BLAKLEY et al v. CELADON GROUP, INC. et al

Filing 101

ORDER granting in part and denying in part Defendants' 59 Motion for Partial Summary Judgment. Furthermore, Helen Blakely's claim under Count III of the Second Amended Complaint, asserting violations of the Truth in Leasing Act, is DISM ISSED sua sponte. The parties will brief the remaining questions under Section 2 of the IWAA and Indiana Wage Deduction Act as set forth in this Order. No partial judgment will issue at this time. (SEE ORDER). Signed by Judge Larry J. McKinney on 6/2/2017. (JKS)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

WILLIAM BLAKLEY on behalf of
himself and those similarly situated,
HELEN BLAKLEY on behalf of herself
and those similarly situated, and
KIMBERLY SMITH on behalf of
herself and those similarly situated,
Plaintiffs,
vs.
CELADON GROUP, INC.,
CELADON TRUCKING SERVICES,
INC.,
QUALITY COMPANIES, LLC,
QUALITY EQUIPMENT LEASING,
LLC,
and JOHN DOES 1-10,

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No. 1:16-cv-00351-LJM-TAB

Defendants.
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
This matter comes before the Court on Defendants’, Celadon Group, Inc., Celadon
Trucking Services, Inc., Quality Companies, Inc., and Quality Equipment Leasing, Inc.
(collectively, “Celadon”), Motion for Partial Summary Judgment (the “Motion”). 1 Dkt. No.
59. In the Motion, Celadon seeks to dismiss Counts IV, V, and VI of Plaintiffs’, William
Blakely (“William”), Helen Blakely (“Helen”), and Kimberly Smith (“Smith”), on behalf of
themselves and all others similarly situated (collectively, “Plaintiffs”), Second Amended

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The Motion was originally filed as a Motion to Dismiss, pursuant to Federal Rule of Civil
Procedure 12(b)(6). Dkt. No. 59. On March 27, 2017, the Court converted the Motion to
a Motion for Partial Summary Judgment, pursuant to Federal Rule of Civil Procedure 56.
Dkt. No. 81.
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Individual, Collective, and Class Action Civil Complaint (the “Second Amended
Complaint”), with prejudice. Dkt. No. 59; see also, Dkt. No. 52. For the foregoing reasons,
the Court GRANTS in part and DENIES in part the Motion.
I. BACKGROUND
William and Smith, as well as many other commercial truck drivers (the
“Contracting Drivers”), each entered into a written Contractor Operating Agreement (the
“Agreement”), 2 Dkt. No. 88, Ex. B-3 at 11-28; Dkt. No. 88, Ex. B-4 at 14-31, through which
Celadon sought to utilize vehicular equipment owned or leased by the Contracting Drivers
to provide services in connection with its business. Agreement, § 1.03. The Agreement
obligated Celadon to pay a Contracting Driver for his delivery services “within fifteen (15)
days after submission by [the Contracting Driver] to [Celadon] of [certain] accurately
prepared and fully completed documents with respect to such services.” Id. at § 5.03.
The Contracting Drivers agreed “that [their] compensation for services…may be withheld
by [Celadon] for payment of, and [Celadon] may set off against [their] compensation for”
various charges and expenses that may be incurred during the duration of the Agreement,
including “[a]dvances and other extensions of credit by [Celadon] to [the drivers].” Id. at
§ 5.05. The Agreement also stated that the Contracting Drivers were responsible for
“[p]aying all operating costs and expenses incidental to the operation of [their vehicular
equipment] including but not limited to” costs related to fuel, insurance, oil, tires, repairs,

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Although Helen performed work for Celadon as a commercial truck driver, she did not
enter into the same Agreement as William and Smith and did not personally receive
settlement statements from Celadon. Dkt. No. 79, Ex. 11 at 37:6-17, 38:4-11. Because
Helen did not enter into the Agreement with Celadon, which serves as the basis for
Plaintiffs’ allegations in Count III of the Second Amended Complaint for violations of the
Truth in Leasing Act, Count III of the Second Amended Complaint as it related to Helen’s
claims must be DISMISSED.
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licenses, plates, and tolls. Id. at § 9.02(c). Furthermore, the Agreement required each
Contracting Driver to maintain an escrow account and authorize Celadon, in its discretion,
“to apply all or any portion of [a driver’s] Escrow Account to the payment of any charges
or indebtedness” incurred during the term of the Agreement.

Id. at §10.04.

