Al-Anazi v. Bill Thompson Transport, Incorporated et al
Filing
30
OPINION and ORDER Granting in Part and Denying in Part Defendant's 17 MOTION for Partial Summary Judgment, ( Scheduling Conference set for 8/11/2016 at 10:00 AM before District Judge Judith E. Levy.) Signed by District Judge Judith E. Levy. (TMcg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Abdallah Al-Anazi,
Plaintiff,
Case No. 15-cv-12928
Judith E. Levy
United States District Judge
v.
Bill Thompson Transport, Inc.,
Mag. Judge R. Steven Whalen
Defendant.
________________________________/
OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S MOTION FOR
PARTIAL SUMMARY JUDGMENT [17]
This is a putative class action case brought under the Truth-inLeasing Regulations. Pending is defendant Bill Thompson Transport,
Inc.’s (“BTTI”) motion for partial summary judgment. (Dkt. 17.)
I.
Background
Plaintiff Abdullah Al-Anazi is a truck owner-operator who
contracted his equipment and driving services to defendant in 2014 and
2015.
On October 21, 2014, plaintiff signed a Contractor Operating
Agreement (“Operating Agreement”) (Dkt. 1-1), which contained several
provisions regarding the rights and responsibilities of the parties
regarding repairs to plaintiff’s truck.
First, in the “Expenses” section, the contract states that
“SUBCONTRACTOR UNDERSTANDS THAT HE IS NOT REQUIRED
TO PURCHASE OR RENT ANY PRODUCTS, EQUIPMENT, OR
SERVICES FROM BTTI AS A CONDITION OF ENTERING INTO
THIS AGREEMENT.”
(Id. at 3.)
Appendix D to the agreement,
entitled “Miscellaneous Charge Back Items,” states that “BTTI, at its
option, shall perform maintenance and/or repair service for the
Equipment, at BTTI’s option and subject to space availability.” (Id. at
12.)
Under “Compensation and Payment,” the agreement states that:
The parties agree that in the absence of a written notice to
the other by certified mail within 90 days of the issuance of
each settlement statement describing compensation under
this Agreement, paid by BTTI to SUBCONTRACTOR, the
settlement described in such settlement statement shall be
final and binding on both parties. Neither party shall make
any claim or demand of any nature on the other for matters
arising out of this Agreement during the period covered by
each settlement statement if no written notice of that claim
or demand has been sent to the other party within 90 days of
the settlement statement.
2
(Id. at 3.)
Plaintiff began driving for defendant on December 1, 2014, and
ceased driving for defendant on May 1, 2015. From the time plaintiff
signed the Operating Agreement in October 2014, to plaintiff
terminating the agreement in May 2015, defendant performed
numerous repairs on plaintiff’s vehicle (see generally Dkts. 17-4, 17-6),
and issued settlement statements related to those repairs. (Dkt. 17-7.)
On August 17, 2015, plaintiff filed a putative class action lawsuit
alleging that defendant violated three provisions of the federal Truthin-Leasing Act and one provision of the Michigan Motor Vehicle Repair
Act. Plaintiff asserts four counts: (1) violation of 49 C.F.R. § 376.12(h)
et seq. due to the Operating Agreement’s lack of specificity regarding
charge back items, (2) violation of 49 C.F.R. § 376.12(h) et seq. due to
the requirement that maintenance and service be performed by an
authorized carrier, (3) violation of 49 C.F.R. § 376.12(h) and (i) et seq.
due to unauthorized deduction of repair and maintenance funds, and (4)
violation of MCL § 257. 1301 et seq. for failure to comply with the
Michigan Repair Act.
3
On November 16, 2015, defendant filed a motion for partial
summary judgment seeking dismissal of Counts I, II, and IV, and a
limitation on all claims under Count III to those for which proper notice
was given under the Operating Agreement. (Dkt. 17.)
II. Legal Standard
Summary judgment is proper where “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). The Court may
not grant summary judgment if “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248. The Court “views the evidence,
all facts, and any inferences that may be drawn from the facts in the
light most favorable to the nonmoving party.” Pure Tech Sys., Inc. v.
