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Roberts v. C.R. England, Inc.

United States District Court, D. Utah, Central Division

January 31, 2017

CHARLES ROBERTS, an individual, and KENNETH MCKAY, an individual, on behalf of themselves and others similarly situated, Plaintiffs,
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.

          Robert J. Shelby Magistrate Judge


          ROBERT J. SHELBY United States District Judge

         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.



         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


         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 ..................................................................... 38

         1. 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 ................................................................................................... 77

         3. 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


         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 contracts under 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 reported to England's Independent Contractor Division, which was managed by Josh England, Michael Fife, and Mitch England.[11] Finally, internal documents suggest that England actively tried to increase the number of Horizon leases, further suggesting a close connection between the two companies.[12] In short, Plaintiffs characterize Horizon as a sales organization operating with the goal of securing as many leases as possible from England's independent contractors.[13] The means of achieving this alleged goal lie at the heart of this litigation.

         Since its founding, England traditionally relied on experienced company drivers and a fleet of trucks to move freight for its customers. But beginning in about 1998, after Horizon was formed, England began using independent contractors to compete with other carriers that were doing so.[14] Dan England testified that his company discovered that independent contractors “were often better, more productive, and more responsible drivers.”[15] England often compensated company drivers differently than independent contractors.[16]

         As England's business expanded in recent years, so too did its need for experienced drivers. To meet this demand, it established five driver training schools in Utah, California, Texas, and Indiana where students could earn a commercial driver license.[17] These schools offered the chance to earn a commercial driver license to individuals with no prior experience.

         England enrolled 94, 095 individuals in its schools between 2008 and 2012. These students paid tuition ranging from $1, 995 to $2, 995, depending on financing-rates England contends were lower than similar commercial driver license programs. In fact, England claims it does not profit from the schools.

         According to England, students who graduated with their commercial driver license were given the option to train for an additional ninety days as an England employee. A total of 38, 524 drivers completed England driving school curriculum and advanced to England's driver training program. This training consisted of Phase I and Phase II, which are described below. After completing Phase I and Phase II, trainees returned to Utah or Indiana “to pass final checks” and attend an orientation.[18] After completing the training program, some trainees became England employees, while other trainees-numbering in the thousands-became independent contractors affiliated with England but with personal truck leases from Horizon.

         In 2004 and 2005, England analyzed driver profitability, comparing its company drivers and affiliated independent contractors.[19] Plaintiffs maintain that this analysis showed that England earned more from using independent contractors than company drivers.[20] Plaintiffs contend this was “a watershed moment” that led England to abandon its traditional company driver model in favor of independent contractors.[21] Maximizing the number of leases and lease operators became an important objective for both England and Horizon. Plaintiffs refer to this objective and related efforts as the Implementation Plan, which is discussed below.

         The numbers suggest that the Implementation Plan succeeded. Between 1998 and 2002, England's projection for active leases varied between 290 and 594. But by 2009, the number of active truck leases at one point exceeded 2, 200, or eighty percent of England's fleet. Although the percentage of independent contractors for England can fluctuate, according to Defendants, independent contractors currently operate twenty-four percent of England's fleet. As of February 2014, England employed 7, 351 full-time employees. Approximately 13, 143 individuals became independent contractors for England between January 1, 2008 and December 31, 2013.[22]

         II. The Third Amended Complaint (Dkt. 101)

         Plaintiffs Roberts and McKay attended an England training school, where each obtained a commercial driver license and eventually became independent contractors for England, operating trucks leased from Horizon.[23] After several months, Roberts and McKay ended their affiliation with England and filed this case as a class action against England and Horizon. The allegations in Plaintiffs' Third Amended Complaint[24] are central to the motions before the court.

         A. General Allegations

         Plaintiffs allege that Defendants used misrepresentations in a nationwide advertising campaign promising “guaranteed job[s]” with England which did not exist to persuade thousands to enroll in England's driver training schools, where each student paid thousands of dollars in tuition.[25] Defendants then targeted students with a “classic bait and switch fraud” in a concerted effort to coerce them to invest in a program known as the “Driving Opportunity.”[26] Participants in the Driving Opportunity program signed a Horizon Truck Sales and Leasing Vehicle Lease Agreement (Lease Agreement) and an Independent Contractor Operating Agreement (Operating Agreement).[27] These drivers then became independent contractors for England, driving trucks leased from Horizon. They did this in lieu of obtaining traditional employment with England as company drivers. Plaintiffs contend that Defendants recruited thousands of drivers as independent contractor drivers by misrepresenting the true income opportunities of lease drivers and failing to inform recruits of high turnover in the industry.[28]

         B. Allegations Specific to Individual Plaintiffs

         Roberts alleges that in May 2009, he viewed an advertisement on England's website from his home in California. Based on England's “representations of training, employment, the Driving Opportunity, and the potential income, ” Roberts submitted an online application to England, spoke with two England representatives on the phone, and ultimately attended a driver training school in California.[29] Although England provided transportation and housing, Roberts borrowed money to cover the cost of his tuition. After arriving, Roberts signed a Student Training Agreement and received a copy of the England Business Guide.[30]

         Also a California resident, McKay learned about England's training program from its website in January 2009 and submitted an online application. During an initial phone interview and a follow-up conversation, England's Utah-based representatives allegedly confirmed that McKay could earn at least $30, 000 per year. McKay alleges he never learned about high turnover or failure rates. After borrowing the cost of his tuition, McKay attended the California training school in February 2009, where he signed a Student Training Agreement and received a copy of the England Business Guide.[31]

         According to the Third Amended Complaint, Plaintiffs and other drivers received training materials that included material misrepresentations in advertisements and in the England Business Guide. After students completed school and Phase I and Phase II training, Defendants allegedly used recruiters, inaccurate data in graphs, and delay tactics to convince Plaintiffs and other trainees to purchase the Driving Opportunity and to dissuade these same trainees from seeking employment as company drivers.

         For example, McKay alleges that England informed him that no company driver positions were available and his only option was to purchase the Driving Opportunity. Eventually, McKay purchased the Driving Opportunity under a six-month lease in July 2009.[32]Similarly, Roberts alleges that he purchased the Driving Opportunity in September 2009. According to Plaintiffs, England informed them and other drivers that if they wanted to get on the road, they needed to lease immediately from Horizon.[33] Plaintiffs aver that they and thousands of drivers purchased the Driving Opportunity and signed “substantially identical” agreements in part because no other options were available to them.[34]

         C. Claims for Relief

         The Third Amended Complaint includes fourteen claims for relief. Plaintiffs seek class certification on ten claims. These ten claims generally fall into three categories.

         First, Plaintiffs claim Defendants violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and Utah Pattern of Unlawful Activity Act (UPUAA) by fraudulently inducing individuals into purchasing the Driving Opportunity, which in turn transferred financial risk from England to unsuspecting lease drivers.[35] Defendants ask the court to enter judgment on the pleadings for both the RICO and UPUAA claims.[36]

         Second, Plaintiffs allege Defendants violated the Utah Consumer Sales Practices Act, the Utah Business Opportunity Disclosure Act, and the Utah Truth in Advertising Act.[37] While the contours of these claims vary, each arises out of allegations that Defendants fraudulently induced drivers into entering the Driving Opportunity in violation of a state statute. Defendants move for summary judgment on the Utah Business Opportunity Disclosure Act claim.[38]

         Third and finally, Plaintiffs assert four claims for relief under common law theories of recovery: (1) fraud and misrepresentation, (2) breach of fiduciary duty, (3) unjust enrichment, and (4) breach of contract.[39] As discussed below, Plaintiffs seek varying categories of class certification for these claims.

         III. Facts Relating to the Motion for Class Certification

         Plaintiffs ask the court to certify a nationwide class for claims arising under Utah state statutes for violations of the Utah Business Opportunity Disclosure Act, the Utah Consumer Sales Practices Act, and the Utah Truth in Advertising Act. Plaintiffs also move for certification of a nationwide class for their negligent misrepresentation, breach of fiduciary duty, and unjust enrichment claims.[40]

         Plaintiffs also propose certification of two subclasses. The first subclass includes independent contractors who purchased the Driving Opportunity Defendants offered during the period when Defendants were utilizing the England Business Guide.[41] For this subclass, Plaintiffs intend to pursue relief under their common law fraud claim, as well as claimed violations of RICO and the UPUAA.[42] The second subclass consists of drivers who executed the Student Training Agreement and then later purchased the Driving Opportunity.[43] For this subclass, Plaintiffs assert a breach of contract claim.

         Both parties have submitted voluminous records in support of their respective positions on class certification. The court recites below the evidence most relevant to the class certification issues presented.

         A. Implementation Plan

         Plaintiffs argue that after England analyzed in 2004 and 2005 the profitability of its drivers, it sought to increase the percentage of independent contractors affiliated with the company as compared to company drivers. In 2005, it adopted a concerted recruitment strategy-the Implementation Plan-to further this goal. Internal documents and deposition testimony suggest that both Horizon and England were concerned about recruitment efforts due to high driver turnover.

