Morales et al v. OK Trans Inc., et al

Filing 259

MEMORANDUM OPINION granting 180 MOTION for Summary Judgment (Signed by Judge David S Morales) Parties notified. (jrm2)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
ADRIANNA MORALES, et al.,
Plaintiffs,
V.
OK TRANS, INC., et al.,
Defendants.

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March 29, 2024
Nathan Ochsner, Clerk

CIVIL ACTION NO. 2:19-CV-00094

MEMORANDUM OPINION GRANTING PENSKE LOGISTICS’ MOTION FOR
SUMMARY JUDGMENT
Before the Court is Defendant Penske Logistics LLC’s (“Penske”) motion for summary
judgment. (D.E. 180). Plaintiffs are opposed to the motion. See (D.E. 196, p. 1). For the reasons
below, the Court GRANTS the motion. (D.E. 180).
I. Background
The facts of this case are straightforward and were recounted in the Court’s order denying
Penske’s earlier motion for summary judgment. See (D.E. 123, p. 1–3). On or about December 26,
2018, in Bee County, Texas, Satnam Singh Lehal was driving a tractor-trailer owned and operated
by OK Transport, Inc. (“OK Trans.”). See (D.E. 223, p. 10). At some point, the tractor-trailer
jackknifed, crossed into the oncoming lane, and collided with a pick-up truck driven by Lyndon
Dean Meyer, who died on impact. See id. at 10–11.
Penske previously moved for summary judgment, arguing that it acted as a broker and not
a motor carrier for purposes of the shipment at issue in this case. See (D.E. 98, p. 5–6, 9–10). The
Court denied that motion, finding disputed fact issues as to whether Penske acted as a motor carrier
or broker. See (D.E. 123, p. 7–10).
In the instant motion, Penske assumes—for purposes of this motion only—that it acted as
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a motor carrier and not as a broker. See (D.E. 180, p. 1–2, n.1, 6). According to Penske, even if it
acted as a motor carrier, it was not Lehal’s statutory employer because it had no arrangement with
Lehal or OK Trans. See id. at 6–10.
II. Legal Standard
Summary judgment is warranted “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). A dispute is genuine “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 (1986). A fact is
material if it “might affect the outcome of the suit under the governing law[.]” Id. In determining
whether a judgment as a matter of law is appropriate, the court must decide “whether the evidence
presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.” Id. at 251–52. The “court must view the evidence ‘in
the light most favorable to the [nonmovant].’” Tolan v. Cotton, 572 U.S. 650, 657 (2014) (per
curiam) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). A court is not required
to search the record for evidence supporting a party’s opposition to summary judgment. Stults v.
Conoco, Inc., 76 F.3d 651, 657 (5th Cir. 1996); Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.
1994).
The movant bears the “initial responsibility” to present evidence proving that no genuine
dispute of material fact exists, but the movant does not have to present supporting evidence
“negating the opponent’s claim.” See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (emphasis
omitted). If the movant “fails to meet this initial burden, the motion must be denied, regardless of
the nonmovant’s response.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per
curiam). If the movant meets this burden, then the burden shifts to the nonmovant to “go beyond
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the pleadings and designate specific facts showing that there is a genuine issue for trial.” Id. (citing
