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Blakley v. Celadon Group, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

December 2, 2016

WILLIAM BLAKLEY on behalf of himself and those similarly situated, HELEN BLAKLEY on behalf of herself and those similarly situated, and KIMBERLY SMITH on behalf of herself and those similarly situated, Plaintiffs,
v.
CELADON GROUP, INC., CELADON TRUCKING SERVICES, INC., QUALITY COMPANIES, LLC, QUALITY EQUIPMENT LEASING, LLC, and JOHN DOES 1-10, Defendants.

          ORDER ON MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS

          LARRY J. McKINNEY, JUDGE

         This matter pends on the Defendants', Celadon Group, Inc., Celadon Trucking Services, Inc., Quality Companies, Inc., and Quality Equipment Leasing, Inc. (collectively, “Celadon”), Motion for Partial Judgment on the Pleadings, pursuant to Federal Rule of Civil Procedure 12(c) (“Rule 12(c)”). Dkt. No. 41. In its Motion, Celadon seeks to dismiss Counts IV, V, and VI of Plaintiffs', William Blakley, Helen Blakely and Kimberly Smith, on behalf of themselves and all others similarly situated (collectively, “Plaintiffs'”), First Amended Individual, Collective, and Class Action Civil Complaint (the “Complaint”). Dkt. No. 41. Celadon asserts that (1) certain payments made by Celadon to Plaintiffs are not subject to the Indiana Consumer Loans Act (Ind. Code § 24.4.5-3-101 et seq.), and the Indiana Small Loans Act (Ind. Code § 24-4.5-7-101 et seq.), largely because the payments are advances, rather than “loans”; and (2) Celadon cannot be subject to the Indiana Wage Assignment Act (Ind. Code § 22-2-7-1 et seq.), if it is considered the Plaintiffs' employer, as Plaintiffs allege in the Complaint. See generally, Dkt. No. 42.

         I. BACKGROUND

         Plaintiffs each entered into a written Contractor Operating Agreement (the “Agreement”) with Celadon to work as commercial truck drivers.[1] Dkt. No. 21, ¶¶ 40-43, 47-48; see also, Dkt. No. 24, Ex. A & B. Under the terms of Agreement, Plaintiffs agreed “that [their] compensation for services…may be withheld by [Celadon] for payment of, and [Celadon] may set off against [their] compensation for” various charges and expenses that may be incurred during the duration of the Agreement, including “[a]dvances and other extensions of credit by [Celadon] to [Plaintiffs].” Agreement, at § 5.05. Plaintiffs were also required to maintain an escrow account under the Agreement and authorized Celadon, in its discretion, “to apply all or any portion of [Plaintiffs'] Escrow Account to the payment of any charges or indebtedness” incurred during the term of the Agreement. Id. at §10.04. The amounts remaining in the Plaintiffs' escrow accounts upon termination of the Agreement were returned to Plaintiffs. Id. at §§ 10.05, 10.06.

         While working under the Agreement, Plaintiffs regularly received “payroll and other advances” from Celadon for amounts between $50 and $550, in exchange for service fees ranging from $3.50 to $7.50 for each advance. Dkt. No. 21, ¶¶ 98, 120-121. The amount of each advance, including the associated service fee, was deducted from the Plaintiffs' paychecks.[2] Dkt. No. 21, ¶ 100. Plaintiffs assert that Celadon also secured repayment of the advances by requiring Plaintiffs to allow Celadon to make debits from Plaintiffs' escrow accounts. Id. at, ¶¶ 101, 104. Plaintiffs further allege that Celadon made unlawful deductions from the Plaintiffs' paychecks, “including but not limited to deductions for lease payments, fuel, trailer lock, glad hand lock, tolls, Qualcomm maintenance fees, air cuff lock, truck repairs, and other miscellaneous fees.” Id. at ¶¶ 76-77.

         In the Complaint, Plaintiffs claim that advances Celadon made to Plaintiffs constitute loans in violation of the Indiana Small Loans Act and Indiana Consumer Loan Act because Celadon deducted the advances and service fees from Plaintiffs' paychecks and secured repayment of the advances with the ability to debit Plaintiffs' escrow accounts. Id. at ¶¶ 97-130, 160-165. Plaintiffs further assert that Celadon's deductions for items, such as “lease payments, fuel purchases, insurance purchases, and payroll advances, ” constitute wage assignments that violate the Indiana Wage Assignment Act by including transaction fees in excess of the permissible 8% rate and by securing agreements for assignments exceeding thirty days. Id. at ¶¶ 131-139, 166-168.