Mt. Hawley Ins. Co., 95 F. App’x 132, 135 (6th Cir. 2004) (citing
Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002)).
III. Analysis
A. Count I: Charge Back Specificity
4
Plaintiff alleges that defendant violated 49 C.F.R. § 376.12(h) of
the Truth-in-Leasing Regulations because the Operating Agreement
lacked specificity as to charge back items. Section 376.12 requires that:
The lease shall clearly specify all items that may be initially
paid for by the authorized carrier, but ultimately deducted
from the lessor's compensation at the time of payment or
settlement, together with a recitation as to how the amount
of each item is to be computed. The lessor shall be afforded
copies of those documents which are necessary to determine
the validity of the charge.
The relevant portion of the agreement states as follows in Section 5:
SUBCONTRACTOR agrees to pay all expenses of operations
pursuant to this agreement, except as otherwise provided
herein, including expenses of repair and maintenance of the
equipment in the condition required by all applicable federal
and state regulations; expenses of oil, fuel (including
deficiencies, if any, in periodic fuel tax payments), and tires;
empty mileage, except to the extent described in Appendix B;
tolls, except for reimbursement by BTTI to the extent
described in Appendix B; base plates, and licenses; federal
highway use tax; expenses of marking the equipment,
expenses of insurance to the extent prescribed in section 11;
and all expenses of other persons assisting or employed by
SUBCONTRACTOR, including health and pension costs,
workers compensation or similar insurance or obligations.
SUBCONTRACTOR agrees to pay or reimburse BTTI for
those additional charges set forth in Appendix D to this
agreement. . . . In the event BTTI pays any of the items set
forth above, the amount thereof paid by BTTI shall be
5
deducted from the amount due SUBCONTRACTOR under
this agreement.
(Dkt. 1-1 at 2.)
Appendix D lists ten miscellaneous charge back items, and states
that “BTTI, at its option, shall perform maintenance and/or repair
service for the Equipment, at BTTI’s option and subject to space
availability. BTTI shall charge SUBCONTRACTOR for such services
according to the fees then in effect at the BTTI shop for such service for
vehicles not owned by BTTI.” (Id. at 12.)
Defendant argues that, pursuant to Port Drivers Fed’n 18, Inc. v.
All Saints Express, Inc., 757 F. Supp. 2d 463 (D.N.J. 2011) (“Port
Drivers II”), the language of Section 5 and Appendix D is clear enough
to satisfy § 376.12(h). The Port Drivers court, having found that a prior
charge back provision was insufficiently clear, analyzed the following
provision:
Contractor agrees that all expenses associated with the
operation of its Equipment while under lease to ASE, such
as, for example, repairs, maintenance, tires, fees, penalties,
insurance, fuel, oil, tolls, permits, applicable taxes, etc.
[“expenses”], shall be the sole obligation of the Contractor....
In the event ASE is requested by Contractor to advance
moneys for expenses on behalf of Contractor, and ASE
agrees to do so, Contractor authorizes ASE to withhold from
6
any moneys due Contractor the amounts advanced by ASE
for the benefit for Contractor.
Id. at 468. That court found that the above provision would have been
sufficiently clear for the purposes of § 376.12(h), if “etc.” was changed to
“and like items.” Id.
In Port Drivers Fed’n 18, Inc. v. All Saints Express, Inc., 757 F.
Supp. 2d 463 (D.N.J. 2011), (“Port Drivers I”) that court interpreted the
following charge back provision:
Contractor authorizes carrier to withhold, from any monies
due to the contractor, any amount due for repairs or
maintenance, gasoline, fuel, oil, labor, tires, insurance or
merchandise purchased by [All Saints] or it's [sic] employee,
advanced as well as any amount for which the carrier may
be liable by failure of contractor to conform to the terms of
this agreement, together with a service charge not exceeding
that prescribed by law.
