costs in certain situations....
...ed a motor carrier’s
actual costs to determine whether the charge-back has been computed correctly.
Instead, a settlement statement which lists the number of units used multiplied by
each unit’s flat-fee cost is enough to satisfy this part of § 376.12(h).
The regulatory history of charge-backs in the insurance section of the Truth-
in-Leasing regulations provides further support for this reading of § 376.12(h). See
49 C.F.R. § 376.12(l)....
...the carrier.
Lease and Interchange of Vehicles 131 M.C.C. 141, 150-151 (1979). When
considering the same change several years later, the ICC noted that it saw no need
to make changes “in view of our alteration of the proposed changes to
[376.12(h)].” 47 Fed....
...make an intelligent decision whether to purchase from the motor carrier or another
source.
Although this is an issue of first impression in this Circuit, courts elsewhere
have reached the same conclusion. An Arizona district court rejected the argument
that § 376.12(h) required the disclosure of actual costs for flat-fee charge-backs:
The validity of the charge-back for fuel that an owner-operator
purchases from [a carrier], for example, does not depend on the bulk
discount price tha...
...disclose third-party costs when such costs are necessary to a determination of the
validity of a variable-rate charge-back. See Owner-Operator Independent Drivers
Ass’n v. C.R. England,
508 F. Supp. 2d 972 (D. Utah 2007) (holding that a motor
carrier violated
376.12(h) because it failed to specifically describe how variable-
rate charge-backs were computed); Tayssoun Transp., Inc. v. Universal Am-Can,
Ltd.,
2005 WL 1185811 (S.D. Tex. 2005) (concluding that a variable-fee charge-
back—based on a “per trip fee” and a “range” of that fee—was a violation of
376.12(h) because it was “incomprehensible”).
Two cases they cite involving flat-fee charge-backs are not persuasive. In
the first, the court held that the carrier violated §
376.12(h) because it failed to
disclose a $35 flat-fee charge-back in the lease, not because it failed to disclose its
actual costs for the flat-fee, charge-back....
...y injunction order stating that
a motor carrier must disclose its administrative costs on the lease. Owner-
Operator Indep. Drivers Ass’n v. Ledar Transp.,
2000 WL 33711271 (W.D. Mo.
Nov. 30, 2000) (holding that the defendant’s lease violated
376.12(h) because it
did not list ‘cost plus administrative fees, etc.)....
...comments from its
1981 notice of proposed rulemaking, rather than the final 1982 adopted rule, in
reaching its conclusions. See Ledar,
2004 WL 5249148, at *6 n.36.
We therefore affirm the district court’s holding that Landstar satisfied
§
376.12(h)’s requirements by issuing the Owner-Operators settlement statements
for its flat-fee charge-backs.
IV
The District Court granted Qualcomm’s motion for a preliminary injunction
and sealed Qualcomm’s pricing list that it provided to Landstar. In sealing the
documents, the District Court found that Qualcomm’s services were “not a
charge-back item as anticipated by Section
376.12(h).” The Owner-Operators
33
appeal this ruling. They argue that §
376.12(h) entitles them to Qualcomm’s
pricing lists because the documents would reveal the profits Landstar made on
charge-backs related to Qualcomm’s services.
“We review the ultimate decision of whether to grant a preliminary...
...and $0.0003 per character/$0.02 per message when more than 60,000
charter/messages [sic] are used by [the Owner–Operator] in any month.” The $65
per month charge is a flat-fee charge-back. The District Court, therefore, did not
err by sealing Qualcomm’s documents because § 376.12(h) does not require
Landstar to provide these actual, third-party costs to the Owner-Operator.
V
The Owner-Operators contend that the District Court erred in granting
Landstar’s motion in limine regarding unjust enrichment....
...There is no dispute that the District Court correctly ruled that injunctive
relief was available on a class-wide basis in this case. The District Court denied
injunctive relief at the conclusion of trial because it determined that Landstar had
“discontinued” violating § 376.12....
...2002);
however, a court “by definition abuses its discretion when it makes an error of
law.” Koon v. United States,
518 U.S. 81, 100 (1996) superseded by statute on
other grounds, 18 U.S.C. § 3742(e).
37
As set forth above, Landstar violated §
376.12(d) by failing to disclose that
the Powertrack fees would be deducted from the Owner-Operators’ compensation.
See supra II.A....
...of that carrier or broker in violation [of the regulations].” 49 U.S.C. § 14704(a)(2)
(emphasis added). See supra note 5. This standard requires proof that the Owner-
Operators sustained an injury as a result of Landstar’s failure to comply with §
376.12....
...ed the “Actual Payment
Clause” of the leases when it failed to reimburse the Owner-Operators for
undisclosed profits. The District Court correctly concluded that this damage
theory is based on a breach of a lease provision, not a violation of § 376.12.
Because the Owner-Operators failed to bring a breach of contract claim, this issue
is not properly before the Court.
We hold, therefore, that the District Court correctly concluded that the
Owner-Operators have to prove actual damages. The Owner-Operators also did
not have the opportunity to prove whether they had sustained actual damages for
Landstar’s failure to comply with § 376.12(d). Therefore, this matter must be
remanded for an evidentiary hearing to permit the Owner-Operators to produce
evidence of any actual damages sustained by Landstar’s violations of § 376.12(d).
VIII
41
The Owner-Operators also appeal from the District Court’s decertification of
the class....
...1997) (denying a motion to strike portions
of a reply brief where argument was raised in initial brief).
Conclusion
For the reasons stated above, we REVERSE the District Court’s order on
summary judgment that Landstar complied with 49 C.F.R. § 376.12(d). We
REMAND this case with instructions that the District Court allow the Owner-
Operators to seek injunctive relief concerning the violation of § 376.12(d).
13
Rule 28.1(c)(4) provides: “Appellee's Reply Brief....
CopyCited 1 times | Published | Court of Appeals for the Eleventh Circuit
...agreements to provide equipment and services to haul freight in interstate
commerce for Landstar System, Inc., et al., (“Landstar”) a motor carrier. The
Owner-Operators have appealed from the judgment entered against them rejecting
their claims that Landstar violated 49 C.F.R. § 376.12(d) and (h), provisions of the
*
Honorable Arthur L....
...were computed, how much Landstar marks-up the charge-back item, or how much
profit Landstar makes from the charge-backs.
B
The Owner-Operators brought a class action lawsuit against Landstar
alleging that the leases violate § 376.12(d)3 and (h) 4 of the Truth-in-Leasing
regulations because Landstar did not disclose reductions for fees, like Powertrack,
3
49 C.F.R. § 376.12(d) provides:
(d) Compensation to be specified....
...mutually agreed upon by the parties to the lease. The
compensation stated on the lease or in the attached addendum may
apply to equipment and driver's services either separately or as a
combined amount.
4
49 C.F.R. § 376.12(h) provides:
(h) Charge-back items....
...6
before calculating the Owner-Operators’ compensation, and failed to disclose or
document mark-ups and profits made on charge-back items. In the complaint, the
Owner-Operators alleged that the leases (1) violate § 376.12(d) because it
“contained nothing regarding Landstar’s practice of reducing shipping revenues
before calculating [the Owner-Operators’] compensation,” and (2) violate §
376.12(h) because the lease “failed to clearly specify that charge-backs included
mark-ups for profits and fees and failed to disclose how the charge-backs were
computed.” Qualcomm filed a motion to intervene when it discovered that
Landstar intended to disclose Qualcomm’s confidential pricing information....
...Lease”), which purported to correct certain violations in the original lease (the
“Original Lease”). The Owner-Operators subsequently filed an amended
complaint. In the amended complaint, the Owner-Operators alleged that the New
Lease violated § 376.12(d) because, although the New Lease discloses “Landstar’s
practice of understating shipping revenues,” it “fails to provide the amount of the
reductions or the method by which they are implemented.” The Owner-Operators
also alleged that the New Lease violated § 376.12(h) because it “fails to disclose
how charge-back items are computed.”
7
Pursuant to 49 U.S.C....
...On October 6, 2006, the District Court issued its ruling on the parties’ cross-
motions for partial summary judgment only on the issue of liability. First, the
District Court denied Landstar’s request to adopt a “substantial compliance”
standard of review regarding § 376.12(d), and instead used the “literal compliance”
standard.7 In applying the literal compliance standard, however, the District Court
ruled in favor of Landstar and determined that the leases complied with §
376.12(d)....
...98% of Adjusted Gross Revenue
[(AGR)]’” and that the “leases set forth the specific deductions used to calculate
AGR.” The District Court found that “[t]his unambiguously falls within the
myriad of possible compensation methods [under § 376.12(d)] upon which the
parties may agree.”
7
On appeal, there is no dispute that the literal compliance standard is the appropriate
standard to use.
9
As to the Owner-Operators’ § 376.12(h) claim, the District Court ruled in
favor of Landstar that Landstar was allowed to profit from charge-back items. The
District Court ruled in favor of the Owner-Operators, however, in finding that
Landstar violated § 376.12(h) because it did not provide the Owner-Operators with
“access to documents under the Original or New Leases which allow them to
ascertain whether they are being properly charged.”
D
On November 17, 2006, the parties filed a joint waiver of jury trial....
...asking the District Court to seal its confidential pricing information it provided to
Landstar. On January 5, 2007, the District Court granted Qualcomm’s motion,
explaining that Landstar’s charge-back for Qualcomm’s services was “not a
charge-back item as anticipated by Section 376.12(h) for which lessors must be
afforded copies of Qualcomm’s confidential pricing information to determine the
validity of the charge.”
On January 12, 2007, the District Court issued an order to define the scope
of the bench trial....
...ed
more for a product or service than they paid a third-party
vendor is insufficient, standing alone, to establish that
Plaintiffs have sustained damages as a result of a
disclosure violation under Section 376.12(h).
Based on these findings of fact, the District Court entered judgment in favor
of Landstar on the issue of damages....
...§
14704(a)(2), “Defendants are [only] liable to Plaintiffs for ‘damages sustained . . .
as a result’ of [a] violation.” The District Court further explained:
The Court has unambiguously held that charge-back
items which include fees and profits are not unlawful
under Section 376.12(h) ....
...damages as a
result of that violation . . . . Accordingly, the Court finds
that Plaintiff’s have failed as a matter of law to establish
damages sustained as a result of Defendants’ violation of
Section 376.12(h).
The District Court also ruled on the scope of the Owner-Operators’ claim for
injunctive relief. The District Court determined that “[Landstar’s] violation of
Section 376.12(h) only applies to the LCAPP Tire Purchase Program.” The
District Court further explained:
For all other programs at issue in this case [except the
LCAAP Tire Purchase Program], Appendix C to the New...
...issuance of the New Lease in June 2004 and their
considerable efforts to compile an elaborate disclosure
plan subsequent to the Court’s summary judgment Order
....
The District Court concluded that, although Landstar violated § 376.12(h),
“Defendants have, nonetheless, demonstrated that they have discontinued the
violation of the regulation.” The District Court explained its conclusion:
this Court finds that Defendants have expressed a sincere
intent to comply with regulations....
...15
The Owner-Operators appeal from seven of the District Court’s rulings.
First, the Owner-Operators appeal from the District Court’s grant of summary
judgment in favor of Landstar on the grounds that Landstar complied with §
376.12(d) and that Landstar is allowed to make profit from charge-back items
under § 376.12(h). Second, the Owner-Operators appeal from the District Court’s
finding that Landstar complied with the requirements of § 376.12(h) because
Landstar provided settlement statements to the Owner-Operators....
...ct Court’s denial of their motion
for partial summary judgment. They argue that the District Court erred in two
ways. First, the Owner-Operators assert that the District Court erred in finding that
Landstar had complied with the requirements of § 376.12(d). Second, the Owner-
Operators contend that the District Court erred in finding that § 376.12(h) allows
Landstar to make profits on charge-back items.
“We review a grant of summary judgment by a district court de novo.”
Shuford v....
...2004).
A
The Owner-Operators contend that the District Court erred in granting
partial summary judgment in favor of Landstar on the ground that the Original
Lease10 had complied with the requirements of 49 C.F.R. § 376.12(d).
Specifically, the Owner-Operators maintain that the Original Lease violates §
10
The Owner-Operators are raising this issue concerning only the Original Lease, as
opposed to the New Lease.
17
376.12(d) because it fails to state that the Powertrack fee would be deducted from
the driver’s compensation....
...the amount paid to any third
party by CARRIER in relation to movement of the load . . . [and by] all incentives,
discounts, or commissions given to . . . third parties.” Original Lease, Appendix
A, ¶ (a)(2) (emphasis added). Landstar maintains that this language meets the
requirements of § 376.12(d) because it sets forth a compensation method mutually
agreed upon.
