UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HOWARD TRUMAN JACOBS; ROBERT

EDWIN WILLIAMS; JOHN T.

GARBROUGH; HERMAN SHARP;

PAUL E. HILLIKER; C. W. PICKETT;

LARRY C. RICHERSON; ALBERT C.

SMITH; RONALD B. HAHN;

WILLIAM F. SETZER; LLOYD D.

RAFFALDT; DARRELL R. LANGFORD;

DAVID TAYLOR; MICHAEL E. LORMAN;

No. 95-2395

JOHN W. SMITH; RANDAL J. ADAMS;

GARY W. WAMPLER; JAMES BURDEN;

GILES S. FISHER, JR.; MICHAEL

MCCORKEL; JAMES PULLEY; KENDALL

GOODMAN; DEBORAH GOODMAN,

Plaintiffs-Appellants,

v.

CENTRAL TRANSPORT, INC.,

Defendant-Appellee.
HOWARD TRUMAN JACOBS; ROBERT

EDWIN WILLIAMS; JOHN T.

GARBROUGH; HERMAN SHARP;

PAUL E. HILLIKER; C. W. PICKETT;

LARRY C. RICHERSON; ALBERT C.

SMITH; RONALD B. HAHN;

WILLIAM F. SETZER; LLOYD D.

RAFFALDT; DARRELL R. LANGFORD;

DAVID TAYLOR; MICHAEL E. LORMAN;

No. 95-2396

JOHN W. SMITH; RANDAL J. ADAMS;

GARY W. WAMPLER; JAMES BURDEN;

GILES S. FISHER, JR.; MICHAEL

MCCORKEL; JAMES PULLEY; KENDALL

GOODMAN; DEBORAH GOODMAN,

Plaintiffs-Appellants,

v.

CENTRAL TRANSPORT, INC.,

Defendant-Appellee.

 2
HOWARD TRUMAN JACOBS; ROBERT

EDWIN WILLIAMS; JOHN T.

GARBROUGH; HERMAN SHARP;

PAUL E. HILLIKER; C. W. PICKETT;

LARRY C. RICHERSON; ALBERT C.

SMITH; RONALD B. HAHN;

WILLIAM F. SETZER; LLOYD D.

RAFFALDT; DARRELL R. LANGFORD;

DAVID TAYLOR; MICHAEL E. LORMAN;

No. 95-2397

JOHN W. SMITH; RANDAL J. ADAMS;

GARY W. WAMPLER; JAMES BURDEN;

GILES S. FISHER, JR.; MICHAEL

MCCORKEL; JAMES PULLEY; KENDALL

GOODMAN; DEBORAH GOODMAN,

Plaintiffs-Appellees,

v.

CENTRAL TRANSPORT, INC.,

Defendant-Appellant.

Appeals from the United States District Court

for the Eastern District of North Carolina, at Wilmington.

Charles K. McCotter, Jr., Magistrate Judge.

(CA-92-17-7-F, CA-92-478-5-F)

Argued: April 4, 1996

Decided: May 3, 1996

Before RUSSELL, WIDENER, and HALL, Circuit Judges.

_________________________________________________________________

Affirmed in part and reversed and remanded in part by unpublished

opinion. Judge Russell wrote the majority opinion, in which Judge

Widener joined. Judge Hall wrote an opinion dissenting in part.

_________________________________________________________________

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COUNSEL

ARGUED: Richard Lynn Masters, MASTERS, MULLINS &

ARRINGTON, Louisville, Kentucky, for Appellants. John James

Doyle, Jr., CONSTANGY, BROOKS & SMITH, Winston-Salem,

North Carolina, for Appellee. ON BRIEF: Junius B. Lee, III, LEE &

LEE, Whiteville, North Carolina, for Appellants. M. Ann Anderson,

CONSTANGY, BROOKS & SMITH, Winston-Salem, North Carolina, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

RUSSELL, Circuit Judge:

The plaintiffs are 21 current and former lease operators for Central

Transport, Inc. ("Central Transport"), a trucking company based in

High Point, North Carolina. As lease operators, the plaintiffs were

independent contractors, not employees of Central Transport. The

plaintiffs owned and operated their own tractors and hauled a variety

of bulk commodities in trailers provided by Central Transport. The

plaintiffs entered into a series of standard equipment leases with Central Transport; each lease did not govern a particular trip, but all trips

made by the lease operator during the lease period. The 21 plaintiffs

reside in various states and operated out of Central Transport terminals across the eastern United States.