Id. at 454-55 (emphasis removed). Plaintiffs challenged the provision
permitting the carrier to withhold money for insurance, and argued that
this did not specify how the amount of the charge-back would be
calculated. Id. at 455. The court agreed with plaintiffs, and stated that
“even if the name and amount of the charge-back is listed, the method
by which the amount of the charge-back is computed is an essential
7
component in fulfilling the requirements of 49 C.F.R. § 376.12(h).” Id.
(citing Owner-Operator Indep. Drivers Ass’n v. Landstar Sys. Inc., 541
F.3d 1278, 1292-93 (11th Cir. 2008)).
In short, the issue with the charge back provision in Port Drivers I
was that it did not specify how certain charges would be calculated.
The provision in Port Drivers II fixed this issue by making all of the
subject charges the responsibility of the driver who formerly would have
been charged. The charge back provision in this case differs because it
still charges plaintiff for the ten items contained in Appendix D –
including the repairs that may be performed at defendant’s discretion.
Plaintiff cites other cases interpreting this provision in which
defendants were found to have violated § 376.12(h). In Owner-Operator
Indep. Drivers Assoc., Inc. v. C.R. England, Inc., 508 F. Supp. 2d 972 (D.
Utah 2007), that court found that the agreement between the parties
failed to clearly specify certain charge backs against compensation and
a recitation of how those charges were calculated, as well as documents
necessary to determine the validity of the charge-backs. Id. at 981.
Likewise, in Tayssoun Transp., Inc. v. Universal Am-Can, Ltd., Case
No. 04-1074, 2005 WL 1185811 (S.D. Tex. Apr. 20, 2005), that court
8
found that a carrier’s deduction of a per-trip fee violated § 376.12(h)
because the agreement between the parties did not specify how the
deduction would be computed or provide copies of documents necessary
to determine the charge’s validity. Id. at *17.
In this case, it is unclear which language plaintiff is stating
violates § 376.12(h), and how. Plaintiff’s primary disagreement is with
the language of Appendix D, which states that defendant may perform
repairs at its discretion and at the rates normally charged for repairs of
vehicles defendant does not own. The language of Appendix D clearly
states how potential charges will be computed: at the rates normally
charged for non-BTTI vehicles.
Defendant has also provided extensive copies of documentation
that it states were provided to plaintiff detailing the charges assessed.
Notably, plaintiff provides a notarized affidavit in support of his claims,
but does not state that he did not know how deductions from his pay
would be computed, or that he did not receive copies of documents to
review.
The cases that plaintiff cites are unpersuasive here, because they
concern agreements under which drivers were either not informed of
9
how charges would be computed, or not given documentation detailing
the charges.
Here, plaintiff received both information regarding
computation, and extensive documentation.
Accordingly, summary judgment is granted as to Count I.
B. Count II: Maintenance and Service
Plaintiff alleges that defendant violated 49 C.F.R. § 376.12(i),
which states that:
The lease shall specify that the lessor is not
required to purchase or rent any products,
equipment, or services from the authorized
carrier as a condition of entering into the lease
arrangement. The lease shall specify the terms of
any agreement in which the lessor is a party to
an equipment purchase or rental contract which
gives the authorized carrier the right to make
deductions from the lessor's compensation for
purchase or rental payments.
Plaintiff alleges that Appendix D of the Operating Agreement violates §
376.12(i). It states that “BTTI, at its option, shall perform maintenance
and/or repair services for the Equipment, at BTTI’s option and subject
to space availability.” (Dkt 1-1 at 12.)
Defendant directs the Court to the statement contained in all
capital letters in section 5 of the agreement: “SUBCONTRACTOR
10
UNDERSTANDS THAT HE IS NOT REQUIRED TO PURCHASE OR
RENT ANY PRODUCTS, EQUIPMENT, OR SERVICES FROM BTTI
AS A CONDITION OF ENTERING INTO THIS AGREEMENT.” (Id. at
3.) Defendant argues that this clause is dispositive under § 376.12(i).
