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Fox v. Transam Leasing, Inc.

United States District Court, D. Kansas

June 11, 2014

CANDACE FOX, et al., Plaintiffs,
v.
TRANSAM LEASING, INC., et al., Defendants.

MEMORANDUM AND ORDER

CARLOS MURGUIA, District Judge.

Named plaintiffs Candace Fox, Anthony Gillespie, and Charles Schreckenbach, individually and on behalf of others similarly situated, have filed a Motion for Class Certification (Doc. 68). Plaintiffs seek certification pursuant to Federal Rule of Civil Procedure 23 on Counts I, II, and III of their fifteen-count Class Action Complaint (Doc. 1). For the reasons stated below, the court denies class certification as to Counts I and II and grants class certification as to Count III.

I. Background

Plaintiffs and the putative class are independent truck drivers who own or lease motor vehicle equipment, namely semi-trucks, to defendant TransAm Trucking, Inc. (referred to herein as "TransAm Trucking"). TransAm Trucking is an interstate for-hire motor carrier engaged in the business of over-the-road transport of goods. TransAm Trucking has over 1, 000 tractor-trailers and hauls interstate loads with no set or regular routes for its drivers. TransAm Trucking has both company drivers who are employees, and independent contractors, also known as "owner-operators, " who provide their trucks and driving services to TransAm Trucking.

Defendant TransAm Leasing, Inc. (referred to herein as "TransAm Leasing") is a separate entity. TransAm Leasing's sole business is leasing semi-trucks to independent contractors who, in turn, lease those trucks and driving services to TransAm Trucking (or some other motor carrier). The court sometimes refers to TransAm Trucking and TransAm Leasing collectively as "defendants."

A. Operative Agreements

All owner-operators who wish to contract with TransAm Trucking sign a written Independent Contractor Agreement ("ICA"). According to plaintiffs, more than 3, 000 putative class members signed substantially identical ICAs. (Doc. 69 at 4.) The ICAs set forth in a uniform way the framework for compensation that applies to each owner-operator. Defendants do not dispute the ICAs are identical in form but contend that the ICAs offer post-execution options (e.g., the option of purchasing different products, equipment, insurance and other services) that make the contracts different from each other. (Doc. 74 at 5.) The ICAs provide that the owner-operator determines the means and manner of performing under the ICA and that TransAm Trucking has no control or direction over the methods by which the owner-operator performs. The ICAs are considered leases under federal truth-in-leasing regulations because the contractor is considered to be leasing the truck and driving services to a motor carrier.

TransAm Leasing leases trucks to contractors under a written Equipment Lease Agreement ("ELA"). Many owner-operators lease a truck from TransAm Leasing, then turn around and lease that truck (and driving services) to TransAm Trucking. Like the ICAs, the ELAs are virtually identical in form, except the ELAs differ with respect to the trucks and lease terms, which results in varying lease payments among contractors.

B. Plaintiffs' Allegations

Plaintiffs allege that defendants falsely marketed to owner-operators by claiming compensation of "over $138, 000 per year on average, " pay in the amount of "$40, 000 more than company drivers over a four-year period, " and "exceptional owner/operator benefits" including compensation "between $100, 000-$200, 000 per year." (Doc. 69 at 6 (citing TransAm Trucking Marketing Materials).) Plaintiffs further claim defendants represented to prospective drivers that drivers could earn such compensation by averaging 2, 500 to 3, 000 miles per week. ( Id. ) These representations were made via various marketing materials, including direct mailings and advertising on defendants' website. Plaintiffs contend these statements were deceptive and unconscionable in violation of the Kansas Consumer Protection Act ("KCPA"), K.S.A. §§ 50-626, -627, because plaintiffs and class members did not make the amount of money defendants promised.

Plaintiffs also allege that defendants violated 49 C.F.R. § 376.12(i), which prohibits lessors from requiring lessees to purchase from them products or services as a condition of entering into a lease. Under the ICA, each plaintiff and class member was required to pay a satellite communications system usage fee of fifteen dollars per week. Defendants counter that the fee is not a forced purchase but is instead a specifically authorized chargeback under 49 C.F.R. § 376.12(h).

II. Analysis

Plaintiffs seek to certify the following class:

All persons, including entities, who operated under an Equipment Lease Agreement and an Independent Contractor Agreement with TransAm Trucking, Inc. and TransAm Leasing, Inc. between November 2, 2009, through the present. (Doc. 68 at 2.)

A. Legal Standards

The determination of class certification is committed to the broad discretion of the trial court. See Shook v. El Paso County (" Shook I "), 386 F.3d 963, 967 (10th Cir. 2004). "The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1217 (10th Cir. 2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550 (2011)). The court is required to perform a "rigorous analysis" before determining that the Rule 23 prerequisites have been met. Id . This "rigorous analysis" will frequently "entail some overlap with the merits of the plaintiff's underlying claim." Dukes, 131 S.Ct. at 2251. In performing its analysis under Rule 23, the court "must accept the substantive allegations of the complaint as true, though it need not blindly rely on conclusory allegations of the complaint which parrot Rule 23 and may consider the legal and factual issues presented by [the] plaintiff's complaint[ ]." Midland Pizza, LLC v. Sw. Bell Tel. Co., 277 F.R.D. 637, 639 (D. Kan. 2011) (quoting DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1194 (10th Cir. 2010)) (internal quotation marks omitted).

As the parties seeking class certification, plaintiffs have the burden to prove that the requirements of Rule 23 are satisfied. See Shook I, 386 F.3d at 968; D. Kan. Rule 23.1(d). In doing so, plaintiffs must first satisfy the prerequisites of Rule 23(a) by demonstrating that (1) the class is so numerous that joinder of all members is impracticable, (2) questions of law or fact are common to the class, (3) the claims of the representative parties are typical of the claims of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. See Fed.R.Civ.P. 23(a). After meeting these requirements, plaintiffs must demonstrate that the proposed class action fits within one of the categories described in Rule 23(b).

B. Rule 23(a) ...


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