         1. Online Advertising

         England used online marketing to increase recruitment. On their respective websites, England and Horizon made representations about the merits of joining England or working as an independent contractor.[44] In 2010, for example, England's website indicated that the projected annual income for a lease operator was $44, 400.35, based on 3, 250 miles per week. Similar statements were posted on Horizon's website. England modified these projections by 2011, stating instead that average weekly miles ranged from 1, 800 to 3, 000. According to Plaintiffs, solo lease operators actually averaged 1, 891 miles at the time.[45] These websites do not appear to have referenced high turnover rates or actual average income for independent contractors.

         In response to Plaintiffs' website exhibits, Defendants submit testimony of trainees who neither visited nor relied on information displayed on the websites. Defendants also contend their websites displayed “potential” mileage, as opposed to the average mileage of an independent contractor, and contained a disclaimer indicating that income depended on individual performance. Finally, Defendants maintain that England also relied on print media, television, radio, billboards, truck trainers, and word of mouth for advertising during the relevant time periods.[46]

         2. Program Brochures

         Plaintiffs contend that England's Independent Contractor Division created brochures with inaccurate statements about the number of miles and income opportunities available to lease operators.[47] Although some of the brochures predate the class period in this case, the evidence suggests that Defendants at times overrepresented the average number of miles available to its independent contractors.

         Similar to the websites, Defendants argue that the brochures merely contained potential mileage and income, as opposed to a specific calculation of average income. Defendants point to a disclaimer that indicated “actual income will vary based on individual performance.” Finally, Defendants point out that the brochures, which varied over time, were not publicly distributed, but were available to trainees at the Horizon offices.

         3. Initial Recruitment

         England instructed its recruiters to contact potential drivers within twenty-four hours of receiving an application for the driving school.[48] Though the parties dispute the issue, there is evidence England carefully developed its recruitment program and encouraged its recruiters to follow a prepared script.[49]

         In 2008 and 2009, England provided manuals to its recruits touting the advantages of its independent contractor program[50] For example, in a Driver Recruiting Information Guide last revised in 2008, England represented that lease operators could “average between $40-$50, 000.00 their first year of leasing after expenses.”[51] In 2008, the manuals suggested that the average number of weekly miles for a solo lease operator was between either 2, 800 and 3, 200 or 2, 800 and 3, 300.[52] According to Plaintiffs, inaccurate statements survived revisions of the recruiting manual until October 2012.[53]

         Manuals for England's recruiters instructed them on the best ways to overcome an applicant's potential objections or questions. Cathy Mattan, a former telephone recruiter, submitted a declaration describing her personal experiences with England's recruiting policies.[54]

         According to Ms. Mattan, England trained her and other recruiters from a manual containing uniform scripts.[55] England required Ms. Mattan to enroll as many students as possible. When she left the company, she had a poor view of how England treated its students, whom she believes were often uneducated, hungry, and desperate for work. Ms. Mattan recalled drivers waiting for weeks at undesirable England-provided lodging for a company position and company truck. She testified that most of those drivers did not obtain company driver positions, but instead ended up leasing trucks.[56]

         In response to Ms. Mattan's declaration, Defendants argue that recruiters were instructed to tailor their discussions to individuals. According to Steve Branch, England's Director of Recruiting and Advertising from December 2008 until March 2013, every single call was different but recruiters were “always instructed to give accurate and truthful information.”[57]Defendants further contend that the manuals and guides Plaintiffs cite were general references, rather than specific scripts to be used uniformly. In Defendants' view, these varied recruiting approaches undermine Plaintiffs' contention that uniform scripts were used to secure enrollment in the independent contractor program. Rather, Mr. Branch agreed that the primary purpose of recruitment was “to get [people] into the schools.”[58]

         4. Student Training Agreement

         During training, some trainees entered into a Student Training Agreement with England. In the Student Training Agreement, trainees agreed to complete England's training program in return for career opportunities.[59] The training was divided into two phases. During Phase I, the student received pay and on-the-job training from a certified driving trainer. The student agreed that Phase I “will be a minimum of 30 days in duration and near the end of this phase I will be given a road evaluation and attend a 1 day certification program.”[60]

         During Phase II, the student would work as “a C.R. England employee assigned as a 2nd seat to a [P]hase II trainer.”[61] England stated that this phase provided the student with an “opportunity to observe the C.R. England lease program and receive further training in running my own business, plus gain additional experience.”[62] After Phase II, the student could “choose one” of four career paths. Under the Student Training Agreement, a student could “[b]ecome a lease operator [or] Phase II Trainer.”[63] Alternatively, the student could “[r]emain a C.R. England employee as a second seat [or] employee with a company truck.”[64]

         5. England's Training Program

         Citing declarations of former employees, deposition testimony, and company documents, Plaintiffs contend Defendants continued to use uniform misrepresentations to induce students into becoming lease operators at training schools and during Phase I and Phase II training.

         For example, Defendants appear to have indicated in a PowerPoint slide entitled “Lease Program FAQs” that a solo lease operator averaged 2, 800 to 3, 300 miles per week with an annual income of $44, 400.35.[65] As discussed below, Plaintiffs submitted declarations suggesting that England's instructors used a similar approach to convince trainees to abandon plans to become company drivers in favor of the Driving Opportunity.

         David Bilbo, a former instructor and company driver, testified that England's policy was to promote aggressively the independent contractor program, and that classes were taught in a manner consistent with identical PowerPoint presentations.[66] Mr. Bilbo testified that England assigned him to teach a Business 101 class during the Phase I Upgrade, and that instructors were required to follow standard scripts and heavily rely on the England Business Guide.[67] Vickie Burr, a former orientation instructor, similarly testified that England “aggressively push[ed] the lease program on students from the very first days they are enrolled in school.”[68]

         During Phase II, trainees received training materials-Career Advancement Training Modules-that they were required to study and be tested on containing the same information found in the England Business Guide.[69] The trainees also spoke with trainers about the advantages of the independent contractor program. Internal records indicate that England may have understood that the long wait times for company trucks could be used to encourage drivers to sign up for the Driving Opportunity.[70] Additionally, during Phase II, trainees received only $0.12 per mile. According to Plaintiffs, economic realities of waiting for a truck during this period contributed to trainees' decisions to purchase the Driving Opportunity.

         As late as 2011, Mr. Fife, an England vice president, informed Horizon employees that the goal was at least “80% conversion to the lease program . . . .”[71] Mr. Fife also provided a “talk track” or a script that highlighted the benefits of the independent contractor program.[72] He later testified that sales representatives used a standard script developed by the company “geared around overcoming objections, helping to clarify, answering questions, things of that nature.”[73]

         As discussed below, Defendants challenge Plaintiffs' assertions that trainees were forced to wait for company trucks, or that they received and relied on a uniform set of information during Phase I and Phase II training. Defendants cite to declarations of trainers and trainees they believe illustrate the range of drivers' experiences during training.[74]

         6. England Business Guide

         According to Plaintiffs, the England Business Guide “uniformly misrepresented mileage and income to the entire putative class between November 2006 and at least July 2010.”[75] Citing instructor testimony, Plaintiffs contend that the England Business Guide was heavily used during orientation and Business 101 presentations. And Defendants purportedly provided a copy of the England Business Guide to every trainee who reached the orientation stage.

         The England Business Guide underwent several revisions each year.[76] In July 2010, Defendants replaced it with the Equinox Business Guide. The early versions of the Equinox Business Guide continued to make factual representations relevant to the class claims.[77]

         According to Plaintiffs, every version of the England Business Guide and Equinox Business Guide between November 2006 and November 2010 contained three graphs. These graphs compared the projected income of independent contractors and company drivers. The graphs suggested that independent contractors traveled more miles and earned more income than company drivers. A caption to one of these graphs stated: “[Y]ou can see that 21% of independent contractors make more than $50, 000 a year. Only 12% of drivers make that same amount.” A separate caption explained: “This graph shows that independent contractors make more money, faster than company drivers do.” Still another provided that independent contractors “average 33% more miles than company drivers do. More miles can equal more money.” Plaintiffs argue that the information unrealistically reflected the experience of the average lease operator.[78]

         Plaintiffs proffer internal emails and deposition testimony from which they contend a reasonable jury could find Defendants understood that the average income comparisons, the weekly mileage graph, and representations relating to the percentage of drivers with incomes exceeding $50, 000 contained in the England Business Guide were false.[79] Based on their evaluation of England's internal data, Plaintiffs calculate that it would have been highly unlikely for a lease operator to reach the income levels reported in the England Business Guide.

         In response, Defendants argue that reliance and interpretation of the graphs in the England Business Guide varied depending on the individual. According to Defendants, the graphs are subject to multiple interpretations. For example, Defendants maintain that the graph comparing the income earned by independent contractors and company drivers is subject to multiple interpretations because the text does not explicitly state that the graph reflects the average income of each group. Similarly, Defendants contend that the bar graph comparing miles driven raises an individual issue of fact because it would require an individual to understand how to read a bar graph and to assume that the graph reflected a guarantee. Finally, Defendants argue that the graph reflecting the percentage of independent contractors receiving in excess of $50, 000 per year is not necessarily false, but instead depends on the data set.

