Hubert Walker v. Trailer Transit, Inc. , 824 F.3d 688 ( 2016 )

In the
United States Court of Appeals
For the Seventh Circuit
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No.  15-­‐‑1482
HUBERT  E.  WALKER,  on  behalf  of  himself  and  a  class,
Plaintiff-­‐‑Appellant,
v.
TRAILER  TRANSIT,  INC.,
Defendant-­‐‑Appellee.
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Appeal  from  the  United  States  District  Court  for  the
Southern  District  of  Indiana,  Indianapolis  Division.
No.  1:13-­‐‑cv-­‐‑00124-­‐‑TWP-­‐‑DKL  —  Tanya  Walton  Pratt,  Judge.
____________________
ARGUED  SEPTEMBER  16,  2015  —  DECIDED  JUNE  1,  2016
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Before   POSNER,   EASTERBROOK,   and   WILLIAMS,   Circuit
Judges.
EASTERBROOK,   Circuit   Judge.   Trailer   Transit   relies   on   in-­‐‑
dependent  truckers,  which  following  the  parties’  convention
we   call   the   Drivers   (though   they   also   provide   the   rigs   that
carry   the   cargo).   Trailer   Transit   contracts   with   shippers   for
the   movement   of   cargo,   then   contracts   with   Drivers   to   pro-­‐‑
vide   transportation.   It   promises   Drivers   71%   of   the   gross
revenues,  with  exclusions.  Here  is  the  language:
2   No.  15-­‐‑1482
The   parties   mutually   agree   that   [Trailer   Transit]   shall   pay   to
[Driver],  as  rental  for  the  equipment  leased  herein,  for  trips  un-­‐‑
der   [Trailer   Transit]’s   operating   authorities   or   in   [Trailer   Trans-­‐‑
it]’s   service,   a   sum   equal   to   seventy-­‐‑one   percent   (71%)   of   the
gross  revenues  derived  from  use  of  the  equipment  leased  herein
(less   any   insurance   related   surcharge   and   all   items   intended   to
reimburse   [Trailer   Transit]   for   special   services,   such   as   permits,
escort   service   and   other   special   administrative   costs   including,
but  not  limited  to,  Item  889).
In  this  suit  a  class  of  about  1,000  Drivers  contends  that  Trail-­‐‑
er   Transit   made   a   profit   on   its   “special   services”   and   owes
71%  of  that  profit  to  the  Drivers.  The  district  court  held  oth-­‐‑
erwise.   1   F.   Supp.   3d   879   (S.D.   Ind.   2014);   2015   U.S.   Dist.
LEXIS  20250  (S.D.  Ind.  Feb.  19,  2015).
The  Drivers  contend  that  only  items  provided  at  cost  can
be   classified   as   “special   services”   (such   as   permits,   licenses,
flashing   lights,   and   escort   vehicles   for   over-­‐‑wide   or   over-­‐‑
long  loads).  If  Trailer  Transit  bills  a  customer  for  more  than
its   cost,   then   the   service   cannot   be   an   item   “intended   to   re-­‐‑
imburse”   Trailer   Transit,   as   the   Drivers   see   things.   The   dis-­‐‑
trict  court  faulted  this  contention  because  it  amounts  to  say-­‐‑
ing  that  the  Drivers  are  entitled  to  71%  of  the  gross  revenue
on   the   principal   charge   for   transportation   (which   Trailer
Transit  bills  at  a  price  per  mile)  and  71%  of  the  net  revenue
on   everything   else.   That   just   isn’t   what   the   contract   says.
Drivers  are  entitled  to  71%  of  the  gross  charge  for  “use  of  the
equipment”  (that  is,  the  Drivers’  rigs),  but  the  contract  does
not  provide  for  a  share  of  Trailer  Transit’s  net  profit  on  any
other   part   of   the   bill.   It   would   be   possible   to   write   such   a
contract,   but   the   parties   didn’t.   Indiana   law   governs   the
meaning   of   this   contract   in   this   diversity   litigation,   and   the
Drivers   do   not   invoke   any   principle   of   Indiana   law   that
No.  15-­‐‑1482   3
turns   “71%   of   gross   on   X   and   nothing   on   Y”   into   “71%   of
gross  on  X  plus  71%  of  net  on  Y”.
