Antitrust Law Daily Wrap Up, ADVERTISING—D. Kan.: Independent truck drivers denied class certification of false ad claims, (Jun 13, 2014)

By Greg Hammond, J.D.

Independent truck drivers were denied class certification of claims that their employer engaged in false representations in violation of Kansas consumer protection law. The federal district court in Kansas City, Kansas reasoned that their false representation claims would require individualized inquiries, and the amount of money in question supported individual actions rather than a class action (Fox v TransAm Leasing, Inc., June 11, 2014, Murguia, C).

Background. TransAm Trucking, Inc. is an interstate motor carrier business that provides over-the-road transport of goods. TransAm Leasing, Inc. leases semi-trucks to independent contractors, who then lease the trucks and driving services to TransAm Trucking. Candace Fox, Anthony Gillespie, and Charles Schreckenback brought a class action suit against TransAm Trucking and TransAm Leasing, alleging that the companies falsely marketed that independent contractors would receive: (1) “over $138,000 per year on average”; (2) “$40,000 more than company drivers over a four-year period”; and (3) “exceptional owner/operator benefits,” including compensation between “$100,000-$200,000 per year.” Consequently, the plaintiffs alleged that TransAm violated the Kansas Consumer Protection Act (KCPA) by making deceptive and unconscionable representations to potential independent contractors.

Fox, Gillespie, and Schreckenback also claimed that TransAm violated federal law by requiring each plaintiff and class member to pay a $15 per week satellite communications system usage fee. The plaintiffs filed a motion for class certification.

Rule 23(a) requirements. Under FRCP rule 23(a), plaintiffs in a class action must establish: (1) the class is so numerous that joinder would be impracticable; (2) there are questions of law or fact common to the class; (3) their claims are typical of the class they seek to represent; and (4) they will fairly and adequately protect the interests of the class.

Because Fox, Gillespie, and Schreckenback alleged that there were over 3,000 independent contractors that comprised the class, and TransAm did not dispute the numerosity requirement, the court determined that they established sufficient numerosity. The commonality requirement was also met, since there were various issues that were considered common to class, such as: (1) whether TransAm’s compensation and mileage statements related to the independent contractors; (2) whether the compensation statements were unfair, deceptive, or unlawful; (3) whether the statements were unconscionable under the KCPA; and (4) whether the contractual requirement that independent contractors pay the satellite communications usage fee is lawful.

The court found that the typicality requirement was met, as the plaintiff’s legal and remedial theories were the same as the putative class members, and the substance of the representations complained of were the same. Adequacy of representation was also sufficient, as there was no evidence that the plaintiffs have any conflict with other members of the class and their counsel is experienced in class action litigation.

Rule 23(b)(3) requirements. In addition to the rule 23(a) requirements, Fox, Gillespie, and Schreckenback were required to demonstrate that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” The court determined that the plaintiffs failed to demonstrate that the common questions of law or fact, with regard to the KCPA claims, predominated over individual questions. Specifically, the court determined that individual inquiries into how much each individual contractor earned would be required and that the substantial amounts of money in question offers an incentive to bring claims individually. As such, the motion for class certification with regard to the KCPA claims was denied.

The court, however, granted the motion for class certification with regard to the final issue—whether TransAm violated federal law by requiring independent contractors to pay satellite communications system usage fees. It reasoned that because the plaintiffs’ claims are substantially similar, common issues will predominate, and a single class action is preferable to individual claims, the plaintiffs met their burden under rule 23(b)(3).

The case number is 12-2706-CM.

Attorneys: Anne E. Smith (Shaffer Lombardo Shurin PC) for Candace Fox. Christopher Marshall McHugh (Seigfreid Bingham PC), and James C. Sullivan (Polsinelli PC) for TransAm Leasing, Inc., and TransAm Trucking, Inc.

Companies: TransAm Leasing, Inc.; TransAm Trucking, Inc.

Cases: Advertising StateUnfairTradePractices KansasNews