It interprets the relevant section of Appendix D to mean only that it
“has reserved the option to refuse to perform repairs on Plaintiff’s
vehicle if it chooses to.” (Dkt. 17 at 20.)
Plaintiff argues that § 376.12(i) imposes a substantive, as well as
linguistic, obligation on defendant. First, the prefatory language of §
376.12 states that “[t]he required leave provisions shall be adhered to
and performed by the authorized carrier.” Second, plaintiff points to
Seventh Circuit case law indicating that this language imposes a
substantive obligation on a carrier to actually comply with the required
contractual terms, not just include them in an agreement. See Mervyn
v. Nelson Westerberg, Inc., 76 F. Supp. 3d 715, 719 (N.D. Ill. 2014)
(citing Owner-Operators Indep. Drivers Ass’n v. Mayflower Transit, Inc.,
2006 WL 1547084, at *5 (S.D. Ind. June 1, 2006)); Owner-Operator
Indep. Drivers Ass’n v. Mayflower Transit, LLC, 615 F.3d 790 (7th Cir.
2010). The Court finds this precedent persuasive.
11
When section 5 and Appendix D are read in concert, the language
of the Operating Agreement does not, on its face, violate § 376.12(i).
Section 5 lists a variety of charges that are the driver’s responsibility,
and incorporates Appendix D to reference other specific charges that
the driver may have to pay. Section 5 governs Appendix D, and so the
disclaimer that the driver is not required to rent or purchase services
governs the interpretation of the language permitting defendant to
perform certain services at its option.
However, a substantive obligation also exists under § 376.12(i).
The language of the Operating Agreement must comport with §
376.12(i), but so must defendant’s conduct under the Operating
Agreement. Defendant argues only that the language of the contract
establishes compliance with the law, but not that it actually complied
with the law. The parties also present competing affidavits regarding
defendant’s compliance with the law (Dkt. 17-2; Dkt. 20-3.) This creates
a genuine issue of material fact regarding defendant’s compliance.
Accordingly, summary judgment is denied as to Count II.
C. Count III: Unauthorized Deduction
12
Plaintiff alleges that defendant materially violated 376.12(h) and
(i) by taking unauthorized deductions from plaintiff under the
Operating Agreement. Defendant moves for partial summary judgment
on this claim, arguing that the notice provision in the Operating
Agreement bars all claims for which notice was not given within ninety
days. The relevant language states that:
The parties agree that in the absence of a written notice to
the other by certified mail within 90 days of the issuance of
each settlement statement describing compensation under
this Agreement, paid by BTTI to SUBCONTRACTOR, the
settlement described in such settlement statement shall be
final and binding on both parties. Neither party shall make
any claim or demand of any nature on the other for matters
arising out of this Agreement during the period covered by
each settlement statement if no written notice of that claim
or demand has been sent to the other party within 90 days of
the settlement statement.
(Dkt. 1-1 at 3.)
Plaintiff makes two arguments regarding the enforceability of this
provision.
First, plaintiff argues 49 U.S.C. § 14705 creates
jurisdictional rights and deadlines for an owner-operator under the
Truth-in-Leasing Regulations, and as such, cannot be contractually
13
modified. (Dkt. 27 at 8-9.) Second, plaintiff argues it is against public
policy to enforce the provision.
Section 14705 establishes a statute of limitations for claims to be
brought under the Truth-in-Leasing Regulations. In cases such as this,
plaintiff “must begin a civil action to recover overcharges within 18
months after the claim accrues.”
49 U.S.C. § 14705(b).
Whether a
statute of limitations is jurisdictional is determined by Congress, and
the Supreme Court has held that “the Government must clear a high
bar to establish that a statute of limitations is jurisdictional.” United
States v. Kwai Fun Wong, ___ U.S. ____, 135 S. Ct. 1625, 1632 (2015).
In order to meet this bar, Congress must do more than establish time
restraints for filing a civil suit.
