The Employee Exception to the California Consumer Privacy Act (CCPA), Employee Rights, Employer Policy and Understanding the Unique Role of the National Labor Relations Act

I. Introduction
When California enacted the CCPA it included a limited one year exception for employee data. There were complex reasons for the exception, of which full integration with employer access and privacy policies and handbooks were most important. As CCPA doctrine had yet to evolve and predictable policy modifications hard to draft, this article will look at these issues through the evolving doctrine of federal labor law, which affects those rights and complicate the adaption to the new CCPA environment. Just as the CCPA is a national model with international roots, the National Labor Relations Act and its defined rights and responsibilities are of similar scope for all entities with national policy planning responsibilities.

II. The CCPA in Brief
The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020. There is a common misconception that companies need to be selling data in order for the CCPA to apply. But that is not correct. The CCPA regulates all for-profit companies doing business in California that collect consumers’ personal information and meet (just) one of the following three thresholds: has annual gross revenues in excess of twenty-five million dollars ($25,000,000); buys, receives, sells, or shares for commercial purposes the personal information of more than 50,000 consumers, households, or devices; or derive 50 percent or more of annual revenues from selling consumers’ personal information.

Significantly, the twenty-five million dollars ($25,000,000) revenue threshold is independent of any consideration whether the business collects any particular volume of consumer data.

In addition, the CCPA also applies to any entity that either: controls or is controlled by a covered business (for example, a subsidiary) or shares common branding with a covered business, like a shared name, service mark, or trademark.

A consumer is a California resident. The scope of information covered by the CCPA is very expansive, including 11 categories of information and subsets in those categories. Very broadly, the CCPA covers all personal information that identifies, relates to, describes, or capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.

The CCPA does not restrict a business’s ability to collect, use, retain, sell, or disclose consumer information that is de-identified or aggregated. The CCPA covers information that can be considered “unique” to a consumer, which can include identifiers such as an internet protocol (IP) address.

CCPA grants consumers: (i) the right to notice of what categories of personal data is being collected and the purpose for which it will be used; (ii) the right to access – to request information regarding the categories of personal information collected about them; (iii) the right to request deletion of personal information collected about them (with some exceptions); (iv) the right to opt-out of the sale of their data and personal information; and (v) the right to equal treatment/nondiscrimination so as to be free from discrimination if they exercise any of their rights.

Businesses have corresponding obligations to these rights. Some include providing privacy disclosures in advance of collecting any data, complying with any verifiable consumer requests identifying data within a 45-day time span, deleting certain data, and providing information free of charge, unless a request is manifestly unfounded or excessive.

The CCPA sets forth specific disclosures that businesses must include in their notices of collection. For example, under the CCPA, businesses must inform consumers at or before the point of collection what categories of personal information will be collected and the purpose for which these categories and information will be used. If a business was to collect additional categories, or collect personal information for a new purpose, they must also provide new notice of such collection and its purpose. This requires ongoing efforts to identify changes in collection or use of previously collected personal information.

An organization that does not collect information directly from consumers generally does not need to provide such a notice, but before it can sell a consumer’s personal information, it must inform the consumer that it is going to do so or verify with the source of the consumer information that notice was given. The right to know categories of third parties also applies - i.e., third parties must also give consumers explicit notice and an opportunity to opt-out before re-selling personal information that the third party acquired from another organization.

The CCPA also sets forth specific disclosures that businesses must include in their privacy policies, including descriptions of consumer rights and how to exercise them. A corollary to the right to notice is the right to access. Under the CCPA, consumers have the right to request that a business disclosure the categories of personal information collected, the categories of sources from which personal information is collected, the business or commercial purpose of the collection, the categories of third parties with whom the business shares personal information; and the specific pieces of personal information the business holds about a consumer. If a business sells personal information or discloses it for business purposes, consumers have the right to request the categories of information being sold or disclosed to other parties. In most instances, consumers are limited to two requests for data access information under the CCPA per year per organization and for a period of no more than the prior twelve months.

Businesses are also required to: (1) verify the identity of the consumer making the request, (2) not release information to other parties claiming to be a consumer, and (3) ensure that any information transmitted to the consumer is done in a reasonably secure way.

