Owner-Operator Independent Drivers Ass'n v. New Prime, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 98-1420
___________
Owner-Operator Independent Drivers *
Association, Inc., et al., individually *
and on behalf of all others similarly *
situated, *
* Appeal from the United States
Plaintiffs - Appellants, * District Court for the
* Western District of Missouri.
v. *
*
New Prime, Inc., et al., *
*
Defendants - Appellees. *
___________
No. 98-2942
No. 98-3143
___________
New Prime, Inc., et al., *
*
Petitioners, *
* Petitions for Review of
v. * an Order of the Federal
* Highway Administration.
United States of America, Federal *
Highway Administration, et al., *
*
Respondents, *
___________
No. 98-3478
___________
Arctic Express, Inc., et al., *
*
Petitioners, *
*
v. *
*
Federal Highway Administration, et al., *
*
Respondents. *
___________
Submitted: April 23, 1999
Filed: August 10, 1999
___________
Before WOLLMAN* and LOKEN, Circuit Judges, and JACKSON,** District Judge.
___________
LOKEN, Circuit Judge.
The ICC Termination Act of 19951 transferred the motor carrier regulatory
functions of the Interstate Commerce Commission to the Department of Transportation
and the Surface Transportation Board. See 49 U.S.C. § 13501. Within DOT, the
*
The HONORABLE ROGER L. WOLLMAN became Chief Judge of the United
States Court of Appeals for the Eighth Circuit on April 24, 1999.
**
The HONORABLE CAROL E. JACKSON, United States District Judge for
the Eastern District of Missouri, sitting by designation.
1
Pub. L. No. 104-88, 109 Stat. 803 (1995).
-2-
Federal Highway Administration (FHWA) administers and enforces regulations that
impose restrictions on lease agreements between motor carriers and owner-operators
of truck tractors, commonly known as the “Truth-in-Leasing” regulations. See 49
C.F.R. Part 376. A class of owner-operators has sued two motor carriers alleging that
certain of their lease provisions violate the regulations. The Western District of
Missouri dismissed one suit, deferring to the primary jurisdiction of FHWA. The
agency then declined to exercise that jurisdiction. The result is four consolidated
appeals in this court raising complex issues of statutory construction. The motor
carriers and the American Trucking Association argue that the agency’s statutory
remedy is exclusive, while the owner-operators and FHWA argue that these private
disputes should be resolved in federal court. Rejecting the motor carriers’ contention,
we reverse the district court’s dismissal of the owner-operator claims.
I. Background and Procedural History
Independent owner-operators lease truck equipment and provide driving services
to federally registered motor carriers. In Case No. 98-1420, the Owner-Operator
Independent Drivers Association and individual owner-operators (the “Owner-
Operators”) filed a class action complaint against New Prime, Inc., a registered motor
carrier, and its affiliate, Success Leasing, Inc. (collectively, “Prime”), alleging that
provisions in Prime’s standard lease agreements and equipment rental-purchase
contracts violate FWHA leasing regulations and are unconscionable under Missouri
law. Briefly stated, the Owner-Operators challenge contract terms governing reserve
funds and security deposits as violating 49 C.F.R. §§ 376.12(i) & (k).
The district court dismissed the complaint, concluding that FHWA has primary
jurisdiction because the claims involve matters within the agency’s expertise. The
Owner-Operators then filed the first of our four consolidated appeals, arguing the
district court improperly applied the primary jurisdiction doctrine. With that appeal
pending, the Owner-Operators filed an ex parte Petition for Declaratory Order with
-3-
FHWA, asking the agency to issue a declaratory order either construing the relevant
regulations in their favor, or declaring that the agency does not have primary
jurisdiction over their dispute with Prime. FHWA responded with a Notice of Denial,
declining to exercise primary jurisdiction because the Truth-in-Leasing regulations and
the issues raised by the Owner-Operators “are fairly straightforward matters clearly
within the competence of a court to resolve,” and because the ICC had addressed
similar issues in OPA Information Bulletin No. 93-103, No. MC-C-30192, Dart Transit
Co.–Petition for Declaratory Order, 9 I.C.C.2d 701 (June 28, 1993). In Case No. 98-
2942 and Case No. 98-3143, Prime appeals FHWA’s refusal to exercise its
administrative jurisdiction.