         Plaintiffs reply that the graphs are not subject to multiple interpretations.[80] Plaintiffs also reiterate that England misrepresented average mileage between February 2006 and October 2012 in every version of the England Business Guide, early versions of the Equinox Business Guide, the Driver Recruiting Information Guide, a publication called the Handbook Guide to Driver Recruiting, training presentations, brochures, and the website.[81]

         B. Experiences of Proposed Class Representatives

         Roberts submitted a declaration in support of the Motion for Class Certification. Consistent with the allegations in the Third Amended Complaint, Roberts testified that he learned about the independent contractor and lease program from England's website and through conversations with England recruiters. In June 2009, Roberts attended training school. After receiving his commercial driver license, he attended orientation at an England facility, where he received the England Business Guide. During classroom instruction, Roberts heard instructors and representatives praise the independent contractor and lease program, which these representatives claimed allowed drivers to make more income than company employees. He testified he never received accurate information about failure or turnover rates.

         Roberts began Phase I training in July 2009. After just over a month, he finished Phase I and attended Phase I Upgrade, where he signed the Student Training Agreement. Roberts testified that he always intended to become a company driver. As he participated in Phase II, Roberts operated under the expectation that he would become a company driver, but he received pressure from England to abandon this plan and enter the lease program. During this period, Defendants' representative indicated that trainees would have to wait to become company drivers and instructed Roberts to carefully study the England Business Guide.

         Relying on representations in the England Business Guide and statements made during the training program suggesting that the average lease driver could be financially successful, Roberts ultimately signed both the Lease Agreement and the Operating Agreement. He testified he was charged $502 a week for a truck lease and also received certain other charges: (1) a fourteen cent-per-mile variable mileage charge, and (2) a seven cent-per-mile general reserve charge. Although he had believed England's income calculation and representations, Roberts testified that he did not make “much money” as an independent contractor, and some weeks even operated at a deficit to England. He stopped working as a lease driver in April 2010.[82]

         McKay also provided a declaration describing his experiences as a lease driver. After learning about England via Google, McKay visited England's website, where he read that the company had a training program that could provide both a commercial driver license and a job. Shortly after submitting an online application, McKay received a telephone call from an England representative who confirmed that England guaranteed a job but did not inform McKay that a position as a company driver would likely be unavailable. Like Roberts, McKay testified that the recruiter did not mention the high turnover rates or the average length of employment for a lease driver.

         McKay attended England's driving school in California in February 2009. His trainers provided him with a copy of the England Business Guide and instructed him to review it.[83] After completing Phase I, McKay signed England's Student Training Agreement in March 2009. According to McKay, the Student Training Agreement confirmed that he would be able to have a company driving position with a company truck at the completion of his training. As part of the Phase I Upgrade, McKay attended classroom presentations, where an England representative encouraged him and other drivers to become lease operators for England.

         At the end of his Phase II training, McKay traveled to Salt Lake City, Utah. An England representative there informed him that no company jobs were available, but that he could begin working immediately as a lease operator.[84] After waiting approximately a month, McKay abandoned his plan to become a company driver, agreed to become an independent contractor, and signed the Lease Agreement and Operating Agreement. McKay testified that he felt that he “had little choice but to enter the independent contractor program as a lease driver” in part because of England's representations about income and the availability of work.[85]

         McKay leased one of Defendants' trucks for $567 per month. He testified that he also paid the variable mileage and general lease reserve charges, levied purportedly in part to cover the cost of “dispatching, load planning, paperwork, and other miscellaneous support services.”[86]According to McKay, England never notified him of the accurate average income, tenure, or weekly mileage for lease drivers in the independent contractor program. If he had known of these facts, McKay would not have enrolled in the program. McKay stopped working as a lease operator in October 2009.

         Plaintiffs also submit declarations from similarly-situated lease operators. For example, Carlos Cavezas testified about his recruitment and training in 2010, an experience that was substantially similar to that of McKay and Roberts.[87] Karen S. McClintic also testified that England recruiters enticed her into enrolling in a similar refresher course, where she was encouraged to become a lease operator.[88]

         C. Experiences of Other Drivers

         Defendants contend that the uniformity described by Plaintiffs is without factual basis. Rather, Defendants argue that every applicant, trainee, independent contractor, and company driver made career decisions based on his or her individual needs and priorities.

         Defendants support this position with a series of declarations from individual drivers who decided to attend England driving school based on equipment selection, recommendations from personal acquaintances, the company's safety record, the opportunity to work a dedicated route, or other reasons separate from England's website or representations about income or miles available to independent contractors.[89] In Defendants' view, these individuals chose to become independent contractors for reasons distinct from any job guarantee or recruitment efforts.[90]

         Similarly, Defendants submit declarations in which drivers testify that England gave them the option to become company drivers.[91] Some of these drivers testify that they never intended to become company drivers. Others testify that England allowed them to become company drivers. And England submitted evidence that at least 12, 500 individuals became company drivers after completing Phase II training since January 2008.[92]

         Defendants argue that questions about whether trainees received sufficient time to consider the Leasing Agreement and Operating Agreement necessarily require consideration of highly individualized evidence. Under this theory, individuals chose to lease from Horizon for a variety of reasons, including whether or not the leasing company required a down payment or whether the driver had a qualifying credit rating. According to Defendants, the plain terms of the Leasing Agreement and Operating Agreement put drivers on notice of their options and obligations. Several declarants testify that they spent days reviewing the agreements before committing to the independent contractor program.

         Finally, Defendants contend that trainees chose to become independent contractors for reasons distinct from of the alleged uniform misrepresentations. For example, several former trainees state they were unaware of the misrepresentations, chose to become independent contractors for reasons completely unrelated to the misrepresentations, or knew of the actual income or mileage of the average independent contractor but nevertheless chose to enter the program. Several of these trainees testify that they heavily relied on representations by trainers. According to Defendants, these trainers did not follow a uniform script but instead tailored the training program to the individual trainees. Several of Defendants' declarants state that they did not rely on the England Business Guide in making their decisions, or that they can no longer remember reviewing or thinking about the graphs contained in the England Business Guide.[93]

         Plaintiffs challenge Defendants' declarations. According to Plaintiffs, the declarants are unrepresentative of the proposed class. Plaintiffs contend that Defendants cherry-picked twenty-eight drivers whose timing or circumstances were unique from the thousands of individuals who were the subject of a campaign of uniform misrepresentations and elected to purchase the Driving Opportunity. To support this proposition, Plaintiffs analyze each of the declarants and identify distinguishing features, which include: (1) the declarant's entry into the independent contractor program after Defendants discontinued the England Business Guide or other misrepresentations, (2) the fact that a declarant transitioned out of the Driving Opportunity, worked as a company driver, or belonged to a minority of drivers who received “Dedicated” routes, or (3) an argument that the declarant never belonged to the proposed class.[94]

         Plaintiffs contend that only nine of the declarants purchased the Driving Opportunity during the relevant time period. According to Plaintiffs, four of these fall into the minority of independent contractors who received guaranteed mileage from a dedicated route, while three transitioned to the lease-purchase program. Of the remaining two drivers, one received extra mileage by working as a trainer, while the other driver earned only $322 per week. Finally, in response declarations Defendants submitted relating to recruitment and training, Plaintiffs point to internal company records, training manuals, presentation materials, trainer guidelines, and trainer compensation, all of which may suggest that Defendants and the trainers themselves understood the importance of conveying a positive and uniform message about the value of the independent contractor program.

         D. Driving Opportunity

         As discussed above, the Driving Opportunity rests at the heart of this case. To Plaintiffs, the Driving Opportunity consisted of the Leasing Agreement and the Operating Agreement, both of which were signed by the proposed class members in Salt Lake City, Utah or Burns Harbor, Indiana. Discovery responses suggest the majority of the proposed class entered into the Driving Opportunity in Utah. In exchange for the Driving Opportunity, drivers leased a truck from Horizon for at least $450 per week. They also paid variable costs for fuel, insurance, permits, and maintenance.

         Despite England's income comparisons and projections, the average annualized income of a solo lease operator amounted to from about $17, 000 to $21, 000 per year, depending on the division in which the driver worked. Plaintiffs contend that Defendants' internal documents show that one in five drivers earned nothing in any given week. Citing testimony, Plaintiffs maintain the difference between a company driver and a lease operator was that the latter experienced high costs, low pay, and insufficient mileage. Unlike company drivers, lease operators had to cover lease payments, fuel, insurance, taxes, truck maintenance, and permits. These costs, in turn, reduced a lease operator's net income.

