Port Can’t Dictate Who Drives for Contractors

(CN)- The Port of Los Angeles cannot force trucking companies to use employee-drivers rather than independent contractors, the 9th Circuit ruled Monday, shooting down a key provision of the port's long-term plans to "grow green."

Since 2008 the port has required all companies operating drayage trucks to enter into concession agreements as part of an effort to expand the port in an environmentally conscious way. Local citizens and environmental groups had successfully halted the port's expansion plans for a decade over pollution concerns. One study cited in the ruling found that people living near the port had a 60 percent greater risk of developing cancer than other Southern Californians.

The port began the initiative to "grow green" in 2006, with the goal of reducing its total emissions 45 percent by 2012. One of the port's primary tools for achieving this goal is the Clean Truck Program (CTP), which the American Trucking Association has been fighting in court since its inception.

The CTP includes a progressive ban on older trucks, and provides grants to trucking companies to replace or retrofit more than 16,000 polluting old trucks. It also slaps penalties on those companies that don't comply. One of the more controversial of the CTP's 14 elements is the so-called employee-driver provision, which requires port concessionaires to transition from owner-operators to 100 percent employee-drivers over five years.

Port officials argued that the employee-driver provision was needed because most independent truckers would not be able to pay to replace or retrofit their trucks. The port estimated that some 10 to 20 percent of independent drayage truckers would not be able to comply with the new rules, and worried that this reality would one day disrupt business.

Trucking-industry advocate American Trucking Association (ATA) sued Los Angles, which operates the port, and others in federal court, alleging that many provisions of the Clean Truck Program were preempted by federal deregulation laws.

After obtaining a preliminary injunction against several provisions of the concession agreements, ATA challenged five specific provisions at trial. U.S. District Judge Christina Snyder ruled in Los Angeles that federal law preempted none of the five challenged provisions, including the employee-driver provision.

A three-judge panel of 9th Circuit judges in Pasadena affirmed the District Court 2-1 on almost all points. However, the panel found that the employee-driver provision is preempted by federal law because it improperly allows the port to dictate the hiring practices of its concessionaires even if the port is subsidizing many of their trucks.

"While the port may impose conditions on licensed motor carriers seeking to operate on port property, it cannot extend those conditions to the contractual relationships between motor carriers and third parties," wrote Judge Betty Fletcher for the panel. "The port argues that it subsidized approximately 35 percent of the drayage trucks operating at the port, and believes that employee-drivers will better protect that investment. But the concession agreements bind all licensed motor carriers operating at the port, not merely those who drive port-subsidized trucks. Accordingly, even assuming that the port's investment in drayage trucks entitles it to control the employment status of the drivers of subsidized trucks, the employee-driver provision still seeks to impact behavior beyond the scope of the obligations imposed by the subsidies."

The judges recognized that the port adopted the provision to "increase stability in port drayage by ensuring that drivers were paid higher wages," but ruled that it could not do so by "unilaterally inserting itself into the contractual relationship between motor carriers and drivers."

Writing in dissent, Judge N.R. Smith argued that preemption applies to four of the five provisions challenged by the trucking group.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit