Issues & Positions
OOIDA President Jim Johnston was a guest speaker Jan. 17 at the Truckload Carriers Association Independent Contractor Division annual meeting in Chicago on the subject of the increasing number of OOIDA lawsuits against motor carriers. The following is the full text of his comments …

My time on the agenda today is titled “An Opportunity for Candid Dialogue Between OOIDA and TCA.” I want to say up front I appreciate the opportunity to be here and speak to such a large number of motor carriers who employ the services of independent truck owner-operators, many of whom are members of OOIDA. I state that up front because just as this presentation is titled, I do plan to be totally candid in my comments and I hope you will be just as candid in your comments and questions of me. And sometimes, total candor is not really what people want to hear.

The agenda also mentions what I’m sure is no secret to any of you that OOIDA has been looking to the courts to resolve “what they perceive to be violations of the leasing regulations” and suggests this forum as an opportunity to discuss other options to resolve future conflicts.

I first want to assure you we are not only willing but anxious to enter into any dialogue that will result in meaningful alternatives to costly, time-consuming litigation as a means of resolving some of the legitimate and serious problems our members experience in their contractual relationships with some motor carriers. While this brief opportunity today will certainly not accomplish those meaningful alternatives, I do have a recommendation I will mention later that might help us to start moving in that direction.

Before getting into that though, I think it would be helpful to discuss briefly some of the pending litigation and what caused us to turn to the courts in the first place. Contrary to what some might believe, we are not simply scurrying around out there looking for new opportunities to sue motor carriers. Nor is litigation the first course of action we look to in resolving member complaints.

We have an entire department within OOIDA, the Business Services department, devoted to working with members on problems they experience in their business dealings with repair shops, warranty issues, brokers and motor carriers. This department is staffed with 16 people who collectively receive hundreds of calls every week. The vast majority of calls relate to problems members are experiencing with motor carriers and brokers for usually what the member considers improper withholding of funds, trip settlements or escrow funds, improper chargebacks or deductions and forced purchase of products or services from the carrier.

The staff reviews every complaint in detail as to first whether it is a legitimate case of some type of improper or illegal activity covered under the leasing regulations, and second whether we have received similar complaints on this same company. The next course of action, if it is found to be a legitimate complaint, is always to contact the motor carrier to get the other side of the story. Many carriers we contact are cooperative and sometimes the issue is an honest dispute between the two parties that is easily resolved. Others are more difficult and may, in fact, involve clear violations of the regulations but the carrier is willing to correct the problem and pay the member what is owed. Very few result in a recommendation for legal action.

When litigation is recommended, it is never because of just one complaint and never simply because of a perceived violation. The violations must be clear and usually extensive. We conduct detailed reviews to determine whether, in fact, the company has an established pattern and practice of violating the regulations in a way that unfairly or illegally disadvantages the interests of leased owner-operators. The information on each case is then turned over to our attorneys who conduct their own review of the legal issues involved and often contact the carrier in a final effort to correct the problem short of legal action.

It is only when all else has failed that legal actions are filed. The leasing regulations are clear. They are unambiguous and they have been on the books now for more than 20 years. If, in fact, there ever was any ambiguity in the regulations, believe me, the court decisions that have and are currently coming down as a result of legal challenges to every aspect of the law are definitively clarifying exactly what is required.

It’s important to also note our goal in these actions is not to put anyone out of business (mostly to keep them from putting others out of business) even after the cases have been filed. We are always willing to discuss settlement. Our goals in settlement discussions are to assure compliance with the regulations, end any abuses that are taking place and to recover for affected owner-operators funds that have been unlawfully taken from them.

I was amazed at a quote I read last year in an industry publication by Dan Barney, an ex-ATA attorney now in private practice and I notice Dan is in attendance here today. As I recall, he referred to the prompt payment and full disclosure provisions of the leasing regulations as “among the most onerous” parts of the regulations. The fact is, there are no onerous provisions in the leasing regulations. Boiled down to the simplest terms, the regulations simply mandate what everyone should be doing on their own anyway. That is honest and fair business dealings. You must disclose in advance what you are going to be taking the owner-operator’s money for. You must pay him what he earns in a reasonable amount of time and disclose in the contract what those earnings will be based on and you must not keep money that doesn’t belong to you. “Thou shalt not steal.” I understand Mr. Barney is now drafting leases for motor carriers. Given his distorted view that honest and fair dealing is an onerous requirement, I must wonder if he is drafting contracts that comply with the regulations or that are designed to get around compliance with the regulations. If the latter is the case and you adopt such a lease, count on seeing us in court to test his theories.

The leasing regulations were implemented in the late 1970s specifically because both the Congress and the Interstate Commerce Commission determined that owner-operators were a vital part of the nation’s transportation system and the future of this important segment of the industry was significantly jeopardized by the unscrupulous business conduct of many of the companies that owner-operators contracted with. Further, because of their substantial disadvantage in dealing with much larger and more economically powerful entities than themselves, they were faced with a take-it-or-leave-it situation and powerless to influence the terms under which they must work. These conclusions were not simply pulled out of thin air. They were developed only after extensive investigations by Congress, the Interstate Commerce Commission and the Justice Department. Dan O’Neal, ICC Chairman at that time, stated on the subject in testimony before Congress:

“My concern is that because they like to eat, owner-operators will continue to find it necessary to enter into contracts with carriers they would like to avoid. Or they may find after entering an agreement that promises are not kept and conditions are not met. What can the owner-operator do about that situation? What about the right to contract? The difficulty is that one owner-operator by himself will have very little chance of bargaining any changes in any contract. His option will be to take it or leave it.”

If the regulations had been adequately enforced (which they were not) they would have accomplished several things. They would have helped to assure the economic stability of owner-operators. They would have helped to maintain a stable growing number of owner-operators to serve the industry and, what should be of importance to all of you, they would have helped to level the playing field between honest carriers who prefer to conduct their business practices ethically and those who would otherwise conduct their business in a dishonest or unscrupulous fashion or who simply needed a little encouragement to be more honest.

Setting aside OOIDA’s “perception of what may be leasing rule violations,” it’s important to note some of the comments and decisions of the courts in these cases. In his comments in ruling against Arctic Express in summary judgment, Judge Algenon Marbley of the U.S. District Court for the Southern District of Ohio stated in part:

“The defendants here did not substantially, nor did they slightly comply. Arctic, behind the shield of an affiliated company, D & A, absconded with the plaintiffs’ escrow funds. Following the ICC’s guidance, this court will not let pass abuses or the potential for abuses occasioned by collusion between a carrier and the third party beneficiary of an equipment purchase deduction.”

In another action just decided in the Intrenet Inc. bankruptcy, the court ruled that escrow funds collected from owner-operators were in fact escrows held in trust for the owner-operators. This despite the argument by Intrenet’s attorneys that because the funds were not segregated they weren’t really true escrow and should remain a part of the bankruptcy estate. Judge Vincent Aug Jr., in response to Intrenet’s attempt to characterize the escrow funds as merely accounting entries that afforded owner-operators only the protection of unsecured creditors stated such a view “undermines a primary goal of the federal truth-in-leasing regulations.” Judge Aug further stated:

“The regulations were enacted for the protection of owner-operators from abusive practices of carriers. Particularly with regard to escrow funds.”

I guess the question that most perplexes me in all of this is why on earth would good, honest carriers agree to throw the support of their association behind helping to defend these types of practices and the companies that deal unscrupulously with their owner-operators? Surely, you don’t condone this type of activity. Is it because you don’t believe it is really happening? That maybe we’ve made it all up for some diabolical reason?

I have seen your association attempt to intervene in a case in Kansas City in defense of a company that is absolutely the lowest, most unscrupulous operator I have seen in my entire 38 years in this business. This company conducted business practices in a way that should be an embarrassment to everyone in the industry and, in my view, rather than facing a civil action they should be facing criminal action. Yet your association attempts to intervene on their behalf.

If you are one of those companies that is honest in your dealings with owner-operators, then I can assure you that you have nothing to fear from us. In fact, you should be applauding our efforts because you must compete every day against those companies able to set rates below cost because they are able to generate huge profits through cheating and stealing from owner-operators or through other schemes that are simply abusive of their relationship and deprive the owner-operator of a fair chance to succeed and earn an honest living.

As I mentioned previously, we are certainly willing to work with you to explore alternative options for dealing with these problems, but only if your interest in developing realistic solutions is sincere because the problems are real — they are not a figment of our imagination. I must tell you up front though, we’re not interested in spending time working on some fluffy-sounding code-of-conduct type system with no teeth like the one developed with shippers and receivers to address practices at loading and unloading docks.

I also have to tell you whatever we are able to develop, the likelihood of completely replacing the option of litigation is slim to none. I can assure you the unbridled greed of some and the profits being generated through their unconscionable business practices will be far too great a motivation for them to reform voluntarily. Would it surprise you to learn, for example, even in the tough times the industry has faced over the past five or six years that anyone has been able to pull down tens of millions of dollars through this period?

My recommendation is if you are interested in working with us to develop alternatives, or more precisely solutions to the problems, that you form a committee to get together with us so we can jointly develop a mutually acceptable plan. If you decide to go forward, I will commit to my own personal involvement along with whatever other staffing or resources are necessary to accomplish the objective. I also will commit to you that we will work honestly and sincerely toward a mutual objective.

While I’m up here and since I still haven’t been struck by anything, there are just a few other comments I would like to make.

