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Blakley v. Celadon Group, Inc.

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

June 2, 2017

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,



         This matter comes before the Court on Defendants', Celadon Group, Inc., Celadon Trucking Services, Inc., Quality Companies, Inc., and Quality Equipment Leasing, Inc. (collectively, “Celadon”), Motion for Partial Summary Judgment (the “Motion”).[1] Dkt. No. 59. In the Motion, Celadon seeks to dismiss Counts IV, V, and VI of Plaintiffs', William Blakely (“William”), Helen Blakely (“Helen”), and Kimberly Smith (“Smith”), on behalf of themselves and all others similarly situated (collectively, “Plaintiffs”), Second Amended Individual, Collective, and Class Action Civil Complaint (the “Second Amended Complaint”), with prejudice. Dkt. No. 59; see also, Dkt. No. 52. For the foregoing reasons, the Court GRANTS in part and DENIES in part the Motion.

         I. BACKGROUND

         William and Smith, as well as many other commercial truck drivers (the “Contracting Drivers”), each entered into a written Contractor Operating Agreement (the “Agreement”), [2] Dkt. No. 88, Ex. B-3 at 11-28; Dkt. No. 88, Ex. B-4 at 14-31, through which Celadon sought to utilize vehicular equipment owned or leased by the Contracting Drivers to provide services in connection with its business. Agreement, § 1.03. The Agreement obligated Celadon to pay a Contracting Driver for his delivery services “within fifteen (15) days after submission by [the Contracting Driver] to [Celadon] of [certain] accurately prepared and fully completed documents with respect to such services.” Id. at § 5.03. The Contracting Drivers 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 [the drivers].” Id. at § 5.05. The Agreement also stated that the Contracting Drivers were responsible for “[p]aying all operating costs and expenses incidental to the operation of [their vehicular equipment] including but not limited to” costs related to fuel, insurance, oil, tires, repairs, licenses, plates, and tolls. Id. at § 9.02(c). Furthermore, the Agreement required each Contracting Driver to maintain an escrow account and authorize Celadon, in its discretion, “to apply all or any portion of [a driver's] Escrow Account to the payment of any charges or indebtedness” incurred during the term of the Agreement. Id. at §10.04. If a Contracting Driver was indebted to Celadon in an amount greater than that held in his escrow account, his indebtedness would be reduced by the amount available in his escrow account, and that Contracting Driver would be personally liable to Celadon for any remaining indebtedness. Id. at § 10.05. If any amounts remained in a Contracting Driver's escrow account after his Agreement was terminated, the remaining amounts would be returned to that driver. Id. at §§ 10.05, 10.06.

         While working with Celadon, Plaintiffs regularly requested and received advances from Celadon for personal use and for costs associated with operating their vehicles, in exchange for one-time service fees ranging from $3.50 to $7.50 for each advance.[3] Dkt. No. 79, Ex. 26 (“Isaacs Dep.”), 26:1-28:4, 33:22-40:16; Dkt. No. 88, Ex. A (“Isaacs Decl.”), ¶¶ 7, 11. Celadon typically provides such requested advances to its drivers, including the Plaintiffs, by either loading the funds onto the drivers' fuel cards or by issuing an “express code” that would allow the drivers to obtain cash at truck stations. Isaacs Decl. ¶ 10; Isaacs Dep., 37:10-38:9. These advances, and their associated service fees, are generally “tied to the trip that [a driver is] on when he takes the advance” and are reflected as reductions on the driver's paycheck for that trip. Isaacs Dep., 65:7-66:14. See also, Isaacs Decl., ¶ 9. When the total amount due to a driver for a particular paycheck does not cover the entire amount already advanced to that driver, the remaining amount is reflected as a reduction on the driver's subsequent paychecks until the entire advanced amount can be accounted for. Isaacs Dep., 50:21-51:2; Isaacs Decl., ¶ 11. If a driver's Agreement is terminated after that driver received advances that have not yet been accounted for on the driver's paychecks, the remaining advanced amount would be deducted from the driver's escrow account before the remaining escrow account funds are returned to the driver. Isaacs Dep., 51:12-52:25; Isaacs Decl., ¶ 12. Celadon has not sought to recover any advanced amounts not otherwise covered by a driver's paychecks or escrow account by taking legal action, hiring collection agencies, or debiting a driver's checking account in at least five years. Isaacs Dep., 51:12-52:6; Isaacs Decl., ¶ 13.

         In their First Amended Complaint, Plaintiffs claimed that the advances made by Celadon constituted loans in violation of the Indiana Small Loans Act, Ind. Code §§ 24-4.5-7-101 et seq. (“ISLA”), and Indiana Consumer Loan Act, Ind. Code §§ 24-4.5-3-101 et seq. (“ICLA”). Dkt. No. 21, ¶¶ 97-130, 160-165. Plaintiffs further asserted that Celadon's deductions for items, such as “lease payments, fuel purchases, insurance purchases, and payroll advances, ” constituted wage assignments in violation the Indiana Wage Assignment Act, Ind. Code §§ 22-7-7-1 et seq. (“IWAA”), 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.

         On December 2, 2016, the Court dismissed Plaintiffs' claims pursuant to the ISLA, ICLA, and IWAA without prejudice and granted Plaintiffs leave to amend their First Amended Complaint. Dkt. No. 50. On December 15, 2016, Plaintiffs filed their Second Amended Complaint, in which they re-plead their claims against Celadon under the ISLA, ICLA, and IWAA. Dkt. No. 52. Celadon filed the Motion on January 12, 2017, arguing that Plaintiffs' Second Amended Complaint still fails to sufficiently plead their claims under the ISLA, ICLA, and IWAA and that, in light of the undisputed material facts of this case, these claims should be dismissed as a matter of law. Dkt. No. 60; Dkt. No. 88.


         As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990). Motions for summary judgment are governed by Federal Rule of Civil Procedure 56, which provides in relevant part: “The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

         Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials showing that a fact either is or cannot be genuinely disputed. Fed.R.Civ.P. 56(c)(1). A genuine issue of material fact exists whenever “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir. 1996). It is not the duty of the Court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying applicable evidence. See Bombard v. Ft. Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996).

         In evaluating a motion for summary judgment, the Court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). If the moving party does not have the ultimate burden of proof on a claim, it is sufficient for the moving party to direct the Court to the lack of evidence as to an element of that claim. See Green v. Whiteco Indus., Inc., 17 F.3d 199, 201 & n. 3 (7th Cir. 1994). “If the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial, summary judgment must be granted to the moving party.” Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996).


         In Counts IV and V of the Second Amended Complaint, Plaintiffs assert that the advances provided by Celadon constitute “loans” that violate the ISLA and ICLA, respectively. Dkt. No. 52 at 22-27, 31-32. However, Celadon argues in large part that the advances do not meet the definition of a “loan” under these statutes and, therefore, do not violate the ISLA or ICLA. Dkt. No. 88 at 8-9.

         The ICLA 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. As the Court previously stated, this statutory definition implies that a debt must be created in order for a loan to exist. Dkt. No. 50 at 6. The definition of a “loan” found in the ICLA is also applicable to the ISLA. 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 ISLA, 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 ...

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