JUDITH E. LEVY, District Judge.
This is a putative class action case brought under the Truth-in-Leasing Regulations. Pending is defendant Bill Thompson Transport, Inc.'s ("BTTI") motion for partial summary judgment. (Dkt. 17.)
Plaintiff Abdullah Al-Anazi is a truck owner-operator who contracted his equipment and driving services to defendant in 2014 and 2015. On October 21, 2014, plaintiff signed a Contractor Operating Agreement ("Operating Agreement") (Dkt. 1-1), which contained several provisions regarding the rights and responsibilities of the parties regarding repairs to plaintiff's truck.
First, in the "Expenses" section, the contract states that "SUBCONTRACTOR UNDERSTANDS THAT HE IS NOT REQUIRED TO PURCHASE OR RENT ANY PRODUCTS, EQUIPMENT, OR SERVICES FROM BTTI AS A CONDITION OF ENTERING INTO THIS AGREEMENT." (Id. at 3.) Appendix D to the agreement, entitled "Miscellaneous Charge Back Items," states that "BTTI, at its option, shall perform maintenance and/or repair service for the Equipment, at BTTI's option and subject to space availability." (Id. at 12.)
Under "Compensation and Payment," the agreement states that:
(Id. at 3.)
Plaintiff began driving for defendant on December 1, 2014, and ceased driving for defendant on May 1, 2015. From the time plaintiff signed the Operating Agreement in October 2014, to plaintiff terminating the agreement in May 2015, defendant performed numerous repairs on plaintiff's vehicle (see generally Dkts. 17-4, 17-6), and issued settlement statements related to those repairs. (Dkt. 17-7.)
On August 17, 2015, plaintiff filed a putative class action lawsuit alleging that defendant violated three provisions of the federal Truthin-Leasing Act and one provision of the Michigan Motor Vehicle Repair Act. Plaintiff asserts four counts: (1) violation of 49 C.F.R. § 376.12(h) et seq. due to the Operating Agreement's lack of specificity regarding charge back items, (2) violation of 49 C.F.R. § 376.12(h) et seq. due to the requirement that maintenance and service be performed by an authorized carrier, (3) violation of 49 C.F.R. § 376.12(h) and (i) et seq. due to unauthorized deduction of repair and maintenance funds, and (4) violation of MCL § 257. 1301 et seq. for failure to comply with the Michigan Repair Act.
On November 16, 2015, defendant filed a motion for partial summary judgment seeking dismissal of Counts I, II, and IV, and a limitation on all claims under Count III to those for which proper notice was given under the Operating Agreement. (Dkt. 17.)
Summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Court may not grant summary judgment if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248. The Court "views the evidence, all facts, and any inferences that may be drawn from the facts in the light most favorable to the nonmoving party." Pure Tech Sys., Inc. v. Mt. Hawley Ins. Co., 95 F. App'x 132, 135 (6th Cir. 2004) (citing Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002)).
Plaintiff alleges that defendant violated 49 C.F.R. § 376.12(h) of the Truth-in-Leasing Regulations because the Operating Agreement lacked specificity as to charge back items. Section 376.12 requires that:
The relevant portion of the agreement states as follows in Section 5:
(Dkt. 1-1 at 2.)
Appendix D lists ten miscellaneous charge back items, and states that "BTTI, at its option, shall perform maintenance and/or repair service for the Equipment, at BTTI's option and subject to space availability. BTTI shall charge SUBCONTRACTOR for such services according to the fees then in effect at the BTTI shop for such service for vehicles not owned by BTTI." (Id. at 12.)
Defendant argues that, pursuant to Port Drivers Fed'n 18, Inc. v. All Saints Express, Inc., 757 F.Supp.2d 463 (D.N.J. 2011) ("Port Drivers II"), the language of Section 5 and Appendix D is clear enough to satisfy § 376.12(h). The Port Drivers court, having found that a prior charge back provision was insufficiently clear, analyzed the following provision:
Id. at 468. That court found that the above provision would have been sufficiently clear for the purposes of § 376.12(h), if "etc." was changed to "and like items." Id.
