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Mervyn v. Atlas Van Lines, Inc.

United States District Court, N.D. Illinois

April 20, 2017

Thomas Mervyn, on behalf of himself and all others similarly situated, Plaintiffs,
v.
Atlas Van Lines, Inc. and Ace World Wide Moving & Storage Co., Inc., individually and on behalf of all others similarly situated, Defendants.

          MEMORANDUM OPINION AND ORDER 1REDACTED1

          Ronald A. Guzman, United States District Judge.

         For the reasons stated below, Defendants' motion for summary judgment as to Thomas Mervyn [246] is granted. All pending motions are denied as moot. Civil case terminated.

         STATEMENT

         This case involves a compensation dispute between truck owner-operators and the agents who hire them to transport household goods. Thomas Mervyn seeks relief both on his own behalf as well as others similarly situated; however, no class has been certified.

         I. Background

         The relevant regulatory background is as follows, as set forth in the parties' briefs. The federal Motor Carrier Act authorizes the Department of Transportation to regulate trucking companies, known as Carriers, that transport household goods across state lines. 49 U.S.C. § 14104. Carriers often contract with Agents, who then contract with truck owners, known as Owner-Operators, to transport the goods. Id. § 13907. The services are provided by the Owner-Operators pursuant to the terms of lease agreements, which are governed by federal Truth in Leasing regulations. Id. § 14102; 49 C.F.R. § 376. As is relevant here, the regulations provide that the lease must "clearly state[]" "[t]he amount to be paid by the authorized carrier for equipment and driver's services." 49 C.F.R. 376.12(d). The amount "may be expressed as a percentage of gross revenue ... or by any other method of compensation mutually agreed upon by the parties to the lease." Id.

         II. Facts

         Ace is an Atlas Agent and leases the trucks and driving services of Owner-Operators to haul certain Atlas shipments. (PL's Resp. Defs.' Stmt. Facts, Dkt. # 254, ¶¶ 3, 4.) Thomas Mervyn is an individual Owner-Operator who leased his truck and driving services to several of Ace's separate corporations at different times. (Id. ¶ 6.) Federal law requires that Atlas publish tariffs showing the rates for each task in a move. (Id. ¶ 15.) One rate is for "linehaul, " which is based on the weight of the goods and the distance they are shipped. (Id. ¶ 16.) Other rates cover fuel surcharge, full value protection for goods, packing and unpacking, storage, and other tasks, not all of which apply on every shipment. (Id. ¶ 17.) Because the tariff rates are only a ceiling on what may be charged, Atlas, like other Carriers, often negotiates significant discounts off tariff rates to win customers' business. (Id. ¶¶ 18, 19.) The discounts vary by amount and type from shipment to shipment, and may include an across-the-board discount on all tariff items or a discount on a particular item, such as linehaul. (Id. ¶¶ 20-22.) In addition to the discounts, Atlas might provide a service for free. (Id. ¶ 23.) The discounts and free services may be mixed and matched in a single shipment. (Id. ¶ 24.) After a shipment is completed, Atlas collects money from the customer and distributes that revenue among the various Agents involved in the shipment, retaining a portion of it where applicable. (Id. ¶ 25.) If the hauling agent used an Owner-Operator to haul the goods, the hauling agent pays the Owner-Operator under the terms of the hauling agent's lease with the Owner-Operator. (Id. ¶ 26.) An Agent's share of the revenue is based on the services it performed. (Id. ¶ 27.)

         According to Atlas, because it needed a way to distribute the costs of providing discounts across the various Agents involved in a shipment, it instituted the "effective bottom line discount" (or "EBLD") policy to distribute the costs of providing discounts across all participants in the shipment. (Id. ¶ 29.) Plaintiff contends that "Atlas used 'freebies' and rebates, neither of which are discounts, to siphon revenue to itself at the expense of owner-operators." (Id.) In other words, Plaintiff does not contest the application of the EBLD method to allocate the costs of discounts across all participants in a shipment; he asserts that the inclusion by Atlas of services it provided for free (i.e., 100% discount) was both a breach of the Lease and a violation of the federal Truth in Leasing regulations.

