Central Refrigerated Service, Inc.
This lawsuit is brought as a nationwide class and collective action 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 suit seeks damages claiming that Central’s form contracts shift the business risks of the economic downturn to truckers who must by law be treated as employees, makes these truckers cover Central’s costs for fleet inventory, insurance, tolls, taxes, and equipment, and makes the truckers pay various fees to Central that enable Central to exact further profit from employees who cannot leave their contracts without crushing financial consequences. The arrangement helps Central keep its workforce as virtual captives, undercuts the competition, avoids unions, evades unemployment and social security taxes, insurance, and permits Central to charge its employees for expenses that must be borne by an employer.
The suit raises two claims, first it claims that the truckers are really “employees” and not “independent contractors.” As a result, the suit claims, truckers are owed wages under the federal minimum wage law (also known as the Fair Labor Standards Act or FLSA) and must be reimbursed for all the deductions from their pay they now face, including lease payments, tolls, gas, maintenance, equipment, taxes, performance bond and insurance.
Second, the complaint claims that Central operates a scheme of “forced labor” in violation of federal law. The case claims that Central coerces drivers to stay working for it for up to three 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 it for 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.
The case is to be heard by U.S. District Court for the Central District of California and will be tried by the Honorable U.S. District Judge Virginia Phillips. Plaintiffs seek to recover the full panoply of expenses that Central shifts to its “owner operators” plus liquidated damages which may equal these deductions. The deductions for which plaintiffs seek recovery include truck lease payments, insurance, tolls, accounting fees, bond, equipment such as Qualcomm, etc. Plaintiffs seek unpaid wages, liquidated damages, interest, costs and attorneys’ fees as well as declaratory relief under the FLSA.
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.
How to Join this Case
If you have also worked for this defendant you can join this case by completing this Consent to Sue form and mailing it to Getman Sweeney. You need the free Acrobat Reader installed to view the form.
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
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 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.
THE DISTRICT COURT RULES THAT CENTRAL REFRIGERATED TRUCKERS ARE EMPLOYEES! – Posted October 10, 2012
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 – and the Court found that we win. This finding essentially means that we have won our minimum wage claim as this is really the only factual issue to be determined. Since 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) must now 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 bargaining position to be in, having the Court rule that drivers are employees. Essentially, the main question remaining is how much drivers participating in the case are owed.
But then the Court issued another surprising decision. 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. It appears that the effect of the ruling may mean that drivers claims must be handled in arbitration individually. Getman Sweeney will be asking the District Court to allow it to appeal this aspect of the decision (there is no appeal as of right on this question). On the other hand, based on the other aspects of the decision, it may well be that arbitration is also a very favorable venue. Under Central’s arbitration clause, drivers pay only $350 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 already 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, while the appeal is pending.
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
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.
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.
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.
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.