Central Refrigerated Service, Inc.
This lawsuit and the resulting cases in arbitration are brought on behalf of truckers who lease trucks from Central Leasing, Inc. (CLI) and are treated as “owner operators” by Central Refrigerated Service, Inc. (CRS). The drivers claim that 1) Central misclassified them as “independent contractors” and then made unlawful deductions from their wages, 2) misrepresented the amount they would make as owner operators, and 3) engaged in a scheme of “forced labor” coercing them to driving for Central even though it was unprofitable, under threat they would be liable for excessive charges and be subject to a negative DAC report if they tried to leave.
The case was first filed in the U.S. District Court for the Central District of California, the Honorable U.S. District Judge Virginia Phillips presiding. During the initial proceedings, Judge Phillips found that the “Contractor Agreement” was really an employment agreement for preliminary purposes. However, she then ruled that the Drivers must bring their claims in arbitration before the American Arbitration Association, under the arbitration clause contained in the Lease and “Contractor Agreement.” (Arbitration is a process where a private decision maker is hired to act as a judge in the case, under rules designed to streamline the decision making process.)
Judge Phillips directed that the Fair Labor Standards Act minimum wage claims in the case would be heard collectively in a single arbitration for all drivers who decide they wish to be part of the case. Judge Phillips directed that other claims would be heard in individual arbitrations. This ruling means that the claims are proceeding on two tracks. The first is the collective arbitration of FLSA minimum wage claims, which is being heard by Arbitrator Patrick J. Irvine. Drivers who wish to participate in the collective arbitration must file a Consent to Sue form, no later than August 5, 2014. Approximately 540 Drivers have already joined the collective arbitration by filing their Consent to Sue form as of May 27, 2014. More drivers continue to join each week.
The second track is individual arbitration for claims of misrepresentation, unjust enrichment due to misclassification, unconscionable contract, and forced labor. Approximately 285 individual arbitrations have been filed against Central as of May 27, 2014, with more being brought each week. The individual arbitrations raise the following claims. First, the Drivers claim that Central operates a scheme of “forced labor” in violation of federal law. The case claims that Central coerces drivers to stay working for years by refusing drivers permission to use their trucks to deliver freight for other companies, by telling owner operators that if they leave their lease, Central will 1) put the driver in default, 2) report the default to the drivers’ DAC report, 3) demand all remaining lease payments be immediately paid, 4) report all remaining lease payments to the drivers’ credit reports. By making these threats, Central coerces drivers to work for months or years, even though drivers are not even making the minimum wage in many weeks. Some drivers go months without seeing a net profit, even incurring additional debt to Central which gives the company ever more leverage over the drivers. This claim covers drivers who worked as owner operators for Central over the 10 years preceding the filing of the complaint. Second, the drivers claim that Central engaged in fraud and misrepresentation when it advertised on its website, through emails and Qualcomm messages and elsewhere that drivers who became “owner operators” would make 15-45% more in pay. Central has recently changed its website to remove promises of any specific amounts owner operators will make, however it still claims that owner operators will earn more than company drivers. It now also claims that switching from company driver to owner operator is more profitable for Central.
Third, the Drivers in the individual arbitrations also claim that Central’s contract unjustly enriches Central at their expense by having the drivers pay for the truck leases, gas, tolls, insurance, equipment, bonds, etc. This claim seeks damages for unlawful contract terms which require Drivers to bear all the expenses and business risk for Central’s fleet inventory while securing all the benefits for Central. This claim seeks reimbursement for the various deductions from Drivers’ pay. Finally, the Drivers claim that the Contract and Lease agreements that Central makes Drivers sign on a take-it-or-leave-it basis, without allowing Drivers to take the agreements off Central’s premises to be reviewed by a third-party and without allowing Drivers to negotiate any of its terms, is so beneficial to Central and detrimental to Drivers as to be unconscionable. This claim seeks rescission of the agreements and a declaration that the agreements are unconscionable and unenforceable.
Getman Sweeney believes that the arbitration process gives the Drivers a number of important advantages over having the case heard in Court. Most importantly, appeals from arbitration decisions are generally limited, meaning that Central will be unable to delay the case and any ultimate award to the Drivers as they would be able to do in Court.
If you are or were an Owner Operator for Central from June 1, 2009 to the present, and you wish to bring a claim that Central Refrigerated failed to pay you the minimum wage (by having negative, or low settlements for some weeks), you must file a Consent to Sue form with Getman Sweeney no later than August 5, 2014.
If you are or were an Owner Operator for Central at any point in the last six years and you wish to bring an individual claim for arbitration for misrepresentation by Central in terms of the earnings you would receive as an owner operator, or for unlawful deductions from your pay for the truck lease, gas, insurance, tolls, maintenance, bonds, etc., or if you were an Owner Operator within the last ten years and you wish to bring an individual arbitration to address Central’s “forced labor,” please contact Getman Sweeney and ask to speak with one of the paralegals handling the Central Refrigerated cases.
Current or former owner operators for Central Refrigerated anywhere in the US who wish to participate should file a Consent to Sue form, if they wish to have their claims asserted under the Federal minimum wage law in this case.Drivers interested in bringing forced labor and fraud claims should call Getman Sweeney at 845-255-9370.If you have also worked for this defendant you can Consent to Sue form and mail, email, or fax it to Getman Sweeney. You need the free Acrobat Reader installed to view the form.
Mediation Scheduled – Posted 4/4/16
The parties have agreed to mediate all current cases involving Lease Operators for Central Refrigerated. The parties have agreed to hold the mediation on June 20 in Atlanta and to have Hunter Hughes as mediator. Mr. Hughes is nationally recognized as a very effective mediator. All activities and deadlines in the individual arbitrations are now stayed until after the mediation. This means that depositions that were previously scheduled are now on hold until after the mediation. In order to prevent unnecessary delays if a settlement is not reached at mediation, the parties will submit their final summary judgment briefs by the end of April to Arbitrator Irvine in the collective action on issues such as whether the drivers were misclassified as independent contractors. Arbitrator Irvine will hold up his summary judgment decision though and will not issue it until after the mediation if it is unsuccessful. If the mediation is successful and the parties reach a tentative agreement to resolve all claims, the settlement will be presented to Drivers for their approval. It has been a long road getting here with many complicated issues handled by briefs and motions. We are pleased to now have an opportunity to try to reach a resolution. We thank all the drivers for their participation in these cases. We do not yet know anyone’s individual recovery at this time should we be successful at the mediation.
