Foster v. CEVA Freight, LLC, LP

Filing 130

ORDER granting in part and denying in part 107 Motion to Decertify; and denying 123 Motion for Leave to File. Signed by District Judge Frank D. Whitney on 8/3/12. (com)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:10-CV-00095-FDW

JAMES FOSTER and STONE
)
LOGISTICS, INC., on behalf of themselves )
and all others similarly stated,
)
)
Plaintiff,
)
)
vs.
)
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CEVA FREIGHT, LLC,
)
)
Defendant.
)
______________________________________ )

ORDER

THIS MATTER is before the Court upon Defendant’s Motion for Decertification (Doc. No.
107). Having considered Defendant’s Motion and Memorandum in Support (Docs. Nos. 107, 108),
Plaintiffs’ Response in Opposition (Docs. Nos. 110), Defendant’s Reply (Doc. No. 114), and
Plaintiff’s Surreply (Doc. No. 116-1), the Court finds that Plaintiffs continue to satisfy the
prerequisites for class certification under Rule 23 of the Federal Rules of Civil Procedure regarding
Counts I-X (“TILA claims”). However, Plaintiffs fail to satisfy the Rule 23 requirements under
Count XI (“breach of contract claim”). Accordingly, Defendant’s Motion for Decertification is
DENIED in part and GRANTED in part.
I. BACKGROUND
Plaintiffs James Foster and his business, Stone Logistics, Inc. (“Plaintiffs”), on behalf of
themselves and all others similarly situated, filed an eleven-count Amended Complaint (Doc. No.
29) against CEVA Freight, LLC (“Defendant”) seeking declaratory and injunctive relief and
damages sustained as a result of alleged violations of the Truth-in-Leasing Act (“TILA”), 49 U.S.C.
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§ 14102(a), and for breach of contract. TILA provides leasing requirements for motor carriers who
lease trucking equipment from owner-operators. TILA requirements are specifically enforced
through the Truth-in-Leasing regulations, 49 C.F.R. § 376 (“Leasing Regulations”).
In 2006, Plaintiffs contracted with Eagle Global Logistics (“EGL”) to provide trucking
equipment and driving services. Thereafter, EGL was acquired by Defendant CEVA, and all
operating agreements were assumed by Defendant. In the first ten Counts, Plaintiffs allege that “the
written operating agreements, in which Defendant has leased trucking equipment from the drivers,
do not meet the requirements” of TILA and the Leasing Regulations due to missing terms and
contradictory provisions. (Doc. No. 29 at 2).
Specifically, Plaintiffs allege in Count I “Unlawful Provision of Transportation Services of
CEVA” under 49 C.F.R. § 376.12 and § 376.11(a). (Doc. No. 29 at 8). Counts II-X allege,
respectively: “Failure to Disclose and Comply with Compensation Provisions in Violation of 49
C.F.R. §§ 376.12(d) and (g);” “Failure to Disclose and Comply with Loading and Unloading
Provision in Violation of 49 C.F.R. § 376.12(e);” “Failure to Disclose and Comply with Purchase
or Rent of Products, Equipment or Services Provisions in Violation of 49 C.F.R. § 376 .12(i);”
“Failure to Provide Insurance Policy in Violation of 49 C.F.R. § 376.12(j)(2);” “Failure to Disclose
and Comply with Itemization and Explanation of Set-Offs Charged for Damages in Violation of 49
C.F.R. § 376.12(j)(3);” “Failure to Take Complete Responsibility of the Equipment in Violation of
49 C.F.R. § 376.12(c)(1)”; “Failure to Take Responsiblity for Fines Not Caused by the Contractor
in Violation of 49 C.F.R. § 376.12(e);” “Wrongfully Withholding Payment in Violation of 49 C.F.R.
§ 376.12(f);” “ Undisclosed, Undocumented and Excessive Charge-Backs to Compensation in
Violation of 49 C.F.R. § 376.12(h).” (Doc. No. 29). Count XI alleges Defendant breached the terms
of its operating agreement with Plaintiffs. (Doc. No. 29 at 15).
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On October 1, 2010, Plaintiffs sought class certification for other similarly-situated owneroperators throughout the country who entered into allegedly deficient operating agreements with
Defendant. (Doc. No. 33). The Court granted Plaintiffs request for class certification, stating “that
if CEVA has breached provisions of the operating agreement by failing to comply with federal
regulations, it has breached those provisions in an identical manner for all class members.” (Doc.
No. 47).
On March 29, 2011, Defendant filed a Motion to Decertify (Doc. No. 50) and a Motion for
Summary Judgment on Counts I, II, X, and XI of Plaintiffs’ Amended Complaint (Doc. No. 29).
The Court denied in part Defendant’s motion as to Count XI but granted in part as to monetary
damages on Plaintiffs’ other claims. (Transcript of Motions Hearing, 1/31/2012; Doc. No. 98 at
49). The Court denied Defendant’s Motion to Decertify because Defendant failed to show sufficient
reason under law or under the facts at the time. Id.
In March 2012, Plaintiffs served their full damages summary. (Doc. No. 108-2). Plaintiffs’
Damages Summary revealed the 1.5 million, out of 12 million, Defendant freight movements they
intended to challenge. Id. On June 16, 2012, Defendant filed this Motion to Decertify the class.
(Doc. No. 107).
II. STANDARD OF REVIEW
The standard used by the courts in reviewing a motion to decertify a class is the same as the
standard used in evaluating a motion to certify. O’Connor v. Boeing North American, Inc., 197
F.R.D. 404 (2000). Federal Rule of Civil Procedure 23 sets forth the requirements for certification
of a class. Fed. R. Civ. P. 23. Plaintiffs who propose to represent the class bear the burden of
establishing that the Rule 23 requirements are met. General Tel. Co. of the Sw. v. Falcon, 457 U.S.
147, 161 (1982).
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Although the Court previously determined that the class satisfies the prerequisites of Rule
23(a) and Rule 23(b)(2), the Court has a duty to continue to monitor its class decision “and, where