In Port Drivers Fed'n 18, Inc. v. All Saints Express, Inc., 757 F.Supp.2d 463 (D.N.J. 2011), ("Port Drivers I") that court interpreted the following charge back provision:
Id. at 454-55 (emphasis removed). Plaintiffs challenged the provision permitting the carrier to withhold money for insurance, and argued that this did not specify how the amount of the charge-back would be calculated. Id. at 455. The court agreed with plaintiffs, and stated that "even if the name and amount of the charge-back is listed, the method by which the amount of the charge-back is computed is an essential component in fulfilling the requirements of 49 C.F.R. § 376.12(h)." Id. (citing Owner-Operator Indep. Drivers Ass'n v. Landstar Sys. Inc., 541 F.3d 1278, 1292-93 (11th Cir. 2008)).
In short, the issue with the charge back provision in Port Drivers I was that it did not specify how certain charges would be calculated. The provision in Port Drivers II fixed this issue by making all of the subject charges the responsibility of the driver who formerly would have been charged. The charge back provision in this case differs because it still charges plaintiff for the ten items contained in Appendix D — including the repairs that may be performed at defendant's discretion.
Plaintiff cites other cases interpreting this provision in which defendants were found to have violated § 376.12(h). In Owner-Operator Indep. Drivers Assoc., Inc. v. C.R. England, Inc., 508 F.Supp.2d 972 (D. Utah 2007), that court found that the agreement between the parties failed to clearly specify certain charge backs against compensation and a recitation of how those charges were calculated, as well as documents necessary to determine the validity of the charge-backs. Id. at 981. Likewise, in Tayssoun Transp., Inc. v. Universal Am-Can, Ltd., Case No. 04-1074, 2005 WL 1185811 (S.D. Tex. Apr. 20, 2005), that court found that a carrier's deduction of a per-trip fee violated § 376.12(h) because the agreement between the parties did not specify how the deduction would be computed or provide copies of documents necessary to determine the charge's validity. Id. at *17.
In this case, it is unclear which language plaintiff is stating violates § 376.12(h), and how. Plaintiff's primary disagreement is with the language of Appendix D, which states that defendant may perform repairs at its discretion and at the rates normally charged for repairs of vehicles defendant does not own. The language of Appendix D clearly states how potential charges will be computed: at the rates normally charged for non-BTTI vehicles.
Defendant has also provided extensive copies of documentation that it states were provided to plaintiff detailing the charges assessed. Notably, plaintiff provides a notarized affidavit in support of his claims, but does not state that he did not know how deductions from his pay would be computed, or that he did not receive copies of documents to review.
The cases that plaintiff cites are unpersuasive here, because they concern agreements under which drivers were either not informed of how charges would be computed, or not given documentation detailing the charges. Here, plaintiff received both information regarding computation, and extensive documentation.
Accordingly, summary judgment is granted as to Count I.
Plaintiff alleges that defendant violated 49 C.F.R. § 376.12(i), which states that:
Plaintiff alleges that Appendix D of the Operating Agreement violates § 376.12(i). It states that "BTTI, at its option, shall perform maintenance and/or repair services for the Equipment, at BTTI's option and subject to space availability." (Dkt 1-1 at 12.)
Defendant directs the Court to the statement contained in all capital letters in section 5 of the agreement: "SUBCONTRACTOR UNDERSTANDS THAT HE IS NOT REQUIRED TO PURCHASE OR RENT ANY PRODUCTS, EQUIPMENT, OR SERVICES FROM BTTI AS A CONDITION OF ENTERING INTO THIS AGREEMENT." (Id. at 3.) Defendant argues that this clause is dispositive under § 376.12(i). It interprets the relevant section of Appendix D to mean only that it "has reserved the option to refuse to perform repairs on Plaintiff's vehicle if it chooses to." (Dkt. 17 at 20.)
Plaintiff argues that § 376.12(i) imposes a substantive, as well as linguistic, obligation on defendant. First, the prefatory language of § 376.12 states that "[t]he required leave provisions shall be adhered to and performed by the authorized carrier." Second, plaintiff points to Seventh Circuit case law indicating that this language imposes a substantive obligation on a carrier to actually comply with the required contractual terms, not just include them in an agreement. See Mervyn v. Nelson Westerberg, Inc., 76 F.Supp.3d 715, 719 (N.D. Ill. 2014) (citing Owner-Operators Indep. Drivers Ass'n v. Mayflower Transit, Inc., 2006 WL 1547084, at *5 (S.D. Ind. June 1, 2006)); Owner-Operator Indep. Drivers Ass'n v. Mayflower Transit, LLC, 615 F.3d 790 (7th Cir. 2010). The Court finds this precedent persuasive.