While Congress need not use any
“magic words,” it must clearly state when a statute of limitations is
intended to be jurisdictional. Id. at 1633.1
The Supreme Court has “made plain most time bars are
nonjurisdictional” and “described filing deadlines as quintessential
claim-processing rules, which seek to promote the orderly progress of
litigation, but do not deprive a court of authority to hear a case.” Id.
This is called the “clear statement rule.” Kwai Fun Wong, ___ U.S. _____, 135 S.
Ct. at 1632.
1
14
(internal quotation marks and further citation omitted). Plaintiff does
not attempt to differentiate the time bars in 49 U.S.C. § 14705 from
typical, nonjurisdictional statutory time bars.
Instead, plaintiff’s
argument assumes that this statutory time bar is jurisdictional in
nature because it grants parties the ability to file an administrative
complaint for an additional eighteen months after the statute of
limitations for a civil action ends. (Dkt. 27 at 8-9.)
Congress did not express a clear intention for the time bars
limiting
claims
under
jurisdictional in nature.
the
Truth-in-Leasing
Regulations
to
be
Congress may establish that a time bar is
jurisdictional in nature by using language that either explicitly
discusses the power of the courts or discusses the statute of limitations
requirement alongside a requirement that any action arising under the
statute must be brought in federal court. Kwai Fun Wong, 135 S. Ct. at
1633.
49 U.S.C. § 14705 meets neither of these standards, and also fails
under the clear statement rule.
For example, 49 U.S.C. § 14705(b)
reads that “[claimant] must begin a civil action to recover overcharges
within 18 months after the claim accrues,” but does not state that this
15
statute of limitations for a civil action is intended to be jurisdictional.
Because § 14705 does not create a jurisdictional time bar, plaintiff’s
argument that the statute of limitations is automatically unable to be
waived or extended by the parties or the court is without merit.
With regard to plaintiff’s second argument, Congress did not
include any explicit prohibitions regarding contractual modifications of
the
statute
of
limitations
when
writing
the
Truth-in-Leasing
Regulations. Congress’ silence on this topic does not mean it approved
of contractual modifications of the statute of limitations under the
Truth-in-Leasing Act, but it does show that there is no explicit ban to
such modifications on the face of the Regulations.
The Federal Institutions Reform, Recovery, and Enforcement Act
of 1989 (“FIRREA”) is an example of Congress explicitly prohibiting
contractual modifications of statutory statute of limitations. FIRREA
adopted statute of limitation periods proceeded by the statement
“[n]otwithstanding any provision of any contract.” 12 U.S.C.A. § 1821.
With this short phrase, Congress “precluded the application of a shorter
contractual limitations period.”
Jett Hanna, Statute of Limitations
Issues in FDIC and Rtc Claims Against Attorneys Representing Failed
16
Financial Institutions, 12 Rev. Litig. 619, 637 (1993); see also Resolution
Trust Corp. v. Krantz, 757 F. Supp. 915, 920 (N.D. Ill. 1991) (finding
that contract provisions attempting to shorten the statute of limitations
provided in FIRREA were unenforceable.)
The Ninth Circuit in reviewing the Truth-in-Leasing Regulations,
determined that “Congress's substantive purpose in authorizing the
Truth–in–Leasing regulations was to protect owner-operators.” Owner
Operator Indep. Drivers Ass'n v. Swift Transp. Co. (AZ), 367 F.3d 1108,
1115 (9th Cir. 2004). Contractual provisions further restricting owneroperators’ ability to file suit contravene this purpose.
Rather than
protecting owner-operators, such contract modifications allow motor
carriers, who are typically in superior bargaining positions, to restrict
owner-operators’s ability to file suit.
Defendant argues it is a “bedrock principle of American contract
law that parties are free to contract as they see fit, and the courts are to
enforce the agreement as written absent some highly unusual
circumstance, such as a contract in violation of law or public policy.”
Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41, 51 (2003). Accordingly,
17
defendant argues that the ninety-day notice provision should be
enforced just as it would be in the insurance industry.