True  enough,  one  standard  meaning  of  “reimburse”  is  to
recover  costs.  Someone  who  submits  a  voucher  for  expenses
incurred   on   a   business   trip   seeks   reimbursement   of   actual
outlays  rather  than  a  profit.  But  this  is  not  the  only  possible
meaning   of   “reimburse.”   The   word   also   is   used   to   mean
“compensate”  or  “pay.”  If  the  contract  had  said  “reimburse
the   expense   of   special   services,”   that   would   limit   the   word’s
meaning   to   recovery   of   actual   costs.   But   those   italicized
words  aren’t  in  the  contract.
Perhaps  the  Drivers  could  have  argued  that  the  exclusion
of   “items   intended   to   reimburse   [Trailer   Transit]   for   special
services”  limits  this  category  to  items  provided  at  cost.  They
then  would  be  entitled  to  71%  of  everything  else  on  the  bill
sent  to  the  shipper.  So  if  Trailer  Transit  paid  someone  $1,000
to  accompany  an  over-­‐‑wide  shipment  and  display  a  “WIDE
LOAD”  banner,  and  billed  the  shipper  $1,250,  then  the  Driv-­‐‑
er   would   be   entitled   to   $887.50   for   that   escort   service—and
Trailer   Transit   would   lose   $637.50   ($1,250   less   $1,000   less
$887.50   equals   -­‐‑$637.50).   But   that’s   not   the   argument   made
in   the   district   court.   The   Drivers   asked   for   $177.50   (71%   of
Trailer   Transit’s   gain   of   $250)   on   this   item,   and   their   appel-­‐‑
late  brief  is  full  of  similar  examples  in  which  they  claim  71%
of  the  net.  Only  in  passing  (a  few  sentences  in  the  brief,  and
one  at  oral  argument)  did  the  Drivers  suggest  that  the  use  of
the  word  “reimburse”  entitles  them  to  71%  of  the  gross  on  all
special   services   billed   at   even   a   dollar   over   cost.   That’s   not
enough   to   preserve   the   argument—which   as   this   example
shows   also   has   little   to   recommend   it.   Why   would   Trailer
Transit   lock   itself   into   automatic   losses   on   special   services?
4   No.  15-­‐‑1482
(We  put  to  one  side  all  questions  about  whether  the  $250  in
our  example  is  a  profit  in  the  first  place.  Trailer  Transit  has
employees  and  other  overhead  expenses  to  cover;  lining  up
and  managing  escorts  is  costly.  The  difficulty  of  determining
Trailer  Transit’s  real  economic  profit  on  any  service  may  be
among  the  reasons  why  the  contract  does  not  entitle  Drivers
to  a  portion  of  its  net  revenue.)
A   better   line   of   argument   for   the   Drivers   might   have
started  from  the  principle  that  parties  cannot  take  opportun-­‐‑
istic   advantage   of   contractual   commitments.   See   Keystone
Carbon  Co.  v.  Black,  599  N.E.2d  213,  214–15  &  n.1  (Ind.  App.
1992).  Suppose  that,  after  a  given  Driver  had  signed  the  con-­‐‑
tract,   Trailer   Transit   reduced   its   standard   mileage   rate   and
increased   the   price   of   special   services   to   shippers   in   a   way
that  left  shippers  indifferent  (they  don’t  care  how  line  items
on  a  bill  are  parceled  out)  but  reduced  the  portion  of  the  bill
subject   to   their   71%   share.   We   asked   the   Drivers’   lawyer
whether  they  are  making  an  argument  of  this  kind.  The  an-­‐‑
swer   is   no;   they   do   not   contend   that   Trailer   Transit   has
moved   charges   from   the   standard   shipping   fee   to   special
services.   The   whole   of   the   Drivers’   position   is   that   they   are
entitled   to   a   slice   of   any   net   profit   on   special   services,   and
the  contract  provides  no  support  for  that.
Hubert   Walker,   the   representative   plaintiff,   furnished
services   to   Trailer   Transit   for   seven   years.   He   must   have
found   the   remuneration   satisfactory.   Only   in   retrospect   did
he  look  for  more,  filing  this  suit  about  two  years  after  haul-­‐‑
ing  his  last  load.  The  judiciary  does  not  rewrite  contracts  af-­‐‑
ter   the   fact   to   favor   one   side.   Walker   and   the   other   Drivers
might  have  insisted  on  receiving  some  part  of  the  profit  from
special   services   (and   then   perhaps   Trailer   Transit   would
No.  15-­‐‑1482   5
have  offered  less  than  71%  of  the  gross),  but  that’s  not  what
this  contract  says.
AFFIRMED