Section 376.12(d) provides, in relevant part:
The amount to be paid by the authorized carrier for
equipment and driver's services shall be clearly stated on
18
...
...ains that the
AGR will be reduced, it does so in broad terms, referring to “third party” fees.
Such language does not “clearly” state that the computation of the amount to be
paid may be reduced by payment processing fees like Powertrack. §
376.12(d). It
is only fair that the Owner-Operators be put on notice how their compensation is
specifically being reduced. The catch-all phrase of “third party” fees is insufficient
to satisfy §
376.12(d) because it does not give adequate notice of any specific
charges. Some district courts have ruled that §
376.12 requires more specificity.
See, e.g., Owner-Operator Indep. Drivers Ass’n v. Bulmatic Tr. Co.,
503 F. Supp.
2d 961, 969 (N.D. Ill. 2007) (finding that a lease was ambiguous under §
376.12(d)
because it failed to define the meaning of “gross revenue” or “specifically state
which items, if any, may be excluded from gross revenue before calculating owner-
operator compensation”); Owner-Operator Indep. Drivers Ass’n v. Arctic Express,
Inc.,
159 F. Supp. 2d 1067, 1078 (S.D. Ohio 2001) (finding a violation of §
19
376.12(k) because language in the agreement of “‘specific items’ are . . . not
‘specific,’ since in practice they include any and all conceivable costs”).
To meet the requirements of §
376.12(d), it is sufficient for the lease to
provide a specific category which would encompass deductions like Powertrack
fees....
...The revisions to the New Lease
cannot constitute an admission that the language in the Original Lease was
defective. However, Landstar’s argument fails to address the problem that the
broad reference to “third party” fees in the Original Lease does not literally comply
with § 376.12(d). Therefore, the District Court erred in ruling on summary
judgment in favor of Landstar that the Original Lease meets the requirements of §
376.12(d).
B
20
On summary judgment, the District Court found that, as a matter of law, §
376.12(h) allows motor carriers to include administrative fees and to make profits
on charge-backs. On appeal, the Owner-Operators contend that § 376.12(h) creates
a flat ban on profits from charge-backs....
...The lessor shall be afforded
copies of those documents which are necessary to
determine the validity of the charge.
ICC, Lease & Interchange of Vehicles, 47 Fed. Reg. 51136-02, 51140 (proposed
Nov. 12, 1982) (codified at 49 C.F.R. §
376.12(h)) available at
1982 WL 146684.
See also supra note 4....
...44013 (proposed Sept. 2, 1981)). Thus, the Owner-
Operators’ reliance on Ledar is misplaced.
III
24
The District Court ruled on summary judgment that, under § 376.12(h),
Landstar must disclose the validity of charge-back items. The Owner-Operators do
not dispute this ruling. Instead they argue that this ruling was eroded by
subsequent rulings from the District Court. They assert that “[u]ltimately, the
court ruled that the only documentation required by Section 376.12(h) was
verification in Plaintiffs’ settlement statements that the amount Landstar charged
corresponded to the dollar amount specific in the written lease.”
The District Court determined, as part of its findings of fact at trial, that
Landstar’s New Leases, with the exception of the LCAPP Tire Purchase Program,
met the § 376.12(h) requirement because it provided “settlement statements” to the
Owner-Operators “reflecting the amount that was charged back to owner-
operators.” The Owner-Operators assert that Landstar failed to comply with the
requirements of § 376.12(h) because the settlement statements, which the parties
refer to as “pay slips,” do not meet the requirements of § 376.12(h). Landstar
asserts that the regulation “requires only that the method for determining the
charge be disclosed,” which the settlement statements satisfy. Landstar maintains
that nothing in § 376.12(h) requires Landstar to provide documents that would
reveal its profits on charge-backs.
25
We review the District Court’s entry of judgment in favor of Landstar, after
the bench trial, de novo....
...United States v. Trainor,
376 F.3d 1325, 1330 (11th Cir. 2004) (citation omitted).
“Indeed, ‘[i]n construing a statute we must begin, and often should end as well,
with the language of the statute itself.’” Id. (citation omitted).
