Trucking Companies Driver Scams Ripoffs Hiring Training Leasing

Recent Trucking Scams News

View News Reports Below.

Includes Truck Driver Training Scams Dishonesty and Misrepresentation. Updated frequently to bring you the latest information and news on Truck Driver Training, Hiring and Truck Lease-Purchase Scams/Ripoffs as reported by the victims.

Most Popular Scams Include:

Deceptive, Misleading Statements made by Trucking Company Recruiter's (professional sales people) designed to entice New (un-aware) Truck Drivers into signing loan documents for Truck Driver Training costs which are several times the reasonable amount for legitimate truck driver training such as found at Community Colleges. They paint a pretty picture. The world is promised to you. Unscrupulous trucking companies and training schools run drivers through like cattle. This is called the "CDL Mill Scam". They prey upon those with poor credit and encourage co-signors. Those with Military educational benefits or Pell grants are especially at risk.

Drivers are forced to quit after a short period of time

Their miles are cut or they are fired for the slightest infraction in order to make power units (trucks) available to new students. These dastardly actions keep the scam volume high.

Trucking Company Lease Purchase Programs out to screw the unsuspecting new truck driver.

At $4.00 per Gallon for diesel, it costs approximately $1.35 per mile in total expenses to run a semi-truck. Keep this figure in mind before signing any owner/operator truck-leasing-purchase-agreement.

Speed Limiters Cap a Truck Drivers Income since most drivers are paid by the mile and NOT by the hour.

Truck Speed Limiters also cause undue stress and fatigue. Speed Limiters make drivers want to quit. Speed Limiters only benefit the trucking company's bottom line profits while endangering the truck driver and the motoring public. See Speed Governor Videos - Click Here

Tips:

Avoid Truck Driver Training Scams: Look for truck driver training schools that have some form of accreditation, such as Community Colleges. Never Take the word of trucking company recruiters. Do your Homework before making any financial commitments.

This Trucking Company Scams News Blog is part of the Truckers News Feed Published by FasterTruck.com

10/13/21 - XPO settles 2 California worker classification cases for nearly $30M

10/13/21 10:50:13pm -

XPO has settled a pair of worker classification cases in California that will pay out close to $30 million to a group of almost 800 drivers.

The settlement documents were filed with the U.S. District Court for the Central District of California last week. The final settlement, approved by the court, covers two cases that were consolidated in the class action, both of them filed in the same court. The suits were originally filed in September 2018 and certified for class action in September 2020. 

One case settled for $9.5 million, the other for $20 million. The number of workers covered by the two cases totals more than 775, all of them drivers.

According to court documents, the plaintiffs in the case filed suit against XPO (NYSE: XPO) on a series of charges familiar to anybody who has read driver misclassification litigation. The plaintiffs, according to the documents, said XPO misclassified them as independent contractors rather than employees; failed to reimburse business expenses; owed them waiting time penalties; didn’t pay them in a timely manner; didn’t give them meal periods; didn’t provide rest periods; didn’t provide itemized wage statements; engaged in “unfair competition”; and owed them penalties under California labor law.

On the key charge of whether the workers were independent contractors or employees, in an earlier filing, XPO’s response focused on the question of “control.” The workers, XPO said in a filing from August 2021, had the ability to accept or reject loads; could provide services to companies other than XPO; and could pay their second-seat workers whatever they wanted. The list of points made by XPO in the filing is a lengthy one, with “control” as the key determinant.

The points are now moot given the settlement. But in one of the settlement documents, the court said that XPO had raised arguments “that posed a risk to plaintiffs’ chance for success.”

“While the court declines to opine on the relative strengths of the parties’ arguments at this stage in the case, the court notes that XPO raised colorable arguments that posed a degree of risk to plaintiffs’ potential for success,” the settlement document said.

The Teamsters aided the suit against XPO, a longtime nemesis. In a prepared statement, the union declared the settlement a “significant victory for working people.”

James Hoffa, the outgoing Teamsters president, said in that statement, “Today, we commend these brave XPO drivers, who decided not to back down and instead fought hard to demand that XPO pay them the money they were rightfully owed.” 

Hoffa added, “If XPO and other companies didn’t misclassify and steal these workers’ wages, there wouldn’t be a shortage of drivers.” 

An XPO spokesman said the case had been settled at “very advantageous terms” for the company.

Attorneys’ fees in the settlement were set at approximately one-third.

The named plaintiffs in the larger settlement, $20 million, with a worker named Angel Omar Alvarez as the lead plaintiff, will see a division of the payout as follows: Five named plaintiffs will get $30,000 each and four others will receive $10,000. The settlement document in the Alvarez case said the settlement was only 40% to 50% of what the class expected to obtain.

Other members of the class action will be notified by mail of their eligibility to file for compensation from the remaining $12.3 million left after other payouts are completed.

The six named plaintiffs in the second case, with Victor Cortez Arrellano as the lead plaintiff, will each receive $10,000. The settlement figure of $9.5 million was said in the court document to be 18.5% of what was requested in the initial lawsuit. Other members of the class action also will be notified by mail to file for their part of the settlement.

More articles by John Kingston

Truck transportation jobs rose in September but not by much

Supreme Court denies review of AB5-related case but law still isn’t impacting California trucking

Echo Global being acquired by private equity firm Jordan Co.

10/08/21 - Navistar sued over data breach affecting thousands

10/08/21 01:04:49am -

Heavy truck and military vehicle manufacturer Navistar is facing a lawsuit over a data breach in May that may have exposed sensitive personal information of tens of thousands of current and former employees and health plan participants.

Lawyers representing Thomas Kalbrier, a former Navistar engineer, and Cherrie Kalbrier, a company health plan participant, filed a lawsuit in U.S. District Court for the Northern District of Illinois on Oct. 1 alleging that the company negligently stored personal information and failed to properly safeguard its network and systems. The suit seeks unspecified damages and class-action status for others affected by the breach.

“[Navistar] maintained the private information in a reckless manner,” states the complaint, filed by lawyers with Chicago law firm Mason Lietz and Klinger. “In particular, the private information was maintained on defendant Navistar’s computer network in a condition vulnerable to cyberattacks of this type.”

The lawsuit came after Navistar — owned by Volkswagen’s Traton Group — disclosed that 49,000 people had been affected by the breach in a notice to the U.S. Department of Health and Human Services on Sept. 24. Those affected are participants in the company’s employee health plan and retiree health and life insurance plan.

The information may have included Social Security numbers, in addition to names, addresses and birthdates, according to a security notice recently posted by Navistar to its website, which mirrors letters sent to those affected by the breach. The company said it was not aware of any third party using that data.

Navistar first disclosed what it characterized as a “cybersecurity incident” in an SEC filing on June 7. The company said in the filing that it first detected the incident on May 20 but disclosed in the security notice that it believes it occurred earlier.

Lawsuit alleges failure to properly monitor systems

The lawsuit characterizes the incident as a cyberattack and appears to challenge Navistar’s version of events. It alleges that the attack was only detected on May 31 — the date when the company said it first learned that data was stolen.

“Had [Navistar] properly monitored their property, they would have discovered the intrusion sooner,” the complaint states.

A cybercriminal group called Marketo, which operates a stolen data marketplace on the dark web — has claimed responsibility for the attack. In June, the group posted data it claimed it had stolen from Navistar, offering it as a sample as a larger archive for sale. 

A representative of Marketo claimed to FreightWaves in July that the attack on Navistar had lasted over a month and that the hackers were able to reenter the company’s network several times. Marketo said it was not a ransomware attack.

Navistar says it ‘takes the security of its systems and data very seriously’

Navistar did not respond to FreightWaves’ request for comment about the lawsuit. But the company has told those affected by the breach that it “takes the security of its systems and data very seriously and regrets any concern this situation may have caused.”

“​​Navistar is committed to systems security and the protection of its corporate, customer, dealer, current and former employee, and plan participant information,” the company wrote. “The company has taken a number of steps to enhance its security protocols and controls, technology, and training, and continues to assess additional options to protect its IT systems.”

The company is offering those affected by the breach 24 months of credit and identity monitoring. However, the lawsuit says those measures are insufficient and that the ​​Kalbriers face “substantial and present risk of fraud and identity theft.”

The ​​Kalbriers’ lawyers did not respond to FreightWaves’ request for comment.

Read more

• Navistar data leaked on auction site after cyberattack
• Cyberthieves say they have ‘moral principles’
• Ransomware attack on Forward Air may have exposed sensitive employee data

Click for more FreightWaves articles by Nate Tabak

10/05/21 - Appeals court denies truck drivers greater reputation protection

10/05/21 11:50:48pm -

Drivers issued citations later deemed inaccurate or misleading could continue to find it difficult to have the information removed from databases used for preemployment screening, based on a recent appeals court decision.

In ruling that the Federal Motor Carrier Safety Administration is not considered a consumer reporting agency — even though the FMCSA falls under the jurisdiction of the Federal Credit Reporting Act (FCRA) — the U.S. Court of Appeals for the District of Columbia Circuit denied owner-operators increased protections against the consequences of inaccurate or misleading information in FMCSA safety reporting databases.

“We had hoped that the news would have been that drivers would have had a new tool to protect their reputation,” Paul Cullen, an attorney for the plaintiffs in the lawsuit, told FreightWaves.

