Seventh Circuit finds trucker too late in contract dispute
May 20, 2020
A federal appeals court recently ruled that an owner-operator is not entitled to his fair share of a shipment because he did not dispute payments in time per the contract.
At a time when rate transparency is on many drivers’ minds, an appeals court’s recent dismissal of a driver’s contract dispute with his former carrier highlights the importance of carefully reviewing contracts. In fact, the first sentence of the opinion states, “This case demonstrates the wisdom of the old Russian proverb popularized by President Reagan: ‘Trust, but verify.’”
On May 1, the Seventh Circuit Court of Appeals upheld an Illinois district court decision to dismiss a case between a trucker, Michael Stampley, and a trucking company he signed a contract with, Altom Transport. Stampley tried to collect money due to him. However, both courts found that he had 30 days to dispute the pay, but he did not.
Stampley hauled freight for Altom as a contracted owner-operator. Altom agreed to pay Stampley 70% of the gross revenues that it collected for each load he hauled. Altom also agreed to give Stampley a copy of the rated freight bill or a computer-generated document with the same information to prove that it had properly paid Stampley for each load, according to court documents.
The contract granted Stampley the right to examine any underlying documents used to create a computer-generated document.
Also, the contract required him to bring any dispute regarding his pay within 30 days. After the 30-day period, the contract states that Stampley waives all rights to contest the validity or accuracy of payments.
Per CFR 376.12, contracts between parties like Altom and Stampley must specify exactly how owner-operators are to be paid. That regulation also requires carriers like Altom to give drivers copy of the rated freight bill, or, in the case of contract carriers, any other form of documentation actually used for a shipment containing the same information that would appear on a rated freight bill.
Stampley received computer-generated documents. However, none of the documents mentioned the tank washes Altom charged clients. Per the contract, Stampley was entitled to 70% of gross revenues, including revenues generated from the washes.
According to the appellate opinion, Stampley filed a class action lawsuit accusing Altom of shortchanging him and other drivers by not paying them a portion of the gross revenues it had collected on their loads. That lawsuit was filed several years after Stampley hauled his last load for Altom.
Although the class was eventually decertified, Stampley proceeded with his individual claim.
Regarding the 30-day window, the trucker argued that it does not apply since the computer-generated document did not contain all of the same information as the rated freight bill.
Most notably, the omitted tank wash charges. However, both the district and appellate court disagreed.
Both courts argue that if the computer-generated document had to have the exact same information as the rated freight bill, any minor discrepancy could render the 30-day provision invalid. Under Stampley’s interpretation, the 30-day provision would be essentially useless.
The Inspection Clause allowed Stampley to ensure that his payments included 70% of all the charges Altom collected for each load, not just 70% of what Altom claimed he was entitled to collect from. More specifically, the clause states that Stampley “shall have the right to ex-amine the source document(s) from which such computer-generated information was compiled [at Altom Transport’s home office during reasonable business hours.],” according to court documents.
Language within the Inspection Clause is similar to language used in broker contracts regarding transparency regulations.
One way brokers avoid giving out information is to make it only available in the office during business hours. This makes it virtually impossible for owner-operators to access the information they need. Regardless, the court found Stampley’s argument unpersuasive.
“Thus, although Altom certainly had an obligation to provide Stampley with an appropriate computer-generated document, Stampley had the ability to verify that document and the obligation to raise any disputes to his pay within 30 days,” the appellate court states. “Stampley could therefore either simply trust the documents he received or inspect the underlying documents to verify they were correct. The record and his argument on appeal demonstrates that Stampley knew the tank washes were taking place, and consequently could have verified whether they were included in his pay by reviewing the underlying documents as he was entitled to.”
The court also addressed any argument regarding fairness.
“As noted above, the (truth-in-leasing regulations) were designed to reduce the power imbalance between interstate carriers and owner-operators,” the appellate court states. “While the contract appears to be weighted heavily in Altom’s favor, it is not unconscionable. The contract gave Stampley 30 days to contest any payment he received, and while that is not long, Stampley has abandoned any argument that the period is unconscionable.”