Of the several claims the plaintiffs brought against Central Transport, one alleged that Central Transport had overcharged them for

workers' compensation insurance. After a bench trial before a magistrate judge,1 the magistrate judge held that Central Transport had

_________________________________________________________________

1 The parties agreed to try this case before a magistrate judge, pursuant

to 28 U.S.C. § 636(c)(1). The parties have elected to appeal the magistrate judge's decision directly to the Fourth Circuit, pursuant to 28

U.S.C. § 636(c)(3).

 4
breached its contract and violated a regulation of the Interstate Commerce Commission ("ICC"), 49 U.S.C. § 1057.12(i). The magistrate

judge rejected the plaintiffs' claim that Central Transport had committed an unfair or deceptive trade practice, in violation of the North

Carolina Deceptive Trade Practices Act (the "Act"), N.C.G.S. § 75-

1.1, et seq.

Both sides contest the magistrate judge's decision. The plaintiffs

challenge the magistrate judge's conclusion that Central Transport did

not commit an unfair or deceptive trade practice. The plaintiffs

pressed this claim because they will receive treble damages under the

Act if they can prove that Central Transport committed an unfair or

deceptive trade practice. In its cross-appeal, Central Transport asserts

that its actions did not even constitute breach of contract, let alone an

unfair or deceptive trade practice. Central Transport, alternatively,

contests the magistrate judge's measure of damages for the breach of

contract.

We agree with the magistrate judge that Central Transport did not

commit an unfair or deceptive trade practice. However, we disagree

with the magistrate judge's factual finding that Central Transport

overcharged the plaintiffs for workers' compensation insurance.

Because the magistrate judge relied on this factual finding to conclude

that Central Transport violated an ICC regulation and breached its

leases, we reverse the portion of the judgment relating to workers'

compensation insurance and remand for a correction of the damage

award.

I.

The plaintiffs filed two separate complaints against Central Transport, which the district court consolidated before trial. Along with a

number of minor claims and allegations, these complaints describe

two areas of serious wrongdoing. First, the plaintiffs allege that, over

the years, Central Transport failed to pay its lease operators the full

portion of the freight revenues owed to its lease operators under the

terms of their leases and covered up these underpayments by failing

to provide its lease operators with the information required to calculate their pay. Second, the plaintiffs allege that Central Transport

overcharged its lease operators for workers' compensation insurance

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and used the premiums to subsidize the workers' compensation insurance policy that Central Transport maintained for its own employees.

Despite the plaintiffs' accusations that Central Transport engaged

in shady and underhanded business practices, the facts reveal that

Central Transport treated its lease operators with fairness and integrity.

A. Driver pay formula

For their compensation, lease operators receive a portion of the

freight revenues billed to Central Transport's customers for each trip

made. The leases clearly state the "driver pay formula" used by Central Transport to determine the lease operator's portion of the freight

revenues.

Beginning in January 1984, Central Transport adopted an

extremely complicated driver pay formula, which resulted from a new

requirement imposed by the ICC on motor carriers in the early 1980s.

The ICC required motor carriers to roll all fuel surcharges into their

freight rates. It also mandated that lease operators receive a minimum

of twelve cents per mile if the freight rates contained rolled-in fuel

surcharges.

Most motor carriers simply rolled the fuel surcharges into their

rates and maintained the same pay percentage arrangement in effect

before the roll-in occurred. This action lowered the overall revenue

paid to the lease operators. Unlike its competitors, Central Transport

sought to ensure that its lease operators received the same amount of

revenue that they did before the fuel surcharges were rolled into the

freight rates. The driver pay formula became more complicated

because it had to keep track of the rolled-in fuel surcharges (i.e., the

"internal fuel surcharge"). When the ICC imposed new fuel surcharges in 1989, the driver pay formula became even more complicated because the formula also had to track these"external" fuel

surcharges to ensure that the lease operators' overall revenue did not

decrease.

In June 1991, Central Transport abandoned its complicated driver

pay formula for a simpler mathematical expression. It is clear, how-

 6
ever, that Central Transport used a complicated formula between

1984 and 1991 to protect the lease operators, not to bewilder them.