Consumers have the right to request deletion of personal information collected by a business, provided the consumer makes the request to the business that actually collected the information from the consumer. There are some limited exceptions to this right. For example, businesses do not need to delete information if the business needs the consumer’s personal information for a reason related to the business, such as providing goods or services to the consumer, complying with other legal requirements, detecting security incidents, conducting research, exercising free speech, protecting or defending against legal claims, or for internal operations the consumer might reasonably expect.

The parameters, limitations, and application of many of these exceptions are vague and fact specific to your business, including in particular with respect to a consumer’s reasonable expectation. For example, in determining whether a particular exception applies, businesses will have to determine the expectations of their particular consumers, how to handle the fact that personal information may be replicated many times and used for different purposes, and consider who and how the organization will make decisions regarding CCPA requests and whether any exceptions apply. Accordingly, businesses should consult legal counsel for assistance in determining whether a particular exception applies.

Businesses, in complying with the timing requirements noted in the access section above, must also inform the consumer in which manner the information is being deleted in response to the consumer’s request to delete collected personal information.

Consumers also have the right, at any time, to direct businesses that sell personal information about the consumer to third parties to stop the sale of their personal information. If a consumer is a minor, the CCPA conversely provides for a right to opt-in to the sale of data (exercised by the minor if the consumer is between 13 and 16 years of age, or by the minor’s parent or guardian if the consumer is under 13 years old). Businesses must wait at least 12 months before asking consumers to opt back in after a consumer has chosen to opt-out.

The CCPA prohibits businesses from discriminating against consumers by denying goods or services, charging a different price or rate for goods or services, providing a different level or quality of goods or services, or suggesting that they will do any of these things based upon a consumer’s exercise of any CCPA rights. Consumers that exercise their rights under the CCPA must be treated equally and have a right to equal services and prices.

However, the right to equal services and prices does not place any restrictions on an organization’s ability to collect information or deny service if a consumer does not want to participate in collection; it only applies once the consumer exercises specific CCPA rights.

III. The “Employee” Exception
The CCPA contains a limited exclusion for a period of one year for personal information of employees and job applicants collected by an organization. As long as employers are collecting the data of its employees and job applicants for purposes solely relating to their employment, the CCPA generally does not apply to the collection of that information. While the CCPA suspends employee rights related to access, deletion, and opting out of data collection, businesses must still provide privacy disclosures to employees regarding their data collection practices. This includes, for example, disclosure of the information that the employer collects and the purpose for the collection. Employees also still retain the right to commence a private right of action in the event affected by a data breach caused by a failure of the duty to maintain reasonable security safeguards.

IV. The Impact – Actual and Potential - of the National Labor Relations Act
We will focus on growing issues of privacy which emerged in workplace investigations under the National Labor Relations Act and are now reflected in state law.

National Labor Relations Board (NLRB) doctrine began to acquire a heightened role in employer policies in a set of decisions relating to employee handbooks and confidentiality in sexual harassment investigations.

The key concept is that under Section 7 of the National Labor Relations Act “protected concerted activity” issues were viewed as impacted by employer handling of data and decisions that might in other contexts be viewed as involving data privacy, but in the Board’s view were characterized as employee privacy.

In Hyundai America Shipping Agency v. N.L.R.B., No. 11-1351, slip op. (D.D.C. Nov. 6, 2015), the D.C. Circuit supported the Board’s position that the need for union and non-union employers to carefully review both oral and written workplace rules and policies, even if they do not on their face touch on union-organizing activity, constituted protectable information, and also as to access that information.

The Hyundai employee handbook included a rule limiting the use of company electronic communications systems, stating, "employees should only disclose information or messages from theses [sic] systems to authorized persons." The Court upheld the NLRB's determination that the rule is facially invalid, agreeing that a reasonable employee could read it as a restriction on employees' ability to share information about terms and conditions of employment. Moreover, it was not limited to protection of a narrow category of only confidential information.