         Although the parties dispute the inferences to be drawn from the data, there is evidence at this point suggesting that Defendants were aware they were making misrepresentations, but continued to make them. For example, an internal study indicated that company drivers made more than lease operators for the same mileage in 2012.[95] And before 2012, internal correspondence suggests that England's executives knew the number of projected miles for a lease operator was less than represented to trainees. In June 2010, Horizon Director Bud Pierce wrote to Michael Fife and informed him that the wage for an independent contractor “averages less than a Company driver without the opportunity for benefits.”[96] In October 2010, an employee emailed Chad England to inform him that “[t]he likelihood of [lease operator] solo drivers averaging 2, 800-3, 000 miles is no longer a reality.”[97] In March 2011, an employee in England's Independent Contractor Division expressed concerns to Josh England and Michael Fife about misrepresentations in the company's advertisements.[98] In November 2011, a director at the Burns Harbor location informed a group of executives that “[t]he solo model is broken and needs to be fixed. Breakeven for a solo [lease operator] ¶ 1, 800 and the average [lease operator] gets barely above that.”[99] Similarly, records suggest that England was aware of high turnover rates for lease operators but failed to disclose the information during initial recruitment or the training program.[100]

         E. Uniformity

         As indicated above, Plaintiffs submitted declarations illustrating a uniform scheme and uniform experience. Defendants submitted declarations suggesting a diversity of experiences among potential class members. In short, the parties hotly contest whether England uniformly made misrepresentations and whether drivers uniformly relied on the alleged misrepresentations to their detriment. Two additional observations relating to uniformity are worth noting.

         Defendants contend that representations changed over time. For example, Defendants discontinued the England Business Guide in 2010, removed pro formas from their websites in 2012, and deleted the alleged misrepresentations from Horizon's brochures in 2012. England contends that it removed mileage and income estimates from recruiting guides in 2013.

         Defendants maintain that there was no uniform distribution or receipt of representations to potential independent contractors. Here, Defendants rely on the testimony of both company drivers and independent contractors. Some testified they could not remember a particular representation. Others indicated that they became independent contractors for reasons independent of the misinformation Plaintiffs identified.

         Plaintiffs respond that Defendants made a series of uniform misrepresentations throughout the class period using different mediums. Citing the England Business Guide, the Handbook Guide to Driver Recruiting, the Driver Recruiting Information Guide, brochures, Business 101 instruction materials, and pro formas from the website, Plaintiffs contend Defendants consistently misrepresented that independent contractors averaged between 2, 718 and 3, 300 miles per week between 2006 and 2012, despite internal communications between executives that suggests they understood the mileage predictions were inconsistent with reality.[101] Similarly, Plaintiffs cite to brochures, graphs, and recruiter materials for the proposition that Defendants uniformly misrepresented the income of an independent contractor.[102]

         F. Turnover Rates

         The parties dispute the inferences that should be drawn from high driver turnover. To Plaintiffs, high turnover suggests culpability. In their view, Defendants could have informed driving school applicants of high turnover rates and told trainees about the relatively high percentage of independent contractors who quickly left England's program and abandoned their Horizon leases.

         Defendants respond that high turnover is endemic to the trucking industry, where drivers face unique challenges, including long stretches of time alone on the road and away from home. Defendants maintain that recruits and trainees knew of high turnover rates in the industry but nevertheless decided to take the risk and enter the independent contractor program. Defendants also argue that an independent contractor might leave the program for a variety of reasons, many of which are unrelated to mileage or income.[103]

         Similarly, the parties dispute whether success or failure in the independent contractor program was driven by a systemic flaw or individual performance. Citing declarations of drivers, Defendants contend that success hinged on each driver's: (1) willingness to minimize time at home, (2) habit of making timely deliveries, (3) fuel efficiency and costs, (4) trip planning, and (5) decision to drive solo or in a team. To Defendants, each of these factors bore a relation to an independent contractor's weekly and annual income, which in turn drove individual success in the program.

         G. OWNRRE Database

         The parties dispute the extent to which damages can be determined on a class-wide basis. This dispute centers on the contents and use of a set of data obtained from England. The parties refer to the data set as the OWNRRE database.

         The OWNRRE database has sets of data for each independent contractor. Among other things, OWNRRE contains mileage information, gross revenue, net payments to each lease operator, and an accounting of fixed and variable costs charged to each lease operator under the Driving Opportunity.

         England contends that OWNRRE does not have sufficient information for an accurate calculation of damages for three reasons. First, Defendants argue the raw data is limited because it gives no indication of individual choices affecting a driver's income, such as fuel efficiency or trip planning. Second, Defendants question whether an expert could calculate damages based on OWNRRE data, when it does not indicate which representation a driver relied on when making the decision to become an independent contractor. Third and finally, Defendants contend OWNRRE does not provide enough information to demonstrate injury-in-fact.

         IV. Facts Relating to Choice of Law

         In the motions for class certification and partial summary judgment, the parties ask the court to determine whether Utah law applies to Plaintiffs' claims. There are minor disputes over the inference to be drawn from or the weight given to a particular fact, but the parties generally do not dispute the following facts relevant to choice of law.

         This case involves considerable contacts with both California and Utah. Plaintiffs lived in California when they learned about England's driver training schools, and attended England's training school in California. Both used Eagle Atlantic Financial Services, Inc. to finance their tuition while in California. They relied, at least in part, on recruiters' representations about the independent contractor program while completing training in California. And although he traveled across the country for England, Roberts based his work as an independent contractor out of California.

         But Utah also bears a significant relationship to this litigation. Both the Leasing Agreement and Operating Agreement Plaintiffs signed provide that Utah law will govern the interpretation of the agreements, stating that they “shall be interpreted under the laws of the United States and the State of Utah, without regard to the choice-of-law rules of such State or any other jurisdiction.”[104]

         Additionally, England and Horizon are incorporated in Utah. Defendants' recruiters contacted prospective drivers from Utah. According to Plaintiffs, Defendants created content for websites and public recruiting materials in Utah. Moreover, although the parties dispute the uniformity of the representations in the training program, there is some evidence that the script used by recruiters and trainees was developed by executives from Defendants' headquarters in West Valley City, Utah. And while students and trainees received the alleged misrepresentations at training locations throughout the country or on the road during training, Plaintiffs proffer evidence that Defendants developed and oversaw the independent contractor program, the training program, and the Driving Opportunity in Utah. Plaintiffs traveled to Utah, where they and a majority of the proposed class members attended Business 101 presentations and purchased the Driving Opportunity.[105] Finally, Defendants appear to have calculated settlement statements and managed leases for independent contractors from Utah.”[106]


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

         Defendants move pursuant to Rule 12(c), Federal Rules of Civil Procedure, for judgment on the pleadings on four of Plaintiffs' claims for relief. These claims allege violations of: (1) the Racketeer Influenced and Corrupt Organizations Act (RICO), (2) Utah's Pattern of Unlawful Activity Act (UPUAA), (3) California's Seller Assisted Marketing Plan Act, and (4) California's Unfair Competition Law.[107] Plaintiffs do not contest Defendants' motion for the claims arising under California statutes.[108] Accordingly, Plaintiffs' Third and Fourth Claims are dismissed with prejudice. The issue remaining is whether the court should grant judgment on the pleadings in favor of Defendants on the RICO and UPUAA claims.

         A. Standard for Judgment on the Pleadings

         Courts in the Tenth Circuit are instructed to apply the “same standard when evaluating 12(b)(6) and 12(c) motions.”[109] Under this standard, the court assumes the truth of all well-pleaded allegations and provides the nonmovant the benefit of any reasonable inferences from the pleadings.[110] A court evaluating a Rule 12(c) motion may not “weigh potential evidence that the parties might present at trial, ” but instead should restrict its analysis to whether the “complaint alone is legally sufficient.”[111] Documents and exhibits attached to the complaint are considered as part of this analysis.[112] “A motion for judgment on the pleadings ‘should not be granted unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law.'”[113]

         For purposes of this motion, Defendants stipulated to the facts alleged in the Third Amended Complaint, but nevertheless contend they are entitled to judgment in their favor because Plaintiffs fail to allege a distinction between the liable persons and the alleged enterprise, as required under cases interpreting the relevant RICO provision. According to Defendants, this line of reasoning should also result in judgment on Plaintiffs' UPUAA claim.

         Assuming the truth of all factual allegations contained in the Third Amended Complaint and drawing all reasonable inferences in favor of Plaintiffs, the court concludes that Defendants are entitled to judgment on Plaintiffs' RICO and UPUAA claims for the reasons stated below.

         B. Standard for Plaintiffs' RICO Claim

         The RICO statute makes it unlawful for “any person employed by or associated with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.”[114] Interpreting the statute, federal courts have held that “the defendant ‘person' must be an entity distinct from the alleged ‘enterprise.'”[115] Although courts derive the requirement from the statutory language, the distinctness inquiry is often informed by two considerations. On the one hand, courts have expressed concern about the original purpose of RICO[116] and the negative effects that could arise out of an unwarranted extension of the statute into otherwise lawful commercial relationships.[117]Second, courts express concern that defendants might escape RICO liability merely by adopting a particular corporate structure.[118] At times, these considerations conflict.

