# Opposition Brief — Hathcock v. Acme Truck Line, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0993%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 2002 - **Citation:** 535 U.S. 928 ## Text Supreme Court, U.S. FILED NO. 01-0976 SUPREME COURT OF THE UNITED STATES. “| BOBBY HATHCOCK, Petitioner versus ACME TRUCK LINE, INC., Respondent ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT ACME’S BRIEF IN OPPOSITION TO HATHCOCK’S PETITION FOR WRIT OF CERTIORARI ELLIS B. MUROV Counsel of Record CHARLES F. SEEMANN III Deutsch, Kerrigan & Stiles, L.L.P. 755 Magazine Street New Orleans, Louisiana 70130 Phone: 504-581-5141 - and - M. DAVID FROCK Frock & Broussard, P.C. 2550 North Loop West, Suite 260 Houston, TX 77092-8908 Phone: 713-688-2300 Attorneys for Respondent, Acme Truck Line, Inc. TABLE OF CONTENTS py Re ge ee reer tere rer il TAB Ge AUTRES ov ctsnewevecsedesssces XiV EE Sordi Wi dundediae steed dsu coeur ss 2 PE Sk ih StS Sho ok ea heed ee cn aves 3 I. HATHCOCK’S PETITION DOES NOT JUSTIFY THE EXERCISE OF JURISDICTION HEREIN ...........-.: 3 Il. THE RELEVANT UNDISPUTED PEATEs PIMIS o vcecvecccscvesss 5 Ill. JUDGES HITTNER, JOLLY, SMITH AND WIENER CORRECTLY HELD THAT THE AGREEMENT DID NOT CONTAIN CONTRA BONOS MORES a | ere rere reer 11 A. ENE OE re 11 B. The Statutes on Which Hathcock Relies Address Or Relate to Wages and Not Rental cri adawddube ceive 12 od Acme Did Not and Has Not Deducted Sums Representing SUTA or FUTA Contributions, Workers Compensation Premiums and/or FICA from the Wages of Hathcock or Any Co CEE acs oceans evevseset 14 1. Wages include monies for driving a truck. ....... 14 2. Wages do not include consideration paid pursuant to- a vehicle ET eee ee ree 15 a Hathcock’s inability to distinguish his dual capacity is, to the extent that it is not already clear, discernible by Acme’s_ consistent treatment of all lessors .... 16 4, Summary: A refutation of specific statements in Ge PU ck ec cecsceves 19 D. Hathcock’s Contention _ that Acme Has Illegally Shifted Its Tax Burden Is Radical, Very, Very Wrong, and Legally VEINS i. viens Oe beebas: 21 iil E. The Infirmity of Hathcock’s Legal Position Is Exemplified by the Absence of Legal Support Therefor and a Meritless Parade of Horribles .... 24 b The absence of legal ee 24 2. Hathcock’s parade of DD vows bayueens at 28 IES Uidvecadesccecestaveeeenecereceess 29 iV TABLE OF AUTHORITIES CASES Backaus v. Murphy Motor Freight Lines, oe Pee eee 12 Brown v. Vernon Sawyer, Inc., 645 So.2d 260 ee te BBR or er er re ee 15 Deleu v. Scaife, 775 F.Supp. 712 Sa PU CREE Siw CRS RUNS Rs theres Feuwwin ss 12 Delno v. Celebreeze, 347 F.2d 159 (9th Cir. 1965) ...... 16 Digiovanni v. City of Rochester, 680 F Supp. 80 CB ee SE bcp ows + 04 reek haw cuere des kes 12 Fontenot v. Trans Gulf, Inc., 664 So.2d 1238 as MEE SUE cacdbiwedtouesudsaeuevacsts 14 Ford v. Troyer, 25 F.Supp.2d 723 (E.D. La. 1998) ...... 12 Gardner v. Ewing, 88 F.Supp. 315 (S.D. Ohio 1950), aff'd, 185 F.2d 781 (6th Cir. 1950), aff'd, 341 U.S. 321 (1951) ............ 25 Hospital Resource Personnel, Inc. v. U.S., fh Foi kit ts 2. Serre er eerie 25, 26 In re Richardson Dinner Theater, Inc., 421 F.Supp. 423 (N.D. Tex. 1976) ..........eeees 27, 28 McElwee v. Wharton, 19 F.Supp.2d 766 Cay ah I BE ks Cos cwhs piece nestiastektasaaes 12 Phillips v. Phillips, 820 S.W.2d 785 (Tex. 1991) ....... Rakowitz v. Zurich American Ins. Co., Docket No. SA/98-107023-/01-CC-5A45 ............. Reef v. Mills Novelty Co., 89 S.W.2d 210 a FO. | repre ey er re renner ys Salazar v. Brown, 940 F.Supp. 160 Oe eae Sanchez v. Overmeyer, 845 F.Supp. 1178 Ce CD HONE 5b 6005 Fee sic bus her ONS 00a ews Spilky v. Helphand, 1993 WL 159944 ES | Re roe re rrr Pr err re Pe Tenneco v. Padre Drilling Co., 453 S.W.2d 814 SE inde ik sae ae Uke ees Vee ot bondaneeban United States v. Pomponio, 528 F.2d 247 (4th Cir. 1975), rev'd and remanded, tt RL Re re an ne ee STATUTES y is Toe Tre ry rer rere GRE ET ais be ice CaN dec schon saneeass Eh a ED Sc eS nian ee ewer eek es Fe 8 4 | eer Te CIEE CLE TEE RTT Por ree vl Fes y - - POPrrrerirriir ott ii 12 Tender Cate GOR. Stee bees se cess is 0210 as 14 Tex. Labor Code $206.00QO) .ncccccccvccvcccccccns 12 FUR EMT COE BIIGGGD cccccccccccusetercbvsres 25 BORE AOOE COGS SRST Te cc ccccecieias¥awsaves 25, 26 Tex. Labor Code §§207.071-72 ........ cece 27, 28 MISCELLANEOUS mene Comt Rake 30 ii ios 6c bai vcdewexiosaent: 12 Vii SUPREME COURT OF THE UNITED STATES —- BOBBY HATHCOCK, Petitioner versus ACME TRUCK LINE, INC., Respondent ACME’S BRIEF IN OPPOSITION TO HATHCOCK’S PETITION FOR WRIT OF CERTIORARI TO THE HONORABLE, THE CHIEF JUSTICE AND THE ASSOCIATE JUSTICES OF THE COURT OF THE UNITED STATES Bobby Hathcock (“‘Hathcock”) was a driver/employee of Acme Truck Line, Inc. (“Acme”) and a lessor of capital equipment. Hathcock, as an employee, received a wage. Acme undisputedly withheld and paid the appropriate taxes on those wages. Acme, as lessee, also paid rent to Hathcock in his capacity as a lessor. Hathcock sued challenging provisions in his Lease Agreement (“Lease,” “Lease Agreement,” or “Agreement”’) that resulted in the reduction of the total amount of rent. Hathcock contends that the Agreement is contra bonos mores. The trial court and the court of appeals dismissed Petitioner’s lawsuit because his entire case is predicated upon | the erroneous presupposition that all of the monies paid by Acme to him were wages for personal services and that none of the monies represented consideration for lease of capital equipment. Petitioner’s writ is absolutely meritless and was properly rejected by the district court and the court of appeals. BACKGROUND Hathcock has owned a 1990 Ford pickup truck since 1995. He leased the truck to Acme pursuant to the Lease. Acme paid Hathcock rent for the truck in accordance with the Agreement. Hathcock drove the truck for Acme. Acme treated him as an employee, and for good reason. He was. Accordingly, Acme compensated Hathcock with a paycheck. After Hathcock resigned, he filed suit in state court. There, Hathcock alleged on behalf of himself and others that he was an independent contractor rather than an employee, that Acme breached the Lease, that Acme defrauded him, that Acme was unjustly enriched, and that Acme had committed conversion. He further contended that the Lease was contra bonos mores. Finally, Hathcock sought declaratory and injunctive relief. Acme removed the case to the United States District Court for the Southern District of Texas. Acme sought summary judgment based on 94 statements of material fact. Hathcock did not dispute any of the 94 statements of material fact. Nevertheless, he filed a cross-motion for summary judgment. Judge David Hittner granted Acme’s Motion and denied Hathcock’s Motion, as well as Hathcock’s Motion for Reconsideration. Hathcock appealed. A panel composed of the Hon. Grady Jolly, Jerry L. Smith and Jacques L. Wiener, Jr. affirmed summary dismissal. Hathcock sought reconsideration. Judges Jolly, Smith and Wiener denied the Motion for Reconsideration. Hathcock then filed a Petition for Writ of Certiorari (“Petition’’). Judges Hittner, Jolly, Smith and Wiener correctly concluded that Hathcock’s allegations were so lacking in merit that summary dismissal was warranted. For that reason and others, Hathcock’s Petition should be denied. ARGUMENT I. HATHCOCK’S PETITION DOES NOT JUSTIFY THE EXERCISE OF JURISDICTION HEREIN Hathcock does not ask this Court to review the summary determination of his status as an employee. Nor does Hathcock appear to ask this Court to review the summary dismissal of his state law breach of contract, conversion, fraud and unjust enrichment claims. Rather, Hathcock seems to ask this Court to only review whether the Agreement contravenes public policy. Supreme Court Rule 10 requires a petition to show the existence of a compelling reason to grant a petition. Rule 10 itself describes the type of cases that potentially warrant Supreme Court review. According to Rule 10, review could be appropriate where an