“If you have a significant violation on your PSP [Pre-employment Screening Program] report, people are much less willing to do business with you, whether you are a driver seeking employment or a carrier trying to get loads from brokers. It can have a huge impact, and that’s why these drivers went to court to try to defend themselves.”

The case began with a district court lawsuit filed in 2012 by four owner-operators and the Owner-Operator Independent Drivers Association against the U.S. Department of Transportation and FMCSA.

The drivers had all been issued tickets — later reduced or dismissed — for violating state vehicle safety laws, yet FMCSA refused to remove the original citations from its Motor Carrier Management Information System (MCMIS). The drivers later authorized the release of their PSP reports, which also included the original citations, as required by prospective employers. The drivers alleged that the citations caused them to miss out on employment opportunities.

In 2016, the district court dismissed the complaint for lack of standing. It was amended in 2018 but dismissed again in 2019 on the grounds that FMCSA, in releasing MCMIS records as required by statute, is not a “consumer reporting agency” under FCRA, and the drivers subsequently appealed. The appeals court’s review was decided on Sept. 24.

Cullen pointed out that a “significant positive” change occurred in FMCSA safety reporting procedures shortly after the lawsuit was filed: If an adjudication is dismissed without a fine or the person is found not guilty, the violation is removed from the driver’s record.

However, “there’s still work to be done to ensure that this whole process is fair,” Cullen said. “Inaccurate or misleading safety information is still available to potential employers.”

Related articles:

• FMCSA head commits to boosting oversight of trucking
• FMCSA wants missing driver exam results by Sept. 30
• FMCSA may face trouble in assessing carrier safety scores

Click for more FreightWaves articles by John Gallagher.

10/05/21 - Unions allege Norfolk Southern job cuts saddled engineers with other duties

10/05/21 12:46:15pm -

Two rail unions are alleging that Norfolk Southern has trimmed its workforce so deeply as a result of precision scheduled railroading (PSR) that it is now forcing some locomotive engineers to perform duties as conductors and brakemen. 

The Brotherhood of Locomotive Engineers and Trainmen (BLET) and the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART-TD) have filed lawsuits in the U.S. District Court for the Northern District of Ohio, claiming NS violated the Railway Labor Act. 

The lawsuits, filed Thursday, contend that NS (NYSE: NSC) has been forcing engineers represented by BLET to work in conductor assignments. BLET says NS is unfairly taking advantage of a clause in the 2015 collective bargaining agreement related to workforce scheduling, according to a court filing.

Conductors and brakemen are represented by SMART-TD. 

In announcing the lawsuits, SMART-TD and BLET said NS has been “willfully” depleting its workforce and using locomotive engineers to fill the responsibilities left open by departing conductors and brakemen.

“The shortage of conductors and brakemen is so severe that NS started ordering locomotive engineers — under threat of termination for insubordination — to work conductor positions even though both the BLET Agreement and the SMART-TD Agreement prohibit the use of locomotive engineers in train service positions,” said SMART-TD President Jeremy Ferguson and BLET National President Daniel Pierce in a joint statement.

“Today, our unions have initiated legal actions that are intended to compel NS to follow our contracts and obey the laws of our land,” they continued. “NS cannot lawfully lay off roughly 4,000 conductors and brakemen, and then give their work to another craft. Nor can NS lawfully deprive locomotive engineers of the jobs, wages and working conditions to which they are contractually entitled by forcing them to perform the work of other crafts.”

The unions said NS’ deployment of PSR, an operational model that seeks to streamline operations, contributed to NS’ efforts to eliminate jobs. 

“Because of PSR, NS has eliminated the jobs of over 35% of its operating crew members since December 2018. NS also has been fighting since the summer of 2019 to cut the size of operating crews by half,” Ferguson and Pierce said.

In response to a request for a statement, NS said it doesn’t comment on pending and ongoing lawsuits.

According to employee headcount data that NS has supplied to the Surface Transportation Board, the number of employees who belong to the train and engine category has fallen 33% over the past five years, from 11,186 in September 2016 to 7,461 in August 2021. The train and engine category includes locomotive engineers, train conductors and brakemen, according to the Federal Railroad Administration.

Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.

Click here for more FreightWaves articles by Joanna Marsh.

Related links:

• Employee headcount falls in August at US Class I rail operations

• Democrats want look at precision scheduled railroading’s impact

• Technology’s long, and likely continuing, impact on freight rail headcount

10/01/21 - Federal court shelves Nikola’s patent infringement lawsuit against Tesla

10/01/21 10:06:51pm -

A $2 billion patent infringement lawsuit filed by Nikola Corp. against electric vehicle maker Tesla Inc. could be dismissed next Wednesday unless Nikola can show why it should continue.

A federal judge in the Northern District of California has administratively closed the case filed in March 2018. The two companies have stopped responding to the suit, in which Nikola accused Tesla of infringing on patents for its hydrogen-powered Nikola One semi, which Nikola has since discontinued.

U.S. District Court Judge James Donato wrote in the “show cause order” published this week that Nikola “has dropped the ball, and this 2018 action is languishing without explanation or apparent good cause.”

The action was first reported by The Verge on Friday afternoon.

Neither Nikola (NASDAQ: NKLA) nor Tesla (NASDAQ: TSLA) commented on the court’s move, according to The Verge. A Nikola spokesperson told FreightWaves the company does not comment on litigation.

Nikola “has dropped the ball, and this 2018 action is languishing without explanation or apparent good cause.”

U.S. District Court Judge James Donato

Nikola claimed that the oft-delayed Tesla Semi was using the same wraparound windshield, mid entry doors and aerodynamic fuselage, among other details, as Nikola’s planned truck.

The startup also alleged that a Tesla recruiter had tried to poach Nikola’s chief engineer, claiming it was evidence that Tesla was interested in Nikola’s designs.

Nikola claimed Tesla was causing “confusion in the market” and said it would cost Nikola more than $2 billion in sales. Tesla said that it was “patently obvious there is no merit” to the lawsuit.

Time marches on

A lot has happened since the suit was filed. Nikola founder and former Executive Chairman Trevor Milton, who was CEO when the suit was filed, left the company in September 2020 following a scathing report by Hindenburg Research alleging Milton had lied about the company’s technological progress.

Milton was indicted July 29 on three federal fraud charges based on allegations he tried to inflate Nikola’s share price for his own benefit. Even after recent sales of millions of dollars in company stock, he remains Nikola’s largest shareholder.

Milton pleaded innocent to the charges and is free on $100 million bail.

Tesla, which originally planned to produce its Semi in 2019, has delayed production until at least 2022. It also has recently redesigned the truck, which may render moot infringement claims based on design patents.

Nikola has actively distanced itself from Milton over the past year, canceling a planned electric pickup truck called the Badger and shuttering a motorsports division. Current CEO Mark Russell said some of Milton’s pursuits were distractions to the company’s mission of making trucks and creating a hydrogen fueling network. 

Nikola One discontinued

Nikola quietly discontinued work on the Nikola One in late 2020 and refocused efforts on the Nikola Tre battery-electric daycab to be followed by a fuel cell variant and then the Nikola Two conventional truck. Pre-series production on the Tre begins in Arizona this quarter.

As for the lawsuit, both Nikola and Tesla apparently stopped responding to some of the court’s requests in recent months, ignoring July 7 and Sept. 2 court requests that could have led to new hearing dates.

The two sides spent much of the past three years arguing over which specific patents would be included in a trial. The Financial Times reported last year that Nikola licensed the design for its own truck from Rimac, a Croatian supercar company.

The U.S. Patent and Trademark Office declined a Tesla request to invalidate some of the patents in April 2020.

Related articles:

Nikola Motor claims Tesla infringed its truck patents, seeks $2B in damages

Nikola’s new president talks zero emissions, Tesla and how hydrogen will save the world

The case against Nikola’s Trevor Milton: ‘Lied about nearly every aspect’

Click for more FreightWaves articles by Alan Adler.

10/01/21 - UPS appeal successful; $27 million nuclear verdict remanded to trial court

10/01/21 08:10:47pm -

A $27 million-plus nuclear verdict against UPS handed down in 2019 has been overturned by a Texas appellate court and remanded to the trial court with a requirement for a venue change. 

The original case was heard in the Texas 58th District Court in Jefferson County. But the order handed down Thursday by Judge Charles Kreger of the Texas 9th Court of Appeals remands the case to Harris County, Texas, home of the city of Houston. 

UPS (NYSE: UPS) and Byron Bisor, the driver from the 2018 wreck that was at the heart of the case, argued that the suit should not have been heard in Jefferson County, where the $27 million verdict was imposed. That verdict came from a bench trial, with Judge Kent Walston imposing the penalties.

Neither Harris County nor Jefferson County are where the wreck occurred; they’re not even in the same state. The wreck occurred in 2018 in Calcasieu Parish, Louisiana, on Interstate 10. 

One of the early plaintiffs in the original lawsuit, Gregorio Flores, settled, which proved consequential in the appellate court decision. 

Three individuals who were struck by the UPS 18-wheeler driven by Bisor — Fabian Williams and a couple, Allen and Deloris Norris — went to trial. Deloris Norris was not in one of the vehicles hit by the UPS truck but joined the suit because of the injuries and impact on her husband. 

The size of the award was propelled by the significant injuries suffered by Williams and Norris. According to a a brief filed by their attorneys in the appeals case, the two men have “uncontested medical expenses of nearly $3.5 million, are permanently disabled, unable to work, without the ability to care or provide for themselves and family, and suffer from unremitting chronic pain, impairment and disability,” it said, adding that “Norris considered ending his own life.”

