Owner-Operator Independent Drivers Ass'n v. New Prime, Inc. , 339 F.3d 1001 ( 2003 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 02-3289/02-3482
___________
Owner-Operator Independent Drivers *
Association, Inc., Individually and on *
behalf of all others similarly situated; *
Marshall Johnson; Jerry Vanboetzelaer, *
*
Appellants/Cross-Appellees, *
* Appeal and Cross-Appeal from the
v. * United States District Court for the
* Western District of Missouri.
New Prime, Inc., doing business as *
Prime Inc.; Success Leasing, Inc., *
*
Appellees/Cross-Appellants. *
___________
Submitted: May 15, 2003
Filed: August 21, 2003
___________
Before WOLLMAN, MAGILL, and BEAM, Circuit Judges.
___________
MAGILL, Circuit Judge.
Plaintiffs-Appellants Owner-Operator Independent Drivers Association, Inc.
("OOIDA"), Jerry Vanboetzelaer ("Vanboetzelaer"), and Marshall Johnson
("Johnson") (collectively "Appellants") appeal the district court's1 grants of summary
1
The Honorable Dean Whipple, Chief Judge, United States District Court for
the Western District of Missouri.
judgment in favor of Defendants-Appellees New Prime, Inc. ("Prime") and Success
Leasing, Inc. ("Success"). Appellants also appeal the district court's denial of class
certification. Prime and Success cross-appeal the district court's dismissal of their
state-law counterclaim against Johnson, asking for relief only if this court reverses.
Our jurisdiction is proper pursuant to 28 U.S.C. § 1291 (2000). We find that
the Interstate Commerce Commission Termination Act of 1995 ("ICCTA"), Pub. L.
No. 104-88, 109 Stat. 803 (1995), is not retroactive and therefore does not grant a
private right of action to parties of leases executed prior to the effective date of the
ICCTA. Accordingly, we affirm.
I.
OOIDA is a business association of owner-operators: individuals who own or
control motor carrier equipment, such as a tractor unit, and lease the equipment, along
with driving services, to a trucking company. Vanboetzelaer and Johnson are owner-
operators and members of OOIDA. Prime is a regulated motor freight carrier,
headquartered in Missouri and operating in forty-eight states. Success leases tractor
units to independent owner-operators. Owner-operators lease tractor units from
Success, and then lease the units, along with their services, back to Prime. Prime and
Success have the same officers, directors, and shareholders.
An owner-operator ("Owner-Operator") who leases a tractor unit from Success
signs a lease agreement ("Lease Agreement"), under which the Owner-Operator
makes weekly rental payments and has an option to purchase the leased tractor. Prior
to 1997, the Lease Agreement contained three provisions at issue in this appeal: (1) a
Repair Reserve, under which Success retained $.035 per mile for tractor repairs in
excess of $500; (2) a Tire Replacement Reserve, under which Success retained $.015
per mile for the purchase of tires; and (3) an Excess Mileage Account, under which
Success retained $.05 per mile for mileage in excess of 2900 miles per week. The
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Lease Agreement provided that if the lease was terminated early, the amount retained
in the Repair Reserve and the Tire Replacement Reserve became the sole property of
Success, and if the Owner-Operator completed the lease, exercised its option to
purchase the tractor, or sold it to a third party, the unused funds would be divided
equally between Success and the Owner-Operator. As to the Excess Mileage
Account, the Lease Agreement provided that if the lease was terminated early, the
amount retained became the sole property of Success, and if the Owner-Operator
completed the lease, exercised its option to purchase the tractor, or sold it to a third
party, Success would pay the Owner-Operator the entire amount retained for excess
mileage.
In April 1997, Success amended the Lease Agreement by (1) eliminating the
Repair Reserve; (2) providing that at the end of the lease or upon termination, the
entire amount withheld in the Tire Replacement Reserve would be returned to the
Owner-Operator, less costs attributable to wear on the tires; and (3) replacing the
Excess Mileage Account with an excess mileage charge ("Excess Mileage Charge"),
which requires an Owner-Operator to pay an additional sum for mileage over a
certain amount, unless the Owner-Operator purchases the tractor unit or completes
the lease, in which case an amount equal to the Excess Mileage Charge shall be paid
back to the Owner-Operator.