appellate decision conflicts with an opinion of another court of appeal, a state court of last resort, or a decision of this Court. Hathcock’s Petition, however, does not claim that the Fifth Circuit’s opinion below conflicts with the opinion of another federal court of appeal, a court of last resort of any state in this country or with any decision of this Court. Review could also be appropriate, according to Rule 10, where an important question of federal law has not been resolved by this Court. Hathcock seems to contend that the Fifth Circuit Court of Appeals has decided an important question of federal law that has not been but should be decided by this Court. Petitioner is wrong for three reasons. First, Hathcock filed his Petition in state court. He asserted only state law causes of actions. Second, a cursory review of Hathcock’s Petition herein shows that most of the statutes which purportedly support his contra bonos mores claim are state rather than federal statutes. See pp. 3, 4, 5, 11, and 14-16 of the Petition. Third, Hathcock does not even remotely demonstrate that the decisions and reasoning of Judges Hittner, Jolly, Smith and Wiener are erroneous. Accordingly, there is no reason why this Court should grant the Petition. een es, Il. THE RELEVANT UNDISPUTED MATERIAL FACTS. The following Statements of Material Fact' appear to be relevant to the issues raised by Hathcock in his Petition for Writ of Certiorari: l. Acme transports equipment, materials and supplies throughout the United States. 4. Acme does not own trucks; rather, it leases vehicles of various sizes from corporations, partnerships, companies and individuals. 5. Acme employs drivers about half of whom drive their own trucks. Stated differently, about half of Acme’s drivers operate trucks owned by another natural or artificial person. For example, Lee Trucking Corporation owns and leases eight trucks to Acme. However, its President, Ronnie Lee, does not drive any of them. Similarly, James Rakowitz (now deceased) owned and leased five trucks to Acme. He drove one of them. exhibits and affidavits to Judge Hitter and with record references to same | ; These were presented with attached deposition testimony in the Fifth Circuit. References to same are deleted herein. 5 6. Hathcock acquired a 1990 Ford pickup truck with over 85,700 miles on it in April 1995 for $7,050. 11. On July 18, 1996, Hathcock and Acme executed a Lease Agreement for a 1990 pickup truck. 12. Pursuant to 93 of the Lease Agreement, Acme paid lessors, including Hathcock: . seventy (70%) percent of the “Earned Revenue derived by the Lessee from the Leased Equipment,” as defined herein, less driver’s wages; payroll taxes (including FICA and other deductions); cost of medical or hospitalization insurance, if applicable; pre- employment driver application information costs, including cost of obtaining motor vehicle driving record; cost of pre-employment driver medical examinations, testing and screening; cost of driver medical examinations, testing and screening, including driver drug testing, screening, medical evaluations and consultations, and biennial medical examinations as may be required by the U.S. Department of Transportation, Federal Highway Administration or any other governmental body, and such other costs or payments made by Lessee by reason of driver employment, and less any “Operating costs and expenses,” and other charges, hereinafter provided, which are incurred by Lessee in connection with the use and/or operation of the Leased Equipment and for which Lessor shall be responsible. (Emphasis added). 13. Acme executed identical leases with its other natural and artificial lessors. 14. During the existence of the Lease Agreement, Acme issued Hathcock a weekly settlement check (“rental check”) pursuant to and in accordance with paragraph 3 of the Lease Agreement. 15. Hathcock cancelled his Lease Agreement with Acme on February 6, 1997. 22. Acme has discharged drivers, while at the same time maintaining (not canceling) the Lease Agreement (lessor/lessee relationship) with said drivers. 