California judge awards $2 million to seven misclassified port drivers

By Clarissa Hawes, Land Line staff writer | Friday, January 30, 2015

A California Superior Court judge ruled that seven port drivers for Pacer Cartage Inc. of Wilmington, Calif., were improperly classified, stating in his decision that the drivers are actually employees, not independent contractors, as originally labeled by the company.

On Wednesday, Jan. 28, California Superior Court Judge Jay M. Bloom agreed with the port drivers that Pacer controlled nearly every aspect of the drivers’ workdays, including their ability to make a living.

“Consequently, consideration of all the factors supports the conclusion that drivers were employees and not independent contractors under California,” Judge Bloom wrote in his decision.

The judge awarded the seven drivers who worked for Pacer in the ports of Los Angeles and Long Beach, damages ranging from $85,632 to $387,936.

Alvin Gomez, lead attorney for the drivers, told Land Line following the ruling that this “landmark decision will forever reshape the United States trucking industry.”

“Once a decision like this is made, it gives notice to every trucking company in the state and in the country that has the same scheme in place that they are now in willful violation of the labor code,” Gomez said. “I think this is going to change the way the trucking companies operate because they are now going to have to properly classify the drivers as employees or treat them truly as independent contractors where the drivers have a right to negotiate the prices or work for other companies.”

Gomez said Pacer and its entities controlled nearly every aspect of the drivers’ businesses.  The seven drivers drove leased trucks and were required to lease them from a company owned by Pacer.

“The only way we found out that Pacer had formed a separate leasing entity was by looking at who the officers were who signed on behalf of the company,” Gomez said. “When we saw the master lease, we noticed that the persons who signed on behalf of the company were also employees of Pacer.”

Gomez also claims that Pacer purchased the vehicles for $101,000, but then received incentives for around $30,000, which lowered the final price they paid to around $71,000. However, he claims the company did not pass on these savings to the drivers. Instead, the company leased the trucks to the drivers for the full amount of $101,000, plus interest.

At one time, Gomez claims the company purchased 200 trucks and made $6 million after Pacer leased the trucks back to the drivers for the full price and “pocketed the incentive money.”

Pacer also required the drivers to purchase mandatory occupational, cargo and commercial insurance from a specific insurance company.

And, while the company controlled nearly every aspect of the drivers’ work days, they did not receive employee benefits like health care, overtime pay, sick leave or vacation and retirement benefits.

Gomez called the Pacer decision a “game-changer” because the damages awarded to the seven drivers is “much higher than in any other case we’ve seen.”

“There’s just over $2 million in damages for these seven drivers, plus interest, which could be another $400,000, plus attorney’s fees and costs, which could be another $1 million, so you are talking about almost a $4 million verdict for these seven,” he said.

“The judge’s decision hit on all of the points that we proved through the trial,” he said. “All of the information we used to prove the drivers were actually employees was obtained by cross examination of their witnesses and their experts that showed these drivers were in fact employees and not independent contractors.”

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