Drivers Move To Have Arbitrator Declare That Lease Operators Are “Employees” – Posted March 2, 2016
Getman Sweeney, along with its co-counsel Edward Tuddenham and Martin & Bonnett, have asked the Arbitrator to rule that Lease Operators were “Employees” as a matter of law. This motion is THE critical motion in the case, effectively proposing to the Arbitrator that the evidence is so clear on its face, that a trial is not necessary. Click here to read the brief in support. Counsel believe that the evidence in favor of the drivers is as clear as day. Notably, Central has not asked the arbitrator to rule that drivers were “Independent Contractors” as a matter of law. However, Central has asked the Arbitrator to rule, among other things, that the collective action be “decertified” and that all drivers be required to file their claims individually, and that some drivers be dismissed from the case for various reasons. Each side has approximately one month to prepare a responsive brief to the other sides’ filings. Then each side will have another month to prepare a “reply” brief. The Arbitrator will then wade through both sides’ filings and decide who is right, or possibly that the factual issues are in dispute and only a trial can resolve the issues. If the Arbitrator rules in our favor, the main remaining issue will be how much Central owes to each driver in damages. The 9 attorneys and 5 paralegals who have worked on this case over the last 3 years, have worked tremendously hard on behalf of the truckers to get to this stage. We are very pleased to finally reach this important stage of the proceedings. If the arbitrator can decide without a trial, we expect a decision on this important issue by early summer.
Discovery Nearly Completed – Posted 10/30/15
The parties have nearly completed the discovery phase of the case and recently exchanged three expert reports per side. Getman Sweeney hired Dr. Steven Viscelli, Swarthmore professor, to help prove that owner operators generally worked far in excess of the hours reported on the DOT logs. Central hired Robert W. Crandall, MBA, whose business is to prepare expert reports for corporations. Mr. Crandall issued a report stating that drivers were properly classified as independent contractors and were not actually employees. Each then prepared a response report alleging errors in the others’ findings. Finally, each expert prepared a reply to the other’s critiques of their initial reports. In November, the parties will have the opportunity to take depositions of each other’s experts.
In December, both parties will have the opportunity to file “dispositive motions.” A dispositive motion is a motion asking the arbitrator to decide all or part of a claim without a trial, based on the undisputed evidence in the case. Here, we will ask Arbitrator Irvine to determine whether drivers were misclassified as independent contractors. Central may also ask the Arbitrator to rule that the drivers were properly considered contractors. Once the motions have been presented to the Arbitrator, there will be response briefs and replies, which should take 3 to four months to fully brief. Then, we expect the Arbitrator will take approximately 30-60 days to rule on these issues. We expect to have a decision by spring or early summer!
To Protect Claims in This Case, Plaintiffs Have Objected to Settlement in Montalvo v. Swift and Calix v. Central Refrigerated – Posted October 2, 2015
In Montalvo v. Swift Transportation Co. of AZ, LLC, and Calix v. Central Refrigerated Service, Inc., the plaintiffs claimed that Swift and Central violated various California state laws for failing to pay drivers minimum wage for the time spent at Swift’s and Central’s new hire orientation in California from July 12, 2007 to July 10, 2015. A tentative settlement was reached between the parties which called for each owner operator to receive between $14.18 and $83.21 in settlement of these claims. Because the release language in the settlement could be taken to mean that Owner Operators give up claims which are being raised in this case, such as Swift’s and Central’s failure to pay Owner Operators minimum wage during the time they hauled freight for Defendants, Getman Sweeney is extremely concerned that the Montalvo/Calix settlement is not in any Owner-Operator’s interest. Plaintiffs’ lawyers in this case reached out to Defendants’ attorneys, to see if our concerns could be addressed in such a way that drivers could participate in the Montalvo/Calix settlement and avoid giving up claims that are asserted in this case. To date, Defendants’ attorneys have refused to cooperate. Accordingly, Plaintiffs’ lawyers in this case were required to submit an Objection to the proposed Montalvo/Calix class settlement. Getman Sweeney advises its clients to DO NOTHING at the present time with respect to opting out of the Montalvo/Calix settlement, as Getman Sweeney has asked the court to either 1) declare that individuals covered by our cases are not releasing any claims if the Montalvo/Calix settlement is approved, or 2) not approve the settlement, or 3) if the settlement is approved as is, that the court exclude our clients from such a settlement, or 4) be given additional time to exclude themselves following clarification of the scope of the release. We will be in touch with affected clients individually following additional discussion with the lawyers for the parties in the Montalvo case and/or after the final settlement fairness hearing with the court on October 30, 2015. If you are an affected class member and have not heard from us individually by early November, please contact the office for further advice concerning the Montalvo/Calix settlement.
Case Updates – Posted July 29, 2015
The discovery period tentatively concluded on July 3rd, however a few remaining pieces of discovery are still concluding. Nine drivers were deposed and Claimants had the opportunity to depose a number of witnesses from Central Refrigerated (see May 8, 2015 update below). Although the discovery period is nearing conclusion, Central has the opportunity to depose one more driver who has opted into the case. Additionally, we will depose Jerry Moyes on July 30th, and will also depose a member of Central’s IT department as well as possibly one more witness.
We have just begun the initial steps for the over 300 individual arbitrations filed against Central so far. The first step is initial mandatory disclosures. Each case will then move into discovery (see explanation of discovery in September 2, 2014 update below). If you worked for Central within the past three years, feel you may have forced labor or fraud claims against Central, want to pursue those claims in an individual case against Central, and have not yet filed an individual case against Central, you can call us at 845-255-9370 to review your claims.
