Landstar Owner-Operator Litigation Quietly Ends
February 6, 2013Earlier this month, Landstar System, Inc., a non-asset based provider of transportation and logistics services, announced the end of its decade-long litigation with the Owner-Operator Independent Drivers Association, Inc. (OOIDA). The litigation, which commenced in 2002, stemmed from allegations brought by OOIDA that Landstar’s motor carrier leases with its owner-operators violated certain federal regulations. Under such leases, owner-operators leased their tractors to Landstar, and then operated such tractors as independent contractors. OOIDA sought damages, injunctive relief and attorney’s fees.
The litigation, widely considered to be one of the most important recent cases in the ongoing battle between the industry and OOIDA over the requirements of such complex federal regulations, had already yielded important decisions as to the terms of such motor carrier leases. For example, one of OOIDA’s key allegations had been that Landstar had acted unlawfully when it provided certain products and services to its owner-operators and charged back these items against compensation owed to the owner-operators at prices higher than the amounts paid by Landstar for such products and services – a common practice in the industry. A Florida federal court upheld such practice in 2006, but required that Landstar provide such owner-operators with access to documents to ascertain whether they are being charged properly. At the time, Landstar expressed confidence that it could provide such documents and had calculated the charge backs properly.
While both Landstar and OOIDA presented the ending of the litigation in positive terms, it should be noted that Landstar ultimately did not have to pay any damages, and that, according to its press release, its current motor carrier leases were found to be valid under federal law. The ending of this litigation should therefore provide a measure of clarity to the transportation industry as to its obligations under federal regulations with respect to such leases.