On July 28, the California Supreme Court rendered the second major transportation decision in the last month (the first was Dilts vs. Penske Logistics filed on July 9th by the Ninth Circuit Court).
In Harris vs. Pac Anchor Transportation, the California Supreme Court considered a case brought by the Attorney General against a truck driver. The Attorney General claimed a violation of California’s Unfair Competition Laws based on the defendant’s misclassification of drivers as independent contractors. The facts were that the defendant’s drivers “invest no capital, own no trucks, and do not use their own tools or equipment.”
Furthermore, the “drivers are often employed for extended time periods, … can be discharged without cause, have no operational control, have no other customers, take all instructions from the defendants, and have no Department of Transportation operating authority.”
The Attorney General claimed that Pac Anchor gained an unfair advantage on its competitors by misclassifying its drivers as independent contractors.
The Trial Court found that the Attorney General’s claims were preempted by the FAAAA as relating to a “price, route or service” of a motor carrier. The case was appealed up to the California Supreme Court, which held that there was no FAAAA preemption, because California’s Unfair Competition Law had at best only an “indirect” effect on the prices, routes or services of motor carriers.
This paves the way for future Attorney General or private party unfair competition claims against truckers that misclassify drivers as independent contractors.
For more information about this ruling and transportation law, contact us today.