         Atlas also uses a "predetermined effective bottom line discount" (or "PBLD"), which is as an estimate of what the EBLD will be for a given customer over a series of shipments. (Id. ¶ 30.) Under the EBLD policy, Atlas divides the total dollar value of the discounts provided to the customer by the total maximum dollar value of that particular shipment using tariff rates, and Atlas multiplies that EBLD percentage by the tariff charges for each Agent to determine how much that Agent should receive. (Id. ¶ 31.) The "bottom line discount" is the percentage discount from the tariff rate, referred to in some documents as "BLD, " and is distinct from the effective bottom line discount, which is the ultimate financial result of a shipment after taking into account all discounts, rebates, free services, and other unbilled expenses (like credit card fees). (Id. ¶ 32.) Atlas does not specify how Agents are to pay Owner-Operators. (Id. ¶ 33.)

         Defendants set forth the following example. In the ___shipment that Mervyn hauled for Ace 1547, Atlas gave the customer a ___ across-the-board, bottom line discount. The gross amount of ___for the shipment was thus billed to the customer ___. (Id. ¶ 38.) There were certain line items, however, for which Atlas did not allocate a charge to the customer: in the___shipment it was for moving "bulky articles." (Id. ¶ 39.) The customer received a 100% discount for that service. (Id.) If an Agent's compensation depended solely on what Atlas allocated to a particular service on the client invoice, Atlas would not have distributed any money to the Agent for those services for which no charge was allocated. (Id. ¶ 40.) By instead applying EBLD, and spreading the cost of this and other discounts across all participants, Atlas allocated some of the revenue to bulky articles and paid all of that to Ace; Ace, in turn, paid Mervyn his contractual share, ___ for the bulky article. (Id. ¶ 41.) Had Atlas not applied EBLD, the Agent and Mervyn would have received nothing for that service. (Id. ¶ 42.)

         Atlas documents the customer's payments, the discounts applied, and the amounts to be distributed to Agents in a computer system, which during the time at issue, produced the Rating Invoice and Distribution System (or "RTDS"), an electronic document displaying the amounts billed to the customer and the amounts distributable from the shipment after application of the EBLD method. (Id. ¶¶ 43-44.) The information in the RTDS screen was used to generate a document called the "Financial Result, " which is an internal Atlas document that contains tables called "Invoice Distribution" and "Payable Distribution." (Id. ¶ 45.) The Invoice Distribution lists the charges made to Atlas's customers before certain unbilled amounts, such as rebates or credit card fees, were applied and before Atlas applied the EBLD method to account for all unbilled amounts. (Id. ¶ 46.) The Payable Distribution lists the charges after the application of the EBLD calculation. (Id. ¶ 47.)

         Plaintiffs lease with Ace World Wide Moving, Inc.[1] ("Lease") stated that Plaintiff "shall earn compensation as provided in the schedule of compensation included in Schedule B" attached to the Lease. (Id. ¶ 50.) Plaintiff hauled interstate shipments of household goods, which are governed by Schedule B-l. (Id. ¶ 53.) On Schedule B-l, included under a heading entitled "Payments to Contractor, " it states that "[t]he following definitions and general rules are applicable to the determination of compensation." (Id. ¶ 53.) The "general rules" listed under "Payments to Contractor" state, in part: "Linehaul and accessorial service charges shall be determined by applying the applicable effective or predetermined effective bottom line discount (determined under Atlas' rules) to the transportation and accessorial charges for each shipment." (Id. ¶ 54.) Below the "general rules, " Schedule B-l stated that Plaintiff was entitled to "Linehaul 58%." (Id. ¶ 56.) The Lease provided that Ace would pay Plaintiff " 100%" of the "Fuel Surcharge." (Id. ¶ 57.) Atlas's various customer contracts permitted it to charge customers a fuel surcharge for rising fuel prices. (Id. ¶ 58.)

         Although the customer contracts set out the tariff rate applicable to a shipment, including the fuel surcharge, customers often negotiated with Atlas to discount the fuel surcharge below the tariff rate. (Id. ¶ 59.) Atlas negotiated this discount separately with each customer and reflected the discount in each customer's unique contract. (Id. ΒΆ 60.) Whatever amount the customer paid in ...


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