Next, the Court upheld the Board in finding unlawful a provision sanctioning disciplinary action up to termination for "[p]erforming activities other than Company work during working hours." The Court agreed with the Board's assessment distinguishing between rules restricting union activity during working hours (including breaks), which are presumptively unlawful, and restrictions of activity during active working time, which are permissible. Because this rule fell into the former category, it was invalid.

It is useful to anticipate how this approach might relate to the access; non-discrimination and opt-out provision of the CCPA.

Although the Board has retrenched from that position in Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019), which reverses a 2015 decision— Banner Estrella Medical Center, 362 NLRB 1108 (2015), enf. denied on other grounds 851 F.3d 35 (D.C. Cir. 2017) by declining to require employers prove, on a case-by-case basis, that the integrity of an investigation would be compromised without confidentiality.

However, if the burden on the employer to determine whether its interests in preserving the integrity of an investigation outweighed employee Section 7 rights, how will that balance tip when and if the CCPA exception expires?

Another aspect of the treatment of potentially protectable information arises in internal communications such as email and whether employees have a statutory right to use employer IT resources unless the employer’s email system furnishes the only reasonable means for employees to communicate with one another. In Caesars Entertainment d/b/a/ Rio All-Suites Hotel and Casino, 368 NLRB No. 143. the Section 7 issue derived from the Board’s earlier decision in Purple Communications, Inc., 361 NLRB 1050 (2014 which envision that section 7 rights included use of such data and the internal modalities for its communication. Previously the Board had held in Register Guard, 351 NLRB 1110 (2007) where the use of employer-provided email is the only reasonable means for employees to communicate with one another on non-working time during the workday.

V. Going Forward
Today’s policies are the seeds of tomorrow’s litigation. Counsel and their clients are wise to stay focusing on the developments in the coming year under the CCPA and its specific ramifications under related regulatory statutes that define employee rights.

Things to do in Vancouver: ARTS IN THE PARKS

ATLP's 91st Annual Meeting is fast approaching and we wanted to share some exciting things to do in Vancouver leading up to the event.

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December 2019 - Passenger Rail Update


The passenger rail sphere has seen a number of developments in the fall of 2019 on the regulatory, legislative and commercial fronts, including:

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Things to do in Vancouver: The Famous Seawall

ATLP's 91st Annual Meeting is fast approaching and we wanted to share some exciting things to do in Vancouver leading up to the event.

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US DOT Proposes Rule Regarding the Safe Transportation of Liquefied Natural Gas by Rail; Comments Due December 23, 2019

On October 18, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA), together with the Federal Railroad Administration (FRA) (both agencies of the US Department of Transportation (DOT)), issued a Notice of Proposed Rulemaking (NPRM) regarding the transportation of liquefied natural gas (LNG). See 84 Fed. Reg. 56,964 (Oct. 24, 2019) and PHMSA Docket. No. PHMSA-2018-0025 (HM-264) (Hazardous Materials: Liquefied Natural Gas by Rail).

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Washington State Crude-by-Rail Law Raises Preemption Questions

The boom in Bakken crude oil production – and the infrequent but serious crude-by-rail accidents associated with it – have led to a corresponding effort by the State of Washington to prohibit the transportation of crude oil through the state. This effort cumulated in the passage of Washington’s Engrossed Substitute Senate Bill 5579 (“Crude Oil By Rail—Vapor Pressure”), which went into effect on July 28, 2019. Under this law, only crude oil with a maximum vapor pressure of 9 psi may be loaded in or unloaded from railroad tank cars within the State. The practical effect of this vapor pressure cap has been to significantly reduce the transportation of Bakken crude into Washington for refining.

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PHMSA Announces the Award of Pipeline Safety and Hazardous Materials Safety Grants

On September 20, 2019, DOT announced the award of over $34,300,000 in awards to enhance pipeline and hazardous materials safety. A PHMSA press release explained that the grants will support states, territories, local governments, tribal entities, emergency responders, universities, and non-profit organizations, to support various state and local safety programs.

