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Sagastume v. RG Transportation, Inc.

United States District Court, D. Idaho

May 21, 2019

LUIS A. SAGASTUME, Plaintiff,
v.
RG TRANSPORTATION, INC., an Idaho corporation; UNITED STATES FIRE INSURANCE CO.; DOES I-X, inclusive, Defendants.

          MEMORANDUM DECISION AND ORDER

          David C. Nye Chief U.S. District Court Judge.

         I. INTRODUCTION

         Pending before the Court is Defendants' Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dkt. 14. On February 28, 2019, the Court held oral argument and took the motion under advisement. Upon review, and for the reasons set forth below, the Court GRANTS in PART and DENIES in PART the Motion.

         II. BACKGROUND

         Plaintiff Luis A. Sagastume formerly worked for Defendant RG Transportation, Inc. (“RGT”). RGT is registered and authorized to operate as a common carrier of property-in layman's terms, RGT is a trucking company.

         On or around January 11, 2013, Sagastume entered into an Installment Sales Agreement with RGT for the purchase of a 2013 Freightliner Cascadia truck. As part of the agreement, the parties agreed that Sagastume would make 72 monthly payments in the amount of $2, 315.73 towards the Truck. The parties also agreed, as part of the Agreement, that RGT would give Sagastume 30-days written notice and an opportunity to cure any alleged default that arose.

         On or around January 11, 2013, Sagastume also entered into an Independent Contactor Agreement with RGT in which Sagastume agreed to haul loads on behalf of RGT for compensation on a per-load basis. These agreements stated that Sagastume would not haul or transport loads for any other trucking company, but that he would provide services exclusively to RGT. On November 13, 2015, Sagastume entered into another lease agreement with RGT under the same general provisions.

         Sagastume alleges that between January 11, 2013, and the end of August 2016, he hauled loads exclusively for RGT but that the lease agreements-mentioned above- failed to comply with applicable law. Furthermore, Sagastume alleges that RGT unilaterally applied deductions to his pay-i.e. “skimmed” his profits-and ultimately terminated him without cause. In terminating him, Sagastume alleges that RGT failed to give him 30-days' notice as required.

         Sagastume filed suit on August 17, 2018, alleging seven (7) different state and federal causes of action.

         On November 16, 2018, RGT filed the instant motion to dismiss asserting that Sagastume has failed to allege sufficient factual details in his Complaint to support each of his claims, and furthermore, that certain claims are statutorily barred.

         III. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim if the plaintiff has “fail[ed] to state a claim upon which relief can be granted.” “A Rule 12(b)(6) dismissal may be based on either a ‘lack of a cognizable legal theory' or ‘the absence of sufficient facts alleged under a cognizable legal theory.'” Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (citation omitted). Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007). “This is not an onerous burden.” Johnson, 534 F.3d at 1121.

         A complaint “does not need detailed factual allegations, ” but it must set forth “more than labels and conclusions, and a formulaic recitation of the elements.” Twombly, 550 U.S. at 555. The complaint must also contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Id. at 570.

         In deciding whether to grant a motion to dismiss, the court must accept as true all well-pleaded factual allegations made in the pleading under attack. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A court is not, however, “required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         In cases decided after Iqbal and Twombly, the Ninth Circuit has continued to adhere to the rule that a dismissal of a complaint without leave to amend is inappropriate unless it is beyond doubt that the complaint could not be saved by an amendment. See Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009).

         IV. DISCUSSION

         RGT alleges that Sagastume's first two causes of action (the “Truth in Leasing” Claims) are statutorily barred. RGT also alleges that each claim-including the Truth in Leasing claims-fails to allege sufficient facts to state a plausible claim for relief and further fails to provide it (RGT) with sufficient notice to adequately defend itself.

         The Court will address each claim in turn, but must first provide some general background on the trucking industry and federal Truth in Leasing law to aid the reader in understanding the Court's decision today.