Celotex, 477 U.S. at 324). The nonmoving party “must identify specific evidence in the summary
judgment record” and demonstrate how that evidence supports their claim. Baranowski v. Hart,
486 F.3d 112, 119 (5th Cir. 2007) (internal quotations and citations omitted). The nonmoving
party’s burden cannot be satisfied by “conclusory allegations, unsubstantiated assertions, or only
a scintilla of evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007)
(internal quotations and citation omitted). If the nonmovant fails to meet this burden, then the
movant is entitled to summary judgment. Little, 37 F.3d at 1076.
III. Discussion
A. The Statutory-Employer Doctrine
As discussed in the Court’s previous order granting Plaintiffs’ partial motion for summary
judgment, there are two theories of statutory employment. See (D.E. 258, p. 3). Only the
“responsibility and control” theory is relevant here. See (D.E. 196, p. 7–8 (containing no argument
that Penske is Lehal’s employer as contemplated by 49 C.F.R. § 390.5)); D.E. 213, p. 2). Under
the responsibility and control theory, an entity is a statutory employer if four conditions are met:
(1) the entity is a motor carrier and not a broker;
(2) it does not own the vehicle involved in the incident;
(3) it is using the vehicle in interstate commerce; and
(4) it does not employ the driver.
See (D.E. 123, p. 4) (order denying Penske’s previous motion for summary judgment); Sentry
Select Ins. Co. v. Drought Transp., LLC, No. 15-CV-890, 2017 WL 5382168, at *2 (W.D. Tex.
May 3, 2017) (Lamberth, J.); Sharpless v. Sim, 209 S.W.3d 825, 829 (Tex. App.—Dallas 2006,
pet. denied)); McKeown v. Rahim, 446 F. Supp. 3d 69, 78–79 (W.D. Va. 2020) (Dillon, J.).
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Only the third condition—whether Penske used the vehicle at issue in interstate
commerce—is relevant to the instant motion.1 See (D.E. 180; D.E. 196, p. 2). After viewing all the
evidence in the light most favorable to Plaintiffs, the Court finds that Penske is entitled to summary
judgment because a motor carrier cannot use a vehicle in interstate commerce unless it has an
arrangement with the owner or driver of the vehicle.
As an initial matter, the parties disagree as to the proper wording of the condition at issue—
Penske argues that the Court must determine whether “the carrier operates the vehicle under an
arrangement with the owner to provide transportation subject to federal regulations[.]” See
(D.E. 180, p. 7) (quoting Hernandez v. Union Pac. R.R. Co., No. EP-17-CV-7, 2018 WL 4169328,
at *3 (W.D. Tex. June 13, 2018) (Montalvo, J.)). Conversely, Plaintiffs focus on whether Penske
“used” the vehicle owned by OK Trans. See (D.E. 196, p. 7). In reply, Penske suggests that relying
on Sentry Select Ins. Co., 2017 WL 5382168, at *2, for the “use” standard is misguided. See (D.E.
213, p. 3 n.1). In Sentry, the court cited Sharpless, 209 S.W.3d at 829, for the proposition that the
correct condition is that “the company is using the truck in interstate commerce[.]” 2017 WL
5382168, at *2 (emphasis added). But Sharpless provides a slightly different standard: “the carrier
operates the vehicle under an ‘arrangement’ with the owner to provide transportation subject to
federal regulations[.]” 209 S.W.3d at 829 (citation omitted).
At bottom, the parties’ disagreement turns on whether a motor carrier is statutorily liable
for a driver’s negligence only when that carrier has a direct arrangement with the owner of the
vehicle. See (D.E. 196, p. 7; D.E. 213, p. 4–5). This Court has yet to address this question—in its