The Owner-Operators also commenced an action in the Southern District of
Ohio, alleging that the lease agreements used by Arctic Express, Inc., and its affiliate,
D & A Associates, Ltd. (collectively, “Arctic Express”), violate the same provisions
of the Truth-in-Leasing regulations. Arctic Express appealed FHWA’s Notice of
Denial to the Sixth Circuit, which transferred the appeal to this court. That is Case No.
98-3478. The American Trucking Association has filed amicus briefs in support of the
Prime and Arctic Express appeals, urging us to reverse the agency’s refusal to exercise
jurisdiction over the carriers’ disputes with the Owner-Operators. The Ohio district
court has stayed its proceedings pending our resolution of these appeals.
II. The ICC Termination Act and Its Antecedents
Prior to the ICC Termination Act, the ICC comprehensively regulated licensed
motor carriers. Congress intended that the Termination Act substantially deregulate rail
and motor carrier transportation. One area of regulation expressly addressed in the Act
was dispute resolution. The Report of the House Transportation and Infrastructure
Committee explained:
-4-
In addition to overseeing the background commercial rules of the
motor carrier industry, the ICC currently resolves disputes that arise in
such areas. There is no explicit statutory requirement to do so. . . . The
ICC dispute resolution programs include household goods and auto
driveaway carriers, brokers, owner-operator leasing, loss and damage
claims, duplicate payments and overcharges, and lumping.
The bill transfers responsibility for all the areas in which the ICC
resolves disputes to the Secretary (except passenger intercarrier disputes).
The Committee does not believe that DOT should allocate scarce
resources to resolving these essentially private disputes, and specifically
directs that DOT should not continue the dispute resolution functions in
these areas. The bill provides that private parties may bring actions in
court to enforce the provisions of the Motor Carrier Act. This change
will permit these private, commercial disputes to be resolved the way that
all other commercial disputes are resolved -- by the parties.
H.R. Rep. No. 104-311, at 87-88 (1995), reprinted in 1995-2 U.S.C.C.A.N. 793, 799-
800 (emphasis added). Consistent with this explanation, the Committee described
§ 14704 of the House Bill as “provid[ing] for private enforcement of the provisions of
the Motor Carrier Act in court. This expands the current law which only permits
complaints brought under the Act to be brought before the ICC.” Id. at 120-121, 1995-
2 U.S.C.C.A.N. at 832-33. The Conference Committee ultimately adopted § 14704 of
the House Bill. See H.R. Conf. Rep. No. 104-422, at 221-22 (1995), reprinted in 1995-
2 U.S.C.C.A.N. 850, 906-07.
In these cases, the Owner-Operators seek to enforce the Truth-in-Leasing
regulations in court, while the motor carriers seek to preserve the prior regime of
exclusive administrative remedies. FWHA has declined to exercise jurisdiction over
these private disputes, which is not surprising given the above-quoted congressional
“directive.” Before this court, the Owner-Operators and FHWA rely heavily on the
Termination Act’s legislative history. Prime, Arctic Express, and the American
Trucking Association urge us to ignore this history because, “[w]hen the words of a
-5-
statute are unambiguous . . . judicial inquiry is complete.” Connecticut Nat’l Bank v.