In addition to the Lease Agreement, Owner-Operators sign a "Service
Contract"2 to lease their driving services to Prime. The Service Contract requires the
Owner-Operator to provide a $1000 security deposit to ensure full performance of the
lease obligations.
2
This agreement is now known as an "Independent Operating Agreement."
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A.
Appellants claim that these three reserve accounts and the security deposit
violate the Truth-in-Leasing regulations, see 49 C.F.R. Part 376 (2003). Specifically,
Appellants claim that the withholding and retention of funds in these accounts and
in the security deposit: (1) are improper because the lease documents fail to identify
and provide an accounting of these "charge back items," in violation of 49 C.F.R.
§ 376.12(h); (2) are unauthorized deductions from compensation, in violation of
§ 376.12(i); and (3) are unauthorized deductions of escrow funds, in violation of
§ 376.12(k). We discuss the specifics of the parties' agreements below.
1. Vanboetzelaer
Vanboetzelaer entered two sets of agreements at issue in this appeal. On
October 5, 1992, Vanboetzelaer entered a Lease Agreement with Success and a
Service Contract with Prime ("October 1992 Lease"). Under the Lease Agreement,
Vanboetzelaer leased a tractor unit from Success for a period beginning on October 5,
1992, and ending January 18, 1994. Under the Service Contract, Vanboetzelaer
leased the tractor unit back to Prime, along with his driving services.
Under the October 1992 Lease, Success withheld (1) $2894 for the Repair
Reserve; (2) $1240 for the Tire Replacement Reserve; and (3) $866 for the Excess
Mileage Account. Vanboetzelaer terminated this lease on February 20, 1993, and as
a result, Success retained all of these withholdings, in accordance with the Lease
Agreement. Success made no interest payments on any of these funds.
Upon termination of the October 1992 Lease, Vanboetzelaer entered a second
Lease Agreement and Service Contract, covering a different tractor unit ("February
1993 Lease"). This agreement ran from February 20, 1993, until February 20, 1995,
with an automatic one-year extension until February 20, 1996.
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Under the February 1993 Lease, Success withheld (1) $20,184 for the Repair
Reserve; (2) $2886 for the Tire Replacement Reserve; and (3) $7282 for the Excess
Mileage Account. Vanboetzelaer completed his obligations under the lease on
February 16, 1996, and subsequently exercised his right to purchase the tractor. In
accordance with the Lease Agreement, Success returned to Vanboetzelaer half of the
funds from the Repair Reserve and Tire Replacement Reserve and all of the funds
from the Excess Mileage Account. Success made no interest payments on any of
these funds. In addition, Prime retained Vanboetzelaer's $1000 security deposit,
which he paid pursuant to the Service Contract.
2. Johnson
Johnson also entered two sets of agreements at issue in this appeal. On July 12,
1994, Johnson entered a Lease Agreement to lease a tractor unit from Success and a
Service Contract with Prime to provide driving services from July 12, 1994, until
August 16, 1995 ("July 1994 Lease"). Johnson terminated the July 1994 Lease on
October 18, 1994, and Success retained all of the funds withheld for the Repair
Reserve, the Tire Replacement Reserve, and the Excess Mileage Account; a total of
$6469.
Upon termination of the July 1994 Lease, Johnson entered a second Lease
Agreement, leasing a different tractor unit from Success, and a second Service
Contract, leasing this tractor unit, along with his driving services, to Prime for a
period from October 18, 1994, until October 18, 1996, with an automatic one-year
extension until October 18, 1997 ("October 1994 Lease"). Johnson claims that he
received a letter from Success written on Prime letterhead, terminating the October
1994 Lease, effective August 20, 1996. Prime and Success claim that Johnson
prematurely terminated the October 1994 Lease on August 20, 1996. Upon
termination, Success retained all funds withheld for the Repair Reserve, the Tire
Replacement Reserve, and the Excess Mileage Account, a total of $17,945. Johnson
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received no interest for the funds retained under the July 1994 Lease or the October
1994 Lease.
B.