Notice provisions in insurance contracts enable insurers to “make
a timely investigation in order to protect [their] interests.” Weller v.
Cummins, 330 Mich. 286, 293 (1951).
Here, defendant has no
investigation to carry out and no evidence to collect. Defendant is the
party that performed maintenance on plaintiff’s truck and charged him
for it. To the extent that defendant must investigate anything, it would
investigate the repair receipts, invoices, and checks it created and
distributed. Defendant does not need to ensure the preservation of
evidence for a timely investigation, because it possesses the evidence to
be investigated.
Extending this principle to defendant in this case
would be unwarranted.
Plaintiff argues that enforcing the notice provision would violate
public policy because courts have held similar contractual provisions to
be unenforceable under other federal statutory schemes meant to
protect workers’ rights. Plaintiff first cites Lewis v. Harper Hospital, a
Family Medical Leave Act (“FMLA”) case in which the court found that
a “six month limitation clause [on FMLA claims] is not enforceable.”
18
Lewis, 241 F.Supp.2d 769, 773 (E.D. Mich. 2005). This was so because
the FMLA explicitly prohibited employees from waiving their rights
under FMLA. Id; 29 C.F.R. § 825.220(d).
Plaintiff also cites Wineman v. Durkee Lakes Hunting & Fishing
Club Inc., 352 F.Supp.2d 815, 822 (E.D. Mich. 2005), in which the court
held that an employee could not waive the Fair Labor Standards Act
(“FLSA”) statute of limitations because allowing an employee to do so
would be contrary to public policy:
In this case, the defendant argues that it is not seeking a
waiver of the employees' substantive rights under the FLSA,
but rather procedural rights represented by the statute of
limitations. In light of the public policy implications,
however, that is a distinction without a difference. The
Supreme Court has held that other procedural rights under
the FLSA, such as the right to bring claims in court rather
than in an arbitral forum, cannot be waived.
Id. (emphasis added).
Much like the Truth-in-Leasing Regulations, the FLSA was
intended by Congress to help employees by giving them “fundamental
workplace rights.” Id. at 821. The Wineman court further stated:
[T]he right to enforce these privileges in court, was intended
“to achieve a uniform national policy of guaranteeing
compensation for all work or employment engaged in by
19
employees covered by the Act. Any custom or contract falling
short of that basic policy, like an agreement to pay less than
the minimum wage requirements, cannot be utilized to
deprive employees of their statutory rights.”
Id. (emphasis added in original) (quoting Jewell Ridge Coal Corp. v.
Local No. 6167, United Mine Workers, 325 U.S. 161, 176 (1945)). It is
both unwise and incorrect to divorce procedural from substantive rights
in employee rights cases. Further, deference should be paid to Congress
when it has specifically created “the right to enforce these privileges in
court.” Wineman, 352 F.Supp.2d at 821. Importantly, Wineman also
recognizes that despite the statutory language differences between the
FMLA and the FLSA, the holding in Lewis is still relevant.
Although there is no concomitant regulation pertaining to
the FLSA, the holding in Lewis is significant in that the
court proclaimed that “imposing a six month statute of
limitation is an interference with employees' rights under
the FMLA where the statute of limitations is either two or
three years.”
Likewise, the six-month contractual
adjustment of the two- and three-year statute of limitations
in this case constitutes a compromise of the employees'
rights under the FLSA.
Id. at 822-23. Much like the FLSA, the Truth-in-Leasing Regulations
have no explicit statutory language barring the protected class from
waiving their rights.
However, the Wineman analysis is equally
20
persuasive here—public policy weighs strongly in favor of preventing
contractual limitations on the ability of plaintiffs to bring suit to protect
rights otherwise guaranteed by the Truth-in-Leasing Regulations.2
Accordingly, summary judgment is denied as to Count III.