Germain, 503 U.S. 249, 254 (1992) (internal quotation omitted). That is very true, and
in all events our principal focus must be on the language of the relevant statutes. But
we cannot ignore the broader perspective. The motor carriers argue that the dispute
resolution provisions of the Termination Act unambiguously give FWHA not just
primary but exclusive jurisdiction to resolve private disputes over the Truth-in-Leasing
regulations. That interpretation is at odds with the overall congressional objective of
partial deregulation and with the relevant committees’ explanations of the specific
provisions in question. To decide whether the motor carriers’ plain language arguments
surmount these obstacles, we begin by quoting the relevant Termination Act provisions:
49 U.S.C. § 14701. General authority
(a) INVESTIGATIONS. . . . If the Secretary or Board, as applicable,
finds that a carrier . . . is violating this part, the Secretary or Board, as
applicable, shall take appropriate action to compel compliance with this
part. . . .
(b) COMPLAINTS. A person, including a governmental authority,
may file with the Secretary or Board, as applicable, a complaint about a
violation of this part by a carrier . . . .
§ 14702. Enforcement by the regulatory authority
(a) IN GENERAL. The Secretary or the Board, as applicable, may
bring a civil action --
(2) to enforce this part, or a regulation or order of the Secretary or
Board, as applicable, when violated by a carrier . . . .
§ 14703. Enforcement by the Attorney General
The Attorney General may, and on request of either the Secretary
or the Board shall, bring court proceedings --
-6-
(1) to enforce this part or a regulation or order of the Secretary or
Board or terms of registration under this part . . . .
§ 14704. Rights and remedies of persons injured by carriers . . .
(a) IN GENERAL. (1) ENFORCEMENT OF ORDER. A person injured
because a carrier . . . 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 [the statute authorizing at least some of the
motor carrier leasing regulations] and 14103.
(2) DAMAGES FOR VIOLATIONS. A carrier . . . is liable for damages
sustained by a person as a result of an act or omission of that carrier or
broker in violation of this part.
(b) LIABILITY AND DAMAGES FOR EXCEEDING TARIFF RATE. A
carrier . . . is liable to a person for amounts charged that exceed the
applicable rate for transportation or service contained in a tariff in effect
under section 13702.
(c) ELECTION. (1) COMPLAINT TO DOT OR BOARD; CIVIL ACTION.
A person may file a complaint with the Board or the Secretary, as
applicable, under section 14701(b) or bring a civil action under subsection
(b) to enforce liability against a carrier . . . .
(2) ORDER OF DOT OR BOARD. --
(B) ENFORCEMENT BY CIVIL ACTION. The person for whose benefit
an order of the Board or Secretary requiring the payment of money is
made may bring a civil action to enforce that order under this paragraph
if the carrier . . . does not pay the amount awarded by the date payment
was ordered to be made.
-7-
These are obviously complex provisions, creating both administrative and judicial
enforcement and remedies. The private judicial remedies are in § 14704. Much of that
section deals with suits to recover rate overcharges, a subject not at issue in these
appeals. More relevant for our purposes are the “general” remedies in §§ 14704(a)(1)
and (2). Broadly speaking, the Owner-Operators argue these provisions authorize
direct actions against carriers in federal court for violations of the Truth-in-Leasing
regulations, while the carriers argue these remedies are secondary to FHWA’s
administrative remedies in § 14701.
III. Specific Issues and Contentions
A. Does FHWA Have Exclusive Jurisdiction To Enforce the Truth-in-
Leasing Regulations? A central issue is whether the Owner-Operators may bring a
private right of action directly in the district court for violations of the regulations. If
not, then their only remedy is to file administrative complaints under § 14701(b), and
the district court was obviously correct in dismissing their action against Prime. The
Owner-Operators and FHWA construe § 14704(a) as authorizing private rights of
action for violations of the regulations. Prime and Arctic Express respond that
§ 14704(a) only authorizes private suits to enforce FHWA orders, not agency
regulations. Given the structure of § 14704(a), this issue has multiple subparts.