         For example, in Brannon v. Boatmen's First National Bank, [119] the Tenth Circuit concluded that the plaintiffs could not proceed on a claim arising under § 1962(c). The plaintiffs alleged the defendant, a subsidiary, participated in an enterprise consisting of its parent corporation. The Tenth Circuit held that merely alleging participation within a corporate structure was not enough to satisfy the distinctness requirement because a “parent corporation, as a matter of corporate reality, is nothing more than the controlling shareholder of a subsidiary.”[120]The court noted that “expanding RICO liability because of a business organization choice makes little sense from a policy perspective.”[121] Because RICO applies only where the defendant participates in the “enterprise's affairs, not just its own affairs, ”[122] the Tenth Circuit held the plaintiff had alleged nothing more than a “legitimate corporate and financial relationship between [the defendant] and its holding company, ” which was insufficient under RICO.[123]

         The Brannon decision must be considered in light of Cedric Kushner Promotions, Ltd. v. King.[124] In Cedric Kushner, the Supreme Court adopted the distinctness requirement but nevertheless held that a corporation's sole owner was “a natural person, distinct from the corporation itself, a legally different entity with different rights and responsibilities due to its different legal status.”[125] In passing, the Supreme Court referenced an analogous decision in the Seventh Circuit in which Judge Posner observed that formal or practical separation between a corporate entity and its sole proprietor satisfied the distinctness requirement.[126] Still, the Court declined to address the merits of cases in which lower courts dismissed claims where plaintiffs alleged that a “corporation was the ‘person' and the corporation, together with all its employees and agents, were the ‘enterprise.'”[127] According to the Court, these cases were distinguishable.[128]

         In each of these decisions, three terms feature prominently: person, enterprise, and association-in-fact. RICO defines person as “any individual or entity capable of holding a legal or beneficial interest in property.”[129] Enterprise means “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”[130] Although not expressly defined by statute, an association-in-fact becomes an enterprise when it has “a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit the associates to pursue the enterprise's purpose.”[131] Stated differently, courts have defined an association-in-fact enterprise as “a group of persons associated together for a common purpose of engaging in a course of conduct.”[132]

         C. Analysis of Plaintiffs' RICO Claim

         Plaintiffs allege in the Third Amended Complaint that England, Horizon, and the drivers who serviced England's customers constituted an association-in-fact enterprise, which Plaintiffs refer to as the “England Truck Leasing Enterprise.”[133] According to Plaintiffs, England and Horizon used the England Truck Leasing Enterprise to fraudulently induce Plaintiffs and thousands of other drivers into signing up for the Driving Opportunity.[134] Plaintiffs further allege that they and other drivers in the proposed class were subject to the control of Defendants.[135]The drivers allegedly participated in the England Truck Leasing Enterprise's common purpose “of providing services necessary to the safe, timely, and effective transportation of goods.”[136]Finally, Plaintiffs allege that England and Horizon are alter egos. In support of this legal theory, Plaintiffs allege the companies had overlapping ownership, management, and finances.

         The central issue here is whether Plaintiffs have alleged an enterprise separate and distinct from Defendants themselves. This involves two sub-issues. First, the parties dispute whether the drivers should be excluded from the enterprise if they are either victims or agents of Defendants. Second, assuming drivers cannot be included in the enterprise, the parties contest whether Plaintiffs satisfy the distinctness requirement, especially where the Defendants are alleged to belong to the same corporate family. The court addresses these issues in turn.

         1. The Relationship Between Drivers and the Enterprise

         Defendants argue the drivers cannot be included in the defined enterprise because victims or agents of a corporation should be excluded from an association-in-fact enterprise. Plaintiffs contend that the England Truck Leasing Enterprise includes the drivers, and that this satisfies the distinctness requirements. Although the parties cite to a wealth of authority in their papers, two decisions were particularly helpful in illustrating the issue presented.

         The first is an unpublished Tenth Circuit Court of Appeals decision: Dirt Hogs Inc. v. Natural Gas Pipeline Co. of America.[137] In Dirt Hogs, a construction company sued a pipeline company. The construction company alleged the existence of an association-in-fact enterprise consisting of the pipeline company, its management, a corporate codefendant, and some of the construction company's employees.[138] The court of appeals affirmed dismissal of the complaint, in part because the enterprise was “nothing more than another name for Natural and its agents, conducting the corporation's business.”[139] In reaching this conclusion, the court recognized that other courts had “pierced through the allegations in a complaint to hold that the alleged enterprise is not distinct from its defendant participants.”[140] Applying that approach, the court excluded victims from the purported enterprise and held that the construction company was unable to prove a distinct person and enterprise.[141]

         The second instructive case is Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A.[142] In Riverwoods, the Second Circuit held plaintiffs could not circumvent the distinctness requirement “by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.”[143]Because “a corporation can only function through its employees and agents [an enterprise composed of itself and its agents] is in reality no more than the defendant itself.”[144] Applying this principle, the Second Circuit affirmed dismissal of a claim in which the defendant was alleged to have engaged in an association-in-fact enterprise with two of its own employees.[145]

         While recognizing that federal courts have been divided in their treatment of agents and victims, the court ultimately concludes the reasoning of Dirt Hogs and Riverwoods is persuasive. Applying the reasoning of these cases, Plaintiffs here cannot satisfy the distinctness requirement by alleging that drivers participated in the England Truck Leasing Enterprise for two independent reasons: (1) although independent contractors, the drivers acted subject to Defendants' control; and (2) the drivers were the alleged victims. Under either approach, the drivers are not properly considered part of the enterprise for the purposes of the RICO distinctness analysis.

         First, the drivers' participation in the enterprise was subject to Defendants' control.[146] In this respect, any shared common purpose or conduct connecting a driver to the enterprise was limited to acts done in the capacity of an agent. As in Riverwoods and Dirt Hogs, Plaintiffs may not circumvent the statutory requirement of a distinct person and enterprise by adding an agent or employee to the definition of enterprise.[147] Similar to the subsidiary-parent corporation in Brannon, a corporation-such as England or Horizon-necessarily conducts business through agents, employees, and at times independent contractors.[148] If a party could simply add an employee or agent to the definition of enterprise to survive a dispositive motion, as Plaintiffs attempt to do here, it would render meaningless the language of § 1962(c) and the distinctness requirement. Indeed, it is hard to see how any entity would escape this sweeping interpretation of RICO in a suit involving alleged wrongdoing. For similar reasons, courts have traditionally “excluded this far-fetched possibility by holding that an employer and its employees cannot constitute a RICO enterprise.”[149] The court sees no reason this principle should not apply with equal force to an independent contractor whose leasing opportunities and employment were expressly limited to and defined by the England Truck Leasing Enterprise.

         Second, the court concludes that the drivers, as the primary victims of the alleged fraud, can hardly be characterized as members of the enterprise. Although the decision is unpublished, the Tenth Circuit appears to have recognized that the weight of authority and sound policy weigh in favor of excluding victims when evaluating whether named defendants are distinct from the enterprise, at least in some cases.[150] Here, as in Dirt Hogs, Plaintiffs seek to add victims to the definition of enterprise in order to satisfy distinctness. Although RICO “protects a legitimate ‘enterprise' from those who would use unlawful acts to victimize it, and also protects the public” from persons who unlawfully use illegitimate enterprises, [151] Plaintiffs have not cited to persuasive authority for the proposition that this general principle requires a court to lump together victims with corporate entities when evaluating distinctness under RICO.[152] Indeed, courts before and after Cedric Kushner and Boyle have declined to include victims as part of the enterprise because victims could hardly have shared a common purpose with as association designed to defraud them.[153] For these reasons, the court concludes that Plaintiffs' RICO claim cannot survive Defendants' motion by relying on allegations that drivers who were also purported victims belonged to the England Truck Leasing Enterprise.

         In response to Defendants' motion, Plaintiffs produce litanies of case citations.[154] After careful review, the court concludes the majority of these cases: (1) are distinguishable because the enterprise included more than victims or agents, (2) fail to squarely address the issue presented in this case, [155] or (3) are unpersuasive.[156]

         For all of these reasons, the court concludes Plaintiffs fail to satisfy RICO's distinctness requirement by alleging drivers-either as victims or agents-belong to the enterprise.

         2. England and Horizon as Persons and Enterprise

         Defendants further contend the Third Amended Complaint independently fails to allege a separate and distinct person and enterprise because Plaintiffs themselves allege England and Horizon belong to a single corporate family. In response, Plaintiffs contend that England and Horizon are distinct from the enterprise because the companies are practically and formally distinct from one another.

         RICO cases are often factually complex, so it is perhaps unsurprising that treatment of this issue has been varied. The Sixth Circuit recently characterized the case law before and after Cedric Kushner as “meandering and inconsistent.”[157] Despite conflicting holdings and outcomes, courts have routinely recognized two general principles. First, “individual defendants are always distinct from corporate enterprises because they are legally distinct entities, even when those individuals own the corporations or act only on their behalf.”[158] Second, corporate defendants are distinct from the enterprise when the corporations themselves are sufficiently distinct.[159] Given the complexity of the issue and the wealth of cases cited by both parties, further discussion of the significant cases helpfully illustrates the contours of the issue presented.