If a

Contracting Driver was indebted to Celadon in an amount greater than that held in his
escrow account, his indebtedness would be reduced by the amount available in his
escrow account, and that Contracting Driver would be personally liable to Celadon for any
remaining indebtedness. Id. at § 10.05. If any amounts remained in a Contracting
Driver’s escrow account after his Agreement was terminated, the remaining amounts
would be returned to that driver. Id. at §§ 10.05, 10.06.
While working with Celadon, Plaintiffs regularly requested and received advances
from Celadon for personal use and for costs associated with operating their vehicles, in
exchange for one-time service fees ranging from $3.50 to $7.50 for each advance. 3 Dkt.
No. 79, Ex. 26 (“Isaacs Dep.”), 26:1-28:4, 33:22-40:16; Dkt. No. 88, Ex. A (“Isaacs Decl.”),
¶¶ 7, 11. Celadon typically provides such requested advances to its drivers, including the
Plaintiffs, by either loading the funds onto the drivers’ fuel cards or by issuing an “express
code” that would allow the drivers to obtain cash at truck stations. Isaacs Decl. ¶ 10;
Isaacs Dep., 37:10-38:9.

These advances, and their associated service fees, are

generally “tied to the trip that [a driver is] on when he takes the advance” and are reflected
as reductions on the driver’s paycheck for that trip. Isaacs Dep., 65:7-66:14. See also,
Isaacs Decl., ¶ 9. When the total amount due to a driver for a particular paycheck does

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Helen stated that she was still entitled to request her own advances, despite not
personally entering into the Agreement with Celadon. Dkt. No. 88-3, Ex. B-2 at 38:12-25.
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not cover the entire amount already advanced to that driver, the remaining amount is
reflected as a reduction on the driver’s subsequent paychecks until the entire advanced
amount can be accounted for. Isaacs Dep., 50:21-51:2; Isaacs Decl., ¶ 11. If a driver’s
Agreement is terminated after that driver received advances that have not yet been
accounted for on the driver’s paychecks, the remaining advanced amount would be
deducted from the driver’s escrow account before the remaining escrow account funds
are returned to the driver. Isaacs Dep., 51:12-52:25; Isaacs Decl., ¶ 12. Celadon has
not sought to recover any advanced amounts not otherwise covered by a driver’s
paychecks or escrow account by taking legal action, hiring collection agencies, or debiting
a driver’s checking account in at least five years. Isaacs Dep., 51:12-52:6; Isaacs Decl.,
¶ 13.
In their First Amended Complaint, Plaintiffs claimed that the advances made by
Celadon constituted loans in violation of the Indiana Small Loans Act, Ind. Code §§ 244.5-7-101 et seq. (“ISLA”), and Indiana Consumer Loan Act, Ind. Code §§ 24-4.5-3-101
et seq. (“ICLA”). Dkt. No. 21, ¶¶ 97-130, 160-165. Plaintiffs further asserted that
Celadon’s deductions for items, such as “lease payments, fuel purchases, insurance
purchases, and payroll advances,” constituted wage assignments in violation the Indiana
Wage Assignment Act, Ind. Code §§ 22-7-7-1 et seq. (“IWAA”), by including transaction
fees in excess of the permissible 8% rate and by securing agreements for assignments
exceeding thirty days. Id. at ¶¶ 131-139, 166-168.
On December 2, 2016, the Court dismissed Plaintiffs’ claims pursuant to the ISLA,
ICLA, and IWAA without prejudice and granted Plaintiffs leave to amend their First
Amended Complaint. Dkt. No. 50. On December 15, 2016, Plaintiffs filed their Second

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Amended Complaint, in which they re-plead their claims against Celadon under the ISLA,
ICLA, and IWAA. Dkt. No. 52. Celadon filed the Motion on January 12, 2017, arguing
that Plaintiffs’ Second Amended Complaint still fails to sufficiently plead their claims under
the ISLA, ICLA, and IWAA and that, in light of the undisputed material facts of this case,
these claims should be dismissed as a matter of law. Dkt. No. 60; Dkt. No. 88.
II. SUMMARY JUDGMENT STANDARD
As stated by the Supreme Court, summary judgment is not a disfavored
procedural shortcut, but rather is an integral part of the federal rules as a whole, which
are designed to secure the just, speedy, and inexpensive determination of every action.
See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also United Ass’n of Black
Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990). Motions for
summary judgment are governed by Federal Rule of Civil Procedure 56, which provides
in relevant part: “The Court shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
Once a party has made a properly-supported motion for summary judgment, the
opposing party may not simply rest upon the pleadings but must instead submit
evidentiary materials showing that a fact either is or cannot be genuinely disputed. Fed.
R. Civ. P. 56(c)(1). A genuine issue of material fact exists whenever “there is sufficient
evidence favoring the nonmoving party for a jury to return a verdict for that
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party
bears the burden of demonstrating that such a genuine issue of material fact
exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87