1. The first sentence of § 14704(a)(1) authorizes civil actions to enforce FHWA
orders. FHWA construes this language as including suits to enforce its Truth-in-
Leasing regulations, relying on cases in which the word “order” in judicial review
statutes has been construed to authorize review of agency rules or regulations. See,
e.g., Northwest Airlines, Inc. v. Goldschmidt, 645 F.2d 1309 (8th Cir. 1981);
Investment Co. Inst. v. Board of Governors of Fed. Reserve Sys., 551 F.2d 1270 (D.C.
Cir. 1977). But those cases turned on the presumption in favor of judicial review,
which does not apply in this case. Here, the issue is whether Congress has authorized
private persons to enforce a particular type of agency action.
-8-
Viewed in context, FHWA’s argument is contrary to the plain language of the
statute. In § 14702(a)(2) and § 14703(1), Congress explicitly authorized FHWA and
the Attorney General to sue to enforce “this part or regulation or order.” The
italicized words confirm that Congress in this statute distinguished between agency
regulations and orders. Then, in § 14704(a)(1), the very next section, Congress granted
private parties the right to sue to enforce an “order of the Secretary” that a carrier has
not obeyed. Given the substantive and procedural differences between agency orders
and regulations, and the policy differences inherent in government and private
enforcement actions, we cannot ignore the plain language limiting the private right of
action created by the first sentence of § 14704(a)(1) to suits to enforce agency orders.
Thus, the first sentence of § 14704(a)(1) does not authorize the Owner-Operators to sue
for violations of the Truth-in-Leasing regulations.2
2. The second sentence of § 14704(a)(1) provides that a private party such as
the Owner-Operators “may bring a civil action for injunctive relief for violations of
section[] 14102,” the section of the Motor Carrier Act that deals specifically with
motor carrier leasing. Though this sentence refers only to violations of the statute, it
must also include violations of FHWA’s implementing regulations. Because § 14102
contains no mandates or prohibitions but simply authorizes the Secretary to adopt
leasing requirements, it would be impossible for a carrier to violate the statute other
than by violating rules or regulations promulgated under the statute.
2
This question of statutory interpretation would be different if FHWA referred
to its regulations as agency orders. See Hawaiian Tel. Co. v. Public Utils. Comm’n,
827 F.2d 1264, 1270-72 (9th Cir. 1987), cert. denied, 487 U.S. 1218 (1988), construing
the Federal Communications Act, and Pacific Fruit Exp. Co. v. Akron, Canton &
Youngstown R.R., 524 F.2d 1025 (9th Cir. 1975), cert. denied, 424 U.S. 911 (1976),
construing rail carrier provisions of the Interstate Commerce Act. Unlike the statutes
at issue in those cases, the dispute resolution provisions of the ICC Termination Act
expressly distinguish between orders and regulations, and the agency concedes we are
dealing with regulations.
-9-
Prime argues that this provision must be limited to actions brought to enforce
FHWA orders because it is part of § 14704(a)(1), which is titled “Enforcement of
Order.” We disagree. “Section and subchapter titles cannot alter the plain meaning of
a statute; they can only assist in clarifying ambiguity.” Minnesota Transp. Regulation
Bd. v. United States, 966 F.2d 335, 339 (8th Cir. 1992). This sentence was added to
§ 14704(a)(1) in conference, and its plain language is not limited to violations of
agency orders. Moreover, the sentence as construed by Prime would make little
practical sense -- a party suing to enforce an agency order is unlikely to need relief
beyond enforcement of the order.3
The carriers further argue that, even if § 14704(a)(1) authorizes private actions
for injunctive relief for violations of regulations promulgated under § 14102, the
Owner-Operators’ claims arise under regulations that were not promulgated under
FWHA’s § 14102 authority. In initially promulgating Truth-in-Leasing regulations, the
ICC cited as authority both the predecessor of § 14102 and the statute giving the
agency general power to issue regulations, now found in 49 U.S.C. § 13301(a). See
generally Global Van Lines, Inc. v. ICC, 627 F.2d 546 (D.C. Cir. 1980), cert. denied,
449 U.S. 1079 (1981). Section 14102(a) authorizes the Secretary to prescribe specific
types of leasing requirements. The carriers argue that the leasing regulations on which
the Owner-Operators rely, 49 C.F.R. §§ 376.12(i) & (k), go beyond the scope of
§ 14102(a) and therefore may not be enforced by a private action for injunctive relief
under § 14704(a)(1). There is a simple answer to this contention -- it is not part of the
jurisdictional issues before us. Section 14704(a)(1) creates a private right of action for
injunctive relief for violations of regulations promulgated under § 14102(a). The
Owner-Operators invoked that portion of § 14704(a)(1) in commencing this action.