         The Second Circuit considered a similar issue in Discon, Inc. v. NYNEX Corporation.[160]In Discon, a telephone removal service company sued a group of telephone companies under § 1962(c).[161] The service company identified an enterprise coextensive with the named defendants, which in turn included a holding company and two wholly owned subsidiaries.[162]The Second Circuit held the RICO claim was properly dismissed because the service company failed to allege a distinct “person” and “enterprise.”[163] Citing earlier precedent, the court noted that a party may be able to assert a claim against a defendant who belonged to an enterprise composed of separate legal entities.[164] But the court ultimately held that a party may not assert a § 1962(c) claim against a group of defendants coextensive with the enterprise when the legal entities acted “within the scope of a single corporate structure, guided by a single corporate consciousness.”[165] The court expressed particular concern that it “would be inconsistent for a RICO person, acting within the scope of its authority, to be subject to liability simply because it is separately incorporated.”[166] In Brannon, the Tenth Circuit relied in part on Discon when it held that a party failed to state a RICO claim against a subsidiary of a parent corporation alleged to be the enterprise.[167]

         At the same time, courts have not uniformly applied the principle articulated in Discon. Some courts have adopted bright-line rules for particular factual contexts. For example, the Seventh Circuit held that an individual was distinct from a sole proprietorship, in part because the proprietorship was a separate legal entity and may have employed other individuals.[168]Similarly, in an unpublished decision, the Tenth Circuit held that a bankruptcy estate was distinct from the debtor because the estate was “a legally different entity with different rights and responsibilities due to its different legal status.”[169] A court in this district held an attorney was distinct from an enterprise comprised of the individual's sole proprietorship, in part because the attorney may have associated with others attorneys.[170]

         Still other decisions appear to be bound by their facts or motivated by particular policy considerations. For example, in United States v. Goldin Industries, Inc., [171] the Eleventh Circuit evaluated the criminal convictions of three family-owned scrap metal disposal businesses. On appeal, the defendant companies cited Discon for the proposition that the government failed to show that the corporate persons were distinct from the enterprise. The government responded that the entities were distinct from an association-in-fact composed of the three corporate defendants and four individuals. Noting that a defendant could be both a person under RICO and a participant in an enterprise, [172] the Eleventh Circuit distinguished Discon and held that each defendant was a “separate and distinct corporation[, ] incorporate[d] in a separate state[, and] a separate ongoing business with a separate customer base.” Because each was “free to act independently and advance its own interests contrary to those of the other two corporations, ” the defendants were distinct from an association composed of all three corporations.[173]

         The Second Circuit used a similar analysis in Securitron Magnalock Corp. v. Schnabolk.[174] In Securitron, a manufacturer sued an individual and two of his companies. After finding the enterprise consisted of the defendants, the jury awarded damages under § 1962(c).[175]On appeal, the defendants argued that the manufacturer could not prove his RICO claim because the defendants were not distinct from the enterprise.[176] The Second Circuit disagreed, holding that even though the individual defendant participated as an officer or agent of the corporation, each corporation was a separate legal entity that could combine to form a distinct enterprise.[177]In its analysis, the court specifically noted that each corporation was engaged in “distinct lines of business” and there were two “active, ongoing businesses rather than two stacks of stationery.”[178]

         Although different in degree, most of the decisions cited by Plaintiffs and England can be distinguished from the instant dispute. This case is distinguishable from suits involving a single defendant and an enterprise composed of additional, separate legal entities. Yet this case also appears to differ from suits where the enterprise consists only of the named defendants, with each participating in the enterprise as a clearly distinct legal entity. Finally, unlike Brannon, this case does not involve a parent company and its subsidiaries. And after reviewing the cases cited by both parties, the court concludes the RICO claim pled in Plaintiffs' Third Amended Complaint presents an issue of first impression in the Tenth Circuit. Specifically, neither the Tenth Circuit nor the Supreme Court has resolved whether an association-in-fact enterprise composed of corporate entities is distinct from the corporate entities, as persons, where a plaintiff alleges both entities belong to a single corporate family and seeks to recover against each under an alter ego theory.[179]

         After studying the factual allegations in the Third Amended Complaint and analogous authority, the court concludes the facts Plaintiffs allege fail to establish a distinct person and enterprise. Assuming the truth of Plaintiffs' allegations, England and Horizon are alter egos of one another.[180] Indeed, Plaintiffs specifically allege the companies have a “unity of ownership, share officers and directors, comingle funds, share a common computer system and office space, and, under the facts presented herein, it would be unjust and inequitable to treat them as separate entities.”[181] In this respect, Plaintiffs' factual allegations make this case analogous to Discon and distinguishable from Goldin Industries and Securitron. Plaintiffs contend England and Horizon acted “as a single corporate structure, guided by a single corporate consciousness.”[182] Acting with a single corporate consciousness, Defendants could hardly “associate[] with any enterprise” that consisted of an identical, coextensive corporate consciousness. And because Plaintiffs cannot prove distinctness under the facts alleged in their Third Amended Complaint, Defendants are entitled to judgment as a matter of law.[183]

         Plaintiffs' claim may be cognizable under a different set of facts and theory of recovery. Under Cedric Kushner, for example, a plaintiff might sue a corporate officer for participating in an association-in-fact enterprise consisting of his employer and other corporate entities.[184] But that is not the case presented.[185] Instead, Plaintiffs chose to pursue Defendants and alleged that they collectively constituted a single entity that was coextensive with the enterprise. Here, coextensive liability, a single corporate consciousness, and shared membership in a single corporate family eviscerate the distinction between person and enterprise that might otherwise exist for separate legal entities.[186] As a result, Defendants are entitled to judgment as a matter of law on Plaintiffs' First Claim for Relief.[187]

         D. Analysis of Plaintiffs' UPUAA Claim

         The parties dispute whether Plaintiffs' RICO and UPUAA claims rise and fall together.[188]While state courts are not required to adopt identical interpretations of UPUAA and RICO, the Utah Supreme Court often considers federal case law on RICO claims when analyzing comparable UPUAA provisions.[189]

         Here, the UPUAA contains a requirement of a distinct person and enterprise, employing language that is nearly identical to the RICO statute.[190] Plaintiffs provide neither authority nor persuasive argument for the proposition that UPUAA does not require a distinct person or enterprise. As the court has already concluded, the Third Amended Complaint does not allege a distinct person and enterprise. In the absence of a distinct person and enterprise, Plaintiffs cannot prevail under UPUAA.[191] Accordingly, Defendants are entitled to judgment as a matter of law on Plaintiffs' Second Claim for Relief.

         II. Motion for Summary Judgment (Dkt. 230)

         Defendants also move for partial summary judgment on Plaintiffs' Sixth Claim for Relief, claiming violation of the Utah Business Opportunity Disclosure Act (UBODA). The motion raises four issues: (1) whether Utah's choice of law rules extend UBODA to Plaintiffs; (2) whether Defendants offered an assisted marketing plan under UBODA; (3) whether the Federal Aviation Administration Act preempts UBODA, as applied to this case; and (4) whether the claim is time-barred.[192]

         A. Summary Judgment Standard

         Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[193] “A material fact is one that might affect the outcome of the suit under the governing law, and a genuine issue is one for which the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[194] When evaluating a motion for summary judgment, the court must “view the evidence and make all reasonable inferences in the light most favorable to the nonmoving party.”[195]

         B. Choice of Law

         The first issue presented is whether Utah courts would apply California law, as opposed to Utah law, to the business opportunity claims in this case. The parties appear to agree that there is a conflict between the laws of these two jurisdictions.[196] Defendants contend that this court must apply California law. Plaintiffs urge application of Utah law.

         Federal courts sitting in diversity apply the choice of law rules of the forum state.[197] The Utah Supreme Court has adopted the “most significant relationship approach, ” as articulated in the Restatement (Second) Conflict of Laws.[198] This court must identify the relevant factors in the Restatement and then evaluate whether California or Utah bears “the most significant relationship to the occurrence and the parties.”[199]

         The parties dispute two issues relevant to the choice of law analysis. First, they dispute whether the contracts between Defendants and the drivers require application of Utah's business opportunity statute, UBODA. Second, in the event the contractual language does not govern the choice of law analysis, the parties dispute whether Utah or California bears the most significant relationship to the events at issue and the parties.

         1. Effect of Choice of Law Provision in the Agreements

         Utah appears to have adopted Section 187 of the Restatement (Second) Conflict of Laws, which applies when parties select and agree upon the application of a forum's law.[200] Citing this provision, Plaintiffs urge the court to broadly construe provisions in the Lease Agreement and Operating Agreement, and to apply Utah law to their UBODA claim.

         The court concludes that neither Defendants nor the drivers contracted to apply Utah law to the UBODA claim. In both the Operating Agreement and the Lease Agreement, the parties stipulated: “This Agreement shall be interpreted under the laws of the United States and the State of Utah, without regard to the choice-of-law rules of such State or any other jurisdiction.”[201]Unlike provisions in many of the cases cited by Plaintiffs, the choice of law provisions in these contracts do not contain broadening language such as “arising out of” or “relating to” the subject matter of the agreements.[202] In this respect, the plain language of the agreements suggests that the choice of law provisions apply only to issues of contractual interpretation. Indeed, the narrow language of these provisions can be contrasted with language elsewhere in the agreements imposing a time limitation, but extending to claims relating to or arising out of the agreements.[203] The difference between the language of the two provisions suggests the parties did not contract to apply Utah law to any claims relating to or arising under either agreement.