When section 5 and Appendix D are read in concert, the language of the Operating Agreement does not, on its face, violate § 376.12(i). Section 5 lists a variety of charges that are the driver's responsibility, and incorporates Appendix D to reference other specific charges that the driver may have to pay. Section 5 governs Appendix D, and so the disclaimer that the driver is not required to rent or purchase services governs the interpretation of the language permitting defendant to perform certain services at its option.
However, a substantive obligation also exists under § 376.12(i). The language of the Operating Agreement must comport with § 376.12(i), but so must defendant's conduct under the Operating Agreement. Defendant argues only that the language of the contract establishes compliance with the law, but not that it actually complied with the law. The parties also present competing affidavits regarding defendant's compliance with the law (Dkt. 17-2; Dkt. 20-3.) This creates a genuine issue of material fact regarding defendant's compliance.
Accordingly, summary judgment is denied as to Count II.
Plaintiff alleges that defendant materially violated 376.12(h) and (i) by taking unauthorized deductions from plaintiff under the Operating Agreement. Defendant moves for partial summary judgment on this claim, arguing that the notice provision in the Operating Agreement bars all claims for which notice was not given within ninety days. The relevant language states that:
(Dkt. 1-1 at 3.)
Plaintiff makes two arguments regarding the enforceability of this provision. First, plaintiff argues 49 U.S.C. § 14705 creates jurisdictional rights and deadlines for an owner-operator under the Truth-in-Leasing Regulations, and as such, cannot be contractually modified. (Dkt. 27 at 8-9.) Second, plaintiff argues it is against public policy to enforce the provision.
Section 14705 establishes a statute of limitations for claims to be brought under the Truth-in-Leasing Regulations. In cases such as this, plaintiff "must begin a civil action to recover overcharges within 18 months after the claim accrues." 49 U.S.C. § 14705(b). Whether a statute of limitations is jurisdictional is determined by Congress, and the Supreme Court has held that "the Government must clear a high bar to establish that a statute of limitations is jurisdictional." United States v. Kwai Fun Wong, ___ U.S. ____, 135 S.Ct. 1625, 1632 (2015). In order to meet this bar, Congress must do more than establish time restraints for filing a civil suit. While Congress need not use any "magic words," it must clearly state when a statute of limitations is intended to be jurisdictional. Id. at 1633.
The Supreme Court has "made plain most time bars are nonjurisdictional" and "described filing deadlines as quintessential claim-processing rules, which seek to promote the orderly progress of litigation, but do not deprive a court of authority to hear a case." Id. (internal quotation marks and further citation omitted). Plaintiff does not attempt to differentiate the time bars in 49 U.S.C. § 14705 from typical, nonjurisdictional statutory time bars. Instead, plaintiff's argument assumes that this statutory time bar is jurisdictional in nature because it grants parties the ability to file an administrative complaint for an additional eighteen months after the statute of limitations for a civil action ends. (Dkt. 27 at 8-9.)
Congress did not express a clear intention for the time bars limiting claims under the Truth-in-Leasing Regulations to be jurisdictional in nature. Congress may establish that a time bar is jurisdictional in nature by using language that either explicitly discusses the power of the courts or discusses the statute of limitations requirement alongside a requirement that any action arising under the statute must be brought in federal court. Kwai Fun Wong, 135 S. Ct. at 1633.
49 U.S.C. § 14705 meets neither of these standards, and also fails under the clear statement rule. For example, 49 U.S.C. § 14705(b) reads that "[claimant] must begin a civil action to recover overcharges within 18 months after the claim accrues," but does not state that this statute of limitations for a civil action is intended to be jurisdictional. Because § 14705 does not create a jurisdictional time bar, plaintiff's argument that the statute of limitations is automatically unable to be waived or extended by the parties or the court is without merit.