UPS’ and Bisor’s appeal of the lower court verdict was based primarily on two arguments. One was that the venue in Jefferson County was improper. Secondly, UPS and Bisor argued that the decision to deny a jury trial and instead go to a bench trial was based on a late filing of a $40 jury fee.

Judge Kreser overturned the earlier verdict on the basis of venue. As a result, he did not hand down a ruling on other aspects of the case.

Various court documents spell out what happened in the March 2018 incident. 

Flores, the plaintiff who settled with UPS, was stopped in an eastbound lane of Interstate 10 in Louisiana because of an unspecified traffic problem in front of him. Williams and Norris were stopped in their own respective vehicles behind Flores. 

UPS’ Bisor allegedly did not see the traffic backup until it was too late to stop. “Bisor struck at least two vehicles in front of him, including those of Allen Norris and Williams, causing a chain reaction involving multiple vehicles,” Judge Kreser’s recap of the incident said. “The impact from the UPS tractor-trailer rig by Bisor pushed Williams’ vehicle into Flores’ vehicle.”

Flores brought his suit in Jefferson County, with UPS, Bisor and Williams as the defendants. Williams was a resident of Jefferson County, and Flores said Williams’ car plowing into that of Flores — regardless of the fact that he was pushed — made him a defendant and therefore made Jefferson County the proper venue. 

UPS and Bisor sought to move the case to Harris County, where Bisor resided and where the case now will head as a result of the appeals court decision. 

Williams filed suit against UPS and Bisor but agreed with Flores’ decision to keep the case in Jefferson County. The Norrises later intervened in the Flores suit, leading UPS and Bisor to say they had no standing in that venue, given that they did not live there. But UPS’ attempt to move the case to Harris County failed (though there is disagreement in the appeal briefs whether UPS and Bisor properly made the request for a venue change). 

It is clear that those impacted by the crash very much wanted the case heard in Jefferson County. Williams was being sued by Flores and there is no evidence he did anything wrong; he just happened to get struck by the UPS truck, like Flores, and then his vehicle hit that of Flores. But even Williams argued the case should be in Jefferson County, as did the Norrises. 

The problem with their argument is that Flores was out of the case, having settled. He was the only one who had an action against Williams, the Jefferson County resident.

The lower court granted partial summary judgment in March 2019, and the case went to a bench trial that awarded the more than $27 million in damages against UPS.

But Judge Kreser said that neither Williams nor the Norrises “alleged or argued any of the necessary statutory factors to establish their right to remain in the Jefferson County litigation.” There is no evidence that Wiliams was at fault, Kreser ruled, and Flores was out of the litigation because he settled. 

With Flores no longer in the case, that undercut the argument that Jefferson County was the proper venue for the litigation.

More articles by John Kingston

7 new indictments handed down in Louisiana staged accident scam

Be prepared, attorneys say: more driver classification suits coming

BMO, big lender to trucking, sticking to existing practices in the bull market

10/01/21 - UPS appeal successful; $27 million nuclear verdict remanded to trial court

10/01/21 08:06:47pm -

A $27 million-plus nuclear verdict against UPS handed down in 2019 has been overturned by a Texas appellate court and remanded to the trial court with a requirement for a venue change. 

The original case was heard in the Texas 58th District Court in Jefferson County. But the order handed down Thursday by Judge Charles Kreger of the Texas 9th Court of Appeals remands the case to Harris County, Texas, home of the city of Houston. 

UPS (NYSE: UPS) and Byron Bisor, the driver from the 2018 wreck that was at the heart of the case, argued that the suit should not have been heard in Jefferson County, where the $27 million verdict was imposed. That verdict came from a bench trial, with Judge Kent Walston imposing the penalties.

Neither Harris County nor Jefferson County are where the wreck occurred; they’re not even in the same state. The wreck occurred in 2018 in Calcasieu Parish, Louisiana, on Interstate 10. 

One of the early plaintiffs in the original lawsuit, Gregorio Flores, settled, which proved consequential in the appellate court decision. 

Three individuals who were struck by the UPS 18-wheeler driven by Bisor — Fabian Williams and a couple, Allen and Deloris Norris — went to trial. Deloris Norris was not in one of the vehicles hit by the UPS truck but joined the suit because of the injuries and impact on her husband. 

The size of the award was propelled by the significant injuries suffered by Williams and Norris. According to a a brief filed by their attorneys in the appeals case, the two men have “uncontested medical expenses of nearly $3.5 million, are permanently disabled, unable to work, without the ability to care or provide for themselves and family, and suffer from unremitting chronic pain, impairment and disability,” it said, adding that “Norris considered ending his own life.”

UPS’ and Bisor’s appeal of the lower court verdict was based primarily on two arguments. One was that the venue in Jefferson County was improper. Secondly, UPS and Bisor argued that the decision to deny a jury trial and instead go to a bench trial was based on a late filing of a $40 jury fee.

Judge Kreser overturned the earlier verdict on the basis of venue. As a result, he did not hand down a ruling on other aspects of the case.

Various court documents spell out what happened in the March 2018 incident. 

Flores, the plaintiff who settled with UPS, was stopped in an eastbound lane of Interstate 10 in Louisiana because of an unspecified traffic problem in front of him. Williams and Norris were stopped in their own respective vehicles behind Flores. 

UPS’ Bisor allegedly did not see the traffic backup until it was too late to stop. “Bisor struck at least two vehicles in front of him, including those of Allen Norris and Williams, causing a chain reaction involving multiple vehicles,” Judge Kreser’s recap of the incident said. “The impact from the UPS tractor-trailer rig by Bisor pushed Williams’ vehicle into Flores’ vehicle.”

Flores brought his suit in Jefferson County, with UPS, Bisor and Williams as the defendants. Williams was a resident of Jefferson County, and Flores said Williams’ car plowing into that of Flores — regardless of the fact that he was pushed — made him a defendant and therefore made Jefferson County the proper venue. 

UPS and Bisor sought to move the case to Harris County, where Bisor resided and where the case now will head as a result of the appeals court decision. 

Williams filed suit against UPS and Bisor but agreed with Flores’ decision to keep the case in Jefferson County. The Norrises later intervened in the Flores suit, leading UPS and Bisor to say they had no standing in that venue, given that they did not live there. But UPS’ attempt to move the case to Harris County failed (though there is disagreement in the appeal briefs whether UPS and Bisor properly made the request for a venue change). 

It is clear that those impacted by the crash very much wanted the case heard in Jefferson County. Williams was being sued by Flores and there is no evidence he did anything wrong; he just happened to get struck by the UPS truck, like Flores, and then his vehicle hit that of Flores. But even Williams argued the case should be in Jefferson County, as did the Norrises. 

The problem with their argument is that Flores was out of the case, having settled. He was the only one who had an action against Williams, the Jefferson County resident.

The lower court granted partial summary judgment in March 2019, and the case went to a bench trial that awarded the more than $27 million in damages against UPS.

But Judge Kreser said that neither Williams nor the Norrises “alleged or argued any of the necessary statutory factors to establish their right to remain in the Jefferson County litigation.” There is no evidence that Wiliams was at fault, Kreser ruled, and Flores was out of the litigation because he settled. 

With Flores no longer in the case, that undercut the argument that Jefferson County was the proper venue for the litigation.

More articles by John Kingston

7 new indictments handed down in Louisiana staged accident scam

Be prepared, attorneys say: more driver classification suits coming

BMO, big lender to trucking, sticking to existing practices in the bull market

09/30/21 - Be prepared, attorneys say: more driver classification suits coming

09/30/21 02:50:21pm -

“This stuff is not going to go away,” attorney R. Eddie Wayland told an audience about lawsuits over independent contractor status. “A lot of lawyers are making way too much money.”

And given that, how a trucking company can protect itself from suits over that status was the focus of Wayland and Mark Hunt, both of them partners at the Nashville law firm of King & Ballow, speaking at the Truckload Carriers Association annual meeting in Las Vegas this week.

The primary message driven home by Hunt and Wayland was that a tremendous amount of up-front diligence is going to be necessary at trucking companies that use independent contractors (ICs) if they don’t want to find themselves on the losing end of a suit that rules those drivers to actually have been employees. 

But the diligence also needs to come with clarity and brevity. As Hunt said of the IC contract that is signed by both company and driver, “if it has a table of contents, it is too long.”

Hunt’s reviews of what should be in the relationship between an IC and a trucking company were as much a list of what not to do rather than what a carrier should do in order to clearly delineate ICs from fleet drivers.

For example, Hunt said, keep orientation separate. “Contract drivers should not receive the same orientation or training as employee or company drivers,” he said.

And don’t give an IC the same company handbook that a fleet gives to an employee driver, Hunt said. That can be viewed as evidence that the ICs are not truly independent. 

Keeping the two of them separate starts with recruiting, according to Hunt. Putting out an advertisement that says something like “be your own boss and build your business” does help separate ICs from employees, he said, and if that is done, “it really enforces that you are a contractor.”

There are other practices that need to be followed to help strengthen a legal argument that the ICs were truly independent, Hunt said. For example, a company should offer an IC multiple loads, rather than attempt to steer an independent driver toward one particular shipment. “They can track it, and if you get into litigation, you’ve got this proof,” he said. 