         Because the Agreements do not reflect the parties' intent to apply Utah law to legal issues beyond contract interpretation, the court concludes the agreements are not determinative, and Sections 145 and 148 of the Restatement are more applicable to assessing whether California or Utah has the most significant relationship to the claim.

         2. Application of Restatement Section 145/148 Factors

         For torts, Utah courts traditionally apply the factors contained in Section 145 of the Restatement. These factors include “(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.”[204] Under the Restatement, courts evaluate these factors “according to their relative importance” based on the nature of the particularized issues.[205]

         Restatement Section 148 specifically addresses claims arising out of a fraud or misrepresentation.[206] When applying Section 148 to misrepresentations that involve individuals in several states, courts evaluate the following factors:

(a) the place, or places, where the plaintiff acted in reliance upon the defendant's representations,
(b) the place where the plaintiff received the representations,
(c) the place where the defendant made the representations,
(d) the domicil, residence, nationality, place of incorporation and place of business of the parties,
(e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and
(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.

         Plaintiffs do not address whether Section 145 or Section 148 has more bearing on this court's analysis of a statutory claim on the theories here advanced, in part because Defendants raised the issue in their reply brief. But the Section 148 factors are helpful insofar as the UBODA claims seeks to recover for harm that arose out of a claimed failure to disclose or report accurate information. After careful consideration of the undisputed facts, the arguments, and the Restatement, the court concludes Utah has the most significant relationship to the parties and the occurrence forming the basis of Plaintiffs' UBODA claim.

         California undoubtedly has some relationship to this case under Section 145 and the first three Section 148 factors. Plaintiffs resided in California. While in California, Plaintiffs accessed online advertisements and spoke with England's recruiters. After enrolling in driver training school, Plaintiffs traveled to a California school, where they learned about Defendants' independent contractor program from instructors. Arguably, the injury occurred in California, where Roberts and McKay began to operate their trucking operations. But while these contacts suggest that California has a significant relationship to the claim, this does not end the inquiry. Under the Restatement, multiple states often share an interest to litigation. Here, the question is whether, notwithstanding these contacts, Utah has a more significant relationship.

         Under both Section 145 and three factors of Section 148(b), Utah bears a significant relationship to the parties and the occurrence. The conduct ultimately causing the claimed injury occurred in the Utah, where Defendants purportedly created a business opportunity without adequate disclosures. And while a plaintiff's place of residence is entitled to substantial weight if the harm is pecuniary in nature, [207] it is also significant to the inquiry that Defendants are incorporated and headquartered in Utah.

         Moreover, the business opportunity itself was based in Utah. Plaintiffs traveled to Utah to attend the Phase II Upgrade. Relying on representations received in Utah and elsewhere, Plaintiffs ultimately signed the Leasing Agreement and Operating Agreement in Utah. While Plaintiffs traveled across the nation as independent contractors for England, Defendants managed their operations and the lease from their Utah headquarters. And in some respects, the injury occurred in multiple states, including Utah, where Defendants continued to deduct payments for fixed and variable costs.[208] The court concludes that the relationship between Plaintiffs and Defendants was centered in Utah and that some performance under the agreements occurred in Utah. All of these facts weigh in favor of applying Utah law, despite Plaintiffs' residency and the place of initial communication.

         When resolving conflicts, courts often also consider the general choice of law factors articulated in Section 6 of the Restatement:[209]

(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.

         The court concludes these factors slightly favor application of Utah law.

         Both Utah and California have an interest in regulating fraudulent business opportunity schemes insofar as California desires to protect residents, while Utah has an interest in regulating its companies. Neither side argues that the needs of the interstate system favor California or Utah. But there are equally compelling arguments as to the justified expectations of parties. On the one hand, the Leasing Agreement and Operating Agreement contain choice of law provisions for interpreting the contracts, but are silent respecting the law to apply to claims or disputes arising out of or related to the contracts. On the other hand, Defendants could justifiably expect that a statute in their home state would apply to their conduct within that state. Plaintiffs persuasively argue that where, as here, a party allegedly perpetrated a uniform scheme across the country, certainty, predictability, uniformity, ease of determination, and application of law weigh in favor of applying the law of the forum where the potentially liable party is based. But this factor weighs only slightly in favor of Plaintiffs, because similar arguments could be made about a bright-line rule requiring application of the law of the victim's home state. In short, after balancing these factors, the court concludes the Section 6 factors weigh modestly in favor of applying Utah law.

         Ultimately, the question of which state has a more significant relationship to the business opportunity claim is a close one. But on balance, the court concludes Utah has the most significant relationship to the parties and events at issue. The conduct that formed the basis of the claim occurred predominantly in Utah. The heart of the claim-the Driving Opportunity- was developed, advertised, managed, and directed from Utah by a Utah-based company. For this reason, Utah law applies and Defendants are not entitled to summary judgment on the UBODA claim under a choice of law theory.

         C. Existence of an Assisted Marketing Plan

         UBODA applies to “sellers” of “assisted marketing plans.”[210] The parties dispute whether Plaintiffs will be able to prove at trial that Defendants marketed an “assisted marketing plan” within the meaning of UBODA.

         An assisted marketing plan is defined as “the sale or lease of any products, equipment, supplies, or services that are sold to the purchaser upon payment of an initial required consideration of $300 or more for the purpose of enabling the purchaser to start a business, in which the seller represents” one of four listed things.[211] Three of these listed seller representations are irrelevant to this case.[212] But a party may prove the existence of an assisted marketing plan by demonstrating that the seller represented “that upon payment by the purchaser of a fee or sum of money, which exceeds $300 to the seller, the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the assisted marketing plan that exceeds the price paid for the marketing plan.”[213]

         Defendants maintain they are entitled to summary judgment under UBODA because: (1) there was no initial required consideration, and (2) Plaintiffs cannot show the existence of a separate sales or marketing program. The court takes up these arguments in turn.[214]

         1. Initial Required Consideration

         Defendants first argue the Driving Opportunity does not constitute an assisted marketing plan under UBODA because there was no “initial required consideration, ” an essential element of the statutory definition. “Initial required consideration” means the “total amount a purchaser is obligated to pay under the terms of the assisted marketing plan, either prior to or at the time of delivery of the products, equipment, supplies, or services, or within six months of the commencement of operation of the assisted marketing plan by the purchaser.”[215] Notably, the statute excludes “not-for-profit sale of sales demonstration equipment, materials, or supplies for a total price of less than $300.”[216]

         Defendants argue: (1) England's Operating Agreement did not require independent contractors to lease products, equipment, or services; (2) drivers who leased vehicles made payments to Horizon, not England; (3) drivers were not required to make payments to England but instead voluntarily opted to have the company process expenses; and (4) drivers could have become independent contractors without paying tuition.[217] In short, Defendants aver that neither Roberts nor McKay were required to pay England initial required consideration and, as a result, the company does not qualify as a seller under the statute.

         The court disagrees. Notwithstanding the language of the Agreements, Plaintiffs have proffered evidence that England and Horizon together developed a plan to attract individuals with no experience in the trucking industry by offering an opportunity to own a trucking business through the Leasing Agreement and Operating Agreement. The record contains testimony of company employees relating to joint recruiting efforts, internal documents describing the Implementation Plan, recruiting guides and scripts, and even pay statements. A reasonable jury could find at trial that Plaintiffs met their burden of demonstrating that England and Horizon jointly offered the Driving Opportunity, which in turn required a payment of at least $300 within the first six months of the program in the form of either fixed leasing payments or variable mileage charges. In this context, the issue of initial required consideration may raise a series of interrelated factual issues at trial, including: (1) whether England and Horizon constituted a joint venture, (2) which company received the benefit of payments processed through England; and (3) whether particular deductions were required under the Driving Opportunity, as defined by Plaintiffs.

         Against these facts, the court cannot find that England is entitled to summary judgment as a matter of law under the theory it did not require drivers to pay initial consideration.[218]

         2. Seller Representation

         Defendants next argue Plaintiffs cannot prove England or Horizon made a representation that would bring the Driving Opportunity within UBODA's definition of “assisted marketing plan.”[219]

         To constitute an assisted marketing plan, the seller must make a representation that falls within the statute.[220] Here, the parties dispute whether England represented “that upon payment by the purchaser of a fee or sum of money, which exceeds $300, the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the assisted marketing plan that exceeds the price paid for the marketing plan.”[221] Because the terms “sales program” and “marketing program” are not defined in the statute, Utah courts would attempt to give the terms their “usual and accepted meaning” by relying on dictionary definitions.[222]

         Marketing is often defined as the “act or process of promoting and selling, leasing, or licensing products or services, ” or alternatively, as the “part of a business concerned with meeting customers' needs.”[223] The noun “sales” is used to refer to “operations and activities involved in promoting and selling goods or services, ” or, as an adjective, to connote “of, relating to, or used in selling.”[224] Among other things, “program” has been defined as “a plan or system under which action may be taken toward a goal.”[225]

         Defendants argue: (1) UBODA requires Plaintiffs to demonstrate that they paid for a marketing program beyond the initial required consideration, which they cannot do; and (2) England did not provide a sales or marketing program.[226] Neither argument, however, provides a basis for granting summary judgment in favor of England on the record presented.

