United States District Court, D. Idaho
LUIS A. SAGASTUME, Plaintiff,
RG TRANSPORTATION, INC., an Idaho corporation; UNITED STATES FIRE INSURANCE CO.; DOES I-X, inclusive, Defendants.
MEMORANDUM DECISION AND ORDER
C. Nye Chief U.S. District Court Judge.
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.
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.
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.
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.
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.
filed suit on August 17, 2018, alleging seven (7) different
state and federal causes of action.
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
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.
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.
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).
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).
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.
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.
trucking industry, there are-generally speaking-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.
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.
Truth in Leasing
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).
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).
Claims at issue
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
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.
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.
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.
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 ...