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Penske concedes it acted as a motor carrier for purposes of this motion. See (D.E. 180, p. 6) (noting that
“even if” Plaintiff’s allegation that Penske acted as a motor carrier is “accepted as true for purposes of this
motion, Plaintiffs’ claims against [Penske] cannot succeed.”). Plaintiffs agree. See (D.E. 196, p. 6). As such,
the first condition is not at issue. And Penske admits that it “did not own the vehicle involved in the subject
accident, nor did it employ [Lehal].” (D.E. 180, p. 7). Thus, only the third condition is at issue here.

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D.E. 258 order, the Court held that Liberty Lane “used” OK Trans’s vehicle to fulfill its obligation
to transport the shipment on behalf of Penske. (D.E. 258, p. 8). There, it was undisputed that
Liberty Lane had an arrangement with OK Trans, the owner of the vehicle, to transport the
shipment. See id. (finding that “Liberty Lane had an agreement with OK Trans that Lehal would
drive OK Trans’s vehicle on behalf of Liberty Lane to fulfill Liberty Lane’s agreement with
Penske”). Conversely, in the instant motion, Penske argues that it had no arrangement with OK
Trans. See (D.E. 180, p. 6; D.E. 213, p. 5).
As such, the Court must determine: (1) whether an arrangement between a motor carrier
and the owner or driver of a vehicle is required before the motor carrier may be considered the
driver’s statutory employer—thus subjecting the motor carrier to vicarious liability—and (2) if so,
whether a direct arrangement existed between Penske and OK Trans or Lehal.
B. Whether an Arrangement is Necessary
Penske argues that it cannot be Lehal’s statutory employer because “there was no written
or oral lease, or any other arrangement[,]” between Penske and Lehal or OK Trans. (D.E. 180,
p. 6). According to Penske, it is five steps removed from Lehal—Penske contracted Penske
Transportation Management LLC (“PTM”) to broker the shipment to Liberty Lane; Liberty Lane
contracted Liberty Commercial, LLC, to sub-broker the shipment to OK Trans; and OK Trans
employed Lehal to drive the shipment. See id. at 7. Penske argues that five steps removed is four
steps too many; absent a “direct arrangement,” it cannot be vicariously liable for Lehal’s
negligence. Id. at 7–8. Conversely, Plaintiffs argue that the Court may impose statutory-employer
liability on Penske even absent a direct arrangement between Penske and OK Trans or Lehal.
(D.E. 196, p. 2).
As discussed in the Court’s order granting Plaintiffs’ motion for partial summary judgment,
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Congress amended federal law in 1956 to require motor carriers to assume control of the vehicles
they lease. (D.E. 258, p. 10–11); Price, 727 F.2d at 496. In relevant part, 49 U.S.C. § 14102
provides:
(a) General authority of Secretary—The Secretary may require a motor
carrier providing transportation subject to jurisdiction under subchapter I of chapter
135 that uses motor vehicles not owned by it to transport property under an
arrangement with another party to—
(1) make the arrangement in writing signed by the parties specifying its
duration and the compensation to be paid by the motor carrier;
(2) carry a copy of the arrangement in each motor vehicle to which it applies
during the period the arrangement is in effect;
(3) inspect the motor vehicles and obtain liability and cargo insurance on
them; and
(4) have control of and be responsible for operating those motor vehicles in
compliance with requirements prescribed by the Secretary on safety of
operations and equipment, and with other applicable law as if the motor
vehicles were owned by the motor carrier.
49 U.S.C. § 14102(a). The intent of the amendments was “to ensure that interstate motor carriers
would be fully responsible for the” operation of leased vehicles “and the supervision of drivers,
thus protecting the public” from motor carriers who might otherwise attempt to shirk financial
responsibility for accidents. Crocker v. Morales-Santana, 854 N.W.2d 663, 668 (N.D. 2014)
(citation omitted); see also Simmons, 478 F.2d at 866–67, 866 n.21. Consistent with the text and
purpose of the statute, the Department of Transportation promulgated regulations—referenced
throughout this Order as the “responsibility and control” regulations—requiring motor carriers
who use equipment they do not own to enter into written leases with the entity that owns the
equipment. See 49 C.F.R. §§ 376.11–.12. The regulations further require that the lease grant the
motor carrier “exclusive possession, control, and use of the equipment for the duration of the lease”
and that the lease “provide that the authorized carrier lessee shall assume complete operation for
the operation of the equipment for the duration of the lease.” Id. § 376.12(c)(1).
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Courts applying § 14102 and the responsibility and control regulations regularly impose
statutory-employer liability on motor carriers when the carrier has a direct arrangement with the
owner or driver of the vehicle at issue. See Puga, 227 F. Supp. 3d at 763–64 (imposing statutoryliability on a motor carrier where there was evidence of an arrangement between the carrier and
the driver); Taghavi v. Soto, No. 3:21-CV-2557-S-BN, 2023 WL 7862769, at *4 (W.D. Tex.
Oct. 12, 2023) (Horan, Mag. J.) (articulating that statutory-employer liability requires that a carrier
operate the vehicle under an arrangement with the owner), adopted, No. 3:21-CV-2557-S-BN,
2023 WL 7706721, at *1 (Nov. 14, 2023) (Scholer, J.); Del Real v. Transportes De Carga FEMA
S.A. de C.V., No. 5:17-CV-00129, 2018 WL 11429351, at *3–4 (S.D. Tex. Nov. 2, 2018) (Saldaña,
J.) (finding no statutory-employment liability where there was no evidence that carrier had an
arrangement with driver); Hutchinson v. Shuman, No. 4:07-CV-37, 2008 WL 11342643, at *4
(N.D. Miss. June 24, 2008) (Aycock, J.) (imposing statutory-employer liability where the carrier
had a contract with the owner of the vehicle); Zamalloa v. Hart, 31 F.3d 911, 918 (9th Cir. 1994)
(“[Motor] carriers are liable as the statutory employers of the drivers from whom they lease trucks
during the term of the lease, regardless of whether the lease is written or oral.”); Sharpless, 209
S.W.3d 825, 829–30 (Tex. App.—Dallas 2006, no pet.) (affirming trial court’s decision finding
statutory-employer liability where there was an arrangement between the carrier and the driver).2
Conversely, this Court found no cases where a court imposed statutory-employer liability
absent an arrangement between the motor carrier and the vehicle’s owner or driver. And while
Plaintiffs argue that nothing in § 14102(a)’s text requires an arrangement between Penske and
Lehal or OK Trans, (D.E. 196, p. 7–8), they fail to grapple with the responsibility and control

