Roberts v. C.R. England, Inc.

CHARLES ROBERTS, an individual, and KENNETH MCKAY,an individual, on behalf of themselves and others similarly situated, Plaintiffs, v. C.R. ENGLAND, INC., a Utah corporation; OPPORTUNITY LEASING, INC.,a Utah corporation; and HORIZON TRUCK SALES AND LEASING, LLC,a Utah Limited Liability Corporation, Defendants.

Case No. 2:12-CV-00302-RJS-BCW

UNITED STATES DISTRICT COURT DISTRICT OF UTAH - CENTRAL DIVISION

January 31, 2017

MEMORANDUM DECISION AND ORDER

Judge Robert J. Shelby

Magistrate Judge Brooke C. Wells

This is a putative class action brought against two affiliated trucking companies by drivers once associated with those companies. Plaintiffs Charles Roberts and Kenneth McKay allege that Defendants C.R. England, Inc. and Opportunity Leasing, Inc. developed a fraudulent plan to induce thousands of people to enroll in England's driver training schools by promising students the choice of eventual employment as a company driver or the ability to earn a desirable income driving as an independent contractor. Plaintiffs contend that in reality, company driver positions were largely unavailable, and students in the driver training schools were subjected to a misinformation campaign to convince them to lease trucks from the Defendants and become independent contractor drivers affiliated with England. Hundreds, if not thousands, of students were persuaded to invest substantial sums of money to lease trucks from Defendants and become independent contractor drivers. But many soon found they could not earn a living as they had been led to believe, and were left debt-ridden. Plaintiffs sue to recover on behalf of these drivers and now move the court for class certification.¹

Defendants acknowledge the hardship accompanying the life of a long-haul trucker, but vigorously deny Plaintiffs' allegations. Defendants oppose class certification,² move for judgment on the pleadings on several of the Plaintiffs' claims,³ and request summary judgment under several theories.⁴ To Defendants, the fraud Plaintiffs allege is a fiction, and myriad individualized issues make this case unsuitable for class certification.

After careful consideration of the pleadings, the parties' extensive briefing and post-hearing submissions, the record developed, and the arguments presented by counsel, the court grants Defendants' motion for judgment on the pleadings, denies Defendants' motion for summary judgment, and grants in part and denies in part Plaintiffs' motion for class certification.

TABLE OF CONTENTS

BACKGROUND

I. Overview of C.R. England and Opportunity Leasing, Inc. (Horizon) ......................... 5

II. The Third Amended Complaint (Dkt. 101) .................................................................. 8

A. General Allegations ............................................................................................... 9

B. Allegations Specific to Individual Plaintiffs ....................................................... 10

C. Claims for Relief .................................................................................................. 11

III. Facts Relating to the Motion for Class Certification .................................................. 12

A. Implementation Plan ........................................................................................... 13

1. Online Advertising ........................................................................................... 13

2. Program Brochures .......................................................................................... 14

3. Initial Recruitment ........................................................................................... 15

4. Student Training Agreement ............................................................................ 16

5. England's Training Program ............................................................................ 17

6. England Business Guide .................................................................................. 19

B. Experiences of Proposed Class Representatives ................................................. 21

C. Experiences of Other Drivers .............................................................................. 24

D. Driving Opportunity ............................................................................................ 27

E. Uniformity ........................................................................................................... 29

F. Turnover Rates .................................................................................................... 30

G. OWNRRE Database ............................................................................................ 31

IV. Facts Relating to Choice of Law ................................................................................ 32

ANALYSIS

I. Motion for Partial Judgment on The Pleadings (Dkt. 189) ........................................ 34

A. Standard for Judgment on the Pleadings ............................................................. 34

B. Standard for Plaintiffs' RICO Claim ................................................................... 35

C. Analysis of Plaintiffs' RICO Claim ..................................................................... 381. The Relationship Between Drivers and the Enterprise .................................... 39

2. England and Horizon as Persons and Enterprise ............................................. 43

D. Analysis of Plaintiffs' UPUAA Claim ................................................................. 49

II. Motion for Summary Judgment (Dkt. 230) ................................................................ 49

A. Standard on Summary Judgment ......................................................................... 50

B. Choice of Law ..................................................................................................... 51

1. Effect of Choice of Law Provision in the Agreements .................................... 52

2. Application of Restatement Section 145/148 Factors ..................................... 53

C. Existence of an Assisted Marketing Plan ............................................................ 57

1. Initial Required Consideration ......................................................................... 58

2. Seller Representation ....................................................................................... 60

D. Preemption .......................................................................................................... 63

1. "Related to" Requirement ................................................................................ 67

2. Transportation Services ................................................................................... 69

E. Statute of Limitations .......................................................................................... 69

III. Motion for Class Certification (Dkt. 206) .................................................................. 73

A. Standard for Class Certification .......................................................................... 74

B. Rule 23(a) ............................................................................................................ 76

1. Numerosity ...................................................................................................... 76

2. Commonality ................................................................................................... 773. Typicality ......................................................................................................... 89

4. Adequacy ......................................................................................................... 91

C. Rule 23(b) Factors ............................................................................................... 92

1. Predominance .................................................................................................. 92

D. Superiority of Class Action ................................................................................ 112

E. The Utah Consumer Sales Practice Act & Administrative Notice ..................... 114

F. Notice ................................................................................................................. 115

BACKGROUND

I. OVERVIEW OF C.R. ENGLAND AND OPPORTUNITY LEASING, INC. (HORIZON)

C.R. England, Inc. is a nationwide trucking company specializing in temperature-controlled transportation. Headquartered in West Valley City, Utah, England has been a family-run business since its inception in 1920. After nearly a century of expansion, it is now Utah's fifth-largest employer. Between 1965 and 2005, England's annual revenue increased from $1 million to over $544 million. Dan England, a grandson of England's founder, oversaw much of this growth as the company's chief executive officer. His son, Josh England, currently serves as the company's president and chief financial officer. England and its affiliated company's growth continued to skyrocket through at least 2009.

England family members formed Opportunity Leasing, Inc. in 1997.⁵ The company often operates under the name Horizon Truck Sales and Leasing, although it has entered into contractsunder its corporate name.⁶ Horizon exists primarily to lease trucks to drivers who have chosen to work as independent contractors affiliated with England.⁷

The parties differ in their views of Horizon's relation to England. Defendants contend that Horizon and England are separate but affiliated corporate entities, while Plaintiffs see Horizon as a part of England's "empire."⁸ Referencing internal audits, organization charts, and financial statements, Plaintiffs argue that the two Utah-based, England family-owned businesses consolidated their finances,⁹ and sometimes shared management.¹⁰ For example, Mitch England testified that he ran Horizon while working as a vice president for England. Testimony and internal documents suggest that after the England family formed Horizon, Horizon...