Section
376.12(h) provides 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.” Section
376.12(h) also requires the motor carrier to “afford[] copies of those documents [to
the lessor] which are necessary to determine the validity of the charge.” See supra
note 4.
The language of the regulation requires motor carriers to recite how the
amount of payment is computed....
...Landstar argues that, “if the method is to charge
26
a flat fee (such as $1,650 per tractor per year for a base plate) then that is all that
must be disclosed.” Landstar further maintains that “[n]othing in Section
376.12(h) requires Landstar to disclose what it [actually] paid for a base plate,”
which would reveal its profit. Id. Thus, the issue before us is whether, where
charge-back items are listed as flat-fees, §
376.12(h) requires Landstar to afford
more documents to the Owner-Operators than copies of the settlement statements.
Because the plain language of the regulation does not address this specific
question, we defer to “‘the executive department’s construction of a statutory
scheme,’” unless it is contrary to legislative history. Lyons,
221 F.3d at 1246
(citation omitted). The ICC commented on §
376.12(h) as follows:
In light of these comments, we conclude that, rather than
require carriers to state with specificity the amount of
charge-backs, we should, instead, require that the lease...
...be able to ascertain whether these charges have been
computed correctly.
ICC, Lease & Interchange of Vehicles, 47 Fed. Reg. 51136-02, 51139 (proposed
Nov. 12, 1982) available at
1982 WL 146684 (emphasis added). Thus, the ICC’s
comments make clear that §
376.12(h) requires the lease to list the items subject to
27
charge-backs and to provide access to the documents so that the Owner-Operators
can determine how those fees were computed....
...alidity of the charge.’” Id.
(citations omitted).
In Tayssoun Transportation, Inc. v. Universal Am-Cam, Ltd.,
2005 WL
1185811, at *16 (S.D. Tex. Apr. 20, 2005), the district court ruled on summary
judgment that a motor carrier violated §
376.12(h) because the lease did not give a
clear method of computing cargo insurance charge-backs. The district court ruled
that references to a “per trip fee” and a “range” of that fee was a violation of §
28
376.12(h). Id. The court explained that the §
376.12(h) “requirement is designed
to allow owner-operators ....
...Id.
In Owner-Operator Independent Drivers Ass’n v. Ledar Transportation,
2000 WL 33711271, at *7 (W.D. Mo. Nov. 30, 2000), the district court, in granting
a motion for preliminary injunction, ruled that a lease which merely listed charge-
back items violated §
376.12(h):
For the few items that Defendant's Standard Lease
Agreement does specify, it fails to recite how the amount
of each such item is computed (e.g., whether Defendant
will deduct simply t...
...Defendant's Lease
Agreement also fails to specify that the owner-operator
will be afforded copies of documents to verify the
validity of these charges. Accordingly, Defendant's lease
is in violation of [§ 376.12(h)] and therefore illegal.
See also Sheinhartz v....
...Saturn Transp., Inc.,
2002 WL 575636, at *6 (D. Minn.
March 22, 2002) (finding that federal law required disclosure of the “amount of
any fees charged in excess of the premiums”); Fed. Proc. Forms § 66:191, Prayers
for Relief ¶ 6 (2007) (providing that §
376.12(h) requires “an accounting of all
transactions involving [the motor carriers’] compensation in any respect, including
but not limited to deductions from income, debits, fuel tax credits and debits, and
requiring [the motor carriers]...
...the Owner-
Operators that verifies that it charged the flat-fee listed in the lease. The settlement
statements are analogous to the types of information the district courts in Rocor,
Universal Am-Cam, Ledar, and Sheinhartz, found inadequate under § 376.12(h).
Much like a flat-fee statement, Landstar’s settlement statements fail to show how
the amount on the settlement statement was computed so that the Owner-Operators
can determine the validity of the charge. This outcome is contrary to the purpose
of § 376.12(h) which is to “ensure that the owner-operator has access to these
computation methods.” ICC, Lease & Interchange of Vehicles, 47 Fed....
...New Prime, Inc.,
398 F.3d 1067, 1070 (8th Cir.
30
2005) (noting that the Truth-in-Leasing regulations were “intended to remedy
disparities in bargaining positions between independent owner operators and motor
carriers.”). Thus, Landstar has failed to comply with §
376.12(h).