D. Count IV: Michigan Repair Act
Plaintiff alleges that defendant violated the Michigan Repair Act,
M.C.L. § 257.1301 et seq., by engaging in deceptive practices. Namely,
plaintiff alleges that defendant violated §§ 257.1332 and 257.1334. In
relevant part, § 257.1332 states that:
(1) A motor vehicle repair facility shall give to the customer
a written estimate, itemizing as closely as possible the price
for labor and parts necessary for a specific job prior to the
commencement of work. A facility shall not charge for work
done or parts supplied in excess of the estimated price or in
excess of the limit stated by the customer in the waiver
provided for in subsection (3) without the knowing written or
oral consent of the customer which shall be obtained at some
time after it is determined that the estimated price or stated
Defendant’s argument that the ninety-day provision does not improperly affect the
statute of limitations is irrelevant due to the public policy issues the notice
provision raises. In a Massachusetts case defendant cites, that court upheld a notice
requirement stating “[plaintiff] cites to no other authority and suggests no other
basis on which the aforesaid notice provision would contravene public policy or
otherwise be unenforceable.” Puleio v. N. Coast Sea-Foods Corp., 934 N.E.2d 302
(2010) (emphasis added). The present case is the sort Puleio anticipated as
contravening public policy, and accordingly the Puleio case’s holding is inapplicable
here.
2
21
limit is insufficient and before any work not estimated or in
excess of the limit is done or the parts not estimated or in
excess of the limit are supplied. If a waiver is not signed as
provided in subsection (3) and the estimated price is
exceeded by not more than 10% or $10.00 whichever is
lesser, the written or oral consent of the customer for the
excess charge need not be obtained unless specifically
requested by the customer. This section shall not be
construed as requiring a motor vehicle repair facility,
mechanic, or mechanic trainee to give a written estimated
price if he agrees not to perform the requested repair. If the
actual cost of repair is less than the agreed upon estimated
cost, the customer shall pay only the actual cost.
(2) If the facility or mechanic informs the customer that the
price for repair will exceed the written estimate or the stated
limit in the waiver and the customer does not want the
repair work performed then the customer is liable for all
reasonable costs to return the vehicle to the condition it was
when it entered the facility. These costs should be indicated
in written form itemizing the costs as closely as possible
with a copy given to the customer. The cost of a diagnosis to
be made, whether or not the customer authorizes repairs to
be performed, shall be contained in the written estimate
before the diagnosis is undertaken.
Section 257.1334 states that:
A motor vehicle repair facility, including a gasoline service
station which performs any of the repairs listed in the repair
categories of certification for specialty mechanics or
developed by the administrator by rule, shall give to each
22
customer a written statement upon return of the repaired
vehicle to the customer. The statement shall disclose:
(a) Repairs needed, as determined by the facility.
(b) Repairs requested by the customer.
(c) Repairs authorized by the customer.
(d) The facility's estimate of repair costs.
(e) The actual cost of repairs.
(f) The repairs or services performed, including a detailed
identification of all parts that were replaced and a
specification as to which are new, used, rebuilt, or
reconditioned.
(g) A certification that the repairs were completed properly
or a detailed explanation of an inability to complete repairs
properly. The statement shall be signed by the owner of the
facility or by a person designated by the owner to represent
the facility. The name of the mechanic or mechanics who
performed the diagnosis and the repair shall also appear on
the statement.
Section 257.1302(g) defines a “motor vehicle repair facility” as:
[A] place of business which engages in the business of
performing or employing persons who perform maintenance,
diagnosis, vehicle body work, or repair service on a motor
vehicle for compensation, but excluding all of the following:
23
(i) A person who engages only in the business of repairing
the motor vehicles of a single commercial or industrial
establishment or governmental agency.
(ii) A person repairing his or her own or a family member's
car.
(iii) A business that does not diagnose the operation of a
motor vehicle, does not remove parts from a motor vehicle to
be remachined, and does not install finished machined or
remachined parts on a motor vehicle, not including a motor
vehicle repair facility that engages in the business of
performing or employing persons who perform vehicle body
work.
