Drivers win $10.4M verdict in contract dispute with Michigan carrier

A group of about 100 truck drivers has won a $10.46 million judgment in federal court in Michigan against a carrier that they said shorted them on payments related to cross-border freight.

The judgment Wednesday by Judge Gershwin A. Drain of the U.S. District Court for the Eastern District of Michigan put actual damages in the class action at about $3.5 million. That figure was tripled under provisions of the Racketeer Influenced and Corrupt Organizations (RICO) Act for a total of nearly $10.5 million.

Keith Flynn, an attorney with Detroit-based Miller Cohen P.L.C., one of the firms representing the plaintiffs, called the judgment “a major victory for working people.”

“We represented a class of hard-working driver owner-operators,” Flynn told FreightWaves in a phone interview. “They were promised compensation. They were defrauded from receiving that compensation.”

At issue, according to Drain’s opinion, was whether the drivers were entitled to 80% of gross revenues that customers paid to defendant RSP Express Inc. for freight hauled by separate third-party carriers to or from Canada or Mexico – without deductions for costs linked to those international shipments.

The plaintiffs are owner-operators who contracted with Romulus, Michigan-based over-the-road freight company RSP to haul freight in the U.S.

The approximately 100 drivers said they were entitled to the full 80% for all freight they hauled, without deductions for costs related to the transport of freight by third parties across the border.

But RSP, owned by Razvan Pop and his former wife, Maria Pop, said freight hauled cross-border by third parties wasn’t delivered “by contractor” as stated in the contract, so the 80% figure didn’t apply. The original complaint stated that the drivers received less than they were entitled to for several years prior to the contract being revised in 2015.

The judge wrote that although the contract allowed some deductions, it didn’t permit deductions for costs linked to third parties hauling freight internationally.

“Thus, by its plain terms, ‘any freight by Contractor’ encompasses any and all freight transported by Plaintiffs, irrespective of whether a third-party carrier handled transporting the freight to or from Mexico or Canada,” Drain wrote.

He stated that RSP provided the drivers inaccurate statements of gross revenues it had received for each load.

“The Settlement Statements … demonstrate that Plaintiffs were consistently paid 80 percent of the gross revenues for all freight they transported, including those originating from or ultimately delivered to Mexico and Canada,” Drain wrote. “The Statements reflect no adjustments or deductions based on the international nature of the transport or based on a third party carrier’s involvement in transporting the freight.”

The defendants argued that costs paid to third parties were “not ‘deductions,’ but instead were not included in and were subtracted from the reported gross revenues,’” he added.

But Drain said he was ruling in favor of the plaintiffs’ civil RICO claim partly because the defendants “habitually mailed fraudulent weekly Settlement Statements to more than one hundred owner-operators/drivers. Therein, RSP underreported the gross revenues it actually received from customers, resulting in significant underpayment to Plaintiffs.”

FreightWaves reached out to RSP Express, but the number on its website apparently was not functioning. An attorney representing RSP Express did not immediately return a message Friday afternoon seeking comment.

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