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(1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir. 1996). It is not the duty
of the Court to scour the record in search of evidence to defeat a motion for summary
judgment; rather, the nonmoving party bears the responsibility of identifying applicable
evidence. See Bombard v. Ft. Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir.
1996).
In evaluating a motion for summary judgment, the Court should draw all
reasonable inferences from undisputed facts in favor of the nonmoving party and should
view the disputed evidence in the light most favorable to the nonmoving party. See Estate
of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996). The mere existence of a factual
dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that
might affect the outcome of the suit in light of the substantive law will preclude summary
judgment. See Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94
F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary
judgment, even when in dispute. See Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir.
1992). If the moving party does not have the ultimate burden of proof on a claim, it is
sufficient for the moving party to direct the Court to the lack of evidence as to an element
of that claim. See Green v. Whiteco Indus., Inc., 17 F.3d 199, 201 & n. 3 (7th Cir. 1994).
“If the nonmoving party fails to establish the existence of an element essential to his case,
one on which he would bear the burden of proof at trial, summary judgment must be
granted to the moving party.” Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir.
1996).

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III. COUNTS IV AND V—VIOLATIONS OF THE INDIANA SMALL LOANS ACT AND
INDIANA CONSUMER LOAN ACT
In Counts IV and V of the Second Amended Complaint, Plaintiffs assert that the
advances provided by Celadon constitute “loans” that violate the ISLA and ICLA,
respectively. Dkt. No. 52 at 22-27, 31-32. However, Celadon argues in large part that
the advances do not meet the definition of a “loan” under these statutes and, therefore,
do not violate the ISLA or ICLA. Dkt. No. 88 at 8-9.
The ICLA defines a “loan” to include (1) a debt created “by the lender’s payment
of or agreement to pay money to the debtor” or to a third party on the debtor’s behalf, (2)
a debt created “by a credit to an account with the lender upon which the debtor is entitled
to draw immediately,” (3) a debt created “pursuant to a lender credit card or similar
arrangement,” and (4) “the forbearance of debt arising from a loan.” Ind. Code § 24-4.53-106. As the Court previously stated, this statutory definition implies that a debt must be
created in order for a loan to exist. Dkt. No. 50 at 6. The definition of a “loan” found in
the ICLA is also applicable to the ISLA.

Ind. Code § 24-4.5-7-102(1) (“Except as

otherwise provided, all provisions of this article applying to consumer loans…apply to
small loans, as defined in this chapter.”). Under the ISLA, a “small loan” is defined as a
loan (a) with a principal loan amount between $50 and $550; and (b) “in which the lender
holds the borrower’s check for a specific period, or receives the borrower’s written
authorization to debit the borrower’s account … under an agreement, either express or
implied, for a specific period” before the lender attempts to deposit or present the check
or debits the borrower’s account. Ind. Code § 24-4.5-7-104(1).
Although Plaintiffs claim that the advances paid by Celadon create debts that
Plaintiffs must repay, the Court does not agree that the advances meet the statutory
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definition “loans” under the ICLA and ISLA.

Instead, the advances constitute early

payments of wages either earned or to be earned by Plaintiffs for their services rendered
to Celadon. The reductions reflected on Plaintiffs’ paychecks for the advances merely
act as an accounting measure for Celadon to ensure that it is not overpaying Plaintiffs for
their services. See Patton v. Stardust Transp., LLC, 26 N.E.3d 1072 (Table), 2015 WL
160217, at *6 (Ind. Ct. App. Jan. 13, 2015) (finding that once a plaintiff was paid for labor
performed, “his right to those wages divested,” and that debits for those prior payments
on the plaintiff’s “subsequent paychecks were not deductions for wages owed—they were
adjustments for wages that had already been paid.”)
While Plaintiffs cite to SDJ Ins. Agency, L.L.C. v. American Nat. Ins. Co., 292 F.3d
689, 694 (10th Cir. 2002), and Ravetto v. Triton Thalasic Tech., Inc., 285 Conn. 716, 73740 (2008), to argue that the advances constitute loans because Celadon can recover on
its advances from sources beyond Plaintiffs’ wages, Dkt. No. 73 at 9, these cases actually
contradict Plaintiffs’ argument. The courts in both Ravetto and SDJ provide that advances
are generally presumed to be compensation, and that amounts advanced in excess of
one’s earned wages are not recoverable “unless an express or implied agreement to
repay is established.” Ravetto, 285 Conn. at 740. See also SDJ, 292 F.3d at 694. Under
the terms of the Agreement, Plaintiffs “remain liable to [Celadon] for any remaining
indebtedness” if the Agreement is terminated and if the amount of indebtedness exceeds
both the Plaintiffs’ wages earned and the amount remaining in their escrow accounts.
Agreement § 10.05. Therefore, because an express agreement exists between Plaintiffs
and Celadon that holds Plaintiffs personally liable to repay any advances exceeding their