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It does not appear that the issue of whether an arrangement between the owner or driver of a vehicle and
the motor carrier leasing the vehicle is necessary to impose statutory liability was before any of the courts
in these cases. Rather, each case involved facts where the motor carrier had an arrangement with the owner
or driver of the vehicle at issue.

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regulations, see id. These regulations require a lease between a motor carrier who uses equipment
it does not own and the owner of that equipment. See 49 C.F.R. § 376.12(a). The regulations also
define a “lease” as an “arrangement in which the owner grants the use of equipment, with or
without driver, for a specified period to an authorized carrier for use in the regulation transportation
of property[.]” 49 C.F.R. § 376.2 (emphasis added); see also Shimko v. Jeff Wagner Trucking,
LLC, No. 11-CV-831, 2013 WL 10075919, at *4 (W.D. Wis. June 28, 2013) (Conley, J.). In their
attempt to expand statutory-employer liability to arrangements between motor carriers, Plaintiffs
cite § 376.22, (D.E. 196, p. 9–11), which contemplates an arrangement where a motor carrier lessor
holds equipment under a lease and then leases that same equipment to a second motor carrier. In
this scenario, § 376.22 requires the motor carriers to enter into a “written agreement” providing
“that control and responsibility for the operation of the equipment shall be that of the lessee from
the time possession is taken by the lessee[.]” § 376.22(c)(2). But Plaintiffs cite no cases, and the
Court found none, where a court has applied § 376.22 to impose statutory-employer liability on a
carrier with no relationship to the owner or driver of the equipment. See (D.E. 196). This lack of
case law makes sense, as the statutory and regulatory scheme at issue here is concerned with motor
carriers trying to escape liability for negligent drivers by leasing equipment and then treating the
drivers of the leased equipment as independent contractors. See Waldhart v. 7S Trucking, Inc., No.
4:15-CV-101, 2016 WL 11476943, at *4 (D. N.D. Dec. 9, 2016) (Erickson, J.). But a lease between
two authorized carriers is outside this concern. Because the motor carrier who leased the equipment
from the owner is subject to the statutory-employer doctrine, the public is protected from a motor
carrier’s attempt to designate the driver as an independent contractor to avoid liability.3

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This in no way suggests a driver can have only one statutory employer. The Court previously rejected that
argument, see (D.E. 287, p. 8–9), and does so again here. When multiple motor carriers have arrangements
with the owner or driver of a vehicle, then multiple motor carriers may be subject to the statutory-employer
doctrine. Id.