With regard to plaintiff's second argument, Congress did not include any explicit prohibitions regarding contractual modifications of the statute of limitations when writing the Truth-in-Leasing Regulations. Congress' silence on this topic does not mean it approved of contractual modifications of the statute of limitations under the Truth-in-Leasing Act, but it does show that there is no explicit ban to such modifications on the face of the Regulations.
The Federal Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") is an example of Congress explicitly prohibiting contractual modifications of statutory statute of limitations. FIRREA adopted statute of limitation periods proceeded by the statement "[n]otwithstanding any provision of any contract." 12 U.S.C.A. § 1821. With this short phrase, Congress "precluded the application of a shorter contractual limitations period." Jett Hanna,
The Ninth Circuit in reviewing the Truth-in-Leasing Regulations, determined that "Congress's substantive purpose in authorizing the Truth-in-Leasing regulations was to protect owner-operators." Owner Operator Indep. Drivers Ass'n v. Swift Transp. Co. (AZ), 367 F.3d 1108, 1115 (9th Cir. 2004). Contractual provisions further restricting owner-operators' ability to file suit contravene this purpose. Rather than protecting owner-operators, such contract modifications allow motor carriers, who are typically in superior bargaining positions, to restrict owner-operators's ability to file suit.
Defendant argues it is a "bedrock principle of American contract law that parties are free to contract as they see fit, and the courts are to enforce the agreement as written absent some highly unusual circumstance, such as a contract in violation of law or public policy." Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41, 51 (2003). Accordingly, defendant argues that the ninety-day notice provision should be enforced just as it would be in the insurance industry.
Notice provisions in insurance contracts enable insurers to "make a timely investigation in order to protect [their] interests." Weller v. Cummins, 330 Mich. 286, 293 (1951). Here, defendant has no investigation to carry out and no evidence to collect. Defendant is the party that performed maintenance on plaintiff's truck and charged him for it. To the extent that defendant must investigate anything, it would investigate the repair receipts, invoices, and checks it created and distributed. Defendant does not need to ensure the preservation of evidence for a timely investigation, because it possesses the evidence to be investigated. Extending this principle to defendant in this case would be unwarranted.
Plaintiff argues that enforcing the notice provision would violate public policy because courts have held similar contractual provisions to be unenforceable under other federal statutory schemes meant to protect workers' rights. Plaintiff first cites Lewis v. Harper Hospital, a Family Medical Leave Act ("FMLA") case in which the court found that a "six month limitation clause [on FMLA claims] is not enforceable." Lewis, 241 F.Supp.2d 769, 773 (E.D. Mich. 2005). This was so because the FMLA explicitly prohibited employees from waiving their rights under FMLA. Id; 29 C.F.R. § 825.220(d).
Plaintiff also cites Wineman v. Durkee Lakes Hunting & Fishing Club Inc., 352 F.Supp.2d 815, 822 (E.D. Mich. 2005), in which the court held that an employee could not waive the Fair Labor Standards Act ("FLSA") statute of limitations because allowing an employee to do so would be contrary to public policy:
Id. (emphasis added).
Much like the Truth-in-Leasing Regulations, the FLSA was intended by Congress to help employees by giving them "fundamental workplace rights." Id. at 821. The Wineman court further stated:
Id. (emphasis added in original) (quoting Jewell Ridge Coal Corp. v. Local No. 6167, United Mine Workers, 325 U.S. 161, 176 (1945)). It is both unwise and incorrect to divorce procedural from substantive rights in employee rights cases. Further, deference should be paid to Congress when it has specifically created "the right to enforce these privileges in court." Wineman, 352 F.Supp.2d at 821. Importantly, Wineman also recognizes that despite the statutory language differences between the FMLA and the FLSA, the holding in Lewis is still relevant.
Id. at 822-23. Much like the FLSA, the Truth-in-Leasing Regulations have no explicit statutory language barring the protected class from waiving their rights. However, the Wineman analysis is equally persuasive here—public policy weighs strongly in favor of preventing contractual limitations on the ability of plaintiffs to bring suit to protect rights otherwise guaranteed by the Truth-in-Leasing Regulations.
Accordingly, summary judgment is denied as to Count III.