certification proves improvident, to decertify, subclassify, alter, or otherwise amend its class
certification.” Chisolm v. TranSouth Fin. Corp., 184 F.R.D. 556, 567 (E.D.Va.1999). A district
court’s decision to decertify a class is committed to its sound discretion. Knight v. Kenai Peninsula
Borough School Dist., 131 F.3d 807, 816 (9th Cir. 1997). Nevertheless, a district court “must
conduct a ‘rigorous analysis’ into whether the prerequisites of Rule 23 are met.” Valentino v.
Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996). “Even after a certification order is entered, the
judge remains free to modify it in the light of subsequent developments in the litigation.” Pitt v.
City of Portsmouth, Va., 221 F.R.D. 438, 443 (2004) (quoting General Tel. Co. of the Southwest v.
Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). Accordingly, the Court will
reconsider whether the class continues to meet the requirements of Rule 23(a) and whether Plaintiffs
claims may be maintained as a class action claim under Rule 23(b)(2) or Rule 23(b)(3).
Under Rule 23(a), Plaintiffs seeking to certify a class must demonstrate: (1) the class is so
numerous that joinder of all members is impracticable; (2) there are questions of law or fact
common to the class; (3) the claims or defenses of the representative parties are typical of the claims
or defenses of the class; and (4) the representative parties will fairly and adequately protect the
interests of the class. Fed. R. Civ. P. 23(a); Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 423
(4th Cir. 2003).
In addition, Plaintiffs must demonstrate that the proposed class falls within one of three
categories enumerated in Rule 23(b). Gunnells, 348 F.3d at 423. Here, Plaintiffs seek class
certification under either Rule 23(b)(2) or Rule 23(b)(3). Rule 23(b) provides that a class action is
appropriate where “the party opposing the class has acted or refused to act on grounds that apply
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generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate
respecting the class as a whole; or the court finds that the questions of law or fact common to class
members predominate over any questions affecting only individual members, and that a class action
is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.
R. Civ. P. 23(b)(2)-(3).
III. DISCUSSION
A. TILA Claims
To litigate Plaintiffs’ claims for the violations of TILA, the Court finds the class it previously
certified to be appropriate. In fact, Defendant does not argue these claims be decertified but instead
asserts Plaintiffs abandoned these claims. (Docs. Nos. 108, 110). Plaintiffs disagree and contend
they are still relevant and active claims. (Doc. No. 110). Because the Court finds that nothing has
changed since issuance of the order certifying the class, the Court re-certifies the following class:
All CEVA “P&D” drivers in the United States operating under the form
operating agreement that originated with EGL Eagle Global Logistics, LP at
any time between March 4, 2006, through the pendency of this action.
This class satisfies all of the necessary requirements of Rule 23.
B. Breach of Contract Claim
Defendant argues that recent depositions of five class members and Plaintiffs’ “data
manager” conclusively show that Plaintiffs’ breach of contract claim could not be more
individualized. (Doc. No. 107). As a result, Defendant argues Plaintiffs no longer meet the
commonality prong of Rule 23 and class decertification is proper. The Court agrees.
This is Defendant’s second decertification motion filed with this Court, which means it is
in fact a motion for reconsideration. As previously stated, “even after a certification order is
entered, the judge remains free to modify it in the light of subsequent developments in the
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litigation.” Pitt, at 443. Such modifications may be made until final judgment is entered. Rule
23(c)(1)(c).
“Commonality requires the plaintiff to demonstrate that the class members ‘have suffered
the same injury.’” Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011) (citing Falcon, at
157, 102 S.Ct. 2364). Plaintiffs’ breach of contract claim must depend upon a common contention.
Wal-Mart, at 2551.
That common contention, moreover, must be of such a nature that it is
capable of classwide resolution–which means that determination of its truth
or falsity will resolve an issue that is central to the validity of each one of the
claims in one stroke. What matters to class certification . . . is not the raising
of common ‘questions’—even in droves—but, rather the capacity of a
classwide proceeding to generate common answers apt to drive the resolution
of the litigation.
Wal-Mart, at 2551 (citing Nagareda, Class Certification in the Age of Aggregate Proof, 84
N.Y.U.L.Rev. 97, 131-132 (2009)).
Through recent deposition testimony, it is now clear that Defendant negotiated individual
payment arrangements with individual members of the class that departed from Defendant’s
standard tariffs. Rhonda Bateman, Defendant’s Director of Independent Contractor Relations,
testified that deliveries made outside the 100-mile radius “are sometimes individually negotiated
with the independent contractor and/or it would go to the mileage rate.” Bateman Dep. 98. (Doc.
No. 108, Exhibit K). Likewise, Defendant’s records manager Michael Kelley testified that stations
“have the ability to manually rate a movement if it falls outside the settlement tariff radius or if it
moves from city to city or if it is some other specialized movement that should not–that is not
covered by the normal settlement tariff for that station.” Kelley Dep. 77. (Doc. No. 108, Exhibit
D). Further, Defendant’s Executive Vice-President Sam Slater testified that stations could exercise