Discovery Updates – Posted May 8, 2015
The discovery deadline in the collective arbitration has been extended through July 3 to allow the parties additional time to exchange information and take a total of 20 depositions – 10 per side. Please see our post from September 2nd (below) for an explanation of this important phase of the case. In the coming weeks, we will depose the following people from Central Refrigerated: Jon Isaacson, Bill Baker, Butch Schmitt, Steve Pettit, and Nick Burbidge. Additionally, we will take depositions of the companies – Central Refrigerated and Central Leasing – through company representatives. We have noticed a deposition of Jerry Moyes but Central has disputed the deposition. Central asked Arbitrator Irvine to dismiss Moyes from the case and asked the Arbitrator to allow him not to sit for deposition. We have briefed the issue and are waiting on a decision on the Moyes deposition from the arbitrator. We are in the process of briefing various discovery issues. This case is now in high gear, and both Claimants and Defendants will be gathering and producing evidence through July 3rd, and briefing a flurry of motions related to discovery.
Discovery Disputes Presented, Pending and Resolved – Posted March 25, 2015
In the collective action, the Drivers have filed multiple motions to press Central to provide documents, answers to interrogatories, to take depositions in a timely and efficient manner. Central also has moved asking for certain discovery from the 15 discovery representatives chosen by the drivers to present their case. A series of decisions have been rendered by the Arbitrator: Click here to review the Arbitrator’s decision with respect to deposition ordering. Click here to review the Arbitrator’s decision with respect to naming successor Swift companies as Respondents. Click here to review the Arbitrator’s decision denying Drivers permission to use discovery reps prior to the defined class period. Still pending are Drivers’ Motion for Sanctions and Motion to Compel Answers to Interrogatories and Request to Produce. Central has also moved to compel answers to interrogatories and request to produce, to which the Drivers are preparing their opposition.
In the more than 300 pending individual arbitrations, both sides have agreed to create a Central Arbitration Management Panel (CAMP) consisting of three arbitrators to uniformly resolve discovery, pretrial, and scheduling issues for all the arbitrations. Both sides have submitted their opening briefs to CAMP regarding the procedures they wish to see implemented. Click here to review the Drivers’ initial brief to CAMP. Central also provided a brief. Responsive briefs by each side are expected shortly, followed by reply briefs on both sides. A decision by CAMP with respect to the competing proposals is expected in or about late April.
Discovery Period Extended – Posted February 4, 2015
The discovery period has been extended for an additional 3 months until May 4, 2015 to give the parties additional time to continue gathering and exchanging information. Please see our post from September 2nd (below) for an explanation of this important phase of the case. We likely will not have many updates during this time although this is a very busy period.
Claimants have identified 15 representatives (and three alternates) who will serve as trial witnesses for the entire class of Claimants in this case. Two of these representatives will serve to raise the argument that the 3 year statute of limitation applicable to FLSA claims should be “equitably tolled.” If the Arbitrator agrees that Central impermissibly led drivers not to know about the existence of their FLSA claims, the liability period can extend back prior to the three years preceding the filing of this case. Central has refused to provide discovery as to the 2 representatives whose work preceded the 3 year limitation period in the case. Claimants moved the Arbitrator to compel Central to provide discovery as to these two representatives. This motion is fully briefed and the Arbitrator has not yet decided the motion.
Discovery Period Extended – Posted November 5, 2014
The discovery period has been extended until February 2, 2015 to allow the parties ample time to gather and exchange information. Please see our post from September 2nd (below) for an explanation of this important phase of the case. We may not post many updates during this time, even though it is a very active period of work for the firm – gathering, indexing, reviewing many thousands of pages of documents and electronically stored information.
Protecting Claims Here From Ellis v. Swift – Posted October 7, 2014
The Plaintiffs’ lawyers in this case were required to take steps to protect these claims from interference by a proposed class action settlement in the Ellis v Swift Transportation case. Ellis is a case challenging Swift’s failure to give notice of consumer background information. While the case
has nothing to do with this case, the proposed release language could have been viewed as prohibiting the forced labor and unconscionability claims involving Swift and Central’s misuse of the DAC Report. To protect the class, Getman Sweeney and Martin Bonnett have been trying to obtain an agreement from Swift’s attorneys to the effect that claims in this case would not be barred by that settlement, if approved by the District Court for the Eastern District of Virginia. Swift initially refused to sign a stipulation. The lawyers here were required to find counsel in Virginia and file a motion and
Objection to the proposed Ellis class settlement. Once the objection was filed, the Court called all the lawyers together and an acceptable stipulation was filed. The stipulation was so ordered by the Court. Click here to review the stipulation and Order. The claims in this case are now protected.
Discovery Begins – Posted September 2, 2014
The case has now entered the discovery period. During this time the parties are able to gather information from each other, such as documents and answers to interrogatories, as well as take depositions of each other. Although Central had initially requested discovery responses from each opt-in, Judge Irvine has ruled that plaintiffs can select 10-15 opt-ins to serve as discovery representatives. The parties have begun to serve discovery demands on each other and this phase of the case will extend through November. During this time we will likely post few case updates, as much of the work takes place behind the scenes, gathering and producing evidence.
OPT-IN PERIOD ENDS! – Posted August 7, 2014
Nearly 1300 Owner Operators filed their consents to sue by August 5, 2014, which marked the end of the opt-in period designated by Arbitrator Irvine in this case. This number represents approximately 38% of the Owner Operators eligible to join (which is a very high percentage)! It is important to note that any Owner Operator who did not file a Consent to Sue form does not lose his or her right to bring minimum wage claims against Central under the Fair Labor Standards Act. The notice period is a deadline for joining this case but an Owner Operator does not lose their claim if they fail to join. Rather, if no Consent to Sue is filed, the claim continues to exist and may be brought in the case if permitted to be filed late, or it may be brought in another case. This means that Owner Operators who wish to assert FLSA minimum wage claims against Central Refrigerated still have a legal right to do so. Getman Sweeney will make a motion to ask Arbitrator Irvine to extend the deadline to allow the filing of late Consents to Sue. Arbitrator Irvine will have discretion to either permit or deny the filing of late claims. If Arbitrator Irvine denies permission to file late consents, late claimants may need to file another case against Central in order to assert their claims. Getman Sweeney has not determined if it will represent late claimants in another such case.
If you are an Owner Operator who did not file a Consent to Sue within the Opt-in period, please send in a Consent to Sue form promptly to be attached to a motion to allow late claims. You can fax your Consent to Sue form to 888-461-1832 or scan and email it to OOParalegal@getmansweeney.com. If you send a late Consent to Sue form, please also provide an explanation as to why you did not send your Consent to Sue before August 5th.