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earned wages, these cases do not preclude the Court from finding the amounts issued
by Celadon to be advances rather than loans.
Plaintiffs also take issue with the Declaration of Felicia Isaacs (“Isaacs”), claiming
that her declaration is inconsistent with her prior deposition testimony. See Dkt. No. 94
at 7-9. The Court disagrees. While Isaacs stated in her deposition that Plaintiffs owe
Celadon and must repay Celadon for the advances given, Isaacs Dep., 50:1-53:15, such
statements are consistent with the statements in her declaration that Plaintiffs received
compensation before it was due. Isaacs Decl., ¶¶ 7-12. If Celadon already paid Plaintiffs
for work they had not yet performed, Plaintiffs will still owe Celadon the performance of
that work in order to rightfully earn the compensation they already received.
Because the Court concludes that the advances paid by Celadon to Plaintiffs
constitute early payment of compensation, rather than loans that create debts that
Plaintiffs must repay, the advances are not subject to either the ISLA or ICLA. Therefore,
Counts IV and V of Plaintiffs’ Second Amended Complaint must be dismissed.
IV. COUNT VI—VIOLATIONS OF THE INDIANA WAGE ASSIGNMENT ACT
Count VI of Plaintiffs’ Second Amended Complaint alleges that the advances paid
by Celadon constituted wage assignments in violation of Sections 2 and 3 of the IWAA.
Dkt. No. 52 at 27-29, 32. Specifically, Plaintiffs assert that Celadon violated (1) Section
2 of the IWAA by assigning Plaintiffs’ wages more than thirty days before the assigned
wages were earned and (2) violated Section 3 of the IWAA because, if Celadon is not
Plaintiffs’ employer, it acted as a wage broker that charged an excessively high interest
rate to make wage assignments. Dkt. No 73 at 20-24; Dkt. No. 94 at 13-14.

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An “assignment” of wages is defined as “[a]ny direction given by an employee to
an employer to make a deduction from the wages to be earned by said employee, after
said direction is given.” Ind. Code § 22-2-6-1. Wage assignments may be made for many
possible purposes, including payments for “equipment necessary to fulfill the duties of
employment” and payroll advances. Ind. Code § 22-2-6-2(b). Therefore, the advances
paid by Celadon to Plaintiffs can qualify as assignments of wages under Indiana law.
Section 3 of the IWAA (“Section 3”) states that no wage broker may ask for,
demand, or receive any compensation, interest, or other payment exceeding 8% per year
for money he or she advances or loans to any employee or wage earner. Ind. Code §
22-2-7-3. A “wage broker” is defined as “[a]ny person, company, corporation, limited
liability company, or association loaning money directly or indirectly to any employee or
wage earner, except the employer of the employee, upon the security of or in
consideration of any assignment of the wages or salary of such employee or wage
earner.” Ind. Code § 22-2-7-1(a).
Although Plaintiffs assert that Celadon acts as a wage broker in the alternative to
being Plaintiffs’ employer, Celadon cannot be a considered wage broker based on its
advances to Plaintiffs, even if it is not Plaintiffs’ employer. First, as stated above, the
advances issued to Plaintiffs by Celadon constitute early payment of Plaintiffs’
compensation and are not loans issued to Plaintiffs. See supra, Section III. Even if the
advances were considered “loans” for the purposes of the wage broker definition,
Celadon has not received any assignments of Plaintiffs’ wages as security or
consideration for providing the Plaintiffs the requested advances. While Plaintiffs argue
that Celadon’s advances were loans that were secured by Plaintiffs’ future wages, Dkt.

