Anton Phillips and Joseph Graham sued Riverside Transportation, Inc. and Missouri Capital and Leasing, Inc. in the United States District Court for the District of Kansas, raising claims under the Fair Labor Standards Act (FLSA) and Truth-in-Leasing (TIL) regulations. Defendants moved to dismiss or strike portions of plaintiffs’ First Amended Class and Collective Action Complaint under Federal Rules of Civil Procedure 12(b)(6) and 12(f).
Factual Overview
Riverside Transportation provides commercial freight transportation services using motor carrier vehicles. Missouri Capital leases commercial trucking equipment to lease drivers. Both companies are owned by the same individuals and share management and facilities. Lease drivers provide commercial truck driving services for Riverside as independent contractors and are required to sign an Independent Contractor Operating Agreement (ICOA). The ICOA contains a class and collective action waiver clause. Lease drivers who obtain vehicles from Missouri Capital must execute an Equipment Lease Agreement (ELA).
Plaintiffs allege that Riverside violated the FLSA’s minimum wage provisions and that both defendants violated TIL regulations by taking improper deductions and failing to properly manage escrow funds. They sought to bring their claims as a FLSA collective action and a Rule 23 class action.
Legal Analysis:
Enforceability of Class and Collective Action Waivers: The court found that the right to participate in a FLSA collective action is waivable. It determined that the plain language of the ICOA’s waiver unambiguously restricts plaintiffs’ right to bring claims on a class-wide basis. The court rejected plaintiffs’ arguments that the waiver was unenforceable due to being an adhesion contract, lack of authentication, or expiration upon termination.
The court also upheld the waiver of Rule 23 class action rights, finding that the ability to pursue litigation as a class is a procedural right that can be waived contractually.
Equitable Estoppel: The court allowed Missouri Capital, a non-signatory to the ICOA, to enforce the class action waiver under the doctrine of equitable estoppel. It found that the TIL claims against Missouri Capital were substantially connected to those against Riverside, given the companies’ integrated operations and identical claims based on the same facts.
TIL Claims Against Missouri Capital: The court dismissed the TIL claims against Missouri Capital, finding that it could not be held liable as an affiliate of Riverside. The plaintiffs failed to allege that Riverside was exploiting a loophole in the regulations, and the ELA was not incorporated into the ICOA.
TIL Claims Against Riverside T:he court denied the motion to dismiss TIL claims against Riverside, finding that plaintiffs plausibly pled actual damages by alleging underpayment through wage deductions, failure to provide required disclosures, and mismanagement of escrow funds.
The court granted in part and denied in part the defendants’ motion, dismissing all class and collective action claims and the individual TIL claims against Missouri Capital, while allowing the individual TIL claims against Riverside to proceed.
Schrag on Law 