DEADLINE TO JOIN LAWSUIT AUGUST 5, 2014 – posted July 30, 2014
As of July 30, 2014 approximately 1200 drivers have joined the lawsuit against Central Refrigerated. The deadline to join is August 5th. If you were an owner operator for Central Refrigerated any time between June 1, 2009 and the present, and you had weeks in which worked but did not earn the minimum wage, you are eligible to join the case. Drivers can join by filling out the Consent to Sue form and returning it to Getman & Sweeney by mail, fax or email no later than August 5, 2014.
Video Update – Posted July 9, 2014
Arbitrator Irvine Directs Notice Be Issued To Owner Operators – Posted April 30, 2014
On April 22nd, AAA Arbitrator Patrick Irvine issued a Decision that Owner Operators must receive a Notice explaining their right to join this case. In order to join the case, a current or former owner operator must fill out and return a form known as a Consent to Sue. The ruling directed Central to provide names and contact information today to Getman & Sweeney who will then promptly mail and email the notice to drivers, giving them 90 days to decide whether to join the case. In his ruling, Arbitrator Irvine rejected a number of objections that Central made which would have minimized the number of drivers who would have joined the case. Getman Sweeney expects to mail and email the notice next week. Owner operators may also access the notice on this website.
Arbitrator Irvine Rules In Favor of Drivers on Important Notice Issue – Posted March 11, 2014
AAA Arbitrator Patrick Irvine ruled yesterday that Owner Operators are “similarly situated” to such a degree that they may bring their claims together. Arbitrator Irvine wrote, “the Arbitrator finds that Claimants have met their initial burden of establishing that they are similarly situated to the other members of the putative class and that handling this matter as a collective action is appropriate.” Claimants are to draft a proposed notice which Central will have the opportunity to review. The ruling also requires Central to turn over the names and contact information for drivers so that Getman Sweeney can mail them a notice of the case with an opportunity to join. Drivers receiving the notice will have 90 days to join the case if they wish. The Order goes on to set a quick schedule for the case, including submitting motions for summary judgment as to whether the drivers are contractors or employees, within nine months. Summary Judgment is a process whereby an Arbitrator can make a ruling in favor or against claims based on a presentation of the evidence without a formal hearing.
Over 300 Plaintiffs in Collective Action, Over 250 Individual Arbitrations Filed – Posted February 26, 2014
As of February 26, 2014, 314 owner operators have joined the lawsuit against Central Refrigerated. Additionally, 254 drivers have filed individual demands for arbitration, bringing claims of forced labor and fraud against Central Refrigerated.
If you would like to join the collective action, you must complete a Consent to Sue Form. If you would like to also bring the forced labor and fraud claims, please call our office at (845) 255-9370.
PARTNERS FINANCIAL SERVICES, INC. CEASES COLLECTIONS FOR GETMAN SWEENEY CLIENTS – Posted January 30, 2014
For many months, Getman Sweeney has been writing to Partners Financial Services to demand they cease collection efforts on behalf of Central Refrigerated and Central Leasing against owner operators who we represent. When notified that the alleged debt is “disputed,” Partners Financial has responded:
In response to your request below, the above referenced customer’s account has been closed and returned to the original creditor. Their contact information is listed below should you need anything further.
Additionally, we have requested the account be deleted from any consumer reporting agency files to which we have submitted information. Consumer reporting agencies may take up to 30 days or longer to update consumer reports and this is beyond our control.
The effect of this change has been highly significant for more than a hundred drivers who were plagued by credit collections efforts resulting from their contract period with Central. It has also been highly significant in removing negative references on drivers’ credit reports. Getman Sweeney cannot promise similar results for owner operators in the future, but we believe that Partners Financial’s decision not to pursue collections and to turn the debt back to Central complies with legal obligations to cease such collections in the event of a dispute as to the validity of debts.
CENTRAL UNILATERALLY CHANGES CONTRACTS – BUT AMENDS ITS POSITION TO CONTINUE EXPERIENCE INCREASES – Posted January 29, 2014
Central Refrigerated recently announced its intention to unilaterally amend its current contract with “owner operators” due to its acquisition by Swift Transportation. The arbitrations being handled by Getman Sweeney complain that under the existing contract, Central has so much control over drivers that Central can unilaterally alter the contract and this power to unilaterally amend the contract is “unconscionable” as a matter of law.
On January 23rd, Getman Sweeney wrote to Central’s attorneys to raise our concerns about Central’s unilateral imposition of changes to the contract. Specific concerns involved the removal of drivers’ experience rate increases which exist in the current “contractor agreement.” We wrote to Central’s attorneys and asked:
Central Refrigerated Service has very recently demanded its current “owner operator” drivers sign an “Addendum to Contractor Agreement” by February 1st. That Addendum calls for disadvantageous terms to the drivers, including but not limited to foregoing all the experience increases to mileage reimbursements that are called for in Central’s form contract with owner operators.
I am writing to ask:
- What Central will do if drivers refuse to sign the Addendum?
- Will Central impose the terms anyway?
- Will Central terminate their contracts and thus the drivers will be deemed in default of their lease with Central Leasing Inc.?
- Will Central place the drivers on safety hold or other hold?
- Will Central continue to give drivers the same quality of loads or take other punitive action for failing to sign the Addendum?
Given the immediate deadline that Central imposed upon drivers, I need to know the answer to these questions immediately. Therefore, please advise me of the answers to each of the above questions no later than 5pm Eastern tomorrow, January 24th.
Not surprisingly, Central has refused to respond to our questions, but the next day, Central alerted drivers that it was altering its contract amendment to leave the experience increases intact.
Arbitrator Irvine Issues Another Significant Order – Posted January 10, 2014
Arbitrator (and former Judge) Patrick Irvine issued another highly significant ruling today in favor of the Truckers. Arbitrator Irvine had previously asked both sides to submit a “joint” scheduling order to set forth the schedule for handling and deciding the case. Typically such schedules govern how long discovery will take, when experts must be selected, and when certain motions will be made. Central refused to participate in setting a schedule, however. Instead, it argued that the case should be stayed to allow it time to ask the District Court to overrule the Arbitrator’s decision allowing the case to go forward on a “collective action” basis. Without waiting for a response from the Drivers, however, Arbitrator Irvine ruled that no stay would be granted to Central. Arbitrator Irvine found no basis for such a stay, particularly given the fact that the District Court had also directed the action to be heard on a collective action basis. This ruling avoids additional months or years of delay in the arbitration as sought by Central. Arbitrator Irvine’s decision went even further however, finding that the evidence already before him appears to justify the lenient “similarly situated” standard for sending out collective action notice to all Drivers who could join the case. He is allowing Central to brief any opposition that it might have to such notice, however, and he set deadlines for further briefing by both sides.