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No. 73 at 23,Celadon’s accounting for prior advances on Plaintiffs’ future paychecks
merely ensure that Celadon does not overpay Plaintiffs for their services and do not
constitute new assignments of Plaintiffs’ wages. Furthermore, if Plaintiffs are not deemed
employees of Celadon, there is no employer available that could make an assignment of
wages that could serve as consideration or security for a loan made by Celadon as a
wage broker. In other words, if Celadon is considered a wage broker, a distinct, thirdparty employer must participate in the transaction, in accordance with Ind. Code §§ 222-6-1 and 22-2-7-1(a). Therefore, even if Celadon is considered or is actually Plaintiffs’
employer, the advances paid to Plaintiffs do not violate Section 3.
Under Section 2 of the IWAA (“Section 2”),
[n]o assignment of his or her wages or salary by any employee or wage
earner to any wage broker or any other person for his benefit shall be valid
or enforceable, nor shall any employer or debtor recognize or honor such
assignment for any purpose whatever, unless it be for a fixed and definite
part of the wages or salary earned during a period not exceeding thirty (30)
days immediately following the date of the assignment.
Ind. Code § 22-2-7-2. Based on this statutory language, an assignment of wages is
invalid if, after thirty days have elapsed from the assignment, the wages assigned have
not yet been earned by the wage earner.
In order be entitled to compensation for the delivery of a particular load, a
Contracting Driver “must first submit to Celadon certain paperwork related to those loads.”
Isaacs Decl. ¶ 4. Once the necessary delivery paperwork is filed, Celadon is required to
pay the Contracting Driver for his services in connection with that delivery within fifteen
days. Agreement § 5.03. While, as stated above, the advances paid by Celadon to
Plaintiffs constitute early payments of Plaintiffs’ compensation, it is not clear from the
evidence presented how much time passed between the date each advance was paid to
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each of the Plaintiffs and the date by which the advanced amounts were earned by the
Plaintiffs. Without such evidence, a question of fact exists as to whether the wages
assigned through each advance were earned by the Plaintiffs within thirty days of each
payment such that they constitute valid wage assignments under Section 2.
In light of the Court’s careful consideration of Plaintiffs’ IWAA claims and the
Second Amended Complaint, the Court raises, sua sponte, the following questions: (1)
whether any private right of action exists under the IWAA Section 2; (2) if so, whether
Plaintiffs suffered any harm from Celadon’s possible violations of Section 2; and (3)
whether any private right of action exists under the Indiana Wage Deduction Act, Ind.
Code § 22-2-6-1 et seq. (“IWDA”); and (4) if so, whether Plaintiffs suffered any harm from
Celadon’s possible violations of the IWDA. The Court expects the parties to address
these questions according to the following briefing schedule:
1.

Plaintiffs shall file a brief, of no more than fifteen pages, in support of a civil

right of action for their claims under IWAA Section 2 and the IWDA, as well as the proper
measure of damages thereunder, on or before June 23, 2017;
2.

Celadon shall filed their response, also of nor more than fifteen pages, on

or before July 14, 2017; and
3.

Plaintiffs shall file their reply, of no more than 8 pages, on or before July 21,

2017.

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V. CONCLUSION
For the reasons stated herein, the Court GRANTS in part and DENIES in part
the Motion. Dkt. No. 59. Furthermore, Helen Blakely’s claim under Count III of the
Second Amended Complaint, asserting violations of the Truth in Leasing Act, is
DISMISSED sua sponte. The parties will brief the remaining questions under Section 2
of the IWAA and Indiana Wage Deduction Act as set forth in this Order. No partial
judgment will issue at this time.
IT IS SO ORDERED this 2nd day of June, 2017.

________________________________
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana

Distribution:
Adam C. Smedstad
SCOPELITIS GARVIN LIGHT HANSEN & FEARY P.C.
[e-mail]

Justin L Swidler
SWARTZ SWIDLER
[e-mail]

Christopher C. Heery
SCOPELITIS GARVIN LIGHT HANSON & FEARY P.C.
[e-mail]

Matthew D. Miller
SWARTZ SWIDLER
[e-mail]

Adam Eakman
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]

Richard S. Swartz
SWARTZ SWIDLER LLC
[e-mail]

Braden Kenneth Core
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]

Joshua Samuel Boyette
SWARTZ SWIDLER, LLC
[e-mail]

Christopher J. Eckhart
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]
Gregory M. Feary
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]

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