Hunt raised the specter of the $100 million settlement agreed to by Knight-Swift in 2019 after Swift Transportation lost a driver classification lawsuit that went back to before Swift was acquired by Knight in 2017. He referred to the case as the “big kahuna.”

Hunt ticked off a list of terms of employment that courts in the federal case, originally filed as John Doe v. Swift, saw as pointing to more of an employee relationship with the drivers rather than a true IC classification. 

For example, Hunt said Swift had the right to terminate IC agreements without cause on 10 days’ notice. “That looks a lot like control,” he said, a reference to the fact that in determining whether a worker is a true IC or is more of an employee, legal definitions found in the ABC test or the long-standing standard known as Borello look to the degree of “control” the carrier has over the driver.

Another potential problem: having a driver sign an IC agreement and a financial lease with what amounts to the same entity. 

Hunt noted the leasing company used by many of the drivers in the Swift lawsuit was a wholly owned subsidiary of Swift. Meanwhile, the IC relationship also was with Swift, raising the question of control.

Hunt noted that signing on an IC who is leasing a vehicle through a true third party can help avoid that issue.

The control that Swift had over the drivers was also exhibited in its approach toward illness, Hunt said. What was theoretically an independent contractor, if he or she was ill, had to find a replacement to deliver an agreed-upon load. “The court said that is control,” he said.

Notably, Hunt also suggested a series of steps that involved giving IC drivers less support, not more, in order to be able to prove later that they were truly independent. 

For example, a company should ensure that the driver is paying for equipment it needs. “You don’t want to give stuff for free to drivers who are ICs,” Hunt said. “They should pay something for it or rent it. They are not employees.”

And while the trend in safety is to put a growing number of cameras on the vehicle, Hunt recommended the opposite in order to keep an IC independent. “If you tell them they are going to have a camera, that is not good,” Hunt said, adding that camera adoption can be incentivized, but a company should avoid doing anything where it is required.

Wayland, in comments following Hunt’s presentation, said that while some of the IC classification lawsuits are being brought by “hacks looking for a quick buck,” there is a group of attorneys who are “very sophisticated.” King & Ballow has gone up against many of them, Wayland said, and they find that many have their own in-house experts on the complicated relationship among ICs, employee drivers and the companies that use the services of both.

Just being the target of such a lawsuit is going to cost a carrier anywhere from $250,000 to $1 million for activities such as hiring experts and conducting electronic searches, Wayland said. 

More articles by John Kingston

Latest package of New Jersey laws further targets independent contractor status

Fate of California’s AB5 riding on 2 cases seeking Supreme Court review

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09/28/21 - Recognize These Scams Targeting Trucking Companies - Occupational Health and Safety

09/28/21 03:34:14am - Recognize These Scams Targeting Trucking Companies  Occupational Health and Safety

09/27/21 - Fate of California’s AB5 riding on 2 cases seeking Supreme Court review

09/27/21 11:00:35am -

With the Supreme Court’s 2021-22 term about to kick off Oct. 4 — the first Monday in October, the long-standing start date for proceedings — California’s trucking industry is focused on two cases that could go a long way to help define whether an independent owner-operator must be considered an employee in that state.

And even as there is little chance of a rapid decision that might threaten the independent owner-operator model in California — there are still pre-decision filings to be made — discussions in the industry are continuing on a key question: If the state’s AB5 rule ultimately becomes the law of the land, what happens next?

There are two key cases in which earlier rulings ultimately went in favor of AB5 and industry participants lost, and those participants are now seeking review from the Supreme Court, known as certiorari,  in a final attempt to keep AB5 out of the state’s trucking sector. 

One of them is the case that the California Trucking Association brought against the state’s attorney general in 2019 and which since the first day of 2020 has provided the injunction that so far is keeping California from enforcing AB5 in the trucking sector. Two appellate courts ruled against CTA in later proceedings, but the injunction has been allowed to stay in place while the case proceeds to the Supreme Court.

The other is a case brought by the state against drayage provider Cal Cartage, an action that started as a driver classification lawsuit but ultimately brought AB5 into the proceedings. That case goes back to 2018.

In both cases, the appeals process ultimately had the same ruling: The Federal Aviation Administration Authorization Act, the so-called F4A, does not preclude the imposition of AB5 in the state’s trucking sector. Earlier decisions in the two cases held the opposite, that F4A precluded AB5 in trucking because it could affect “rates, routes and services.” That phrase is lifted directly from the wording of F4A, which prohibits a state from passing any law or regulation that could impact those three market conditions. 

The impact of AB5 on trucking’s rates, routes and services was invoked in several of the briefs filed in support of the CTA’s request for review.  

In the brief filed by a coalition of 48 state trucking associations (excluding California and Minnesota, which filed its own amici brief), attorneys wrote that through AB5, “California has effectively deprived a federally regulated industry of the right to use the owner-operator business model. As such, the state’s actions affect prices, routes and services in the industry. California’s AB5 is no different than the outright ban of owner-operators by the Ports of Los Angeles/Long Beach or the Michigan Legislature.”

Marc Blubaugh, a partner and co-chair of the firm’s Transportation & Logistics Practice Group, filed an amici brief on the CTA case for both the Transportation Intermediates Association and the Intermodal Association of North America, supporting CTA’s request for certiorari and against the two appellate decisions that held AB5 was not in conflict with F4A. 

In an interview with FreightWaves, Blubaugh said that “conventional wisdom” is there should be a ruling on the certiorari request by the CTA in the next four to six months. 

Blubaugh said the CTA could have waited longer to file its certiorari request, which would have kept the injunction in place in the interim. But he speculated that the “thought process” was that the Supreme Court was “going to be looking at the Cal Cartage case, and wouldn’t we rather have the CTA petition so we can say, ‘Here’s another case involving the F4A issue, signaling again that this is of great public importance and needs a consistent decision.’”

He added that some of the lawyers involved in filing the amici briefs believe that the CTA case is a “better vehicle” to block AB5 in trucking because of the wording of F4A. 

Greg Feary, a partner with the trucking-focused law firm of Scopelitis, Garvin, Light, Hanson & Feary, said he did not expect to see a ruling on the certiorari petition until “probably much later this year or early next year.”

There is a third logistics-related request for certiorari before the court that deals with the question of F4A: an appeal of the C.H. Robinson vs. Miller lawsuit, in which the 3PL was found negligent as a result of a crash that left a driver a quadriplegic. AB5 is not at issue in the case, but F4A is. 

Regardless of how the calendar plays out, the reality is that if the appeals court decisions in the Cal Cartage and CTA cases are upheld, AB5 would become an immediate reality in California trucking. 

That means there is plenty of discussion in the industry about its structure on the other side of a decision upholding AB5. Even if the discussions are just theoretical at this point, they are planting the seeds for the various solutions that might ultimately be adopted in an AB5 world.

The ABC test in AB5 is a three-step guideline that can be used to establish whether a worker is an employee of an independent contractor (IC). It is generally viewed as written in such a way that it is more likely that a worker will be considered an employee rather than an IC. Its presence in the PRO Act that has passed the U.S. House of Representatives but not the Senate is considered a key sticking point for its ultimate approval.

The ABC test is problematic for the trucking industry because of the B prong. It defines a person as an employee if that worker is involved in the primary activity of a company. A trucking company can hire an outside accountant for tax preparation and not conflict with the B prong because accounting is not its primary activity. But if it hires an independent owner-operator to move freight, then it runs the risk of conflicting with the B prong since moving freight is what the company is all about.

One option would be to make a lot more drivers employees, which has always been the goal of the backers of AB5, including its key sponsor, Assemblywoman Lorena Gonzalez. 

But that is given little chance of happening. In its amici filing, the Western States Trucking Association (WSTA) foresaw a situation in which some “fortunate” companies would be able to add to its rank of employees drivers, while others will “be forced to dramatically reduce the services they provide and the routes they service. For many small owner-operators, the result will be that they will no longer be able to work as independent contractors by marketing their trucks and their skills as drivers because the employment mandate will be cost-prohibitive.”

A second alternative would be to meet the standards of the business-to-business exception that is part of AB5. But that pathway is difficult to meet with its 13-point test, and few see it as being able to keep the independent owner-operator model alive in an AB5 world. 

Another possibility is the so-called brokerage model. Feary reiterated what he told FreightWaves in April, that a trucking company could essentially become just a broker and hire independent owner-operators to move freight. 

Blubaugh said he thought the brokerage option was “the most popular option” for companies looking at what they might do to comply with AB5. It would allow companies “to say we’re not in the same line of business,” since the former trucking company/now 100% brokerage would not be moving freight but instead just brokering it. 

The converted carrier could also pursue new business lines, such as offering an array of services like insurance or regulatory compliance functions to the independent drivers, some of whom might previously have been an employee of the converted carrier but now might need to be driving under their own authority from FMCSA.

Another option laid out by Blubaugh is a complicated setup involving what he said was a “two-check” plan, a system in which an independent driver is paid wages and a payment in a separate check for leasing the truck in order to keep an arm’s-length relationship.

Joe Rajkovacz, the director of governmental affairs and communications at WSTA, said he already is seeing activity in preparation for AB5 that involves changing the legal status of what are now independent drivers. 

“What is happening, even right now in response to the possibility of AB5 becoming enforceable, brokers are increasingly requiring sole-proprietor motor carriers to incorporate or become LLCs,” he said in an email to FreightWaves. He added that WSTA is aiding in such conversions.