Video Update – Posted December 20, 2013
Arbitrator Irvine Issues Significant Order – Posted December 10, 2013
Arbitrator (and former Judge) Patrick Irvine issued a VERY significant ruling in this case on December 9th. Judge Irvine held that he was bound to follow the terms set by the District Court to conduct this arbitration on a “collective basis.” Central wanted the Arbitrator to rule that each case had to be separately filed and had argued that the District Court’s order that the case be arbitrated as a collective action could be reconsidered by the arbitrator, since the question was one for an arbitrator to decide. This case now goes forward as a group arbitration. Even more importantly, however, Judge Irvine decided that he agreed with the District Judge’s decision that the case should be heard “collectively.” This extra explanation means that once this case is concluded, Central Refrigerated will be unable to appeal the District Judge’s decision on collective arbitration. The net effect of this ruling is that years of potential delay through later appeals by Central have now been prevented. In addition to this ruling, Judge Irvine agreed with the Drivers and held that the Employment Rules (not the Commercial Rules) will apply to this case and that therefore Central will be required to pay all fees and costs of the arbitration to the extent that the case is brought by drivers who operated only a single truck.
This decision follows hundreds of pages of briefing by both sides. The next step in this case should be a motion concerning the issuance of a Notice to all owner operators explaining the case.
AAA Begins Arbitrator Selection for 200 the Individual Arbitrations Filed, Briefing in Collective Arbitration – Posted October 24, 2013
The AAA has begun the selection process for the individual arbitrations. For each individual driver, the AAA is sending lists of 5 different arbitrators. Both sides have to agree on one of those five arbitrators to handle each individual arbitration. The lawyers will have 2-3 weeks to select or reject. Although we are in the process of selecting arbitrators, it will at least be many months before any drivers appear in front of an arbitrator, since once an arbitrator is chosen, the parties will still need to submit briefs on preliminary issues and engage in discovery (the process by which each side obtains documents and information from each other).
Also, the 200th individual arbitration has now been filed as drivers bring claims that Central misled them to become owner operators by falsely claiming they would make substantially more as owner operators. The individual arbitrations also allege that Central operated a scheme intended to coerce them into remaining as drivers for Central, under threat of massive debt and negative credit and DAC reports, if they “default” on their leases by leaving the company.
In the collective case against Central alleging that the company failed to pay owner operators the minimum wage (through deducting lease, gas, tolls, insurance, etc. from their pay and because of all the negative settlements they receive), the parties have now filed many hundreds of pages of briefing to the arbitrator, on issues such as what rules apply to the arbitration, whether the arbitrator is required to follow the instructions of the District Court and what fees apply to the case. Click here to read the drivers’ attorneys’ first brief on these topics. Central filed four briefs consisting of hundreds of pages, seeking to have the arbitrator revisit questions which the District Court resolved. Click here to read the drivers’ attorneys’ second, brief in response to Central’s brief. One more set of reply briefs by both sides will be filed in three weeks.
Swift Transportation Acquires Central Refrigerated – Posted August 9, 2013
On August 6, 2013, Swift Transportation Company acquired Central Refrigerated Transportation, Inc. in a transaction valued at $225 million. We do not anticipate that the acquisition will affect either our litigation against Swift Transportation or our litigation against Central Refrigerated. We will update our website if the acquisition affects our litigation in any way.
The parties held a scheduling conference call with Arbitrator Patrick Irvine on July 31, 2013. Arbitrator Irvine has ordered the parties to submit legal briefs on various preliminary issues including:
1. What, if any, findings or rulings by the District Court are binding on the Arbitrator in his conduct of the arbitration?
2. Whether a collective arbitration is authorized or required by the agreements between the parties, or other authority?
3. What rules of the American Arbitration Association (Employment or Commercial) apply to this proceeding?
We will argue that the District Court’s findings that Plaintiffs are employees and that Central’s arbitration agreement authorizes collective arbitration is binding upon the Arbitrator. We will also argue that the AAA’s Employment rules apply to the arbitration because Central’s arbitration agreement was part of an employer promulgated plan.
The parties must submit their initial briefs by September 16, 2013, their opposition briefs by October 16, 2013, and their reply briefs by November 6, 2013. After the briefs are fully submitted, the Arbitrator will rule on the preliminary issues and the arbitration will proceed to the discovery stage.
207 DRIVERS JOIN SUIT AGAINST CRS – Posted August 8,2013
As of this date, 207 drivers from across the country have joined the lawsuit against Central Refrigerated Service. If you would like to join the case, please complete a Consent to Sue Form and mail, email, or fax it to Getman & Sweeney.
ARBITRATOR SELECTION IN COLLECTIVE CASE – Posted July 9, 2013
Both sides in the collective arbitration have agreed that Patrick Irvine should serve as the arbitrator in the case. Arbitrator Irvine was a Judge on the Arizona Court of Appeals from 2002 through 2011. Arbitrator Irvine will likely convene a telephone conference to discuss scheduling shortly. Now that the parties have agreed to an arbitrator in the collective action, we expect the American Arbitration Association to begin the process of selecting arbitrators for the individual arbitrations (which raise individual claims of forced labor, fraud, and unjust enrichment).
ARBITRATOR SELECTION IN COLLECTIVE CASE – Posted June 12, 2013
190 truckers have joined the collective FLSA arbitration by filing their consents to sue. 154 truckers have also filed individual arbitrations against Central, claiming that Central defrauded them in the amount they would earn as “owner operators,” claiming that Central engaged in a scheme to force them to continue working in violation of the federal forced labor statute and claiming that the Independent Contractor agreement was unconscionable and unjustly enriched Central by treating them as independent contractors.