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No “Acting Under” Federal Question Jurisdiction for Self-Certifying Aircraft Manufacturer

On September 20, 2019, the Ninth Circuit addressed federal question jurisdiction under 28 U.S.C. § 1442(a)(1) as applied to an aircraft manufacturer that self-certified a helicopter involved in a fatal crash. The issue is of particular interest now given the ongoing Boeing 737 MAX controversy that also was self-certified.1

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Marine Salvage Award for Post-Hurricane Vessel Recovery

Recently, a United States District Court in the Southern District of Georgia granted a salvage award to a professional salvor for the recovery of a pleasure vessel in the aftermath of Hurricane Matthew. In JSM Marine LLC v. Gaughf, — F. Supp.3d – (S.D. Georgia 2019), 2019 WL 4309014, the court held that the marine salvor was entitled to a salvage award for successfully rescuing the pleasure boat from marine peril. The court also awarded the salvor reasonable attorney’s fees against the vessel owner.

Defendant owned the MIST APPROACH, a 2007 Grady White 228 Seafarer. The 22 foot boat had a small cabin and was designed for offshore saltwater fishing and inshore fishing in the Savannah, Georgia area. At the time Hurricane Michael landed onshore, the MIST APPROACH was tied to Defendant’s dock on a boat lift. The hurricane force winds destroyed Defendant’s boat lift and dock, and ripped the MIST APPROACH from its moorings. The vessel was transplanted four houses down and shoved aground onto a rocky shore surrounded by a field of hurricane debris. The vessel was clearly incapacitated. Unfortunately, at the time of the hurricane, Defendant had not properly registered the MIST APPROACH with the Georgia Department of Natural Resources.

Defendant and her husband were forced to evacuate from the area and did not return home until after the hurricane. Defendant reported the damage to the vessel insurer who assigned an adjuster. After inspecting the vessel, the adjuster planned to contract with a third party to tow the vessel. Before the adjuster could retain the towage contractor, Plaintiff salvaged the vessel.

Plaintiff and a crew of four men working over 40 man-hours, conducted the salvage operation for the MIST APPROACH. Because of the precarious position of the vessel, Plaintiff was required to use a 130 foot barge, a 35 ton crane, a work skiff, gear, a push boat, a truck with a trailer and other specialized equipment. Plaintiff and his crew were forced to cut away rock debris and hoist the vessel from the debris field before transporting the boat to a warehouse.

Defendant refused to pay Plaintiff’s invoice of $7,144. Defendant claimed that Plaintiff’s salvage efforts were unnecessary, and claimed that Plaintiff had stolen her vessel. Plaintiff was arrested by local authorities for felony theft, but ultimately the charges were dismissed. Plaintiff then filed suit for a salvage award.

The district court found that the MIST APPROACH was clearly in marine peril because it was grounded and stranded on a rocky outcrop in a field of debris and could not be safely moved without assistance. Accordingly, the district court applied the specific criteria for a salvage award articulated by the Supreme Court in landmark decision The SABINE, 101 U.S. 384 (1879) recognized and applied by the Eleventh Circuit in Girard v. M/V BLACKSHEEP, 840 F.3d 1351, 1356 (11th Cir. 2016). The elements of a valid salvage claim are: (1) property in marine peril; (2) service voluntarily rendered by a third party when not required by either a contract or existing duty; and (3) success of the salvage, either in whole or in part. In Girard, the Eleventh Circuit specifically recognized, that “as a matter of public policy, salvage law encourages mariners to aid ships in distress.” Id. at 671.

The district court used the factors in landmark general maritime law decision in THE BLACKWALL, 77 U.S. 1 (1869) to measure the amount of the salvage award. These factors are:

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International Maritime Organization (“IMO”) Update - 2012 Cape Town Agreement

The Cape Town Agreement was adopted in 2012 for the purpose of providing comprehensive international rules to assure the safety of fishing vessels and their crew. The International Convention on Standards of Training, Certification and Watchkeeping for Fishing Vessel Personnel 1995 (the “1995 STCW-F Convention”) that is currently in force, dovetails with the Cape Town Agreement to promote safety for the worldwide fishing industry.

