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A chargeback isn't a sale of insurance

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The 7th Circuit Court of Appeals held today that a chargeback for the cost of insurance is not a sale of insurance, as some owner-operators of leased trucks argued. The Circuit Court also took issue with the District judge’s decision on which statute of limitations applied to the parts of the suit.

In Owner-Operator Independent Drivers Association Inc., et al. v. Mayflower Transit, LLC, No. 08-1679, some owner-operators of trucks leased by Mayflower Transit challenged the company’s policy of reducing price-per-mile payments and other fees by the cost of insurance, a process called chargeback. They argued under 49.U.S.C. Section 14704(a)(2) that a chargeback violates 49 C.F.R. Section 376.12(i), which says “the lessor is not required to purchase or rent any products, equipment, or services from the authorized carrier as a condition of entering into a lease arrangement.” The owner-operators claimed the requirement to reimburse Mayflower for the insurance is the same thing as buying insurance from Mayflower.

U.S. District Judge Sarah Evans Barker dismissed some of the plaintiffs’ claims for relief after finding that the statute of limitations is two years, even though Section 14704(a)(2) didn’t define a period of limitations for suits on its authority. The owner-operators argued that the residual statute of limitations allows for a four-year period.

Judge Barker held that a chargeback for the cost of insurance isn’t a sale of insurance. She also thought the failure of Section 14705(c), which states a two-year statute of limitations under Section 14704(b), but doesn’t mention Section 14704(a)(2), was a scrivener’s error and that it could be corrected by reading the reference to (b) as if it were referring to (a)(2).

This was a problematic approach, wrote Chief Judge Frank Easterbrook, because Congress enacted and the president signed a statute that places a two-year limitation on administrative complaints under (b), but left (a)(2) to the four-year residual statute of limitations.

“A judge’s belief that Congress planned to do something different but bollixed the job does not alter what the enacted statute provides,” he wrote. “The Constitution gives the force of law only to what is actually passed by both houses of Congress and signed by the President. What Congress meant to do, but didn’t, is not the law.”

Two other Circuit Courts have also addressed this subject and found that (b) must be enforced as written and the period of limitations for suits under (a)(2) is four years.

The 7th Circuit also affirmed that a chargeback is not considered a sale of insurance and does not violate Section 376.12(i). Chief Judge Easterbrook noted that the 8th Circuit reached the same conclusion on chargebacks and no other Court of Appeals has held otherwise. The judges remanded for any further proceedings that may be required by their ruling on the limitations issue.

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  1. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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