In the collective action arbitration, much work has been happening behind the scenes. First, Central argued that the AAA’s commercial rules should apply. Getman Sweeney and the litigation team was successful in arguing that employment rules should apply (though an arbitrator may ultimately revisit this question later). Both sides are continuing their effort to find a mutually agreeable arbitrator. June 25th is the date for both side’s next selection from a list of approximately 15 retired and active judges. If the parties cannot agree, the AAA may impose an arbitrator.
ANOTHER VICTORY! NINTH CIRCUIT DENIES CENTRAL’S “STAY” AND PETITION FOR MANDAMUS – Posted March 29, 2013
Yesterday, the Ninth Circuit Court of Appeals handed Central Refrigerated a final defeat in Central’s effort to block the very arbitrations that it requires its owner operators to file. Central Refrigerated had filed every conceivable motion to block the arbitrations including multiple urgent and emergency motions, reconsideration requests, multiple stay requests, threats to appeal, etc. which had kept the owner-operators’ legal team busy filing briefs in opposition. Central argued that the individual arbitrations over forced labor and the collective arbitration of the minimum wage and deduction claims will be very inefficient and costly to it. Central’s mandamus petition was the last possible effort for Central to block the arbitrations in Court. Click here to review the Order denying mandamus and denying the stay. Meanwhile, the AAA has begun processing the individual and class arbitrations. The parties should begin selecting arbitrators shortly and the arbitrations will begin in earnest.
COURT DENIES CENTRAL’S “STAY” AND CENTRAL FILES PETITION FOR MANDAMUS – Posted March 11, 2013
Central Refrigerated continues to file every conceivable motion to block the arbitrations filed by Owner Operators, filing a flurry of emergency motions, reconsideration requests, stay requests, threats to appeal, etc. which had kept the owner-operators’ legal team busy filing briefs in opposition. Central has now filed a petition for mandamus with the Ninth Circuit Court of Appeals. Mandamus is considered an “extraordinary” writ only to be used when there is no appeal available and the District Court has made a clear error of law, and a ruling by the Court of Appeals will advance the ultimate termination of the litigation. This is a desperate measure which Getman Sweeney believes will not interfere with the progress of the arbitrations, as none of the criteria for mandamus exist here.
Central had also renewed its motion to the District Court to “stay” the arbitrations while it sought first an appeal to the Ninth Circuit and now mandamus. The District Court has now for the second time denied Central a stay of arbitration. Click here to review yesterday’s Order denying the stay. Up to this point, the American Arbitration Association had granted Central an automatic “stay” or delay of the arbitrations for 60 days in order to seek a stay in the District Court. The AAA has advised the parties that unless the District Court stays the arbitrations, the administrative stay will dissolve on March 12th. Now that the District Court has finally and completely denied the stay request, Central’s mandamus filing in the Ninth Circuit will not delay the arbitrations.
DISTRICT COURT DENIES CENTRAL REFRIGERATED’S MOTION FOR PERMISSION TO APPEAL – Posted January 31, 2013
Central Refrigerated has tried everything to block the arbitrations filed by Owner Operators, filing a flurry of emergency motions, reconsideration requests, stay requests, threats to appeal, etc. which had kept the owner-operators’ legal team busy filing briefs in opposition. Central’s strategy came to a crashing halt today, when the District Court ruled that it would not grant Central a special right to appeal (known as an “interlocutory appeal” – which is an appeal before the case has been resolved). Such an appeal would have delayed the arbitrations for a year or even two. Click here to read the District Court’s Order issued today. At this point, the American Arbitration Association granted Central a “stay” or delay of the arbitrations for 60 days, while Central sought a stay in the District Court. With today’s ruling, it becomes clear that there simply is no reason for the District Court to grant any further stays of the arbitrations. Getman Sweeney expects the AAA to dissolve its stay, either immediately, or at the end of the 60 day period, because Central will not have obtained a stay in the District Court by that time. Central has also threatened to ask the Court of Appeals to take the extraordinary measure of ordering the District Court to reverse its decision, even where no appeal is available. This legal device is called “mandamus” and it is extremely rare. Such an appeal would require the Court of Appeals to find an abuse of discretion by the lower court in unusual circumstances, where there is a compelling reason not to wait for an appeal from a final judgment. And while Central might choose to scrape the bottom of the barrel by choosing an inappropriate legal strategy, Getman Sweeney does not see any chance that such a strategy will delay the many arbitrations which have been filed already, or the many new arbitrations which are filed each week on an ongoing basis. The Court’s ruling today in a nutshell? “Let the arbitrations begin!”
DISTRICT COURT DENIES CENTRAL REFRIGERATED’S EMERGENCY MOTION – Posted December 5, 2012
Defendants responded to the Court’s November 8th ruling directing class arbitration of the FLSA claims for the truckers in this case by filing an emergency motion seeking a quick ruling reconsidering that order and/or an order extending their time to appeal. Judge Phillips has today ruled that Central’s motion should be denied. Judge Phillips wrote: “Defendants seek an extension to file a notice of appeal from the Court’s 11/8/12 Order, or, in the alternative, an order shortening time for hearing a motion for reconsideration of that same order. Defendants may not appeal as a matter of right from the Court’s 11/8/12 Order. Defendants, therefore, fail to demonstrate good cause and their Application is denied.”
DISTRICT COURT ISSUES SECOND MAJOR RULING! – Posted November 28, 2012 (edited 12/6/12)
On November 8th, the District Court issued a second critically important ruling favorable to the truckers in this case. Judge Phillips has ruled that the arbitration agreement imposed by Central did not waive “collective action” for Fair Labor Standards Act claims raised in the case. The Judge required that the arbitration of Plaintiffs’ FLSA claims be done collectively. She also “tolled” the statute of limitations for all truckers while the case is ongoing, which means that from the date of September 14, 2012, truckers’ FLSA claims will not expire if they fail to raise their claims. Given the Court’s prior ruling that the drivers in this case are employees, the ruling is very significant. Since the Court ruled drivers are employees, the benefits of arbitration now greatly favor the drivers. First, Central has to pay nearly all the costs of arbitration. Drivers’ arbitration costs are much lower and are being borne by Getman & Sweeney. The very high cost to Central in having to litigate claims individually creates strong incentives for Central to resolve claims quickly (which arbitration is designed to do). Second, since there are virtually no appeals after an arbitration, what might have taken a decade to resolve through the Courts, will likely be concluded much more quickly.
