On January 20th, the federal court of appeals for the 9th Circuit issued a favorable ruling affirming summary judgment in a case brought by the Owner-Operator Independent Driver Association ("OOIDA") against Swift Transportation for alleged violation of the federal leasing regulations. OOIDA challenged Swift's method of disclosing chargebacks against owner-operator compensation. Neither the lease nor settlement statements issued to the owner-operators disclosed Swift's profit on chargeback items, if any, but the lease did set forth flat fee chargebacks, or information sufficient for the owner-operator to determine the amount that would be charged back.
The court made the same distinction between flat fee and variable fee charge backs as was made by the 11th Circuit in its 2010 decision involving Landstar. The court agreed with the decision in Landstar that, assuming the chargeback is a flat fee, the carrier is under no obligation to disclose any markup that might apply. However, the court departed from Landstar with respect to variable fee chargebacks. The Swift court read Landstar as requiring the carrier to provide a full itemization of the carrier's underlying costs with respect to variable rate chargebacks (from which the owner-operator could then ascertain the carrier's profit by deducting the underlying cost from the amount of the chargeback). The Swift court declined "to make a blanket assertion that all variable-rate charge-backs per se require a disclosure of the amount of the carriers' profits and costs. A full 'recitation as to how the amount of each item is computed' does not necessarily require carriers to disclose their precise profits or costs to third-parties, even for variable rate fees."
The governing rule, according to the Swift court, is that the carrier must provide sufficient information so that the owner-operator can determine in advance whether their final costs will be. Since Swift was not required to disclose chargebacks, the owner-operators failed to prove that they were damaged so the court affirmed judgment in favor of Swift.
The court made the same distinction between flat fee and variable fee charge backs as was made by the 11th Circuit in its 2010 decision involving Landstar. The court agreed with the decision in Landstar that, assuming the chargeback is a flat fee, the carrier is under no obligation to disclose any markup that might apply. However, the court departed from Landstar with respect to variable fee chargebacks. The Swift court read Landstar as requiring the carrier to provide a full itemization of the carrier's underlying costs with respect to variable rate chargebacks (from which the owner-operator could then ascertain the carrier's profit by deducting the underlying cost from the amount of the chargeback). The Swift court declined "to make a blanket assertion that all variable-rate charge-backs per se require a disclosure of the amount of the carriers' profits and costs. A full 'recitation as to how the amount of each item is computed' does not necessarily require carriers to disclose their precise profits or costs to third-parties, even for variable rate fees."
The governing rule, according to the Swift court, is that the carrier must provide sufficient information so that the owner-operator can determine in advance whether their final costs will be. Since Swift was not required to disclose chargebacks, the owner-operators failed to prove that they were damaged so the court affirmed judgment in favor of Swift.
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