3
Consistent with this interpretation, the Conference Report stated that private
actions brought to enforce the “leasing . . . rules may also seek injunctive relief.” H.R.
Conf. Rep. No. 104-422 at 221, reprinted in 1995-2 USCCAN at 906.
-10-
Whether their claim for injunctive relief is valid must be addressed in the first instance
by the district court.
3. Section 14704(a)(2) provides that “[a] carrier . . . is liable for damages
sustained by a person as a result of an act or omission of that carrier . . . in violation of
this part.” The Owner-Operators argue this statute creates an express private right of
action to remedy violations of the Truth-in-Leasing regulations. Prime argues
§ 14704(a)(2) must be read with § 14704(a)(1) as limited to actions to enforce agency
orders. We decline to read these two subsections as interrelated. They are separate
parts of § 14704(a), which is entitled, “In General.” Moreover, a review of § 14704
in the two bills that were sent to conference, H.R. 2539 and S. 1396, reveals that the
Conference Committee drafters reorganized this section in the final bill -- the
enforcement of agency orders section that is now § 14704(a)(1) and the damage
remedy that is now § 14704(a)(2) were not previously linked.
The carriers further argue that the language of § 14704(a)(2) -- a carrier “is liable
for damages sustained” on account of a “violation of this part” -- is not sufficient to
authorize a private right of action for damages for violations of FHWA regulations. In
this regard, we confess to being rather mystified by the inconsistent language used in
the Termination Act’s various enforcement provisions. In § 14702(a)(2) and
§ 14703(1), Congress authorized FHWA and the Attorney General to sue “to enforce
this part or a regulation or order,” whereas § 14704(a)(2) makes carriers liable in
damages for conduct “in violation of this part.” Moreover, the language of
§ 14704(a)(1) explicitly gives private parties the right to sue, whereas § 14704(a)(2)
passively says that a carrier “is liable for damages sustained by a person.” Despite
these linguistic imperfections and inconsistencies, the most logical reading of the
language of § 14704(a)(2) is that it authorizes private parties to sue for damages for
carrier conduct “in violation of [regulations promulgated under] this part.” And that
interpretation is certainly reinforced by the legislative history of § 14704(a)(2). The
Conference Report stated that§ 14704(a)(2) “provides for private enforcement of the
-11-
provisions of the Motor Carrier Act in court. . . . The ability to seek injunctive relief for
motor carrier leasing . . . violations is in addition to and does not in any way preclude
the right to bring civil actions for damages for such violations.” H.R. Conf. Rep. No.
104-422 at 221-22, reprinted in 1995-2 U.S.C.C.A.N. at 906-07. In construing this
inconsistently drafted statute, it is appropriate to use its legislative history to confirm
the most plausible construction of a subsection’s plain language. See Wisconsin Public
Intervenor v. Mortier, 501 U.S. 597, 610 n.4 (1991).
For the foregoing reasons, we conclude that 49 U.S.C. § 14704(a) authorizes
private actions for damages and injunctive relief to remedy at least some violations of
the Motor Carrier Act and its implementing regulations. Thus, we reject the motor
carriers’ contention that FHWA’s remedial jurisdiction is exclusive.