First, it is truly unfortunate that because of general suspicion or mistrust or whatever, we have not been able to work together more closely in the past on issues of mutual concern — and there are many. Hours of service is one example. Our positions on this important issue have never been that far apart, yet our efforts to work with TCA were for the most part either rebuffed, or dialogues that were started were ended when TCA simply went its own way with no further communication. Our ability to work together on this issue would be extremely beneficial to all concerned.

Consider the effect of company management standing up and saying, “We must be allowed to run our drivers 12 or 14 hours a day. It’s essential to our profitability.” Then consider the effect of the drivers standing with you agreeing and saying, “When I’m 500 or 1,000 miles from home and not tired, the last thing in the world I want to do is stop after 10 hours and sit around some truckstop till I get sleepy enough to take a nap before setting out again.”

The loading and unloading issues, I just mentioned. We attended one meeting on this issue with TCA and National Industrial Transportation League early on in the discussions after which TCA apparently decided to go forward on its own. We could certainly have brought a great deal to the table on this issue and I firmly believe through our combined effort and resources we could have developed a much more effective result.

The fuel surcharge issue. Despite all of the press coverage on the announcement that OOIDA and TCA were working together on this issue, we really haven’t had much success in trying to work with TCA toward a mutually acceptable solution. First, contrary to the perceptions that might be generated by Bob Hirsch’s comments on this subject in his column in your Nov. 9, 2001, newsletter, we made no effort to exclude TCA from input on this important subject. In fact, we made every effort to gain TCA’s input from the very beginning of our effort in early 2000.

  • In May of 2000, well before the legislation was introduced, I personally contacted both TCA and ATA seeking input and support. The response from ATA was “we are remaining neutral and taking no position on this issue.” The response from TCA was “we can’t take any position.” One staffer said at that time they really didn’t even know who was in charge of TCA that could make that decision. I then contacted Ed Trout and on May 24 Ed responded by e-mail:

    “Jim … thanks for the info on 4441 … you were right it was in ‘no mans land’ back at ATA and TCA … I fired a few folks up and it will be on the ATA agenda at our leadership conference in June … I know of more support than opposition so outcome should be interesting … I’ll let you know … Ed Trout.”

  • On April 19, 2000, a meeting was held in Congressman (Nick) Rahall’s offices at which all interested parties were invited to provide input. In attendance were ATA, NITL, NASSTRAC (National Small Shipments Traffic Conference), MFCA (Motor Freight Carriers Association), OOIDA and several LTL and package carrier representatives. TCA was not present even though I personally contacted Bob Rothstein suggesting TCA’s participation.
  • In November of 2000 when Congress was on the verge of adjournment and HR4441 had passed the House and was stalled in the Senate, TCA established a committee to look into the issue. We heard nothing more until I think about mid 2001 at which point we began attempting to work with you to iron out any differences. Most of the changes we agreed with and, in fact, would have included them in the original bill if some support had been available to counter what was almost total opposition. 

    We were in communication primarily with Bob Molinaro in discussing the changes and had some difficulty getting together with TCA staff. Mutually acceptable compromises were reached, I believe, in October of last year (too late to mount a serious effort at passage), and as of this date we still have no decision from TCA on acceptance of the mutually agreed language. Bottom line is, if Bob’s choice of words left you with the impression we were beaten into submission on accepting TCA’s input on this legislation, nothing could be further from the truth. We are pleased to have your input and I sincerely hope we can look forward to your support. To my knowledge, to date the only carrier that has actively supported these efforts is Don Oren at Dart Transit.

    We do very much wish to work with TCA on issues of mutual concern. To do so, though, it is important to tear down or find a way to work around this wall of mistrust. It’s important to be candid, honest and truthful in our communications. There will always, I am sure, be areas where we will never reach agreement. But there will be many more where we can. Finding those areas of agreement and putting forth the sincere effort to work together on them would very obviously be in everyone’s best interest.

    In conclusion, I would like to suggest one issue where we could certainly use your help. Several years ago OOIDA filed lawsuits against the states of New York, Ohio, Indiana and Illinois challenging the imposition of fuel-use taxes on miles driven on toll roads. Our theory is that where tolls cover the full cost of constructing, maintaining and operating the toll roads, the imposition of an additional fuel-use tax for use of those toll roads constitutes an undue burden on commerce.

    The state courts have uniformly rejected OOIDA’s cases. A victory will cost these states hundreds of millions of dollars. If OOIDA succeeds, motor carriers and owner-operators will potentially be in line to receive those hundreds of millions of dollars in refunds.

  • On Jan. 17, 2002, we filed a petition for a writ of certiorari with the U.S. Supreme Court. OOIDA needs your help to encourage the court to hear this case. We ask that TCA prepare and file an amicus brief with the Supreme Court asking it to grant OOIDA’s petition. As far as I can see, there is no downside to TCA for this activity. The upside for the industry is very substantial. I really can’t think of a more mutually beneficial issue to begin working together on.

Thank you.