Plaintiff alleges that defendant violated the Michigan Repair Act, M.C.L. § 257.1301 et seq., by engaging in deceptive practices. Namely, plaintiff alleges that defendant violated §§ 257.1332 and 257.1334. In relevant part, § 257.1332 states that:
(2) If the facility or mechanic informs the customer that the price for repair will exceed the written estimate or the stated limit in the waiver and the customer does not want the repair work performed then the customer is liable for all reasonable costs to return the vehicle to the condition it was when it entered the facility. These costs should be indicated in written form itemizing the costs as closely as possible with a copy given to the customer. The cost of a diagnosis to be made, whether or not the customer authorizes repairs to be performed, shall be contained in the written estimate before the diagnosis is undertaken.
Section 257.1334 states that:
Section 257.1302(g) defines a "motor vehicle repair facility" as:
Defendant argues that the Michigan Repair Act does not apply to it, because it repairs only vehicles that it owns or has full control over pursuant to federal law within the scope of its business dealings, and is thus exempt under the Repair Act's first exemption for an entity that only repairs the vehicles of a single commercial establishment. Plaintiff argues that because he owns his truck, this exemption is not applicable to defendant because the motor vehicle does not belong to defendant and is therefore not the vehicle of a single commercial establishment.
Michigan case law is silent as to whether a common carrier who leases a vehicle from a third party, to be used solely in the common carrier's operations, is exempt under the Michigan Repair Act. The Repair Act states that "[a] person who engages only in the business of repairing the motor vehicles of a single commercial or industrial establishment or governmental agency" is excluded from the Act. M.C.L. § 257.1302(g)(A)(i).
Defendant cites various federal regulations defining the relationship between owner-operators and carriers in support of the proposition that it is exempt from the Michigan Repair Act. These regulations, defendant argues, establish that when defendant repairs the trucks of owner-operators it employs, it is doing so in service of a single commercial establishment that has exclusive control over the owner-operators' vehicles.
Defendant first relies on the definitions section of the Federal Motor Carrier Safety Regulations ("FMCSR"), 49 C.F.R. § 390.5, which define defendant as an employer and define plaintiff, "an independent contractor while in the course of operating a motor vehicle," as an employee of defendant. Defendant next relies on other sections of the FMCSR that define owner-operators as "drivers" over whom defendant would have responsibility. See 49 C.F.R. §§ 382.107 (owner-operators are "drivers" along with regularly employed, casual, and leased drivers for the purpose of a motor carrier's controlled substance and alcohol use testing responsibilities), 390.11 (motor carrier is obligated to ensure that its drivers, including owner-operators, observe all duties and prohibitions imposed on them).
Defendant also argues that, under the FMCSR, it is defined as an "owner" of the owner-operator's equipment because, despite not having title to the vehicle, it "has the right to exclusive use of [the] equipment." 49 C.F.R. § 376.2(d)(2); see also 49 C.F.R. § 376.12(c)(1) (stating that "the lease [between the owner-operator and trucking company as authorized carrier lessee] shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease," and that the authorized carrier lessee "shall assume complete responsibility for the operation of the equipment for the duration of the lease.").
For the purposes of the Michigan Repair Act, these federal regulations establish that carriers such as defendant are required to assume broad, even absolute, responsibility for both owner-operators and their equipment. This extends to the legal requirement, expressed in both 49 C.F.R. § 376.12(c)(1) and the Operating Agreement, that carriers such as defendant have exclusive possession, control, and use over the equipment. For this reason, a carrier such as defendant repairs the vehicles of a "single commercial . . . establishment" when it repairs the vehicles of the owner-operators it employs, such as plaintiff. M.C.L. § 257.1302(g)(A)(i).
This is so because the defendant is required to exercise a degree of control and responsibility over the equipment as a matter of law such that the vehicle is a part of its commercial establishment during the period defendant employs the owner-operator. That the owner-operator may terminate this relationship and with it defendant's control over his vehicle does not change this analysis, because while the contractual relationship is still in force, defendant is required to assert exclusive possession, control, and use over the vehicle.
Accordingly, summary judgment is granted as to Count IV.
For the reasons stated above, it is hereby ordered that:
Defendant's motion for partial summary judgment (Dkt. 17) is GRANTED as to Counts I and IV and DENIED as to Counts II and III.
IT IS SO ORDERED.