On August 14, 1997, Vanboetzelaer, Johnson, and OOIDA filed a class-action
complaint against Prime and Success, alleging violations of the Truth-in-Leasing
regulations. The district court dismissed the complaint, concluding that the Federal
Highway Administration ("FHWA") had primary jurisdiction because the claim
involved matters within the agency's expertise. This court reversed and remanded,
finding, inter alia, that the FHWA did not have exclusive jurisdiction over the claim.
Owner-Operator Indep. Drivers Ass'n Inc. v. New Prime, Inc., 192 F.3d 778, 783-85
(8th Cir. 1999).
On remand, the district court denied Appellants' request for class certification,
holding that certification under Federal Rule of Civil Procedure 23(b) was
inappropriate because questions affecting individual members predominated over
common questions of law or fact. Subsequently, the district court denied Appellants'
request to file an interlocutory appeal challenging the denial of certification.
On January 22, 2002, the district court granted partial summary judgment for
Prime and Success, holding that the ICCTA does not provide a private right of action
for claims based on lease agreements that terminated before January 1, 1996, the
effective date of the ICCTA. On August 2, 2002, the district court extended its
holding, finding that the ICCTA could also not be applied retroactively to grant a
private right of action based on lease agreements executed before January 1, 1996,
thereby granting summary judgment for Prime and Success on the remainder of
Vanboetzelaer's and Johnson's claims.
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Subsequently, the district court granted summary judgment for Prime and
Success on the remaining plaintiff's, OOIDA, claims for declaratory and injunctive
relief, finding that (1) the amendments to the Lease Agreement mooted OOIDA's
claims; (2) OOIDA lacked standing to challenge agreements entered after January 1,
1996, because it failed to show that any of its members entered into leases with Prime
or Success after this date; and (3) the terms contained in the Lease Agreement, as it
was amended in April 1997 ("Amended Lease Agreement"), are sound and legal.
This appeal followed.
II.
First, we examine whether the district court erred in holding that the ICCTA
cannot be applied to conduct predating its enactment and thereby granting summary
judgment in favor of Prime and Success on all of Vanboetzelaer's and Johnson's
claims. We review a district court's grant of summary judgment de novo, applying
the same standard as the district court. Caviness v. Nucor-Yamato Steel Co., 105
F.3d 1216, 1223 (8th Cir. 1997) (citation omitted). We will affirm only when there
are no genuine issues of material fact, and the moving party is entitled to judgment
as a matter of law. Id. (citation omitted); Fed. R. Civ. P. 56(c) (2003).
A.
The ICCTA transferred the motor carrier regulatory functions of the Interstate
Commerce Commission ("ICC") to the Department of Transportation ("DOT") and
the Surface Transportation Board ("STB"). See 49 U.S.C. § 13501. Within the DOT,
the FHWA administers and enforces regulations regarding lease agreements between
motor carriers and Owner-Operators, known as the Truth-in-Leasing regulations. See
49 C.F.R. Part 376.
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Appellants claim that certain provisions of the Lease Agreements and Service
Contracts violated the Truth-in-Leasing regulations. Appellants seek injunctive relief
and damages under the following provisions of the ICCTA, entitled "Rights and
remedies of persons injured by carriers or brokers":
(a) In general. –
(1) Enforcement of order. – A person injured because a carrier or
broker providing transportation or service subject to jurisdiction under
chapter 135 does not obey an order of the Secretary or the Board, as
applicable, under this part, except an order for the payment of money,
may bring a civil action to enforce that order under this subsection. A
person may bring a civil action for injunctive relief for violations of
sections 14102 and 14103.
(2) Damages for violations. – A carrier or broker providing
transportation or service subject to jurisdiction under chapter 135 is
liable for damage sustained by a person as a result of an act or omission
of that carrier or broker in violation of this part.
49 U.S.C. § 14704(a).
The ICCTA became effective on January 1, 1996. It is undisputed that all
agreements between Appellants and either Prime or Success were executed prior to
January 1, 1996. As a result, Prime and Success argue that Appellants may not bring
an action under the ICCTA, as the claims at issue involve agreements which
terminated before the effective date of the ICCTA, and the ICCTA was not intended
to apply retroactively. Our task it to determine whether the ICCTA applies
retroactively, an issue of first impression in our circuit.
