PAM Transport Settles Lawsuit But Disputes Liability

PAM Transport Settles Lawsuit But Disputes Liability

PAM Transport Inc. of Tontitown reported a fourth-quarter loss of $13.6 million on Feb. 24, thanks to the $16.5 million settlement of a class-action case.

Justin Swidler of Swartz Swidler of Cherry Hill, New Jersey, said a primary reason his clients agreed to settle was the company’s admission in court documents that the lawsuit could be disastrous to PAM. Swidler said PAM CFO Allen West said a loss — the plaintiffs were asking for as much as $90 million — could trigger loan defaults and, ultimately, bankruptcy.

“We hear that in private discussions from almost everybody we sue,” he said. “We paid attention to it. It was a tough quarter for them because of this lawsuit.”

But Angela Clark, PAM’s vice president of risk management, denied bankruptcy was a risk or a concern.

“The Company submitted a statement indicating that an adverse ruling for all damages requested by plaintiffs (approx. $90M) could adversely affect our existing loan covenants and therefore could negatively affect our liquidity during the appeals process,” Clark said in an email to Whispers. “(There was no mention of bankruptcy or even an indication that such an event was possible).”

Swidler filed the lawsuit originally in 2016 on behalf of three drivers who alleged that PAM failed to pay them minimum wage as required by federal and state law when all the hours they spent on duty were factored in. PAM disputed that non-work activities required compensation and said the lawsuit’s success could end the pay-for-performance model of the trucking industry.

PAM admitted no liability or guilt but did agree to policy changes. PAM will no longer charge its drivers fees for pay advances or withhold pay until paperwork is turned in.

“I think the settlement allows the drivers of PAM to experience new policies that should have never existed, quite frankly,” Swidler said. “It allows them to get a reasonable amount of money for being underpaid for so many years.”

Clark said PAM settled to put the matter to rest so it could concentrate on its growth initiatives. Even with the fourth-quarter clanker, PAM made nearly $8 million in profits in fiscal 2019.

Swidler said approximately 16,000 drivers will be eligible for part of the settlment, generally about $1,000 for every year they drove during 2013-19. Swartz Swidler will get $5.5 million.