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“local discretion” in negotiating with drivers to “effect . . . delivery” of Defendant’s freight. Slater
Dep. 30. (Doc. No. 108, Exhibit C).
Deposition testimony reveals that individually-negotiated contracts between station managers
and drivers appear to be far more common especially among the specific 1.5 million transactions
in question then under the 12 million total transactions originally at issue. Thus, Plaintiffs fail to
meet the commonality prong of class certification under Rule 23(a). As a result, there is no longer
proof of any “glue holding the alleged reasons for all [Defendant’s 1.5 million payment] decisions
together,” much less a “common contention” “of such a nature that it is capable of classwide
resolution.” Wal-Mart, 131 S.Ct. at 2551.

IV. CONCLUSION
IT IS THEREFORE ORDERED that Defendant’s Motion to Decertify (Doc. No. 107) for
Plaintiffs failure to meet the prerequisites of Rule 23 is DENIED in part and GRANTED in part.
Defendant’s Motion for Surreply is DENIED as moot.
FURTHERMORE, because the Court and parties have been preparing for and are scheduled
to begin trial on August 20, 2012, the Court concludes that preceding to trial as scheduled would be
more efficient then staying this case pending interlocutory appeal. THEREFORE, the Court sua
sponte denies a stay pending appeal.
IT IS FURTHER ORDERED, that Plaintiffs’ Motion for Leave to Take de bene esse
Depositions (Doc. No. 123) is DENIED. To the extent Plaintiffs need to authenticate documents,
they need not obtain deposition testimony but can present to the Court authentication affidavits
pursuant to Rule 902(11) and Rule 803(6)(A)-(C). Should Defendant be unwilling to cooperate with

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Plaintiffs on this issue, the Court will revisit the issue of de bene esse depositions for these
individuals only.
IT IS SO ORDERED.
Signed: August 3, 2012

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