B.
"[A] presumption against retroactive legislation is deeply rooted in our
jurisprudence." Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994) (citation
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omitted). The rationale for this presumption is that "[e]lementary considerations of
fairness dictate that individuals should have an opportunity to know what the law is
and to conform their conduct accordingly." Id. As such, the Supreme Court has
provided a framework for determining when a federal statute applies to conduct
predating the statute's enactment. First, a court must determine if Congress has
expressly prescribed the statute's proper reach. Id. at 280. If Congress has
prescribed the reach, "there is no need to resort to judicial default rules." Id. If not,
a court must examine whether the statute would have a retroactive effect; i.e.,
"whether it would impair rights a party possessed when he acted, increase a party's
liability for past conduct, or impose new duties with respect to transactions already
completed." Id. If the statute would do any of these things, the presumption is that
the statute does not govern, absent clear congressional intent otherwise. Id.With regard to the ICCTA, Congress has not expressly prescribed the statute's
reach. Therefore, we must proceed to the second step: whether application of the
statute in this case would have a retroactive effect. We agree with the district court
that private rights of action for damages based on the ICCTA are limited to actions
involving agreements executed after the ICCTA's effective date; otherwise, the statute
has a retroactive effect.
Prior to the ICCTA, only the ICC could bring claims against motor carriers for
failure to comply with the applicable regulations. The ICCTA shifts this power and
permits individual Owner-Operators to bring defendants directly into court. We find
that this creates an impermissible retroactive effect.
This issue is analogous to the issue presented in Hughes Aircraft Co. v. United
States, 520 U.S. 939 (1997), in which the Supreme Court held that when a statute
expanded the class of plaintiffs who could bring claims, the statute altered the
defendant's substantive rights and therefore had a retroactive effect. Id. at 950 ("In
permitting actions by an expanded universe of plaintiffs with different incentives, the
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[new statute] essentially creates a new cause of action, not just an increased
likelihood that an existing cause of action will be pursued.") (citation omitted). Here,
by permitting Owner-Operators to bring their own actions against motor carriers, the
ICCTA expands the class of plaintiffs who could bring claims, thereby altering the
motor carriers' substantive rights. But see Owner-Operator Indep. Drivers Ass'n, Inc.
v. Arctic Express, Inc., No. 97-CV-750, 2003 WL 21645754 (S.D. Ohio July 11,
2003).
The Hughes Court also noted that individual plaintiffs will be motivated
"primarily by prospects of monetary reward rather than the public good." 520 U.S.
at 949. We find this to be the case here as well: Owner-Operators who sue motor
carriers will likely be motivated by their own potential financial gain. This increases
defendant motor carriers' potential liability, thereby creating a retroactive effect.
We find that the application of the ICCTA to the case at bar would result in a
retroactive application of the statute, for which there is no evidence of congressional
intent. Therefore, we agree with the district court that the ICCTA's private right of
action is applicable only to leases executed after the effective date of the ICCTA.
Accordingly, we affirm the grants of summary judgment in favor of Prime and
Success with regard to Vanboetzelaer's and Johnson's claims, as all of their claims
were based on leases and agreements executed prior to January 1, 1996.
III.
Next, we examine whether the district court erred in granting summary
judgment in favor of Prime and Success on OOIDA's claims for declaratory and
injunctive relief. Again, we review a district court's grant of summary judgment de
novo. Caviness, 105 F.3d at 1223 (citation omitted). We will affirm only when there
are no genuine issues of material fact, and the moving party is entitled to judgment
as a matter of law. Id. (citation omitted); Fed. R. Civ. P. 56(c).
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A.
First, to the extent OOIDA seeks declaratory and injunctive relief based on
leases executed prior to January 1, 1996, the effective date of the ICCTA, those
claims are barred for the same reasons Vanboetzelaer's and Johnson's claims were
barred, as discussed above. Therefore, we consider here only those claims of OOIDA
regarding agreements executed after January 1, 1996. We divide those claims into
two groups: (1) agreements entered from January 1, 1996, until April 1997, the
effective date of the amendments to the Lease Agreement; and (2) agreements entered
after the April 1997 amendments.
B.
With respect to the agreements executed after January 1, 1996, but before April
1997, we find that OOIDA lacks standing. In order for an organization to have
standing to assert the claims of its members, it must show that "(a) its members would
otherwise have standing to sue in their own right; (b) the interests it seeks to protect
are germane to the organization's purpose; and (c) neither the claim asserted nor the
relief requested requires the participation of individual members in the lawsuit."
Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). OOIDA
has presented no evidence of any OOIDA member that executed an agreement with
either Prime or Success during this period. Because no member of OOIDA has
standing to sue, OOIDA can not meet the requirements for organizational standing.
Therefore, with respect to agreements entered between January 1, 1996, and April
1997, we affirm the district court's grant of summary judgment in favor of Prime and
Success.
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C.
OOIDA also claims that the Amended Lease Agreement violates the Truth-in-
Leasing regulations. The Amended Lease Agreement (1) contains no Repair Reserve;
(2) provides that at the end of the lease or upon termination, the entire amount
withheld in the Tire Replacement Reserve will be returned to the Owner-Operator,
less costs attributable to wear on the tires; and (3) replaces the Excess Mileage
Account with the Excess Mileage Charge, which requires an Owner-Operator to pay
an additional sum for mileage over a certain amount, unless the Owner-Operator
purchases the tractor unit or completes the lease, in which case an amount equal to
the Excess Mileage Charge shall be paid back to the Lessee. OOIDA claims that the
Set-Off provision of this Amended Lease Agreement makes the Tire Replacement
Reserve and the Excess Mileage Charge escrow funds that do not comply with 49
C.F.R. § 376.12(k), the Truth-in-Leasing regulation governing escrow accounts. We
discuss in turn the specifics of the relevant regulations, the Set-Off provision, and
how this provision relates to the Tire Replacement Reserve and the Excess Mileage
Charge.
1. The Regulations Governing Escrow Funds
The Truth-in-Leasing regulation regarding escrow funds provides:
(k) Escrow funds. If escrow funds are required, the lease shall specify:
....
(2) The specific items to which the escrow fund can be applied.
....
(6) The conditions the lessor must fulfill in order to have the escrow
fund returned. At the time of the return of the escrow fund, the
authorized carrier may deduct monies for those obligations incurred by
the lessor which have been previously specified in the lease, and shall
provide a final accounting to the lessor or all such final deductions made
to the escrow fund. The lease shall further specify that in no event shall
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the escrow fund be returned later than 45 days from the date of
termination.
49 C.F.R. § 376.12(k).
Escrow fund is defined as "[m]oney deposited by the lessor with either a third
party or the lessee to guarantee performance, to repay advances, to cover repair
expenses, to handle claims, to handle license and State permit costs, and for any other
purposes mutually agreed upon by the lessor and the lessee." § 376.2(l). In other
words, if the account is considered an escrow fund as defined above, the Amended
Lease Agreement must: (1) specify what the funds held in escrow may be used for,
§ 376.12(k)(2); and (2) specify what items owed to Success at the termination or
completion of the lease may be offset against any escrow funds to be returned to the
Lessee, § 376.12(k)(6).
2. The Set-Off Provision
The Set-Off provision of the Amended Lease Agreement provides:
(a) Termination of Lease. If this Lease is terminated prior to the
expiration of its term, You grant Success the right to require any carrier
that You are leased with, and You shall so authorize that carrier, to off
set against any amounts due You by the carrier an amount sufficient to
cure any deficiencies in Lease charges, Tire Replacement Reserve,
Excess Mileage Charges, or any other amounts due Success, by virtue
of advances made on Your behalf for items referred to in paragraph 22,
and to pay those amounts directly to Success.
(b) Completion of Lease. At the time You complete the full term
of this Lease, You grant to Success the right to set off against any
amounts due You from the Tire Replacement Reserve and any
incentives earned by you for completion of this Lease, any amounts due
Success by virtue of advances made on Your behalf for items referred
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to in paragraph 22 under the terms of this Lease. Also, in the event the
Tire Replacement Reserve has a negative balance, Success may set off
from any incentives earned by You for completion of this Lease amounts
sufficient to zero balance the Tire Replacement Reserve. You further
authorize Success to offset against any amounts due You under the
terms of this Lease, any amounts due the carrier to whom You are
leased, and to remit such amounts to that carrier upon request.
Am. Lease Agreement, Appellants' App. at 417-18.
The Amended Lease Agreement explains that the Owner-Operator is
responsible for certain financial obligations, described in detail, and that if Success
advances funds to meet these obligations, then they may offset the amount owed the
Owner-Operator upon termination or completion of the lease, as described above.
The financial obligations are specified as: a Qualcomm unit, maintenance and repairs
to the tractor unit, licenses, permits, taxes, non-trucking use auto liability insurance,
loss or damage to the tractor, equipment missing or damaged upon return of the
tractor unit, and costs associated with Prime's or Success's securing possession of the
tractor unit, in the event the Owner-Operator does not voluntarily return the unit.
OOIDA argues that offsets against the Tire Replacement Reserve and the Excess
Mileage Charge are violations of the Truth-in-Leasing regulations because these
accounts are actually escrow funds, and the Set-Off provision, as it relates to these
accounts, fails to comply with the regulations governing escrow funds.
a. The Tire Replacement Reserve
The Tire Replacement Reserve provides:
During the term of this Lease, You agree to place in a Tire
Replacement Reserve an amount equal to 1.5 cents per mile that the
Tractor travels. You shall authorize the Tire Replacement Reserve
amount to be deducted from Your weekly Settlement by any carrier You
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lease the Tractor to and remitted to Success, and You and Success will
require that carrier to provide You with an accounting of the deductions
or Success will do so as it receives the payments. You may demand an
accounting of the amounts paid by You to the Tire Replacement Reserve
at any time.
The Tire Replacement Reserve shall be used to purchase tires for
the Tractor while the Lease is in effect. During that time, Success shall
pay to You interest equal to the average yield on Ninety-One-Day
Thirteen Week Treasury Bills as established in the weekly auction by
the Department of Treasury. Interest shall be paid to You quarterly.
Upon termination of this Lease, Success shall retain out of the Tire
Replacement Reserve an amount equal to the cost attributable to the
amount of wear on the tires which occurred during the time this Lease
was in effect. The calculation of such costs shall be based on the wear
of each tire measured in one thirty-seconds of an inch of useable tire
remaining at the time of termination. Because the types of tires and their
costs vary the resulting calculations may also vary and it is not possible
to include an exact calculation of cost in this Lease. However, Success
will make available to You upon request, all information necessary to
calculate the cost to You attributable to wear on your tires at any given
time. The balance of the Tire Replacement Reserve, less amounts set off
as provided in paragraph 21, shall be paid to You. In the event You
exercise Your option to purchase, all amounts accumulated in the Tire
Replacement Reserve, less amounts set off as provided in paragraph 21,
shall be paid to You. All amounts to be returned to You from the Tire
Replacement Reserve, after authorized deductions, shall be returned
within forty-five (45) days following termination of this Lease
Agreement.
Am. Lease Agreement, Appellants' App. at 413-14.
OOIDA argues that the Tire Replacement Reserve is an escrow account subject
to the Set-Off provision, and that allowing the offset of certain expenses against those
escrow funds before they are returned violates § 376.12(k)(2) and (6) because it turns
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that escrow into an all-purpose general fund. We agree that the Tire Replacement
Reserve is an escrow fund; however, we disagree that the Set-Off provision turns the
escrow into an all-purpose general fund or in any way violates the Truth-in-Leasing
regulations.
Section 376.12(k)(2) requires that a lease agreement specify the "items to
which the escrow fund can be applied." § 376.12(k)(2). The Amended Lease
Agreement provides that these funds will be applied to tire expenses during the life
of the lease. In addition, the Amended Lease Agreement expressly identifies those
debts that an Owner-Operator may incur during the lease period that may offset items
owed to the Owner-Operator at the termination of the lease. These debts include
advances for the following items: the Qualcomm unit, maintenance and repairs,
licenses, permits, taxes, insurance, loss or damage to the tractor, missing or damaged
equipment, and costs associated with securing possession of the tractor unit.
We also find that the Set-Off provision does not violate § 376.12(k)(6), which
requires the return of remaining escrow funds within forty-five days. The Tire
Replacement Reserve funds are required, under the provisions of the Amended Lease
Agreement, to be returned to the Owner-Operator within forty-five days. The fact
that certain specifically enumerated items may offset the funds returned in no way
violates this provision. For these reasons, we agree with the district court that the
Tire Replacement Reserve in the Amended Lease Agreement does not violate the
Truth-in-Leasing regulations.
b. The Excess Mileage Charge
The Excess Mileage Charge provides:
The Excess Mileage Charge is based on the accumulated average weekly
miles the Tractor travels in excess of the mileage shown in Schedule A.
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The Excess Mileage Charge shall be adjusted and paid by You weekly
based upon the average miles the Tractor travels. If You exercise Your
option to purchase, Success shall pay to You an amount equal to the
entire Excess Mileage Charge paid by You.
Am. Lease Agreement, Appellants' App. at 413.
We agree with the district court that the Excess Mileage Charge does not meet
the definition of an escrow fund. Specifically, this charge does not create an account
into which money is deposited for any of the purposes provided at 49 C.F.R.
§ 376.2(l). Instead, the purpose of these funds is to cover any decrease in value of the
tractor unit based on excess mileage driven; it is not money deposited with the Lessor
to which the Lessee has a valid claim. Therefore, the Excess Mileage Charge is not
subject to the dictates of § 376.12(k).
IV.
Appellants also argue that the district court erred in refusing to grant their
motion for class certification. We review a district court's denial of class certification
for abuse of discretion. Glover v. Standard Fed. Bank, 283 F.3d 953, 959 (8th Cir.
2002) (citation omitted).
The threshold requirements for class certification are: (1) the class is so
numerous that joinder of all members is impractical; (2) there are questions of law or
fact common to the class; (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the representative parties will
fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). The
district court found that the Appellants satisfied each of the requirements of
Rule 23(a), and we agree.
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In addition, Rule 23 requires the court to find that a class action is the
appropriate vehicle through which to resolve the litigation, providing three situations
in which a class action would be appropriate. Fed. R. Civ. P. 23(b). Because
Appellants seek predominantly monetary relief, we agree with the district court that
the applicable provision of Rule 23(b) that must be satisfied is the following:
[T]he court finds that the questions of law or fact common to the
members of the class predominate over any questions affecting only
individual members, and that a class action is superior to other available
methods for the fair and efficient adjudication of the controversy. The
matters pertinent to the findings include: (A) the interest of members of
the class in individually controlling the prosecution or defense of
separate actions; (B) the extent and nature of any litigation concerning
the controversy already commenced by or against members of the class;
(C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; (D) the difficulties likely to be
encountered in the management of a class action.
Fed. R. Civ. P. 23(b)(3).
We also agree with the district court that Appellants have not satisfied this
provision, as questions affecting individual members of such a class would
predominate over questions of law or fact common to the members.
As the district court pointed out, 49 U.S.C. § 14704(a)(2) provides a right to
recover only to persons who have sustained damages as a result of a carrier violation.
Therefore, neither Prime nor Success would be liable for returning funds if, for
example, the Owner-Operator did not have a positive balance in his escrow account
or the funds owed to the Owner-Operator were offset by other monies owed to Prime
or Success. To make such determinations, a court would be required to examine each
individual class member's account, including offsets, advances, and other items.
Recovery for any plaintiff would be based on individual, not common, questions of
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fact. Therefore, we affirm the district court's denial of class certification, as we agree
that questions affecting individual class members would predominate over common
questions of law or fact.
V.
Finally, regarding Prime and Success's cross-appeal of the district court's
dismissal of their state law counterclaim against Johnson, we need not address this
issue, as Prime and Success asked that the district court exercise supplemental
jurisdiction over their claims only if this court reversed and remanded any of
Appellants' claims. Therefore, this issue is moot.
VI.
For the foregoing reasons, we affirm the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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