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Court voids communications fee in contractor lease

October 19, 2016

A federal appeals court struck down a $15-per-week fee for use of a trucking company's satellite communications system on the grounds that it violated a provision of the federal truth-in-leasing regulations (49 CFR Part 376) that govern the terms of carriers' contracts with owner-operators. Three owner-operators had challenged TransAm Trucking's fee as a violation of 49 CFR 376.12(i), which bars a carrier from requiring that an owner-operator purchase or rent any products, equipment, or services from the authorized carrier as a condition of the lease.

 

A three-judge panel of the U.S. Court of Appeals for the 10th Circuit upheld a lower court's finding that the $15 fee violated the truth-in-leasing regulations. The court rejected TransAm's claim that a ruling in a different circuit related to liability insurance supports its satellite communications usage fee. But trucking companies by law must purchase liability insurance for any vehicles it uses to transport freight, including those provided by owner-operators, the appeals court said. TransAm has no such legal obligation to purchase satellite communications. 

 

Although the appeals court rejected the fee, it did agree with the district court that TransAm was permitted to require truckers to use a satellite communication system. But owner-operators must have the option of obtaining equipment or services from an outside source, it said. 

 

The appeals court did side with TransAm on one issue, however. It reversed the district court's certification of a class action lawsuit for damages. "Because the truckers failed to present any evidence of their damages resulting from the unlawful usage fee, however, the district court should have entered summary judgment for TransAm on that damages claim," the appeals court said.

 

For a copy of the appeals court's opinion, click here.

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