         II. STANDARD

         The Court decides motions brought under Rule 12(c) by the same standard as that for a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). See R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 647 (7th Cir. 2003). The Court may consider only the pleadings and must view the allegations in the light most favorable to the non-moving party. See Id. The pleadings include the complaint, the answers, and any documents attached thereto as exhibits. See N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir. 1998); Wright v. Assoc'd. Ins. Cos., 29 F.3d 1244, 1248 (7th Cir. 1994) (stating that “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim”). The Court may also take judicial notice of matters of public record and not subject to reasonable dispute. See Ennenga v. Starns, 677 F.3d 766, 773-74 (7thCir. 2012) (citations omitted). Furthermore, “[a] judgment on the pleadings is proper when only questions of law, and not questions of fact, exist after the pleadings have been filed.” All Am. Ins. Co. v. Broeren Russo Const., Inc., 112 F.Supp.2d 723, 728 (C.D. Ill. 2000).

         Generally, the Court will presume the facts as alleged by the Plaintiffs to be true, but it is not bound by the Plaintiffs' legal characterization of facts. See Nat'l Fidelity Life Ins. Co. v. Karaganis, 811 F.2d 357, 358 (7th Cir. 1987). Under Rule 12(b)(6), the Court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of Plaintiff. See Esekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995).

         Under the Supreme Court's directive in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), to survive a motion to dismiss for failure to state a claim upon which relief may be granted, a plaintiff must provide the grounds for his entitlement to relief with more than labels, conclusions or a formulaic recitation of the elements of a cause of action. Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The “allegations must be enough to raise a right to relief above the speculative level.” Id. The touchstone is whether the Complaint gives the defendant “fair notice of what the … claim is and the grounds upon which it rests.” Id. (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Legal conclusions or conclusory allegations are insufficient to state a claim for relief. McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011).

         III. COUNTS IV AND V-VIOLATIONS OF THE INDIANA SMALL LOANS ACT AND INDIANA CONSUMER LOAN ACT

         In Counts IV and V of their Complaint, Plaintiffs allege that the advances provided by Celadon constitute loans in violation of the Indiana Small Loans Act and Indiana Consumer Loan Act, respectively. Celadon argues that it cannot be liable under these Acts largely because the amounts paid to Plaintiffs were advances; therefore, they do not meet the definitions for “loans” under Indiana Consumer Loan Act or “small loans” under the Indiana Small Loans Act. See Ind. Code § 24-4.5-7-104; Ind. Code § 24-4.5-3-106.

         The Indiana Consumer Loan Act defines a “loan” to include (1) a debt created “by the lender's payment of or agreement to pay money to the debtor” or to a third party on the debtor's behalf, (2) a debt created “by a credit to an account with the lender upon which the debtor is entitled to draw immediately, ” (3) a debt created “pursuant to a lender credit card or similar arrangement, ” and (4) “the forbearance of debt arising from a loan.” Ind. Code § 24-4.5-3-106. The definition of a “loan” within the Indiana Consumer Loan Act also applies to the Indiana Small Loans Act. Ind. Code § 24-4.5-7-102(1) (“Except as otherwise provided, all provisions of this article applying to consumer loans…apply to small loans, as defined in this chapter.”). Under the Indiana Small Loans Act, a “small loan” is defined as a loan (a) with a principal loan amount between $50 and $550; and (b) “in which the lender holds the borrower's check for a specific period, or receives the borrower's written authorization to debit the borrower's account … under an agreement, either express or implied, for a specific period” before the lender attempts to deposit or present the check or debits the borrower's account. Ind. Code § 24-4.5-7-104(1).

         The Court concludes that Plaintiffs have not sufficiently alleged facts to support finding Celadon's payments meet the statutory definition of a “loan.” The definition of a “loan” provided by Ind. Code § 24-4.5-3-106 implies that a debt must be created in order for a loan to exist. The Plaintiffs alleged that Celadon reduced Plaintiffs' paychecks by the amounts they advanced to Plaintiffs, Dkt. No. 21, ¶ 100, but, even in the light most favorable to Plaintiffs, their allegations fail to establish that the advances created any kind of debt to meet the definition of a “loan.” ...


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