C.R. England settles lease-purchase lawsuit for $37.8M
May 1, 2019
A $37.8 million settlement has been reached between C.R. England and a class of truck drivers who accused the company of fraudulently recruiting them to participate in a lease-purchase agreement.
The settlement, which was preliminarily approved in January and announced by the parties in April, determined that C.R. England will pay a total of $37.8 million, including attorney fees and administration costs.
According to the settlement, Kenneth McKay and the estate of Charles Roberts will receive $68,500 for their role as plaintiffs. The class consisted of drivers who entered into a lease agreement with Opportunity Leasing – doing business as Horizon Truck Sales and Leasing – and an independent contractor operating agreement with C.R. England between May 27, 2007 and Jan. 31, 2017. Class members are expected to receive $1,000 or more.
A spokesperson for C.R. England and attorney for the plaintiffs issued a joint statement about the settlement.
“If this settlement is approved, all class members will be eligible to receive four-figure cash payments, relief from collection of outstanding debts for truck operations and driving school tuition, and an opportunity for credit and DAC reporting repair,” said C.J. Krawczyk, co-lead attorney for the class members.
The C.R. England spokesperson said, “We are proud of the opportunity we offered to enterprising people to start and grow their own businesses … However, we understand that some were not happy with their experience, and we hope that this settlement resolves any lingering concerns.”
The Salt Lake City-based trucking company also agreed to cancel disputed, unpaid debts for permits, licenses and truck-lease payments. The debts amounted to about $48 million.
In addition, C.R. England agreed to refrain from actively collecting student tuition debt of class members. According to court documents, the unpaid tuition debt amounts to about $13 million.
Under the terms of the settlement, C.R. England is limited in how it can engage new independent contractor drivers for a two-year period. During that two-year period, C.R. England has agreed to provide a written disclosure addressing annual turnover, average time in job, and average income for independent contractor drivers.
The Owner-Operator Independent Drivers Association said it was happy to see the settlement and hopes it will lead to a change in practices when it comes to lease-purchase agreements in the trucking industry.
“We’ve always wondered why attorneys general in states didn’t look more closely into these arrangements,” OOIDA President Todd Spencer told Land Line Now’s Terry Scruton.
Originally filed in 2011 by McKay and Roberts, the lawsuit alleged C.R. England and Horizon Trucks Sales and Leasing violated the Utah Business Opportunity Disclosure Act, the Utah Consumer Sales Practices Act and the Utah Truth in Advertising Act, as well as common law claims for fraud, negligent misrepresentation, unjust enrichment and breach of fiduciary duty for all independent contractor lease operators.
McKay and Roberts, who drove for C.R. England as independent contractors and leased trucks from Horizon, an affiliate of C.R. England, alleged that the defendants developed a fraudulent plan to induce thousands of people to enroll in C.R. England’s driver training schools by promising students the choice of eventual employment as a company driver or the ability to earn a desirable income driving as an independent contractor.
The plaintiffs claimed there weren’t many company driver positions available, and students in the driver training schools were subjected to a “misinformation campaign” to convince them to lease trucks from the defendants and become independent contractor drivers for C.R. England.
The complaint alleged that as many as thousands of students were persuaded to invest substantial sums of money to lease trucks from the defendants. The plaintiffs claimed that many of these drivers were left “debt-ridden.”
Some of the allegations in the 2011 complaint included that:
- Drivers were often charged $3,000 for tuition at C.R. England’s truck driving school to be repaid out of future earnings at 18% interest.
- If a driver resisted entering a lease-purchase and insisted on obtaining employment, they were told that they must enter the lease-purchase agreement for at least six months or wait an indefinite period for a truck to become available.
- Defendants concealed that most drivers fail within a year or two and do not make any significant net earnings as a driver, if they earn anything at all.
- Drivers were presented a nonnegotiable form “Truck Sales and Leasing Vehicle Lease Agreement” that each driver was required to sign.
- Defendants provided false, misleading and omitted material information in connection with the business opportunity.
The parties differed in their views of Horizon’s relationship to C.R. England. The defendants said the corporations are separate but affiliated entities.
In all, the litigation lasted nearly seven years. The class was certified in January 2017, and C.R. England’s petition against the certification was denied by the 10th Circuit for the U.S. Court of Appeals in March 2017.
The parties exchanged more than 680,000 pages of relevant documents, conducted 22 depositions and responded to hundreds of written discovery requests.
The final hearing in the case is scheduled for July 9. To receive final approval, the court must find the settlement to be fair, reasonable and adequate to the class.
The settlement ends all claims against the defendants with neither party conceding any aspect of their positions.
“After more than seven years of litigation, this resolution is timely and fair,” Krawczyk said in the statement. “It is being submitted to the court unopposed.”
For more information about the settlement, go to CREnglandClassAction.com.