         Contrary to Defendants' theory, Utah Code § 13-15-2(1)(a)(iv) does not require a party affirmatively to prove an additional payment was made. Applying the plain and ordinary meaning of the statutory language, the court concludes UBODA merely requires a party to show that a seller represented that, on the payment of a threshold amount, it would provide the benefits of a program or plan relating to selling, leasing, or licensing goods or services, and that this plan or program would permit the purchaser to derive income in excess of the price paid.[227]

         While proof of this payment may be relevant to whether the seller made a representation in the first instance, the court's inquiry under the statute centers on the occurrence of a qualifying representation, as opposed to the existence of a particular payment. Here, Plaintiffs offered some evidence that England developed the Driving Opportunity to attract independent contractors, indicated that independent contractors would pay leasing and variable mileage costs in exchange for business from one particular client (England), and suggested that the Driving Opportunity was an affordable and potentially lucrative business opportunity.[228] Because a reasonable jury could find Defendants' representations relating to the profitability of the Driving Opportunity met the statutory requirements, genuine issues of material fact preclude summary judgment.

         In response, Defendants insist that the use of different terms in different subsections of the statute-marketing plan and marketing program-suggests that UBODA requires both initial consideration and a future payment for the program itself. As discussed above, the definitions of plan and program overlap. But even assuming UBODA requires a separate initial payment and then a subsequent payment for the marketing program itself, genuine issues of material fact preclude summary judgment. Here, a reasonable jury could find that Defendants' program-the opportunity to provide services directly to England under the Leasing Agreement and the Operating Agreement-was contingent on lease payments, variable mileage payments, or both. In other words, a jury could distinguish the initial required consideration from payments required to continue to participate in the Driving Opportunity. If so, genuine issues of material fact exist on the issue of whether drivers paid for a marketing program under UBODA.

         Defendants' UBODA challenge raises significant issues. At trial, England may convince the jury that England and Horizon did not work together to offer a business opportunity, that Plaintiffs did not make sufficient payments to either England or Horizon, or that the Driving Opportunity-at least as defined by Plaintiffs-does not constitute an assisted marketing plan under UBODA. On the record presented, however, Plaintiffs are entitled to all reasonable inferences that can be drawn from settlement reports, company documents describing the development of the independent contractor program, the affiliation between the two family- owned companies, testimony relating to recruitment, website advertising, and the England Business Guide. Taken together, this evidence raises a genuine issue of material fact concerning whether Defendants offered an assisted marketing plan to drivers without making statutory disclosures.

         For all these reasons, the court concludes England is not entitled to summary judgment under UBODA at this stage of the proceedings.

         D. Preemption

         The next issue is whether the Federal Aviation Administration Authorization Act preempts UBODA claims against motor carriers like England. Defendants contend the Aviation Act's express preemption provision bars such claims. Plaintiffs argue the generally applicable statute in this case falls outside the Aviation Act's preemption provision.

         Under the Aviation Act, a state “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.”[229] When applying this preemption provision, courts often draw on the reasoning of two Supreme Court decisions: Rowe v. New Hampshire Motor Transp. Ass'n[230] and Dan's City Used Cars, Inc. v. Pelkey.[231]

         In Rowe, the Supreme Court considered whether the Aviation Act preempted a state statute regulating tobacco delivery and imposing civil penalties for transporting tobacco products when either the sender or receiver lacked a state license. Importing a preexisting interpretation of a preemption provision from the Airline Deregulation Act of 1978, the Court held: (1) “[s]tate enforcement actions having a connection with, or reference to, carrier rates, routes, or services are pre-empted”; (2) “pre-emption may occur even if a state law's effect on rates, routes, or services is only indirect”; (3) “it makes no difference whether a state law is consistent or inconsistent with federal regulation”; and (4) “pre-emption occurs at least where state laws have a significant impact related to Congress' deregulatory and pre-emption-related objectives[, ]” which was to ensure motor carriers received the benefit of “competitive market forces” which in turn would stimulate “efficiency, innovation, and low prices.”[232]

         Applying that standard, the Court held the Aviation Act preempted state tobacco laws.[233]Recognizing that the state statute directly targeted trucking and delivery services, the Court concluded the provision had a “significant and adverse impact” on the objectives of the Aviation Act, insofar as the licensing statute required “carriers to offer a system of services that the market does not provide” and would “freeze into place services that carriers might prefer to discontinue in the future.”[234] The Court also discussed a provision in the statute that would impose an obligation to examine every package, concluding it “directly regulates a significant aspect of the motor carrier's package pickup and delivery service” in a manner prohibited by the Aviation Act.[235] Finally, the Court observed that imposing the tobacco regulations could “easily lead to a patchwork of state service-determining laws, rules, and regulations.”[236]

         The Court reached the opposite conclusion in Dan's City Used Cars, Inc. v. Pelkey.[237]There, the Court considered whether the Aviation Act preempted a state law that could be used to impose penalties on a towing company if it unlawfully possessed and disposed of a vehicle.[238]Reiterating the standard used in Rowe, the Court noted that the statutory phrase “related to” extended to any state law “having a connection with or reference to carrier rates, routes, or services, whether directly or indirectly.”[239] But “the breadth of the words ‘related to' does not mean the sky is the limit.”[240] To the contrary, the Aviation Act “does not preempt state laws affecting carrier prices, routes, and services in only a tenuous, remote, or peripheral manner.”[241]The Court then held that the Aviation Act did not preempt enforcement of a claim based on a state statute that was “related to neither the ‘transportation of property' nor the ‘service' of a motor carrier.”[242] Under the definition of transportation, [243] the state statute did “not limit when, where, or how tow trucks may be operated” but instead created a basis for pursuing a company for neglecting “statutory and common-law duties of care.”[244] The Court rejected the towing company's argument that the statute affected the service of a motor vehicle carrier, because the transportation service-removal of an abandoned vehicle-“ended months before the conduct on which [the vehicle owner's] claims are based.”[245] Distinguishing Rowe, the Court observed that the statute “has neither a direct nor an indirect connection to any transportation services a motor carrier offers its customers.”[246] The Court concluded the state statute meant to regulate disposal of towed vehicles was “far removed” from the purpose of the Aviation Act, which was to ensure that a patchwork of regulation did not obstruct the “free flow of trade, traffic, and transportation of interstate commerce.”[247]

         As the parties recognize in their papers, application of these principles and the Aviation Act varies depending on the context. At least one court has held that the Aviation Act preempted state laws governing independent contractors as applied to motor carriers because the laws directly and substantially impacted the business model of a trucking company.[248] Still other courts have held that generally applicable economic regulations-such as independent contractor wage laws or meal break requirements-have such a tenuous relationship to competitiveness as to fall outside the scope of the Aviation Act.[249]

         As discussed above, Defendants argue UBODA is preempted because its enforcement against a motor carrier company like England directly affects trucking services, prices, and the transportation of property. Plaintiffs, however, contend the Aviation Act does not preempt their claims against Horizon or England because UBODA is a generally applicable state law that neither regulates transportation of property nor directly relates to prices, routes, or services. The court agrees with Plaintiffs and finds for the two reasons discussed below that the Aviation Act does not preempt the UBODA claim.

         1. “Related to” Requirement

         The court concludes that UBODA is not sufficiently related to the price, route, or service of a motor vehicle carrier. Instead, it is a generally applicable business regulation statute requiring entities engaging in the practice of offering business opportunities in the form of assisted marketing plans to comply with certain reporting and disclosure obligations.[250] Unlike the tobacco delivery regulations in Rowe, UBODA imposes obligation that are “tenuous, remote or peripheral” to a motor carrier's price, routes, or services. It regulates only the manner in which a motor carrier may offer business opportunities to third parties.

         In this respect, UBODA is properly analogized to generally applicable discrimination, rest break, or wage laws which unavoidably affect drivers and motor carriers but have survived preemption challenges because they bear only a tenuous connection to motor carriers and do not exert a “significant impact on . . . rates, routes, or services.”[251] As the Ninth Circuit recently observed, “Congress did not intend to preempt generally applicable state transportation, safety, welfare, or business rules that do not otherwise regulate prices, routes, or services.”[252]

         And unlike cases where courts reach the opposite result, Defendants have not provided an evidentiary record here that supports the conclusion that compliance would have a “significant” effect on their prices, routes, or services.[253] This case stands in contrast to Sanchez, a case Defendants cite, where the district court evaluated a substantial record before finding the Aviation Act preempted a state law requiring a carrier to “convert its independent contractors to employees, ” resulting in “a categorical ban on the use of independent contractors by motor carriers in Massachusetts, ” and substantially limiting services, efficiency, and routes.[254]

         In contrast, Defendants simply assert that patchwork compliance will affect its business model, which is a substantial step removed from prices, routes, and services. As the Supreme Court recently observed, “the breadth of the words ‘related to' does not mean the sky is the limit.”[255] While UBODA compliance may place an indirect burden on England, nothing in the record suggests a significant likelihood that shipping prices would increase, routes would be cut, or services reduced.[256] And while approximately twenty-five states have adopted similar statutes, England has not shown that its ...

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