Driver issuesLegal issuesNewsRailroadTrucking

Horizon Freight wins a battle in an “employee or contractor” driver case, but impact is limited

Photo: Horizon Freight home page

In a legal case brought in a federal court in Illinois over the question of drivers being contractors vs. employees, Horizon Freight has won a round. But it isn’t expected to have much impact on the heavily-litigated question of driver status.

Judge Andrea Wood of the northern district court of Illinois’ Eastern division ruled this past week that the putative class action case brought by two plaintiffs against Horizon Freight System was in the wrong court. It should have been a state action, she said in her decision. A putative class action is one in which the plaintiffs seek class certification but haven’t been granted that designation yet (and may not ever get it).

The question of jurisdiction came up because Horizon is based in Cleveland, Ohio.  Horizon describes itself as an intermodal carrier. Mohammed Ayyash and Fadi Hafez, the two plaintiffs in the cases, are both based in Illinois and worked for Horizon out of an Illinois-based facility.

Hafez had a clause in his agreement with Horizon called a “forum-selection” clause that designates an Ohio county court as the forum for any legal disputes with Horizon. It is that clause that was the basis for the ruling by Judge Wood.

“Plaintiffs…argue that regardless of the validity of the choice-of-law clause, the Court should not enforce the forum-selection clause because he had no bargaining power to negotiate it and because the present case has no ties to Ohio with respect to (Illinois law) except for the location of Horizon’s headquarters,” Judge Wood wrote in her November 15 decision. “But a mere lack of bargaining power on the part of one party to a contract does not make a forum-selection clause invalid. Likewise, mere inconvenience to the opposing party is not sufficient to invalidate a forum-selection clause as ‘unreasonable.’”

After going through a lengthy discussion of the law, Judge Wood writes that the plaintiffs “have failed to meet (the) burden of establishing Ohio (as a) gravely inconvenient forum such as to effectively deprive him of a meaningful day in court.”

Wood dismissed the case and state that on the basis of the forum-selection clause, Hafez could bring the case in Cuyahoga County, Ohio, where Cleveland is located.

Alejandro Caffarelli, attorney with Caffarelli & Associates of Chicago and counsel for both Hafez and Ayyash, said in an email to FreightWaves that because the decision only covered Hafez, it would not impact the federal case for Ayyash, which will continue. Aayash did not have the same sort of agreement as Hafez.

Caffarelli described the scope of the decision as “limited” and that a decision has not been reached yet whether to pursue state court action for Hafez.

The case is just over three years old. In her decision, Wood summed up the crux of the plaintiffs’ description of their status at Horizon.

“Their agreements with Horizon specify that they were independent contractors even though, according to Ayyash and Hafez, they were actually Horizon’s employees,” she wrote. “Ayyash and Hafez also allege that Defendants deducted certain operating expenses from their pay without authorization. Those deductions included expenses associated with truck leases, insurance, fuel, maintenance, repairs, tolls, base plates, lubricants, tires, workers’ compensation coverage, phone and communication charges, equipment fees, and administration. Some of the expenses should have been borne by their employer. The deductions were so large that they would sometimes amount to over 25% of Ayyash’s total wages. As a result, Ayyash was paid less than a federal minimum wage or was not paid for all the hours he worked.”

Tags
Show More

John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.

2 Comments

  1. Here we go again?. Another one who thought they were going to be a millionaire the easy way finds out its hard to make money as an owner op so they claim the company should pay their bills for them while still paying them 70-80% of the revenue?.
    Ive been an,owner op for 30 years. Theres been hard times and theres been great times.
    Learn to make smart decisions about who you work with for how much, get ready to fix your truck on the side of the road in a blizzard if thats what it takes instead of getting a room at the holiday inn for a week while a dealer fixes everything and realize you cant spend all your money on chrome and big screen tv .

  2. I have yet to see any lease for an owner op that doesnt clearly specify that the contractor is responsible for the fuel,oil,repairs,etc.
    Either this suit is purely bogus or the "contractors" are "forgetting"about the lease the signed when the put the truck on.
    Either way its ironic that they argue that they should be allowed to unilaterally ignore the terms of a contract that theyre complaining someone else is ignoring?

Close