Friday, U.S. District Judge Fernando Gaitan issued a decision on OOIDA's request for a preliminary injunction to restrain Ledar Transport from operations under an often-overlooked provision of Federal Motor Carrier Leasing Regulations that specifies what must be contained in leases between a carrier and the equipment owner.
The court found that Ledar's lease violated federal motor carrier regulations. The judge ordered that the carrier could no longer engage in interstate commerce with equipment it does not own, until the company executes a court-approved lease with each owner-operator.
Among the violations cited by Gaitan in Ledar's owner-operator lease:
* Ledar's stated requirement in its lease for a $1,000 early lease termination fee is illegal. The amount corresponds with a required $1,000 security deposit, determined by the court to be an escrow fund that must be refunded to the owner-operator within 45 days after the lease termination.
* A provision that allowed Ledar 45 days from the time that all permits, paperwork and other equipment and supplies were tuned in at the termination of the lease. This illegally extended Ledar's escrow return and was therefore illegal.
* A provision requiring the owner-operator to provide Ledar with an explanation and itemization for cargo or property damage claims. This conflicts with federal regulations requiring the carrier to provide this information.
* A provision allowing Ledar to reduce owner-operators' compensation if the company's operating costs increase. Leasing rules require the amount of compensation to be clearly stated on the lease; the judge ruled that making that amount subject to change does not comply with the regulations.