Opinion ID: 989148
Heading Depth: 3
Heading Rank: 1

Heading: Driver pay formula

Text: 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 theseexternal 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.