Tuesday, November 3, 2015
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C.A. Orders Arbitration in Dispute Involving Port Workers
By KENNETH OFGANG, Staff Writer
A dispute between a company that ships and distributes merchandise from the Ports of Los Angeles and Long Beach and its drivers is subject to binding arbitration, the Court of Appeal for this district ruled yesterday.
Div. Two overturned Los Angeles Superior Court Judge Susan Bryant-Deason’s order denying a petition brought by Performance Team Freight Systems, Inc.
The trial judge ruled that California law barring enforcement of arbitration agreements with respect to wage claims was not preempted, due to an exception to the Federal Arbitration Act. The appellate panel, however, found the exception inapplicable and state law therefore preempted.
The dispute involves claims by 19 drivers that the company failed to fully reimburse them for expenses and made improper deductions from their paychecks. After the drivers filed wage claims with the California Labor Commissioner, the company sought arbitration under clauses in the “independent contractor agreements” the drivers had signed.
Judge’s Ruling
The commissioner and the drivers opposed arbitration. Bryant-Deason ruled that the arbitration clauses, which by their terms applied “to the interpretation or the performance of the terms of this Agreement,” did not apply to wage claims. She also ruled that the drivers were transportation workers who could not be compelled to arbitrate under the Federal Arbitration Act.
Section 1 of the FAA says “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from coverage under the act.
The term “workers engaged in foreign or interstate commerce,” Presiding Justice Roger Boren explained for the Court of Appeal, has been held to mean transportation workers.
But even if the claimants are transportation workers—the jurist said the issue is in doubt because they only drove short routes, and entirely within the state—the §1 exception doesn’t apply because their agreements with the company are not “contracts of employment,” Boren said.
Independent Contractors
Not only did the contracts designate the workers as independent contractors, it gave them the right to refuse requests and assignments, to select and hire other drivers to fulfill the assignments, and to determine the hours they would drive and the routes they would take.
“In sum, although an agreement of the sort here does not definitively establish an independent contractor relationship, it does weigh in favor of a conclusion that the agreement is not a contract of employment under section 1,” Boren wrote. “Absent any countervailing evidence, we find that respondents failed to meet their burden in demonstrating that the section 1 exemption should apply.”
Boren went on to agree with the company that the wage claims were within the scope of the agreements to arbitrate.
“The individual respondents contend that they performed the trucking services required by the agreements, but that the performance required by Performance Team (in the form of compensation) was inadequate,” the presiding justice explained.
“Furthermore, an analysis of the individual respondents’ status as employees or independent contractors will require an interpretation of the agreements’ terms (among other evidence) to decide if the terms accurately reflect the parties’ working relationship,” he wrote.
“Thus, the parties’ dispute encompasses both the interpretation and performance of the subject agreements’ terms,” he said, and “the trial court erred by finding that the individual respondents’ claims were outside the scope of the arbitration provision.”
Argument Rejected
He also rejected the argument that the agreement was procedurally unconscionable. The claimants, he said, failed to present evidence to support their allegations that the agreements were contracts of adhesion, that the Spanish-speaking drivers did not understand English, or that the statutes governing arbitration were not explained to them.
Attorneys on appeal were Johnnie A. James, Robert R. Roginson, and Kathleen Choi of Ogletree, Deakins, Nash, Smoak & Stewart for the company; McAvoy & Rivera’s D. Briana Rivera and Patricia Shackelford for the drivers, and Paul S. Chan, Thomas V. Reichert and Douglas A. Fretty of Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, along with Paul J. Loh and Aarti K. Wilson of Willeken Wilson Loh & Delgado, for Labor Commissioner Julie Su.
The case is Performance Team Freight Systems, Inc. v. Aleman, 15 S.O.S. 5256.
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