B. The Issue of FHWA Primary Jurisdiction. The district court properly
concluded it has jurisdiction over the Owner-Operators’ claims against Prime,
jurisdiction that is concurrent with FHWA’s administrative enforcement and remedial
powers. However, as the court recognized, this does not resolve the issue of primary
jurisdiction, a common law doctrine that allows a court to refer matters to an
administrative agency to give the agency an opportunity to address issues within its
expertise. See Access Telecomms. v. Southwestern Bell Tel. Co., 137 F.3d 605, 608
(8th Cir.), cert. denied, 119 S. Ct. 404 (1998).
The district court invoked the doctrine of primary jurisdiction and dismissed the
Owner-Operators’ complaint. After the dismissal, the Owner-Operators petitioned
FHWA for a declaratory order. The agency responded, refusing to exercise its
discretionary jurisdiction under § 14701(a), or its discretion to commence an
enforcement action under § 14702(a)(2), because Congress in the ICC Termination
Act’s legislative history told the agency not to allocate scarce resources to resolving
private disputes. The agency further expressed its view that resolution of the Owner-
-12-
Operators’ claims “are fairly straightforward matters clearly within the competence of
a court to resolve.”
On appeal, the motor carriers argue we should compel FHWA to exercise its
jurisdiction. However, they cannot point to a provision in the ICC Termination Act that
overcomes “the presumption that agency decisions not to institute proceedings are
unreviewable under” the Administrative Procedure Act. Heckler v. Chaney, 470 U.S.
821, 837 (1985); see United States v. Gary, 963 F.2d 180, 185 (8th Cir. 1992). The
doctrine of primary jurisdiction enables a court to stay its hand while seeking the
guidance of an administrative agency’s perceived expertise. When the agency declines
to provide guidance or to commence a proceeding that might obviate the need for
judicial action, “[t]he court [can] then proceed according to its own light.” Atchison,
Topeka & Santa Fe Ry. v. Aircoach Transp. Ass’n, 253 F.2d 877, 886 (D.C. Cir.
1958), cert. denied, 361 U.S. 930 (1960); see Local Union No. 189, Amalgamated
Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 686 (1965) (“the doctrine of primary
jurisdiction is not a doctrine of futility”); Skaw v. United States, 740 F.2d 932, 938
(Fed. Cir. 1984). Accordingly, the district court should now proceed to exercise its
jurisdiction over the Owner-Operators’ claims against Prime.
C. FHWA’s Notice Ruling. Prime argues that the Owner-Operators’ ex parte
application to FHWA for a declaratory order, and the agency’s Notice denying that
application, constitute an adjudication that violated the Administrative Procedure Act
and Prime’s right to due process. We strongly disapprove of the Owner-Operators’ ex
parte approach to the agency, and if the result had been an “adjudication” adverse to
Prime’s interests, we would reverse FHWA’s ruling as procedurally improper. But
there has been no such adjudication. FHWA’s denial Notice had no more effect than
if the agency had filed an amicus brief or memorandum with the district court declining
the court’s request for administrative guidance and expertise. To the extent FHWA
expressed views that are relevant to the merits of Prime’s dispute with the Owner-
Operators, Prime will have ample opportunity to respond in the district court.
-13-
D. The Merits of the Underlying Dispute. Prime argues we should affirm the
district court’s dismissal of Count II of the Owner-Operators’ complaint because the
agreement containing the challenged terms was not a “lease” as defined by the Truth-
in-Leasing regulations. Prime further argues we should affirm the dismissal of Count
III because this Missouri law claim is preempted by federal law. These contentions go
to the merits of the underlying dispute. They should be addressed in the first instance
by the district court. We therefore decline to consider them at this time.
In Case No. 98-1420, we reverse the judgment of the district court and remand
for further proceedings not inconsistent with this opinion. In Case No. 98-2942, Case
No. 98-3143, and Case No. 98-3478, we deny the petitions for review.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
-14-