56. Hathcock and other drivers received weekly paychecks (“employee paycheck”) from Acme. Acme withheld income, social security and Medicare taxes. 62. The IRS has conducted an employment tax compliance check on July 18, 1996. At the time, the IRS reviewed and reconciled Forms 940, 941, W-2, W-3, W-4, 1096 and 1099, together with the related compensation and leasing agreements. The compliance check specifically examined the status (employee/independent contractors) of the driver. 63. The IRS did not find fault with Acme’s: a. Treatment of drivers as employees. b. Deductions. c. Accounting. 65. Acme has submitted its Lease Agreement to federal and state agencies, including the Interstate Commerce Commission Cha} -- LO te IE LN A TEL 66. The ICC suggested changes to Acme’s Lease Agreement in the late 1980s. The ICC, however, did not suggest, much less require, a change to §3 of the Lease Agreement. 67. Neither the Texas Railroad Commission nor the Public Service Commissions in Oklahoma, Mississippi, Louisiana and Alabama have ever suggested, much less required, a change to q3 of the Lease Agreement. 77. Lessors, such as Hathcock, set drivers wages with parameters (10%-25%) supplied by Acme. 78. Hathcock chose to pay himself 10% for his driving services. 79. Hathcock fully understood the operator/interaction of the two-check system as he chose to set the driver wage as low as possible, i.e., at 10%. 80. Acme paid rental to Hathcock in accordance with paragraph 3 of the Lease Agreement. 81, Hathcock alleges that his economic damages consist of or are equal to the 23% of driver wages deducted from his rental check pursuant to 43 of the Lease Agreement. 82. Acme and its lessors, including Hathcock, agreed that lessors would share in the costs of driver employment (up to 23% of driver wages) for such things as FUTA, SUTA, FICA, Workers Compensation insurance and more, pursuant to 43 of the Lease Agreement. 83. Hathcock claims that he was self-employed and an independent contractor. 84. As an independent contractor, however, Hathcock owed FICA and Medicare, as well as income taxes. 85. Moreover, the cost of duplicating benefits, such as 10 workers compensation, SUTA, FUTA and the value of 401(k) contributions, when coupled with monies due by independent contractors for FICA, Medicare and income taxes, exceeds the monies actually deducted from Hathcock’s rental and employee paychecks. III. JUDGES HITTNER, JOLLY, SMITH AND WIENER CORRECTLY HELD THAT THE AGREEMENT DID NOT CONTAIN CONTRA BONOS MORES PROVISIONS. A. Introduction. Hathcock did not dispute Statement of Material Fact Nos. 4, 5, 11-14, 56, 80, 81 and 82. These statements and Coatney Affidavit (No. 2)’ show that Acme paid in full FICA and FUTA to the federal government and SUTA to state governments. These statements also show that Acme issued all lessors (including Hathcock) a rental check to compensate them for the use of their vehicles, and that Acme issued all drivers (including Hathcock) a paycheck to compensate them for driving vehicles. These statements, moreover, show that Acme did not pass along to employees any of the costs of driver employment. These statements finally show that Acme passed along some of . Coatney A ffidavit No. 2 was submitted along with “Acme Truck Line, Inc.’s Response to Plaintiff's ‘Factual Basis’ that Allegedly Supports his Motion for Summary Judgment.” 