The lease operators received bi-weekly settlement statements that

showed their portion of the freight revenues, as calculated by Central

Transport. Although the statements were required to state all the

information required for the lease operators to calculate their pay on

their own--thus ensuring that they received the correct amount--the

statements often lacked critical information. The plaintiffs believe

that Central Transport has underpaid them over the years.

In fact, it has not. During discovery, the parties engaged an

accounting firm to conduct an independent audit of Central Transport's pay records. The audit consisted of a detailed review of randomly sampled transactions involving all of the plaintiffs. The

auditors examined shipping records, driver pay documentation, applicable contracts or tariffs, and other records to determine the accuracy

of the pay received by the plaintiffs. The audit revealed that, despite

the complexity of the driver pay formula, Central Transport paid its

lease operators correctly for the work performed. Although Central

Transport made some minor errors here and there, the errors tended

to favor the plaintiffs. The audit revealed no systemic underpayment

of the lease operators.

Many of the plaintiffs testified that they believed they were receiving between 60 and 62 percent of the freight revenues billed to Central Transport's customers. The audit revealed that, between 1979 and

January 1984, the lease operators received 60 percent of the freight

revenue. When Central Transport adopted its more complicated driver

pay formula in 1984, the lease operators' payments increased to 66.1

percent of the freight revenue. Thus, between 1984 and 1991, the

plaintiffs received more than they thought they were entitled to

receive. Instead of cheating the lease operators out of their pay, Central Transport treated them fairly.

The magistrate judge did conclude that Central Transport violated

federal regulations by failing to provide the plaintiffs with adequate

pay documentation. However, it found that there was nothing inherently unfair or deceptive about the pay documentation Central Transport provided. Furthermore, it found that the plaintiffs did not suffer

 7
any material damages because they received the correct pay. The

magistrate judge awarded nominal damages of $100 per plaintiff for

Central Transport's technical error.

B. Workers' compensation insurance

The leases in effect before March 1991 required the lease operators

to purchase workers' compensation insurance through Central Transport. Central Transport deducted funds from the lease operators' pay

and used those funds to purchase the insurance. Central Transport

covered its lease operators under its own workers' compensation policy, the same policy it used to cover its own employees. However,

most of the plaintiffs did not realize they received workers' compensation coverage through Central Transport's employee group insurance policy instead of through individual policies.

As the price of workers' compensation insurance rose in the late

1980s, lease operators began to complain about the high cost of workers' compensation insurance. In response to these recurring complaints, and out of a desire to reduce its overall workers'

compensation insurance exposure, Central Transport amended the

workers' compensation insurance requirement. Since March 1991, the

lease requires lease operators to obtain their own workers' compensation insurance. Lease operators also have the option of obtaining

occupation accident insurance, a lower-quality policy that covers

fewer injuries but at a lower premium. The lease requires only that

lease operators furnish Central Transport with proof of insurance coverage.

Before 1991, when lease operators were still covered under Central

Transport's group policy, the plaintiffs paid for their insurance

according to a long-standing, well-published formula used to calculate their premiums:

Premium = Gross Pay X .3333 X State Rate

Central Transport communicated this formula to its lease operators by

distributing memoranda and by including the formula in the leases.

Liberty Mutual Insurance Company ("Liberty Mutual"), Central

 8
Transport's workers' compensation insurance carrier, provided the

formula to Central Transport. The same formula was used to determine the rates for the drivers employed by Central Transport. Central

Transport, however, paid the workers' compensation premiums for its

own employees.

The magistrate judge found that Central Transport used the lease

operators' premiums to subsidize its cost of providing workers' compensation insurance to its employees. The magistrate judge relied on

statistical data introduced by the plaintiffs at trial, which established

the following facts:

In 1988, Central Transport paid a workers' compensation

premium of $1,297,088, of which the lease operators contributed $341,682, or 26 percent.

In 1989, the total premium was $1,085,508, of which the

lease operators paid $342,187, or 31 percent.

In 1990, the total premium was $1,342,373, of which the

lease operators paid $493,311, or 37 percent.

Between 1988 and 1990, the lease operators comprised less

than 20 percent of the total work force.

The magistrate judge agreed with the plaintiffs that the evidence demonstrated that Central Transport used the lease operators' premiums

to subsidize its own cost of providing workers' compensation insurance to its employees.

Leases between motor carriers and lease operators must "specify

that the lessor is not required to purchase or rent any products, equipment, or services from the authorized carrier as a condition of entering into the lease arrangement." 49 C.F.R. § 1057.12(i) (1995).

