Appeals court overturns LA port’s employee rule

A federal appeals court overturned a lower court’s upholding of the Port of Los Angeles’ ban on owner-operators Sept. 26.

The U.S. Court of Appeals for the Ninth Circuit reversed the federal Central District of California’s ruling that allowed the port’s requirement that only employee drivers regularly could work the port. The American Trucking Associations had appealed the lower court’s decision upholding the port’s concessionaire agreements, which include the progressive ban on owner-operators.

The port responded to the Sept. 26 ruling by posting a statement on its website that it would “refrain from enforcing the employee driver provision.”

Barring independent contractor truckers was the most contentious issue in the associations’ extensive battle with the port, although the ATA did not dispute the progressive ban on older trucks.

Bill Graves, ATA president and CEO, considered the decision a victory.

“This plan was never about clean air, it was about promoting special interests of a few well-connected labor groups,” Graves said. “Successful clean trucks plans in Long Beach, Seattle and the ports of New York and New Jersey have shown you can improve air quality without forcing owner-operators out of your port.”

The ATA had argued that five agreement provisions were preempted by the Federal

Aviation Administration Authorization Act, which bars government entities from regulating motor carriers’ rates, routes and services.  The lower court said the provisions did not fall under the act’s preemption, partly because California adopted the entire agreement in its capacity as a market participant, rather than a market regulator.

The majority of the three-judge panel voted to reverse the district court’s conclusion that the employee-driver provision is not affected by the act because of the market participant doctrine.

Judge N. R. Smith dissented, stating that “the market participant exception to preemption does not apply.” Drayage services, not port services, form the relevant market and the port is acting as a regulator of drayage services, he wrote.

ATA Chief Counsel Robert Digges said although the court upheld the association’s argument on the central issue, the ATA now would decide if it should further appeal the remainder of the issues the Sept. 26 decision left unchanged.

“We firmly believe the other challenged provisions of the Concession Agreement should have been preempted, as explained in a strong dissent by the panel’s Chief Judge (Smith),” Digges said. “Should we appeal, that dissent will be very helpful to our effort.”

The concession agreements progressively limited the number of owner-operators that concessionaire carriers could use at the port, ending that allowance after five years. Owner-operators who infrequently served the ports could buy a limited number of day passes.

The appellate court affirmed the district court’s holdings that the financial capability, maintenance, off-street parking, and placard provisions are not preempted by the FAAA.

The Owner-Operator Independent Drivers Association, Harbor Trucking Association and Intermodal Association of North America were among the organizations that filed amicus curiae or friend-of-the-court briefs on the ATA’s side. Amicus curiae are filed by those not party to the lawsuit, but have a strong stake in the issue.