The idea behind the conversion to an LLC or an S corporation model is that the driver would not be paid as an independent contractor whose compensation is then recorded in an IRS 1099 form, which is the mark of an IC. Rather, it’s a payment to an outside corporation.

Feary said he was not a fan of that approach. “I don’t think the whole S corp. LLC idea has much merit,” he said. He viewed it as a “misguided attempt” to “fit under the B-to-B exception.” 

“But there is far more to the B-to-B exception than whether a formal business entity exists,” Feary said. 

All of the approaches involve a radical restructuring of industry practices. No matter which one is pursued, Feary said, “it’s a heavy lift for the entire industry.” 

This cornucopia of possible different models sits alongside the warnings that were inherent in all the amici filings. In addition to WSTA, filings were made by OOIDA, the American Trucking Associations, a group of state trucking associations and a coalition of shippers, like the American Chemical Association.

 “The reason you saw so many amici briefs is this is going to have massive ripple effects on the supply chain,” Blubaugh said. 

More articles by John Kingston

CTA’s last hope to protect California trucking industry from AB5: U.S. Supreme Court

Latest package of New Jersey laws further targets independent contractor status

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09/24/21 - Federal watchdog sues BNSF over alleged sexual harassment

09/24/21 10:53:24pm -

The Equal Employment Opportunity Commission (EEOC) has filed a lawsuit on behalf of female employees alleging a sexually hostile work environment at BNSF’s rail yard in Alliance, Nebraska.

The employees were subjected to an almost daily barrage of harassing conduct and comments from male co-workers and supervisors over many years, according to the lawsuit and EEOC. When the employees complained about sexual and derogatory comments, as well as slurs, graffiti, and sexually suggestive and nude photos of women, supervisors allegedly brushed off the incidents.

The suit also alleges that BNSF’s (NYSE: BRK.B) headquarters in Fort Worth, Texas, failed to take appropriate action. 

These actions violate Title VII of the Civil Rights Act of 1964, which prohibits sexual harassment in the workplace, EEOC said. The EEOC is seeking monetary relief for the women as well as an order prohibiting future harassment.

“There is still work to be done to ensure employees in all workplaces are able to do their jobs without the humiliation, stress, and fear caused by illegal sexual harassment,” said Andrea G. Baran, regional attorney for the EEOC’s St. Louis District Office. “This type of conduct is unlawful in every industry and workplace, whether it’s an office or a store or a railyard.

In response to the lawsuit, BNSF said in a statement: “BNSF only recently received notice that the complaint had been filed and is still in the process of reviewing the allegations contained within it. BNSF takes its obligations to provide a workplace that is free of sexual harassment very seriously. The company’s efforts in that regard include regular training and unequivocal conduct expectations for all employees, multiple avenues for employees to use to report inappropriate conduct, and prompt action to prevent, address, and remedy any alleged inappropriate conduct.”

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Click here for more FreightWaves articles by Joanna Marsh.

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09/24/21 - NASA’s escape logistics

09/24/21 07:55:10pm -

On today’s episode Dooner and The Dude are talking to NASA’s Nate Hickman and Nick Kindred about Orion’s launch-abort system. Orion is built to take humans farther than they’ve ever gone before and will be used on the NASA Artemis mission. Today we’ll learn what happens when good missions go wrong.

Quality Transport Company Senior Vice President Amanda Schuier shares her bloodlines story. Schuier is third generation in this business and a proud recipient of Women In Trucking’s “Top Women to Watch” award in 2020. She’ll also let us know what went down at the recent TMC conference.

We’ve got another shortage on our hands and this time it’s tires. Are the wheels coming off the supply chain? We’re talking to IMI Mid-Atlantic Territory Manager Bob Bortner about it.

Plus, the feds say scammers received $70 billion in questionable PPP loans; Amazon-focused AB701 in California gets the governor’s signature; Emerge raises $130M Series B to scale digital freight marketplace; the “Mission Impossible” train hits a bridge; and more.

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09/24/21 - EEOC sues 2 trucking companies, alleging disability discrimination

09/24/21 07:53:00pm -

Two trucking companies violated federal law by discriminating against people with disabilities, according to separate lawsuits filed by the Equal Employment Opportunity Commission (EEOC).

Atlanta-based Pilot Freight Services fired its international manager because of his cancer diagnosis, alleges an EEOC lawsuit filed Friday.

Pilot Freight Services is a global transportation and logistics provider with 96 locations in North America, as well as operations in Europe and Asia. Pilot has an internal fleet of 277 motor vehicles and 255 drivers, according to the Federal Motor Carrier Safety Administration. 

On June 7, 2019, Thomas Hunt told his manager at Pilot Freight Services that he needed to request leave to see his doctor about some biopsy results, according to the EEOC. 

“About 10 days later, Hunt was terminated by Pilot, allegedly as a result of a reduction in force. Pilot claimed that Hunt was laid off because he had less tenure than other employees and his position was eliminated. However, in the months leading up to and following Hunt’s discharge, Pilot hired several employees who were not discharged based on tenure and hired an employee in a position very similar to the one that Hunt previously held, and with a higher salary,” according to the lawsuit.

The EEOC is seeking unspecified back pay, compensatory damages and punitive damages for Hunt.

“Cancer is a big enough catastrophe for anyone without an employer piling on and firing him or her because of the disease,” Darrell Graham, district director of the Atlanta office, said in a statement.

In a separate lawsuit filed Thursday, the EEOC alleges Dallas-based Stevens Transport discriminated against an applicant based on his disability — hypertension — and because it regarded him as disabled.

The lawsuit also alleges that Stevens Transport violated the law when it asked the applicant — whom it did not name — a disability-related question before making an offer of employment.

Stevens Transport is one of the largest refrigerated over-the-road trucking companies in North America. The company operates 1,937 trucks and employs 2,458. 

“Employers may not make any disability-related inquiries before a job offer has been made,” Meaghan Kuelbs, senior trial attorney in the EEOC’s Dallas office, said in a statement. “Should such information be elicited during the application process, the Americans with Disabilities Act expressly prohibits the exclusion of a candidate for hire simply because of his status as a person with a disability.”

According to the lawsuit, the applicant applied at Stevens Transport in August 2019. During his interview, the applicant was asked whether a gap in his employment reflected on his resume was medically related.

“That question led the applicant to disclose that he had been diagnosed with hypertension in a previous job, which caused him to require medical leave. The EEOC’s suit alleges that Stevens Transport did not hire him because he disclosed his prior use of medical leave during the job interview,” according to the EEOC.

EEOC is seeking unspecified back pay and compensatory and punitive damages, along with injunctive relief for the applicant from Stevens Transport.

Neither Pilot Freight Services nor Stevens Transport immediately responded to FreightWaves’ request for comment.

Click for more FreightWaves articles by Noi Mahoney.

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09/24/21 - Recognize These Scams Targeting Trucking Companies - Occupational Health and Safety

09/24/21 06:39:56pm - Recognize These Scams Targeting Trucking Companies  Occupational Health and Safety

09/24/21 - NYC legislation establishes minimum payment per trip for delivery drivers

09/24/21 03:54:16pm -

New York City is quickly becoming one of the front lines in the battle for gig worker protections. 

In May 2020, the city enacted commission caps on third-party delivery services, limiting the amount they could charge partnering restaurants to 15% in an effort to help them weather the economic throes of the pandemic. About a month ago, it made those caps permanent. Predictably, the big three food delivery services, Uber Eats, DoorDash and Grubhub, reacted the same way they did when San Francisco permanently codified a similar set of commission caps – with a lawsuit.

But New York City officials are trying to limit food delivery’s bite of the Big Apple by firing back yet again. On Thursday, the City Council approved a legislation package that would improve pay and delivery conditions for the city’s 80,000 drivers, specifically targeting employees of the three major third-party delivery providers. Among the measures, which are supported by Mayor Bill de Blasio, is an unspecified minimum payment per trip, increased tip transparency and restroom access at partnering restaurants.

Less than the bare minimum

The legislation package addresses the pervasive issues facing the city’s third-party delivery economy. For one, because delivery drivers are classified as independent contractors, not employees, they aren’t being paid like employees. According to a survey of 500 food app delivery workers from Cornell University’s Worker Institute, the average hourly wage for a NYC delivery driver, including tips, is $12.21, falling to $7.87 without tips. New York City’s minimum wage is $15 an hour for employees.

Those low wages have resulted in one-third of delivery drivers working seven days a week and another one-third working six days a week, but despite all the time drivers spend at work, delivery companies aren’t making work conditions any better. Around half of delivery drivers say they’ve been in an accident or crash while doing deliveries, and three-quarters of those workers paid for the resulting injuries themselves. The lack of protections also harms the more than half of drivers who have experienced bike theft, of which three in 10 were physically assaulted during those incidents.

New York City’s latest delivery app legislation package should improve things. In addition to establishing a minimum payment per trip, the measures would make apps disclose their tipping policies; eliminate charges for insulated food bags, which often cost drivers up to $50; require restaurants to offer bathroom access to delivery workers; and prevent the apps from charging fees before paying their workers.

Reason for (cautious) optimism

Matt Spoke, CEO of Moves Financial, a fintech company for the gig economy, thinks the new set of provisions will be an essential boon for NYC gig workers, but he warns that poking the bear too much could backfire on delivery drivers and the people fighting for their protections.