Central Transport's leases did in fact contain such a provision. The

magistrate judge concluded that Central Transport violated 49 C.F.R.

§ 1057.12(i) and breached its leases by providing workers' compensation coverage to the lease operators under its company-wide workers'

insurance policy. Although Central Transport did not actually provide

 9
the workers' compensation insurance to the lease operators (Liberty

Mutual issued the coverage), the magistrate judge treated Central

Transport as the provider of workers' compensation insurance

because Central Transport received a benefit from including the lease

operators in its group policy: Central Transport used the lease operators' premiums to subsidize its own cost of providing workers' compensation insurance to its employees. Thus, the magistrate judge

concluded that Central Transport violated 49 C.F.R.§ 1957.12(i) and

breached the leases, and it awarded damages in the amount of

$164,085.07, plus $10,867.43 in costs.

The magistrate judge did not find, however, that Central Transport's workers' compensation insurance requirement constituted an

unfair or deceptive trade practice. The magistrate judge found that the

leases clearly stated the lease operators' obligation to purchase workers' compensation insurance through Central Transport, and that Central Transport provided the lease operators with the formula used to

calculate the lease operators' premiums.

Central Transport eventually responded to the lease operators'

complaints about escalating costs of workers' compensation insurance. In 1991, Central Transport eliminated its requirement that lease

operators purchase workers' compensation insurance from Liberty

Mutual through Central Transport's group policy. Central Transport

now requires only that the lease operators show proof that they have

obtained a workers' compensation policy or an occupational accident

policy from an independant insurance carrier.

C. Other claims

Of the many minor claims asserted by the plaintiffs, the magistrate

judge ruled in favor of Central Transport. The magistrate judge found

that Central Transport owed specific amounts to three plaintiffs for

improper escrow account deductions, and additional amounts to two

plaintiffs for individual pay claims. It remedied these improper deductions but held that they did not constitute unfair or deceptive trade

practices.

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II.

We first consider whether Central Transport's conduct constituted

a violation of the North Carolina Unfair Trade Practices Act (the

"Act"), N.C.G.S. § 75-1.1, which provides:

Unfair methods of competition in or affecting commerce,

and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.

N.C.G.S. § 75-1.1(a). The plaintiffs seek to prove that Central Transport engaged in unfair or deceptive acts because an injured party

under the Act can collect treble damages and attorneys fees. N.C.G.S.

§ 75-1.6.

The Act prohibits both "unfairness" and "deceptiveness." Hageman

v. Twin City Chrysler-Plymouth Inc., 681 F. Supp. 303, 306

(M.D.N.C. 1988). "A practice is unfair when it offends established

public policy as well as when the practice is immoral, unethical,

oppressive, unscrupulous, or substantially injurious to consumers."

Johnson v. Phoenix Mut. Life Ins. Co., 266 S.E. 2d 610, 621 (N.C.

1980). An act or practice is deceptive "if it has the capacity or tendency to deceive." Marshall v. Miller, 276 S.E.2d 397, 403 (N.C.

1981).

Mere breach of contract does not constitute an unfair or deceptive

trade practice. Bartolomeo v. S. B. Thomas, Inc. , 889 F.2d 530, 535

(4th Cir. 1989). "It is clear that the statute encompasses such things

as misrepresentation and a wide variety of shady practices sometimes

associated with the marketing of consumer goods and services. Whatever the limit of their reach, however, the words must mean something more than an ordinary contract breach." United Roasters, Inc.

v. Colgate-Palmolive Co., 649 F.2d 985, 992 (4th Cir. 1981), cert.

denied, 454 U.S. 1054 (1981). A plaintiff must show "substantial

aggravating circumstances attending the breach" to receive treble

damages under the Act. Bartolomeo, 889 F.2d at 535.

The plaintiffs argue that Central Transport committed an unfair and

deceptive trade practice by overcharging the lease operators for the

 11
cost of workers' compensation insurance and using the lease operators' premiums to subsidize its cost in providing workers' compensation insurance to its own employees. The plaintiffs allege that Central

Transport covered up its scheme by withholding information about

the workers' compensation policy from the lease operators; in fact,

the plaintiffs contend they did not even know they were covered

under Central Transport's group policy instead of under individual

policies.

