Court exempts owner-operator truck equipment leases from arbitration
The U.S. Court of Appeals for the 11th Circuit has exempted owner-operator equipment leases with motor carriers from compulsory arbitration under the Federal Arbitration Act.
The Sept. 16 ruling upholds an earlier decision in the U.S. District Court for the Northern District of Georgia, which determined last March that arbitration provisions between truck drivers and motor carriers contained in Allied Holdings Inc.'s owner-operator leases could not be enforced because they merely set out the terms of a relationship, as established by federal truth-in-leasing regulations.
'Insofar as Allied relies upon them independently, the terms of the equipment leases (show) that they are contracts of employment, not rental agreements that govern only the drivers' equipment,' the appeals court said in its affirmation of the district court's decision.
The appellate panel noted that Donald Pardee, a truck driver and plaintiff in case, had a contract with Allied stating that 'his truck 'shall be operated by Pardee, who will be employed by Allied as an employee.' Equipment leases, therefore, are ' contracts of employment of transportation workers engaged in interstate commerce' and are 'exempt from arbitration under 9 U.S.C. section 1,' the appeals court concluded.
Jim Johnston, president of the Owner-Operator Independent Drivers Association (OOIDA), said the ruling was another step 'in eroding the authority of these arbitration clauses and empowering truckers to seek relief in the court system when faced with violations of their rights under the federal regulations.'
OOIDA had contended it is financially prohibitive for owner-operators to file for arbitration because their individual claims are too small to justify the costs.
The full title of this case is 'Leland Wilkins, et al., v. Allied Holdings Inc.; Allied Automotive Group Inc.; Allied Systems Ltd.'; U.S. Court of Appeals for the 11th Circuit; docket number 03-01698-CV-CAP-1.