Defendant argues that the Michigan Repair Act does not apply to
it, because it repairs only vehicles that it owns or has full control over
pursuant to federal law within the scope of its business dealings, and is
thus exempt under the Repair Act’s first exemption for an entity that
only repairs the vehicles of a single commercial establishment. Plaintiff
argues that because he owns his truck, this exemption is not applicable
to defendant because the motor vehicle does not belong to defendant
and is therefore not the vehicle of a single commercial establishment.
Michigan case law is silent as to whether a common carrier who
leases a vehicle from a third party, to be used solely in the common
carrier’s operations, is exempt under the Michigan Repair Act.
24
The
Repair Act states that “[a] person who engages only in the business of
repairing the motor vehicles of a single commercial or industrial
establishment or governmental agency” is excluded from the Act.
M.C.L. § 257.1302(g)(A)(i).
Defendant
cites
various
federal
regulations
defining
the
relationship between owner-operators and carriers in support of the
proposition that it is exempt from the Michigan Repair Act.
These
regulations, defendant argues, establish that when defendant repairs
the trucks of owner-operators it employs, it is doing so in service of a
single commercial establishment that has exclusive control over the
owner-operators’ vehicles.
Defendant first relies on the definitions section of the Federal
Motor Carrier Safety Regulations (“FMCSR”), 49 C.F.R. § 390.5, which
define defendant as an employer and define plaintiff, “an independent
contractor while in the course of operating a motor vehicle,” as an
employee of defendant. Defendant next relies on other sections of the
FMCSR that define owner-operators as “drivers” over whom defendant
would have responsibility. See 49 C.F.R. §§ 382.107 (owner-operators
are “drivers” along with regularly employed, casual, and leased drivers
25
for the purpose of a motor carrier’s controlled substance and alcohol use
testing responsibilities), 390.11 (motor carrier is obligated to ensure
that its drivers, including owner-operators, observe all duties and
prohibitions imposed on them).
Defendant also argues that, under the FMCSR, it is defined as an
“owner” of the owner-operator’s equipment because, despite not having
title to the vehicle, it “has the right to exclusive use of [the] equipment.”
49 C.F.R. § 376.2(d)(2); see also 49 C.F.R. § 376.12(c)(1) (stating that
“the lease [between the owner-operator and trucking company as
authorized carrier lessee] shall provide that the authorized carrier
lessee shall have exclusive possession, control, and use of the equipment
for the duration of the lease,” and that the authorized carrier lessee
“shall assume complete responsibility for the operation of the
equipment for the duration of the lease.”).3
For the purposes of the Michigan Repair Act, these federal
regulations establish that carriers such as defendant are required to
assume broad, even absolute, responsibility for both owner-operators
and their equipment. This extends to the legal requirement, expressed
The Operating Agreement contains a clause stating that defendant, “[t]o the
extent required by applicable regulations . . . shall assume possession, control, use
of and responsibility for the Equipment, during this Agreement.” (Dkt. 1-1 at 2.)
3
26
in both 49 C.F.R. § 376.12(c)(1) and the Operating Agreement, that
carriers such as defendant have exclusive possession, control, and use
over the equipment.
For this reason, a carrier such as defendant
repairs the vehicles of a “single commercial . . . establishment” when it
repairs the vehicles of the owner-operators it employs, such as plaintiff.
M.C.L. § 257.1302(g)(A)(i).
This is so because the defendant is required to exercise a degree of
control and responsibility over the equipment as a matter of law such
that the vehicle is a part of its commercial establishment during the
period defendant employs the owner-operator. That the owner-operator
may terminate this relationship and with it defendant’s control over his
vehicle does not change this analysis, because while the contractual
relationship is still in force, defendant is required to assert exclusive
possession, control, and use over the vehicle.
Accordingly, summary judgment is granted as to Count IV.
IV.
Conclusion
For the reasons stated above, it is hereby ordered that:
Defendant’s motion for partial summary judgment (Dkt. 17) is
GRANTED as to Counts I and IV and DENIED as to Counts II and III.
27
IT IS SO ORDERED.
Dated: July 6, 2016
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on July 6, 2016.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
28
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