To prove that Central Transport used the lease operators' premiums

to subsidize its cost in providing workers' compensation insurance to

its own employees, the plaintiffs introduced statistical information

showing that the lease operators' contribution to the group plan was

disproportionate to their overall representation in the workforce. The

magistrate judge accepted this statistical evidence at one point in its

findings of facts and conclusions of law, finding that the "lease operators' contribution to the group plan was disproportionate. The lease

operators paid between 26% to 36% of Central's total workers' compensation premiums for the years 1988-90, whereas their overall representation in the Company's workforce was about 20%." Jacobs v.

Central Transport, Inc., No. 92-478-CIV-5, Findings of Fact and

Conclusions of Law 46 (E.D.N.C. Apr. 13, 1995).

We find that the magistrate judge clearly erred in relying on the

plaintiffs' statistical evidence because it does not demonstrate that the

lease operators subsidized Central Transport's workers' compensation

insurance premium. According to Liberty Mutual's formula, the

amount of the premium is proportionate to gross pay of the person

being covered; it is not the same per person. As long as the gross pay

of the average lease operator was greater than the gross pay of the

average employee of Central Transport, the lease operators would

have to pay a greater amount in workers' compensation insurance premiums. To determine whether the lease operators paid a disproportionate amount in premiums between 1988 and 1990, the magistrate

judge should have compared their gross pay with the employees'

gross pay, not their overall representation in Central Transport's

workforce.

Having discounted the significance of the plaintiffs' statistical evidence, we find no evidence in the record that Central Transport over-

 12
charged the lease operators on their life insurance premiums. In fact,

the evidence demonstrates that the lease operators paid their fair

share. Central Transport calculated the lease operators premiums

according to a formula provided by Liberty Mutual, the same formula

that Liberty Mutual used to calculate Central Transport's premium for

coverage of its own employees. See Jacobs v. Central Transport, Inc.,

No. 92-478 CIV-5, Findings of Fact and Conclusions of Law 10

(M.D.N.C. Apr. 13, 1995) ("None of the rates differentiated between

company drivers and lease operators."). We conclude that the magistrate judge was clearly erroneous in finding that Central Transport

overcharged the lease operators on the workers' compensation insurance premiums and used the lease operators' premiums to subsidize

its cost of providing workers' compensation insurance to its own

employees.

The plaintiffs also argue that Central Transport committed unfair

trade practices because its violations of ICC regulations demonstrate

that it offended the established public policy of North Carolina. The

plaintiffs claim that Central Transport violated ICC regulations by

requiring the lease operators to purchase workers' compensation

insurance through Central Transport, by failing to provide copies of

the insurance policy to lease operators upon request, by failing to provide lease operators with the information necessary to calculate

whether they were properly paid, and by making a few improper

deductions from certain plaintiffs' escrow accounts.

Not every technical violation of a federal regulation constitutes a

violation of public policy. Central Transport's violations of ICC regulations were also breaches of contract, and the district court remedied

the violations with contract damages. These violations, however, do

not demonstrate that Central Transport engaged in immoral, unethical,

oppressive, or unscrupulous conduct. We see no substantially aggravating circumstances to justify trebling Central Transport's contract

damages. Central Transport made a few mistakes that violated ICC

regulations and that the district court remedied through damages for

breach of contract. These ICC violations do not demonstrate that Central Transport engaged in unfair trade practices.

We therefore reject the plaintiffs' argument that Central Transport

engaged in an unfair or deceptive trade practice.

 13
III.

We next turn to Central Transport's cross-appeal. Central Transport argues that its requirement that lease operators purchase workers'

compensation insurance through its group policy did not violate 49

C.F.R. § 1957.12(i) or breach the relevant provision in the leases.

Alternatively, Central Transport argues that the magistrate judge miscalculated the damages for its breach.

A.

The federal regulations governing leases between motor carriers

and lease operators require such leases to "specify that the [lease

operator] is not required to purchase or rent any products, equipment

or services from the authorized carrier as a condition of entering into

the lease arrangement." 49 C.F.R. § 1057.12(i). The ICC promulgated

the regulations in 49 C.F.R. § 1057 to "promote full disclosure

between the carrier and owner-operator in the leasing contract, [to]

promote the stability and economic welfare of the independent trucker

segment of the motor carrier industry, and [to] eliminate or reduce the

opportunity for skimming and other illegal practices." 44 Fed. Reg.

4680, 4680 (1979) (emphasis added). Section 1057.12(i) clearly fulfills these goals: it prevents motor carriers from extracting hidden

charges from their lease operators by requiring them to purchase

goods or services from the carriers at inflated prices.

The magistrate judge found that Central Transport violated 49

C.F.R. § 1057.12(i) and breached the various leases by requiring the

lease operators to purchase workers' compensation insurance through

Central Transport. The magistrate judge recognized that Liberty

Mutual, not Central Transport, provided the insurance to the lease

operators. Nonetheless, the magistrate judge construed Central Transport as a provider of workers' compensation insurance because Central Transport extracted a benefit from the insurance arrangement:

Central was more than a mere conduit for the purchase of

workers' compensation coverage for the lease operators

through an independent carrier. Central included the lease

operators in the Company's group policy for all of its

employees. In so doing, Central used the monies collected

 14
as premiums from the lease operators to subsidize Central's

workers' compensation program for its employees.

* * *

The lease requirement that the lease operators purchase

workers' compensation insurance "through" Central did not

violate the regulatory and lease provisions prohibiting a

lease requirement that the lease operators "purchase . . . any

products, equipment or services from" Central. 49 C.F.R.

§ 1057.12(i) . . . . However, when Central unilaterally

decided to provide the lease operators' workers' compensation coverage through the Company's employee group plan,

Central became more than a mere conduit. Central became

the provider of a product or service.

Jacobs v. Central Transport, Inc., No. 92-478-CIV-5, Findings of

Fact and Conclusions of Law 45-56 (E.D.N.C. Apr. 13, 1995).

We agree with the general principle implicit in the magistrate

judge's holding: 49 C.F.R. § 1057.12(i) prevents a motor carrier from

requiring its lease operators to obtain products, equipment, or services

from a third party, where the carrier benefits from the arrangement.

Although 49 C.F.R. § 1057.12(i) applies only to products, equipment,

and services that the motor carrier itself provides to the lease operators, we construe the carrier to be a provider when it requires its lease

operators to deal with a third party and it receives some benefit from

the arrangement. The ICC enacted § 1057.12(i) to prevent a motor

carrier from skimming its lease operators' profits by exacting hidden

charges; a motor carrier cannot circumvent this regulation by laundering its kickback through a third party.

We disagree with the magistrate judge's conclusion that Central

Transport received a benefit from its requirement that the lease operators purchase workers' compensation insurance through its group policy with Liberty Mutual. The magistrate judge found that Central

Transport used the lease operators' premiums to subsidize its cost of

providing workers' compensation coverage to its own employees. As

we have stated in the previous section, that finding was clearly erroneous. Central Transport charged the lease operators according to a

 15
formula provided by Liberty Mutual, the same formula used to calculate Central Transport's premium for coverage of its employees.

There is no evidence that Central Transport would have paid a higher

premium had it not included the lease operators in its workers' compensation insurance policy.2 There is no evidence that Central Transport received any sort of kickback for funneling the lease operators'

business to Liberty Mutual.

We therefore conclude that Central Transport did not violate 49

C.F.R. § 1057.12(i) or breach its leases.

B.

Even had we found that Central Transport violated 49 C.F.R.

§ 1057.12(i) and breached its leases with the plaintiffs by requiring

the lease operators to purchase workers' compensation insurance

through its group policy with Liberty Mutual, we could not have

awarded any damages.

If Central Transport had breached its leases, the plaintiffs would

have been entitled to compensatory damages. The purpose of compensatory damages is to restore the injured party to the party's original condition, i.e., to make the party whole. Shaver v. N. C. Monroe

Constr. Co., 306 S.E.2d 519, 526 (N.C. Ct. App. 1983), review

denied, 311 S.E.2d 294 (1984). For a breach of contract, the injured

party shall be compensated for all losses which the fulfillment of the

contract would have prevented or which the breach has caused. Coble

v. Richardson Corp. of Greensboro, 322 S.E.2d 817, 822 (N.C. Ct.

App. 1984).

_________________________________________________________________

2 There is also no evidence in the record that the lease operators would

have paid lower premiums if they had received individual policies, or if

they had had the option of purchasing insurance from a carrier other than

Liberty Mutual. However, it is irrelevant whether the lease operators

could have obtained a better price for workers' compensation insurance.