Getman Sweeney has already filed a collective action arbitration raising FLSA claims on behalf of all Central Owner Operators who leased a single truck (or one truck at a time) and who have opted in to the District Court case or arbitration. Please see below on how you can opt in to the arbitration. Getman Sweeney is also beginning the process of filing individual arbitrations for owner operators against Central raising a variety of other claims: forced labor, fraud (in misrepresenting the amount of earnings owner operators will make), unconscionable terms of the contractor agreement and lease, unjust enrichment, and others.
Defendants have filed an “emergency” motion for reconsideration of the Court’s November 8th decision, which Plaintiffs strongly opposed. Click here to review Plaintiffs’ Opposition briefing. In the reconsideration request, Defendants have asked the Court to reverse its decision to allow collective arbitration of the FLSA claims. Should reconsideration be denied, we expect that Defendants may try appeal the Court’s November 8th decision to a higher court, which Plaintiffs will also strongly oppose, as we believe no appeal is permissible from this ruling. In the meantime, Plaintiffs will move forward with collective arbitration of FLSA claims and individual arbitration of other claims.
Please read the following carefully to make sure that you are a part of this arbitration if you choose to be:
• If you are a driver who has already filed a Consent to Sue in this case, but you have not sent us an arbitration retainer, please contact Getman & Sweeney at once to discuss handling your claims in arbitration.
• If you have not joined this case and you have been an owner operator at Central within the past three years, you can join this FLSA case by completing the Consent to Sue Form, and mailing, emailing, or faxing it to our office.
• If you have been an owner operator for Central, but you stopped more than three years ago, you may still have claims in this case. If you want our office to pursue your claims, use the “Request for Information” box on the right side of your screen, or hit the “Contact” button at the top of your screen, and we will contact you to discuss how to pursue your claims in arbitration. Or call Getman Sweeney at 845-255-9370.
DISTRICT COURT RULES THAT CENTRAL REFRIGERATED TRUCKERS ARE EMPLOYEES! – Posted October 10, 2012 (Updated April 9, 2014)
The District Court has issued a critical ruling in the case. Click here to read the Court’s decision. First, and most importantly, the Court’s decision finds that the truckers in this case ARE EMPLOYEES! The Court wrote “although the factors are mixed, the Court finds, based on the Complaint and the moving papers, that Plaintiffs are employees, not independent contractors.” In effect, the Court has determined the central issue in this case on a preliminary basis- and the Court found that we win. This finding, if upheld by the Arbitrator, essentially means that we have won our minimum wage claim as this is really the only factual issue to be determined. If drivers are employees, then they must be paid the minimum wage under federal law. That means that all the weeks drivers receive no pay (or sub-minimum wage pay) will need to be compensated. And Plaintiffs will argue that they are entitled to reimbursement of the various expenses that drivers had to pay. There will be significant questions as to how these damages are calculated, and there are some procedural issues, but it is a very powerful position to be in, having the Court rule that drivers are employees.
After reaching this decision, the Court issued another important ruling. The Court ruled that the Federal Arbitration Act does not apply to drivers, but that the Utah Arbitration Act requires drivers to bring their claims in arbitration, in Utah. The effect of the ruling is that drivers’ Forced Labor claims must be handled in arbitration individually. Based on the other aspects of the decision (and other decisions of the Court), Getman Sweeney believes that arbitration is a very favorable venue. Under Central’s arbitration clause, drivers pay only $175 to file an arbitration, while Central itself will be forced to bear approximately $10,000 or more per individual arbitration, with the central question of whether drivers are employees preliminarily decided.
If you are a driver who has already filed a consent to sue in this action, you will need to contact Getman Sweeney to discuss how to proceed in arbitration.
Here are some sections of the Court’s ruling that drivers are employees:
“Although a mixed bag, the allegations in Plaintiffs’ Complaint favor a finding
that they were employees and not independent contractors. First, Plaintiffs allege
that Defendants exercised significant control over them. Plaintiffs allege that
Defendants controlled “the amount of hours that Plaintiffs may drive in a week” and
“when, where, and how Plaintiffs deliver freight.” (Compl. at ¶ 9.) Defendants
allegedly “monitor and control the time of Plaintiffs’ departure and the time of arrival.”
(Compl. at ¶ 75.) Defendants monitor Plaintiffs’ “exact location, speed, route
compliance, ETA, rest time and driving time and other aspects of job performance”
through an on-board computer/GPS system. (Compl. at ¶ 75.) Plaintiffs also allege
that Defendants “prohibit” Plaintiffs from working for other trucking companies.
(Compl. at ¶ 7.) This level of control favors a finding that Plaintiffs are employees.
Additionally, Defendants lease the trucks to Plaintiffs, and Defendants
allegedly “control the equipment that Plaintiffs use, including its operation,
maintenance, and condition.” (Compl. at ¶ 9.) Defendants also “prohibit Plaintiffs
from using the truck[s] they lease to drive for other trucking companies.” (Compl. at
¶ 12.) Moreover, Defendants attach a “speed governor” to the trucks in order to
control the speed that Plaintiffs drive. (Compl. at ¶ 9.) Defendants’ control over the
equipment further supports a finding that Plaintiffs are employees.
Defendants argue that Plaintiffs are not employees because the Contractor
Agreements state that Plaintiffs “shall be considered an independent contractor and
not an employee.” (Mot. at 16.) “The contractual language, however, is not
conclusive” because “[e]conomic realities, not contractual labels, determine
employment status.” Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748, 755
(9th Cir. 1979). The “economic realities” here favor a finding that Plaintiffs are
employees. Defendants also allege that CLS cannot be considered an employer
because they were “simply a lessor of equipment.” (Reply at 1.) This is
unpersuasive. CRS and CLS are intertwined, and the level of control exerted by
Defendants over both Plaintiffs and their trucks indicates that CLS cannot simply be
excluded by virtue of a being contractually labeled a “lessor.”