“Gig worker protections are critical to ensure that workers in New York City can earn a living while providing such a critical service to New Yorkers, especially during the pandemic. We’re particularly excited about bathroom access finally being addressed at the city level,” Spoke told Modern Shipper. “The balance that needs to be carefully found is ensuring that companies like Uber and DoorDash maintain a sustainable business model while providing workers with a livelihood. Well-intentioned legislation, if not carefully considered, can end up having an adverse effect on gig workers who rely on these apps daily, especially those who may not have other options for income.”

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Related:

Read: Food delivery companies in NYC face permanent commission cap

Read: Food delivery companies sue NYC over commission caps

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Grubhub (NASDAQ: GRUB), for one, doesn’t appear too phased by the new measures.

“These bills are common-sense steps to support the delivery workers who work hard every day for New York’s restaurants and residents,” Grant Klinzman, a spokesman for Grubhub, said in a statement. “Ensuring they receive a living wage and have access to restrooms isn’t just a good idea, it’s the right thing to do.”

The support for the legislation may come as a surprise, given that Grubhub was one of several companies to sue the city over its enacting of permanent commission caps in August. But DoorDash (NYSE: DASH) has also come out in support of the measures.

​​“We recognize the unique challenges facing delivery workers in New York City and share the goal of identifying policies that will help Dashers and workers like them. This is why last year we announced an industry-leading set of initiatives to improve Dasher safety, strengthen earnings and expand access to restrooms. We will continue to work with all stakeholders, including the City Council, to identify ways to support all delivery workers in New York City without unintended consequences,” a DoorDash spokesperson told TechCrunch.

As of this writing, Uber Eats (NYSE: UBER) has yet to issue a statement either in support or opposition of the legislation.

If their statements are any indication, there may be significantly less pushback from the companies against the new package than there was against the city’s commission caps. In their joint injunction against the caps, Uber Eats, Grubhub and DoorDash called the provision “unconstitutional,” expressing that they were being unfairly restricted in their contracts with restaurants. 

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09/23/21 - Say it ain’t Mo! Trucking fraudsters take advantage of PPP rollout

09/23/21 12:35:33pm -

While the emergency relief program was designed to help struggling small businesses stay afloat during the global pandemic more than a year ago, federal investigators claim fraudsters — including trucking-related businesses — took advantage of the U.S. Small Business Administration’s chaotic launch to vie for billions in government-backed forgivable loans.

Now, federal prosecutors are attempting to claw back up to $70 billion in fraudulent and ineligible pandemic relief loans obtained through the SBA’s Paycheck Protection Program (PPP).

A reality TV star and owner of a trucking company is the latest to be sentenced in the feds’ effort to track down potential PPP loan fraud scammers.

Maurice Fayne, aka Arkansas Mo, 38, of Dacula, Georgia, who appeared on VH1’s reality TV show “Love & Hip Hop: Atlanta,” was sentenced to more than 17 years in federal prison on Sept. 14, related to the $3.7 million PPP loan he received for his defunct trucking company, Flame Trucking, and to fund his long-running Ponzi scheme. 

“Fayne planned to use the PPP program as a cover for his long-running Ponzi scheme,” Kurt R. Erskine, acting U.S. attorney for the Northern District of Georgia, said in a statement. “The funds the program supplies serve as a lifeline to many businesses desperately trying to stay afloat during the pandemic, and unfortunately his fraud helped deplete those precious dollars.” 

Court documents alleged he also defrauded more than 20 people out of millions of dollars in a Ponzi scheme that were supposed to be invested in his trucking business from March 2013 through May 2020. 

According to the original complaint filed in May 2020, Fayne submitted a PPP loan application with United Community Bank (UCB), headquartered in Blairsville, Georgia, which is a U.S. SBA lender.

In his application, Fayne stated that he had 107 employees and his average monthly payroll was nearly $1.5 million. He also certified that the loan proceeds for Flame Trucking would be used to “retain workers and maintain payroll or make mortgage payments, lease payments and utility payments specified under the Paycheck Protection Program Rule.”

Instead, prosecutors said Fayne used the PPP funds to purchase expensive jewelry, pay back $40,000 in child support and lease a Rolls-Royce.

The feds claim he used the investors’ money to pay his personal debts and expenses and transferred more than $5 million to a casino in Oklahoma to cover his gambling debt in the seven-year Ponzi scheme.

In addition to his prison sentence, a federal judge sentenced Fayne to five years of supervised release and ordered him to pay restitution of nearly $4.5 million to his victims.

Two days after his sentencing, Fayne’s new attorney, Leigh Ann Webster of the Atlanta-based law firm Strickland Webster LLC, filed a notice of appeal in the U.S. Court of Appeals for the 11th Circuit in Atlanta.

Webster did not return FreightWaves’ request for a comment regarding Fayne’s appeal. 

Feds crackdown on PPP fraud

Applicants exhausted $349 billion within 13 days of the SBA’s initial rollout of funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. A total of $800 billion was doled out in three waves to pandemic-relief funds to help struggling businesses.

Many of the PPP loans weren’t properly vetted and lacked internal controls to prevent fraud in its haste to provide a lifeline to small businesses, according to the SBA’s watchdog report that was released in October 2020. 

“To expedite the process, SBA ‘lowered the guardrails’ or relaxed internal controls, which significantly increased the risk of program fraud,” the report stated.

Investigators claim the fraudsters reactivated dormant companies to receive multiple PPP loans — but there was just one problem: The business owners didn’t have any revenue, employees or payroll-related documents they needed in order to apply for the government-backed loans. 

Instead, prosecutors allege the scammers quickly got to work forging documents and creating fake payroll numbers to apply for the loans before the emergency relief funds ran out.

Since the PPP program’s rollout, Joshua Stueve, senior communications adviser for the DOJ, told FreightWaves its Fraud Section attorneys have prosecuted more than 100 defendants in over 70 criminal cases.

The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds, Stueve said.

The owner of a Pennsylvania-based towing company, Tonye Johnson, 29, of Philadelphia, was sentenced to 18 months in prison in late July, three months after pleading guilty to conspiracy to commit wire fraud in April. 

Federal prosecutors have linked Johnson to a massive fraud ring attempting to obtain $24 million in PPP loans that sucked in more than 11 individuals who are facing or have pleaded guilty to fraud charges. Prosecutors say the scammers offered their services to help other fake business owners apply for PPP loans — for a price. 

Investigators claim the network used the same forged documents and fake payroll numbers on the majority of the fraudulent loan applications. If the business owners’ PPP loans were paid out, the scammers demanded kickback payments of up to 25% of the loan amount. Then, the scammers urged those business owners to refer others to the scheme for a cut of the kickback payments if the loans were approved.

Johnson was originally charged with wire fraud, bank fraud and conspiracy to commit wire fraud and bank fraud in the U.S. District Court for the Southern District of Florida in September 2020.

He admitted to obtaining a fraudulent PPP loan of $389,627 for his intrastate company, Synergy Towing & Transport LLC of Flourtown, Pennsylvania, based on falsified documents, provided by a network that helped him prepare the fake documents and submit his PPP application in exchange for a 25% kickback from the loan proceeds. 

According to court filings, four confidential informants involved in the PPP fraud scheme have been cooperating with the FBI since late June 2020.

PPP funds spent on luxury cars, not payroll expenses

The owner of a purported California road maintenance company is facing multiple charges after federal prosecutors claim he stole hundreds of thousands of dollars, which he allegedly spent on luxury cars and other high-priced goods, after obtaining more than $7.25 million in PPP funds.

Oumar Sissoko, 59, of Temecula, California, was taken into custody by FBI agents in April after a grand jury indicted him on four counts of wire fraud.      

According to the indictment, Sissoko obtained a $7.25 million loan for his company, Road Doctor California LLC, after submitting a PPP loan application with JPMorgan Chase Bank in April 2020, claiming his pothole repair company was in the process of hiring 450 full-time employees and would have average monthly payroll expenses of $2.9 million. 

Court filings state that when Sissoko applied for the loan, he acknowledged the funds would be used to pay employees, interest on mortgages, rent and utilities.

After JPMorgan approved his PPP loan in May 2020, prosecutors allege he went on a personal spending spree, purchasing a luxury car for over $100,000, paying off the loan on a different luxury car he owned and spending $6,000 on a personal computer. 

“The impermissible uses also included a nonrefundable down payment of approximately $100,000 to purchase a company located in New Hampshire and the attempted transmission of approximately $150,000 to accounts in the African nation of Mauritania associated with a minerals exploration company for which Sissoko purports to serve as CEO,” the Department of Justice said in a news release on Wednesday. 

The DOJ didn’t indicate what happened to the rest of the $7.25 million in PPP loan funds Sissoko received. 

According to a document filed with the California secretary of state’s office, Sissoko registered Road Doctor California in December 2019. However, he used the address of a post office in Los Angeles as the company’s headquarters. 

Sissoko claims he had 20 employees when he filed his PPP loan application, but there’s no website or phone number listed for his pothole repair business. There’s also no mention of owning Road Doctor California on Sissoko’s LinkedIn profile. 

09/22/21 - FreightWaves Classics/Fallen Flags: American President Lines still lives under new ownership (Part 2)

09/22/21 06:55:09pm -

In Part 1 of this article, the history of Pacific Mail Steamship Company (a predecessor of American President Lines) was profiled. Its other owners are profiled in Part 2.

