TDR Obtains Dismissal of Alleged Employment Misclassification Claims
FSLA, TILA and IRS Code Claims Against Motor Carrier Denied
April 28, 2017
On April 21, 2017, the United States District Court for the Central District of Illinois granted our clients’ motion to dismiss a putative class action brought on behalf of hundreds of potential class members under the Fair Labor Standards Act, the IRS Code, the Truth in Leasing Act and various Illinois and Indiana statutes. Derolf et al. v. Risinger Bros. Transfer, Inc., et al., 16-cv-1298 (ILCD, April 21, 2017).
Plaintiffs were former owner-operators who provided driving services for a motor carrier headquartered in Morton, Illinois, pursuant to Independent Contractor Operating Agreements. Plaintiffs alleged that they were improperly classified as independent contractors and that they should have been considered “employees” under the Fair Labor Standards Act and the Internal Revenue Code. Plaintiffs also alleged that the lease provisions of their Operating Agreements violated federal Truth in Leasing Act regulations.
The Federal District Court found that plaintiffs were independent contractors as a matter of law under the terms of the Operating Agreements. Accordingly, the Court dismissed plaintiffs’ FLSA claims. The Court also dismissed plaintiffs’ claims under the Internal Revenue Code, holding that a private right of action existed only when the Form 1099 fraudulently represented the amount paid to the taxpayer. Finally, the Court considered the vehicle lease and found no actionable claim under the TILA regulations. The Court noted that none of the alleged violations caused any actual damage to plaintiffs.
Given the widespread use of the owner-operator business model, misclassification claims are rising in the trucking industry, this case will have significant ramifications for similar businesses around the country.
TDR lawyers Caesar Tabet, Daniel Stanner, Amanda Catalano, and Kelly O’Neill secured this important opinion.