We conclude, therefore, that the District Court correctly ruled that §
376.12(h) requires Landstar to provide documentation related to charge-back
items, but erred in concluding that it met the requirement.
IV
The District Court granted Qualcomm’s motion for a preliminary injunction
and sealed Qualcomm’s pricing list that it provided to Landstar. In sealing the
documents, the District Court found that Qualcomm’s services was “not a charge-
back item as anticipated by Section
376.12(h).” The Owner-Operators appeal this
ruling. They argue that §
376.12(h) entitles them to Qualcomm’s pricing lists
because the documents would reveal the profits Landstar made on charge-backs
related to Qualcomm’s services.
Qualcomm asserts the District Court’s ruling was correct....
.... . and $0.0003 per character/$0.02 per message when more than 60,000
charter/messages [sic] are used by [the Owner-Operator] in any month.” Lease,
Appendix C (Doc. 237). The $65 per month charge is analogous to a flat-fee. As
discussed above, §
376.12(h) requires Landstar to provide copies of “documents
which are necessary to determine the validity of the charge,” so that the Owner-
Operators can ascertain “how the amount of each item is to be computed.”
Landstar is required to do so, even if those documents reveal Qualcomm’s pricing
list. See, e.g., Rocor,
2000 WL 35512897, at *1 (finding that motor carrier must
provide documents to show how a flat-fee was computed). Qualcomm offers no
authority that §
376.12(h) should be read to allow flat-fee charge-backs without
documents showing how the flat-fee was computed....
...relief was available on a class-wide basis in this case. The District Court denied
34
injunctive relief at the conclusion of trial because it determined that Landstar had
“discontinued” violating § 376.12....
...2002);
however, a court “by definition abuses its discretion when it makes an error of
law.” Koon v. United States,
518 U.S. 81, 100 (1996) superseded by statute on
other grounds, 18 U.S.C. § 3742(e).
As set forth above, Landstar violated §
376.12(d) by failing to disclose that
the Powertrack fees would be deducted from the Owner-Operators’ compensation.
See supra II.A. Landstar also violated §
376.12(h) by failing to provide
documentation relating to how charge-back items were computed....
...of that carrier or broker in violation [of the regulations].” 49 U.S.C. § 14704(a)(2)
(emphasis added). See supra note 5. This standard requires proof that the Owner-
Operators sustained an injury as a result of Landstar’s failure to comply with §
376.12....
...Clause” of the leases when it failed to reimburse the Owner-Operators for
undisclosed profits. The District Court correctly concluded that this damage
38
theory is based on a breach of a lease provision, not a violation of § 376.12.
Because the Owner-Operators failed to bring a breach of contract claim, this issue
is not properly before the Court.
We hold, therefore, that the District Court correctly concluded that the
Owner-Operators have to prove actual damages. However, because the District
Court failed to require Landstar to provide documentation under § 376.12(h)
related to profits on charge-backs, the Owner-Operators did not have the
opportunity to demonstrate that they had sustained actual damages. The Owner-
Operators also did not have the opportunity to prove whether they had sustained
actual damages for Landstar’s failure to comply with § 376.12(d). Therefore, this
matter must be remanded for an evidentiary hearing to permit the Owner-Operators
to produce evidence of any actual damages sustained by Landstar’s violations of §
376.12(d) and (h).
VIII
The Owner-Operators also appeal from the District Court’s decertification of
the class....
...1997) (denying a motion to strike portions
of a reply brief where argument was raised in initial brief).
Conclusion
For the reasons stated above, we REVERSE the District Court’s order on
summary judgment that Landstar complied with 49 C.F.R. § 376.12(d). We
AFFIRM the District Court’s conclusion that, under § 376.12(h), Landstar is
required to provide documentation related to charge-back items, but REVERSE the
District Court’s finding that Landstar provided those documents. We also
REVERSE the District Court’s order sealing Qualcomm’s documents because they
are required to be disclosed under § 376.12(h)....
...That brief must comply with Rule 28(a)(2)-(3) and (11)
and must be limited to the issues presented by the cross-appeal.”
44
instructions that the District Court allow the Owner-Operators to seek injunctive
relief concerning the violations of § 376.12(d) and (h).
As to the issue of damages, we AFFIRM the District Court’s ruling that the
Owner-Operators have to prove actual damages under 49 U.S.C....