Dollar Shipping Company

Born in Scotland and raised in Canada, Captain Robert Dollar was a successful lumber merchant in British Columbia. He bought his first ship in 1893 after unsuccessfully seeking regular service to move lumber from the Pacific Northwest to California.

A few years later, Dollar founded the Dollar Steamship Company (commonly referred to as the “Dollar Line”) on August 12, 1900. The Dollar Line soon had a large fleet of schooners that were used to transport lumber from northern California and Oregon to markets in southern and central California. 

Dollar sailed to Asia for the first time on a Pacific Mail ship in 1902. He wanted to explore potential lumber markets in Asia. He acquired several ships and began trans-Pacific shipping with a chartered voyage to Yokohama, Japan and the Philippines, which was his entry into international shipping. 

During World War I, Dollar ordered the construction of multiple ships in China for $30 million. 

In 1921, Dollar acquired the Pacific Mail Steamship Company, which had been having severe financial difficulties. The next year the Dollar Line acquired the Admiral Oriental Line; it was renamed the American Mail Line. 

Dollar then purchased seven liners in 1923 from the US Shipping Board that helped him begin his round-the-world service. The seven ships were named after U.S. presidents, a tradition that Dollar Shipping continued until the company’s end. The first Dollar Line departure of this type was the President Harrison on January 5, 1924. 

In 1925 Dollar bought eight more “President Type” liners from the Shipping Board, which had been run previously by Pacific Mail. 

The Dollar Line continued its expansion in the mid-1920s. It bought five more President Type ships in 1926. That year, over 45,000 passengers sailed on Dollar Line ships. Dollar encouraged others to invest in Asia, which helped open Asia to 20th-century industry. In addition, the Merchant Marine Act of 1928 (also known as the Jones-White Act) helped Dollar Line. It led to a lucrative new mail contract, which required the company to order new ships to meet demand.

The company was renamed the Dollar Steamship Line in 1929. Then, as the Wall Street Crash of 1929 was beginning, Dollar ordered two steam turbo-electric ocean liners. The two ships were the largest built for a U.S. shipping company up until that time. The SS President Hoover was launched in 1930 and the SS President Coolidge was launched the following year. Although they were state-of-the-art luxury liners, the Great Depression was taking its toll; the ships “carried only half their capacity on their maiden voyages.”

At 88, Robert Dollar died on May 16, 1932. His son, Robert Stanley Dollar, succeeded him as the head of the company. However, the company began a steady decline, due in part to increased operating costs. Then in December 1937 the President Hoover ran aground off the coast of Taiwan; the seven-year old ship was written off as a total loss. The company was $7 million in debt by 1938, and interest on its debt increased by $80,000 daily. In June 1938 the President Coolidge was seized under admiralty law in San Francisco for an unpaid debt. 

Dollar Steamship Lines had expanded its services in the 1925-38 period. By 1938, however, the combined impacts of the Great Depression and its debt load (most of which was due to the expansion of its fleet) meant that the company was on the brink of bankruptcy. 

That led the Federal Maritime Commission (FMC) to arrange a subsidy to keep the company solvent; in August 1938, the FMC released the company from its debt in return for 90% of the company’s common stock. All this was done because the services of Dollar Steamship Lines were considered vital to the interests of the U.S. in light of the rise of fascism in Europe and the Sino-Japanese war in the Far East.

William Gibbs McAdoo was appointed as the company’s new president. The Dollar Steamship Line was renamed the “American President Lines” (or APL) on November 1, 1938, and the American Mail Line was sold to R.J. Reynolds. 

Dollar Steamship, which had been a major player in American shipping, slipped into maritime history.

APL in World War II

The U.S. government had commissioned 16 new ships for APL by 1940, and continued naming the ships after presidents. The U.S. entered World War II on December 8, 1941, and the War Shipping Administration was created in 1942. APL was an agent for the War Shipping Administration, managing some of the Administration’s ships, “maintaining and overhauling them, crewing them and being responsible for the handling of cargo and passengers.” APL’s ships also were used for the war effort, in addition to the hundreds of Liberty and Victory ships that were built. An additional 16 ships were built specifically for APL in 1944. 

APL’s fleet saw service activity during World War II; several ships were sold to the U.S. Navy for troop transports and others operated as Liberty ships, transporting materiel for the war effort.

R. Stanley Dollar initiated court proceedings in 1945 in an attempt to regain the company. The case lasted seven years, and the government continued to operate APL during that time. The company renewed its round-the-world passenger service, and launched the SS President Cleveland and SS President Wilson, which were advertised as “your American hotel abroad.” 

The company continued to expand, building 11 ships between 1952 and 1954. These included cargo ships as well as passenger ships. The Dollar case was also resolved – but the Dollar family did not win control of the company.

A magazine advertisement for American President Lines. (Image: cruiselinehistory.com)

Ralph K. Davies, a former Standard Oil of California executive, had begun buying shares in American President Lines in 1944. By 1952, he owned 11% of the company’s outstanding shares and was its largest minority shareholder. On October 29, 1952, Davies and a group of investors outbid two other investor groups (including one led by R. Stanley Dollar) and paid $18.3 million for the FMC’s controlling interest in the company. 

Davies was named APL chairman (he held the position until 1971), and he merged APL with Natomas Company, a gold-dredging company that became an oil and gas exploration company (and, in 1965, the parent of APL). Davies also acquired control of American Mail Line at the same time; he sought to reintegrate that company into APL.

When Davies took control of APL it was a leader in providing cargo and passenger services between the U.S. Pacific Coast and the Far East. It also offered around-the-world services for cargo and passengers. 

Container shipping

Malcom McLean’s Sea-Land Corporation (with significant assistance from Fruehauf Trailer Company), was beginning the freight revolution on ships, railroads and trucks with the intermodal container. Sea-Land’s use of intermodal containers began in the mid-1950s. 

In 1958, APL began researching containerization; the company sent teams to 28 major ports. Based on information collected, Davies began integrating intermodal containers into the APL business model. By 1961, APL began launching ships capable of container transport. The SS President Tyler and SS President Lincoln were the first two combination break-bulk/container vessels in the APL fleet. Various ports around the world also began adapting their operations to new container-based systems, although many shippers, carriers and ports were still wary. By the end of the 1950s, APL was still purchasing combination ships rather than all-container ships. However, by 1969, 23% of APL’s business moved via container.

APL intermodal containers move by rail. (Photo: ppw-aline.com)

Changes in the 1960s and 1970s

Chandler Ide succeeded Davies as head of Natomas in 1971 when Davies retired. Ide led the company’s retrenchment in the mid-1970s; APL discontinued its around-the-world freight services and passenger services to concentrate on its Pacific and Indian Ocean lines.

Passenger ships’ share of travelers decreased dramatically in the 1960s as more travelers flew in airplanes rather than travel by ship. By 1973, APL’s last passenger liner was the SS President Wilson. The ship completed her final global trip and was sold. That same year, American Mail Line’s absorption into APL was completed, and its ships were given traditional “President” names. 

Container transport continued to increase; by 1971 58% of APL’s business moved via container. That led APL to begin converting many of its traditional break-bulk freight and combination ships into more efficient container-only ships in 1973; it also ordered four new container ships. In 1977 the company’s management decided to end worldwide freight service and shifted APL’s focus to trans-Pacific routes. 

With containerization firmly established, APL began developing the concept of “seamless integrated intermodal service in the U.S. market” in 1977 – moving containerized freight via ship, train and truck under one corporate identity. APL started the LinerTrain in 1979, a direct rail land-bridge service transporting containers from Los Angeles to New York using its own railcars. The result was a very reliable system to deliver containers. Concurrently, APL ordered its  largest vessels to date – three diesel-powered container ships.

APL double-stack intermodal containers. (Photo: APL Media Library)

The 1980s

APL began its StackTrain service in 1984, which followed on from the successful LinerTrain operations. StackTrain used double-stacked railcars that carried a container stacked on top of another container, which doubled the freight carried on each railcar. The railcars were built with a well that held the bottom container, which lowered the two stacked containers and therefore reduced their combined height to fit within rail line clearances. That led to the common nickname for double-stack railcars – “well cars.” The double-stacking of containers was introduced in the late 1970s and deployed in 1981; APL was the first shipping line to fully embrace and exploit the concept. APL’s railcars were developed and manufactured by Thrall Car. Line-haul rail service was initially provided by Union Pacific Railroad and Chicago and North Western Railway (and eventually by Conrail once track clearances were increased). 

By double-stacking containers operating efficiency was significantly improved. Train lengths were decreased as were the number of axles per container, which saved fuel per ton-mile. Another benefit was created by permanently joining five cars in a set. This reduced the number of couplers, which reduced slack action. Less slack action reduced the damage to the freight transported in containers.

APL also continued to modernize its fleet, ordering ever-larger and faster containerships. The company also started Red Eagle service, a door-to-door service. APL also introduced larger container sizes – 45-foot containers in 1982, 48-foot containers in 1985 and 53-foot containers in 1988. The company also developed post-Panamax vessels in 1988. These ships were too large to transit the Panama Canal, measuring 903 feet long and 129 feet wide. Each had the capacity to load 4,300 twenty-foot containers (known as TEUs). Because of these innovations, APL was declared an industry leader in 1989, with the award of the “Admiral of the Ocean Sea Award” by the United Seamen’s Service to APL president W. Bruce Seaton.