Defendants also argue that “drivers use their own equipment to transport
goods.” (Mot. at 4.) This equipment, however, is leased to Plaintiffs by Defendants
and heavily controlled by Defendants. Defendants further allege that drivers “may
hire their own assistants and employees to work for them,” “pay their own repair and
maintenance, use taxes, fuel charges, and other fees,” and are “paid for each
loaded mile that goods are transported.” (Mot. at 4-5.) These factors favor a finding
that Plaintiffs are independent contractors. On balance, however, and in
consideration of all the factors, these arguments are insufficient to counter a finding
that Plaintiffs are employees.
The remaining factors favor this Court’s conclusion that Plaintiffs are
employees. There is a certain level of skill required in Plaintiffs’ work, and at the
very least, special licensing is required. The relationship between Plaintiffs and
Defendants is ongoing, as opposed to an isolated project, and Defendants were free
to continue assigning additional projects to Plaintiffs. The work conducted by
Plaintiffs is the “primary business in which CRS engages–the transportation of
goods.” (Compl. at ¶ 70.) Finally, as discussed above, Defendants exerted control
over when and how long Plaintiffs worked. Therefore, although the factors are
mixed, the Court finds, based on the Complaint and the moving papers, that
Plaintiffs are employees, not independent contractors.”
DEFENDANTS MOTION TO COMPEL ARBITRATION ON AN INDIVIDUAL BASIS – Posted September 24, 2012
Defendants have filed a Motion to Compel Arbitration, asking the Court to order Plaintiffs to individually arbitrate their claims in this case due to an arbitration clause contained in Plaintiffs’ employment contracts. Defendants argue that arbitration is required under the Federal Arbitration Act, or alternatively, the Utah Arbitration Act. Click here to read Defendants’ Motion to Compel Arbitration. Plaintiffs have vigorously opposed Defendants’ motion, arguing that the Federal Arbitration Act does not apply to interstate truck drivers’ contracts of employment (citing a decision of the Ninth Circuit Court of Appeals in the Van Dusen v. Swift Transportation case, that the Court has no authority to compel arbitration under Utah law because Federal Law preempts state law, that the arbitration clause in Plaintiffs’ employment contracts violates various federal labor laws such as the National Labor Relations Act and the Norris-LaGuardia Act (which protect workers’ right to engage in concerted activity for mutual aid), and that the Fair Labor Standards Act requires that Plaintiffs be allowed to act collectively (in other words, that they cannot be forced to arbitrate their claims individually). Click here to read Plaintiffs’ Opposition. Defendants submitted a Reply to Plaintiffs’ Opposition. Click here to read Defendants’ Reply. Oral argument was held before Judge Phillips in Riverside, California, by Dan Getman for the Plaintiffs and Suzanne Jones for the Defendants. We are now awaiting the Court’s decision on Defendants’ motion, which will determine whether Plaintiffs will be allowed to vindicate their claims in court or if they must go to arbitration and, if they must go to arbitration, whether they can do so as a group or if they must arbitrate individually. The Court’s ruling on these important questions will determine the shape of this litigation. How the case proceeds depends very much on how the Court rules on each of the issues before it. We will post an update as soon as the Court renders its decision.
VIDEO CONCERNING THIS LAWSUIT – Posted June 3, 2012
Getman Sweeney prepared this video concerning its lawsuit against Central Refrigerated.
VIDEO CONCERNING INVESTIGATION – Posted June 3, 2012
Getman Sweeney prepared this video concerning its investigation of the practices of Central Refrigerated. Since preparation of the video, Getman Sweeney has now filed the lawsuit in the Central District of California raising claims that CRS failed to pay minimum wage (by making unlawful deductions from pay for truck lease, maintenance, insurance, bonding, taxes, etc.) and that CRS has created a scheme of “forced labor” requiring owner operators to work only for CRS for a period of years under threat of exorbitant debt and negative DAC reports should the driver refuse to work for CRS. Click here to review the investigation video.
COMPLAINT FILED – Posted June 3, 2012
The document which starts a lawsuit is called a “complaint.” Click here to review the complaint in this case. The Defendants have not yet filed an answer in the case.
FREQUENTLY ASKED QUESTIONS – Posted June 3, 2012
Answers to Common Questions:
What claims are covered in this lawsuit?
The lawsuit claims that Central Refrigerated treated the truckers who leased trucks through Central Leasing as “independent contractors” when they were really employees of CRS and CLI AS A MATTER OF LAW. As such, CRS and CLI failed to pay all the wages due, and made unlawful deductions from truckers’ pay for truck lease payments, gas, equipment, maintenance, insurance, tolls, Qualcomm, and bonding, etc. The case raises class action claims that CRS and CLI operate an unlawful scheme to force drivers to work only for CRS for long periods by threatening them with serious financial harm, exorbitant debt, and harm to their DAC Reports if they fail to drive for CRS.
What remedies are sought?
Under the federal minimum wage law, back pay and an equal amount of liquidated damages are claimed for each violation. Plaintiffs also seek compensatory damages and punitive damages for the forced labor violations.
How far back can claims be made?
You are entitled to file FLSA claims (using the Consent to Sue Form) for the period extending back three years from the date you file the form. Forced Labor claims can be brought for a period of ten years preceding the filing of the complaint. Please call if your lease ended over three years ago and you wish to join the case.
Do I have to pay to join the case?
No. The attorneys are handling this case on a contingent basis and will only be paid when we win through a settlement or final judgment. When plaintiffs win a pay case, the defendant must pay the plaintiffs’ costs and attorneys fees.
Can I wait to file my Consent To Sue Form?
You may be part of the Forced Labor class action if the Court later “certifies the case as a class action.’ However, certain claims under the Fair Labor Standards Act are not covered in the case until your Consent to Sue Form is returned to the plaintiffs’ attorneys and then filed with the Court. If you delay in filing the Consent to Sue Form, part or all of your claim may be barred by the “statute of limitation.”
Can CRS or CLI fire me or take action against me for joining the lawsuit?
The law prohibits retaliation for joining a pay lawsuit. If any employee suffered retaliation, Central would be liable for double the injury caused by retaliation against an employee. Notify us immediately if you hear of any threats of retaliation or if you think any retaliation occurs. Retaliation is extremely rare in overtime cases, because an employer can suffer such serious penalties.
What locations are covered by this lawsuit?
Past and present truckers driving for CRS as “owner operators” anywhere in the U.S. may be included in this lawsuit.