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Granted, this Court agrees with Plaintiffs that failure to comply with the written lease
requirement in § 14102 or the responsibility and control regulations does not shield a carrier from
statutory-employer liability. See (D.E. 258); Jackson v. O’Shields, 101 F.3d 1083, 1089 (5th Cir.
1996). As Judge Ramos stated in Puga, “any requirement of a lease is a consequence of triggering
the statute, not the means for triggering the statute. Therefore, no lease—written or oral—is
required prior to imposing statutory liability[.]” 227 F. Supp. 3d at 764. As such, motor carriers
cannot skirt statutory liability by failing to formalize their arrangements into leases. But here
Penske argues that it had no arrangement with OK Trans or Lehal at all—not that it had an
arrangement but did not formalize it via a written or oral lease. See (D.E. 180, p. 6). And § 14102(a)
is concerned with whether the “necessary relationship” exists—not whether it is termed a lease.
See Puga, 227 F. Supp. 3d at 764.4 The Court also agrees with Plaintiffs that “use” presupposes
the existence of an arrangement. See (D.E. 196, p. 9) (arguing that, barring theft, any “use”
necessitates an arrangement). The question is whom that arrangement must be between. And after
considering the text of § 14102, the responsibility and control regulations, and the relevant case
law, the Court finds that an arrangement must exist between the motor carrier and the owner or
driver of the vehicle at issue to trigger statutory-employer liability. To hold otherwise would
expand the scope of the statutory-employer doctrine beyond that which other courts have
articulated. This Court declines to take that step.
C. Whether an Arrangement Existed Between Penske and OK Trans or Lehal
The parties agree that Penske’s arrangement was with Liberty Lane and not with OK Trans
or Lehal. See (D.E. 180, p. 6–7) (containing Penske’s allegations that it did not have an

The issue of what constitutes a “necessary relationship” to impose statutory liability was not squarely
before the Puga court. See id.
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arrangement with OK Trans or Lehal); (D.E. 196, p. 7–8) (Plaintiffs’ response, which argues that
Penske is “Lehal’s statutory employer even though Penske’s arrangement was with Liberty”)
(emphasis added)). In fact, Plaintiffs admit that “Penske did not directly communicate with [OK
Trans] or Lehal[.]” (D.E. 196, p. 9). Thus, it is undisputed that Penske did not have an arrangement
with OK Trans or Lehal.
The Court acknowledges Plaintiffs’ contention that there is evidence from which a jury
could find that Liberty Lane advised Penske’s sister company, PTM, that OK Trans would
transport the shipment. See id. at 4–5. However, even assuming PTM knew that OK Trans would
transport the shipment, that knowledge is insufficient to create a factual dispute as to the existence
of an arrangement as between Penske and OK Trans. Notably, Plaintiffs do not allege that Penske
was aware that OK Trans was to transport the shipment—only that PTM was. See id. at 4–5. And
even if Penske was aware that Liberty Commercial had sub-brokered the shipment to OK Trans,
there is no evidence that Penske engaged OK Trans in any manner. As such, no arrangement
existed, and Penske is entitled to judgment as a matter of law.
IV. Conclusion
For the reasons above, the Court GRANTS Defendant Penske’s motion for summary
judgment. (D.E. 180).
SO ORDERED.

Dated: Corpus Christi, Texas
29 2024
March____,

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