APL President Kennedy maneuvers out of the Port of Los Angeles on its way to anchorage. (Photo: APL)

The 1990s

APL’s growth continued in the 1990s. It still named its ships after U.S. presidents, and its fleet included 20 fully containerized ships. APL started stack train service from Chicago to Mexico in 1991 to serve Chrysler auto plants, as well as providing general service to other customers. 

In 1993 APL began a 30-year agreement with the Port of Los Angeles to open a new $70 million terminal. It almost doubled the size of its Seattle terminal in 1994, increasing it from 83 acres to 160 acres. 

APL vessel at berth with revised logo. (Photo: APL)

Changes in ownership and direction

In 1997, APL was acquired by Neptune Orient Lines, or NOL. The next year, the APL China was battered by a storm south of Alaska’s Aleutian Islands. Nearly 400 containers were swept overboard and many others were damaged (as was the ship). This led to a $50 million lawsuit against APL, the largest maritime shipping loss in history at that time.

NOL sold APL’s stack train franchise to Pacer in 1999; it is now known as Pacer Stacktrain. In the new century, business began to falter. In 2001, NOL reported an annual loss of $57 million, followed by a staggering loss of $330 million in 2002. APL’s sales dropped from $3.8 billion in 2000 to $3.4 billion in 2002. 

This led acting CEO Ron Widdows to start a cost-cutting campaign, as well as faster decision-making. The company began generating profits in 2003. Technology was a focus in 2005; APL introduced its “Real-Time Locating System” that used RFID tags to accurately record every container in its system’s position. Using RFID tags reduced delays and “lost” containers. This also meant that APL could handle more cargo more efficiently; APL’s Global Gateway South terminal at the Port of Los Angeles moves 1.65 million TEUs each year.

The APL Mexico City. (Photo: APL)

Another change of ownership

APL’s headquarters in Oakland, California were moved and consolidated with NOL and its other business lines in Singapore in 2009. 

Then, on June 10, 2016, NOL (as well as APL) became subsidiaries of CMA-CGM.

APL today

Compared to the situation at the end of World War II, there are very few U.S. flagged vessels left. However, American President Lines (and its predecessors) have been a partner to the U.S. government for “ocean transportation and in-country logistics.” APL has a U.S.-flagged fleet of ships that provide secure, efficient services to key foreign military locations. 

The APL fleet of U.S.-flagged commercial vessels with military utility provide reliable support that is essential for national defense. APL’s U.S.-flagged fleet is manned by a pool of trained U.S. mariners.

09/22/21 - An employer’s ‘honest belief’ and good recordkeeping helps it win pregnancy discrimination lawsuit

09/22/21 02:54:54pm -

The United States Court of Appeals for the Sixth Circuit (which has jurisdiction over Kentucky, Michigan, Ohio, and Tennessee) recently considered the question of whether a former employee could prove that her firing was connected to her pregnancy, which would support a claim for pregnancy discrimination under the Tennessee Human Rights Act. The Sixth Circuit ruled for the employer, holding that the employer believed that the employee fraudulently filled out office paperwork and finding that the employee failed to put forth sufficient evidence that would have supported a claim for pregnancy discrimination.

Background

About a year and a half after beginning work for the employer, the employee was verbally counseled for being late to work on seven different occasions within a 90-day period. A few months later, she received a written warning for being late to work a total of 12 times with five of those occasions and an absence coming after the prior verbal counseling.

About five months after the written warning, the employee told the office manager she was pregnant. Five days later, the employee was given a final written warning, noting that the employee had received 15 tardies, two incidents of leaving work early, missing two time-card punches, and an absence over a 12-month period. The final written warning also noted that three of the tardies, two early departures, and two missed time-card punches had come after the first written warning.

The company’s regional director discussed the final written warning with employee.  During the same conversation, the employee mentioned that she had examined a patient earlier in the day who did not possess all of the necessary documentation to pass a physical. According to the employee, she informed the regional director that she offered to waive a fee for the patient whose wife would return with the required paperwork and pick up the patient’s certification. The regional director denied that she and the employee ever discussed the employee’s waiver of the fee or plan to allow the patient’s wife to bring the necessary paperwork and obtain the certification. Nevertheless, the employee wrote in the patient chart that she had “[n]otified [the regional director] about situation regarding . . . physical and patient leaving upset. [Regional director] agreeable with plan . . . .”

Following this development, the regional director consulted her immediate supervisor, the company’s national director of health and wellness. Approximately a week later, the national director decided to meet with the employee and the employee’s office manager. The employee claimed that during the meeting she was given the ultimatum of resigning and being able to keep her health insurance or being threatened with termination and being reported to the licensing board. According to the employee, she stated that she was “20 weeks along” and agreed to resign so she would not lose her health insurance immediately. The company’s national director and office manager denied that employee was given an ultimatum and instead testified that the employee’s decision to resign was her own idea and voluntary.  Ultimately, the employee resigned.

District Court’s decision

The employee sued the employer alleging a violation of the Tennessee Human Rights Act for pregnancy discrimination. The case made its way to federal court and the District Court ruled in favor of the employer.  The District Court held that there was a genuine issue as to whether the employee actually resigned when faced with threatened termination and reporting to the licensing board. The District Court further held that the employee had put forth sufficient evidence of potential pregnancy discrimination to shift the burden of proof to the employer. But ultimately, the District Court determined that the employer honestly believed that the employee intentionally made inaccurate statements in the chart and that the employee failed to put forth sufficient evidence showing that the employer did not honestly believe in this professed non-discriminatory reason. Additionally, the District Court held that the employee failed to provide sufficient evidence that actual discrimination, as opposed to the alleged falsification of documents, was the real reason for the employee’s termination.

Appellate Court’s decision

On appeal, the employee challenged the District Court’s “honest belief” ruling on the basis that this rule “does not exist under Tennessee law.” However, the employee did not address the District Court’s conclusion that she had not plausibly linked her pregnancy to her firing. This, the Sixth Circuit held, was fatal to the employee’s appeal because an appeal must not only challenge the primary basis of a trial court’s decision, but it must also challenge the alternate basis as well. The Sixth Circuit affirmed the District Court holding that the employee “forfeited the right to challenge the second basis for the [D]istrict [C]ourt’s holding, even if she prevailed on her argument about the ‘honest belief’ rule . . . .”

Takeaway

This case shows that employees have the burden of plausibly linking their pregnancy to alleged adverse employment decisions, such as terminations. Further, this case illustrates the importance of an employer’s record keeping functions with respect to employee job performance.  Because the employer here maintained good records, the employer was able to use those records to show its honest belief and help prevent a bad outcome for the employer.  When employers have concerns about employee performance, including concerns about employee ethics, employers should keep good records of such issues and follow internal policies for reviews of such performance, including any verbal or written counseling, warnings, reprimands, and related decisions.

R. Eddie Wayland is a partner with the law firm of King & Ballow.  You may reach Mr. Wayland at (615) 726-5430 or at rew@kingballow.com.  The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.

09/22/21 - Recognize These Scams Targeting Trucking Companies - Occupational Health and Safety

09/22/21 08:00:33am - Recognize These Scams Targeting Trucking Companies  Occupational Health and Safety

09/21/21 - Indiana Rail Road kicks off 3-year intermodal expansion project

09/21/21 05:25:27pm -

Short line Indiana Rail Road (INRD) is planning a multiyear expansion of intermodal facilities for customers that want service to and from the Indianapolis market and Canadian and U.S. West Coast ports.

INRD has kicked off the first phase of its expansion project, which will span three years and will have an anticipated completion date in 2023, the company said Monday.

The first phase, which included the acquisition of 12 acres of land adjacent to INRD’s container yard, will more than double the container yard footprint, include an onsite chassis depot and “allow a generous amount of incremental parking capacity and flexibility,” INRD said. The first phase will include ground preparation and the installation of concrete inbound-outbound traffic lanes with a kiosk gate system for expedited handling.

In the following two phases, INDR will construct two loading pad tracks and rear access service roads, as well as install lighting and high-security fencing. 

“The launch of this project represents the entrepreneurial thinking of our management team,” said INDR President and CEO Dewayne Swindall, who praised Bob Babcock, senior vice president of operations, and Dan Corcoran, manager of intermodal business development, for “a tremendous job in establishing the value and growing this business with our Class I partners.” 

INDR’s existing intermodal facility, the Senate Avenue Intermodal Terminal, is projected to move more than 40,000 containers and recently began a grain export operation with International Feed, the company said. The facility opened in 2013 and moved 1,450 containers in its first year.

According to the company’s website, INDR partners with Canadian railway CN (NYSE: CNI) and all major ocean carrier alliances for its intermodal services. The Senate Avenue terminal, located in Indianapolis, bypasses Chicago, which helps customers avoid terminal congestion and costly drayage to and from central Indiana and the Ohio Valley, INDR said. 

The short line contends that its service to Asia uses the ports of Prince Rupert and Vancouver, which is 2.5 days closer to key Asian ports than going through the Southern California ports. 

INDR, a privately held, 250-mile short line serving southwest Indian and eastern Illinois, also offers transloading services, railcar storage and locomotive maintenance and repair for electro-motive diesel locomotives. 

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Related links:

• Indiana short line, rail groups file lawsuit over Illinois’ crew size law

• Supply chain congestion weighs on US rail intermodal volumes

• Intermodal Summit: How supply chain upheaval is impacting warehousing

• Intermodal Summit: Sales, trends, capacity going into 2022

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