         A. Trucking

         In the trucking industry, there are-generally speaking[1]-three main players: (1) shippers, who typically are manufacturers sending goods to retailers or others, (2) truckers, who transport the goods, and (3) motor carriers who arrange the transportation between the shippers and truckers. See, e.g., RLI Insurance Co. v. All-Star Transportation, Inc., 608 F.3d 848, 848 (D.C. Cir. 2010). In addition to the three players listed above, sometimes other individuals may be involved in the process. For example, a transportation “broker” arranges the transportation of a shipper's goods with an authorized motor carrier for a fee. See 49 C.F.R. § 371.2. There are also “intermediary agents” who, like brokers, are individuals who fall somewhere between the other parties-between a carrier and an owner/operator for example-and arrange fees, leases, etc., with other third parties.

         In this case, RGT is a motor carrier. It coordinates the shipment of goods between manufactures, or front-end business, and retailers, or back-end businesses. Sagastume is an owner/operator. He owns his truck (via an installment sales contract with RGT) and also acts as an operator hauling loads on behalf of RGT.

         B. Truth in Leasing

         Federal Truth in Leasing regulations, 49 C.F.R. Part 376, are part of the “Federal Motor Carrier Safety Regulations” which apply to interstate transportation under the authority of 49 U.S.C. §§ 13301 and 14102. These regulations were initially promulgated by the Interstate Commerce Commission and are currently overseen by the Federal Motor Carrier Safety Administration. See Owner-Operator Independent Drivers Ass'n, Inc. v. Bulkmatic Transport Co., 503 F.Supp.2d 961, 963 (N.D. Ill. 2007) (summarizing regulatory oversight). Under the Truth in Leasing regulations, when a motor carrier arranges transportation in equipment owned by others, it must have a written lease with the owner or owner-operator of that equipment that meets certain requirements. 49 C.F.R. § 376.11 - 376.12. The purpose of these regulations is to “promote full disclosure between the carrier and owner-operator in the leasing contract, promote the stability and economic welfare of the independent trucker segment of the motor carrier industry, and eliminate or reduce the opportunity for skimming and other illegal practices.” Part 1057-Lease and Interchange of Vehicles, 44 Fed. Reg. 4681 (January 23, 1979).

         Both sides agree that owner-operators “are precisely the intended beneficiaries of the protection in the Truth in Leasing regulations.” See Dkt. 14-1, at 7; Citing Yata v. BDJ Trucking Co., 2018 WL 3303290, *3 (N.D. Ill. July 5, 2018).

         C. Claims at issue

         1. Truth in Leasing Claims (Claim 1 and Claim 2 in Amended Complaint) Sagastume's first cause of action seeks an injunction against RGT on the basis of certain alleged violations of 49 C.F.R. § 376.12, while his second cause of action asserts claims for damages based on these alleged violations. RGT contends that it is statutorily exempt from the provisions at issue and that these claims must be dismissed.

         Under 49 C.F.R. § 376.26, “the leasing regulations set forth in § 312.12(e) through (1) do not apply to leases between authorized carries and their agents.” RGT argues that Sagastume was its agent and therefore he cannot sue under these provisions. This assertion is not clearly supported by the record.

         As a threshold matter, Section 10 of the 2015 lease agreement between Sagastume and RGT states that “Owner/Operator is an independent contractor and is not to be considered an agent or employee of RG Transportation for any purpose.” Dkt. 14-2, at 11 (emphasis added). RGT asserts that contractual language is not dispositive, and this particular language notwithstanding, the court “still has to make a legal determination whether Sagastume functioned in fact as an agent of RGT.” Dkt. 14, at 4.

         RGT notes that “agent” is not defined anywhere in 49 C.F.R. § 376 and undertakes a “plain meaning” analysis, concluding that because Sagastume acted on behalf of RGT, got his “marching orders” from RGT, and was subjected to a host of other lease provisions limiting-or otherwise directing-his work, he was in fact, an agent.

         After reviewing Sagastume's allegations in his complaint, RGT simply takes the position that “taking the allegations contained in the Amended Complaint as true, Sagastume functioned as RGT's agent.” Dkt. 14, at 4. In its reply brief, RGT softens its position somewhat and states that “the Court should assume that there was an agency relationship.” Dkt. 17, at 3. Ultimately, RGT argues that the ...


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