The plaintiffs can establish a violation of 49 C.F.R. § 1057.12(i) only if

they demonstrate that Central Transport benefitted by including the lease

operators in its group policy.

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The magistrate judge found that Central had overcharged the lease

operators for the cost of workers' compensation insurance and used

the difference to subsidize its cost in providing workers' compensation coverage to its own employees. The magistrate judge, however,

did not award the amount of the overpayment as damages. Instead,

the magistrate judge measured the plaintiffs' damages as the difference between the cost of obtaining workers' compensation insurance

and the cost of obtaining occupational accident insurance.

We hold that the magistrate judge used an improper measure of

damages. Central Transport did not violate 49 C.F.R. 1057.12(i) or

breach its leases by requiring its lease operators to purchase workers'

compensation insurance, instead of occupational accident insurance,

as a condition of doing business. Nothing in the federal regulations

or the leases prevented Central Transport from requiring the lease

operators to purchase workers' compensation insurance instead of

occupational accident insurance, or some other lower-quality insurance. Central Transport had every right to demand workers' compensation insurance as a condition of doing business. The end result of

the magistrate judge's award of damages is a windfall for the plaintiffs, who receive workers' compensation insurance for the price of

occupational accident insurance, a lower-quality policy.

Central Transport could only have violated 49 C.F.R.§ 1057.12(i)

and breached its leases by overcharging the lease operators for the

cost of the workers' compensation insurance and using the difference

to subsidize its own workers' compensation insurance premium. The

proper measure of damages is the amount of the overcharge. The

magistrate judge should have awarded the plaintiffs' cost of obtaining

workers' compensation insurance from Liberty Mutual through Central Transport's group policy, less the cost of obtaining workers' compensation insurance from Liberty Mutual through individual policies.

However, there is no evidence that Central Transport overcharged

the lease operators for the cost of workers' compensation insurance.

We have already discounted the plaintiffs' statistical evidence that

attempted to show that the plaintiffs paid a disproportionate share of

the workers' compensation insurance premium. There is no evidence

that the inclusion of the lease operators in Central Transport's group

policy affected the amount of Central Transport's premium for the

 17
coverage of its employees. No evidence suggests that the lease operators could have purchased individual workers' compensation policies

for less than the premiums paid to Liberty Mutual for their participation in Central Transport's group policy.

Because Central Transport did not overcharge the lease operators

for the workers' compensation insurance, we conclude that the plaintiffs did not suffer any damages resulting from a violation of 49

C.F.R. § 1057.12(i) or a breach of the leases.

IV.

For the foregoing reasons, we affirm the magistrate judge's judgment in favor of Central Transport on the plaintiffs' claim for unfair

or deceptive trade practices. We reverse the magistrate judge's judgment for the plaintiffs on their workers' compensation insurance

claim. We remand for a correction of the award of damages.

AFFIRMED IN PART AND

REVERSED AND REMANDED IN PART

HALL, Circuit Judge, dissenting in part:

While I agree with most of what the majority has written, I disagree on two points. First, I believe that 49 C.F.R.§ 1057.12(i) outlaws the company store, period. The potential for abuse involved in

any forced sale -- whether of socks or workers' compensation coverage -- is sufficient to render it in violation of the regulation. I disagree, then, that the plaintiffs must prove that Central Transport

actually benefited from forcing their participation in its own workers'

compensation plan.

As for damages, I agree that a remand is required. Though Central

Transport was not entitled to be a provider of workers' compensation

coverage, I know of no reason why it could not insist that such coverage be obtained. The plaintiffs' damages are not, therefore, properly

measured by the cost of the much less expensive occupational accident coverage.

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On the other hand, I would not declare that the magistrate's finding

that the plaintiffs were actually overcharged (in some amount) was

clearly erroneous. We were not asked to make such a holding. Central

Transport conceded at argument that it offered no evidence of its own

payroll from which one could find that the plaintiffs' share of the premiums was strictly proportional to their share of pay. In fact, Central

Transport asserts simply that "[t]he proper measure of damages for

plaintiffs' claim . . . is the difference between the amounts plaintiffs

paid for their insurance and the amount they should have paid based

on their percentage of representation of the work force." Brief of

Appellee/Cross Appellant at 33-34. I would order that this measure

of damages be applied on remand.

In these few respects, I respectfully dissent; otherwise, I join the

judgment and opinion of the majority.

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