11 the costs of driver employment to truck suppliers, i.e., lessors such as Hathcock. B. The Statutes on Which Hathcock Relies Address Or Relate to Wages and Not Rental Revenues. Hathcock cites to the provisions calling for payment of FICA and Medicare taxes at p. 3 of his Petition. For example, he represents that employers are required to pay a portion (4), and that employees are required to pay the other half. See 26 U.S.C. § 3111(a) and (b).? Hathcock, however, does not ; Hathcock does not claim that he has a private cause of action under the Social Security Act, and for good reason. He does not. See Salazar v. Brown, 949 F.Supp. 160, 164 (W.D. Mich. 1996); Spilky v. Helphand, 1993 WL 159944 at p. 2 (S.D. N.Y. 1993). Nor is there an implied private cause of action where an employer does not comply with its FICA obligations. See, e.g., McElwee v. Wharton, 19 F.Supp.2d 766, 770 (W.D. Mich. 1998) (holding remedy of restitution is not available); Salazar, 940 F.Supp. at 164-65; Spilky, 1993 WL at pp. 2- 3; Digiovanni v. City of Rochester, 680 F.Supp. 80, 82-83 (W.D. N.Y. 1988). See also Deleu v. Scaife, 775 F.Supp. 712, 716 (S.D. N.Y. 1991) (granting defendant’s unopposed motion to dismiss FICA and FUTA claims finding that “Congress [did not intend] to imply a private remedy for violation of these sections of federal tax law”). While Acme is not ethically required to bring contrary authority to the attention of this Court, two district court judges have reached a different conclusion. See Sanchez v. Overmeyer, 845 F.Supp. 1178 (S.D. Ohio 1993); Ford v. Troyer, 25 F.Supp.2d 723 (E.D. La. 1998). Acme submits that these decisions are not sound. Regardless, none of these cases involve situations where the employer withheld the employer and employee portions of FICA and, thus, all taxes had been paid. POINT: Even Sanchez and Troyer do not support Hathcock’s claim herein. 12 contend that these taxes were not paid, and for good reason. They were. At p. 11 of the Petition, Hathcock cites provisions prohibiting assignments, attachments and garishments of Social Security benefits (42 U.S.C. §407), even though there are no allegations, much less facts, showing the applicability of 42 U.S.C. §407. Hathcock also cites 26 U.S.C. §3301 which imposes an unemployment tax on employers. There are, however, neither allegations nor facts showing that Acme did not pay all FUTA sums due. Hathcock further cites provisions requiring Texas employers to pay an unemployment compensation tax based on a percentage of “wages for employment paid during a calendar year...” (Tex. Labor Code §204.002(a) (emphasis added)) and prohibiting employers from “deduct[ing] any part of [said] contributions from the wages of an individual in the employer’s employ.” Tex. Labor Code §204.003 (emphasis added).* See also Texas Labor Code 207.073 (same). Again, however, Hathcock cannot point to any evidence showing that Acme failed to pay all SUTA due or that Acme recouped said costs from its employees. Moreover, Hathcock cites La. R.S. 23:1531, which prohibits employers from recouping their SUTA contributions from wages, and La. R.S. 23:532, which sets forth the amount F Private causes of action are not specifically authorized for violations of this statute and Hathcock has never claimed that one exists. 13 of the tax. Again, there are no facts supporting an allegation that Acme did not pay SUTA or reduced Hathcock’s or anyone else’s wages to cover its liability for SUTA. Finally, Hathcock cites §§207.071-73 of the Texas Labor Code that prohibit employers from agreeing to employ persons provided that they agree not to seek unemployment compensation benefits. However, there are no allegations or facts showing the applicability of said provisions herein. C. Acme Did Not and Has Not Deducted Sums Representing SUTA or FUTA Contributions, Workers Compensation Premiums and/or FICA from the Wages of Hathcock or Any Other Driver. 1. Wages include monies for driving a truck. Wages are defined as “all remuneration for personal services.” Tex. Labor Code Ann. §201.181. Personal services are those “rendered by the claimant personally.” Tenneco v. Padre Drilling Co., 453 S.W.2d 814, 819 (Tex. 1970). See also Fontenot v. Trans Gulf, Inc., 664 So.2d 1238, 1248 (La.App. Ist Cir. 1995) (stating that “wages means the amount earned by the employee through his own labor, rather than profits for his enterprising or rental for any equipment he may provide. ..”). Hathcock, for some reason, fails to cite the provisions in the Louisiana Revised Statutes stating that “[e]mployment, 14 —————