During the October 21 – 23 IMO Torremolinos Ministerial Conference on Fishing Vessel Safety and Illegal Unreported and Unregulated Fishing, 48 States signed a public Declaration of support for the Cape Town Agreement. Notably, the Cape Town Agreement imposes compulsory safety requirements for fishing vessels that are 24 meters in length. The safety regime includes requirements for stability, seaworthiness, electrical equipment, machinery, mandatory life-saving equipment, communication equipment, fire protection equipment as well as obligatory vessel construction methods. The Cape Town Agreement will not come into force until it is executed by a minimum of 22 Member States with a combined total of 3,600 fishing vessels of more than 24 meters that would be within the ambit of the convention.

International Maritime Organization (“IMO”) Update - Symposium on Extreme Maritime Weather

On October 23 – 25, the IMO, in conjunction with the World Meteorological Organization (“WMO”), hosted a Symposium on Extreme Maritime Weather Towards Safety of Life at Sea and a Sustainable Blue Economy at the IMO London Headquarters. The Symposium was a contribution to the UN Decade of Ocean Science for Sustainable Development.

The 200 attendees represented shipping companies, ports, harbors, off-shore industries, terminal operators, Coast Guard and marine insurers. The purpose of the meeting was to discuss the impact of global warming and increasing extreme weather conditions on the international carriage of cargo. The group acknowledged that most cargo sold in international trade is transported by ships. The attendees discussed implementation of additional safety measures and new emergency protocols to protect human lives and prevent large cargo losses. The group further discussed new methods to anticipate, detect and avoid extreme weather conditions. In addition, the group focused on the need for sustainable shipping practices and risk reduction.

The Impact of Collective Bargaining, Legislation and Recent Decisions on Independent Contractor Litigation

I. Introduction

The cutting edge in labor relations is the crafting of conditions in labor agreements that either preempt private class actions or shift their adjudication to grievance and arbitral forums; or alternatively, set different wage and working conditions. Related to this is the expansion to broad form of arbitration agreements outside the bargaining forum. Also noteworthy are judicial decisions that craft new uniform laws in the gig and independent workers economy.

The readers in our modes can expect to see new forms of labor agreements adapt to the new economic and legal environment given the foregoing. This article commences a discussion on this issue, certain to be the dominant one in traditional labor relations and litigation for the foreseeable future.

II. Unpaid Wage Claim Held Not Preempted By Union Contract (By Ronald W. Novotny)

In Melendez v. San Francisco Baseball Associates LLC (2019) S245607, the California Supreme Court recently held that a security guard’s state law claim for unpaid wages and “waiting time” penalties could proceed over his employer’s objection’s that they had to be resolved under his union’s agreement. Because the employee’s claim was founded on a right existing in state law, and not the agreement, he was permitted to proceed with his claim in court even though the agreement was relevant to the claim and would have to be “consulted” in determining it.

George Melendez worked as a security guard at AT&T Park in San Francisco, and filed a lawsuit when he was not paid his final wages immediately after the end of each San Francisco Giant’s home stand, concert, or other event at the stadium that he worked at. He primarily claimed that the Giants’ failure to pay him wages due at the time of termination entitled him to “waiting time” penalties of up to 30 days’ additional pay after the completion of each assignment. He principally relied on a 2006 Supreme Court case, Smith v. Superior Court (2006) 39 Cal.4th 77, which held that a hair dresser who was hired to work for only a single day was required to be paid at the end of that job.

The Giants argued that there were numerous provisions in its collective bargaining agreement with the Service Employees International Union, Melendez’s collective bargaining representative, which showed that security guards were employed on a continuous year-round basis and were not terminated after single job assignments. These included provisions that classified employees based on the number of hours worked per year, provided for probationary period of 500 hours of work, and required drug screening for new hires. Because of these provisions, the Giants argued that Melendez’s claim was preempted by Section 301 of the Labor Management Relations Act, because it required “interpretation and application” of the union agreement.

Relying on past cases, including the Ninth Circuit Court of Appeal’s 2000 decision in Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102, the California Supreme Court rejected the Giants’ federal preemption defense. The Court stated that not every claim that requires resort to the language in a labor-management agreement is necessarily preempted, and that this is particularly the case when the meaning of the contract is not in dispute. The case at hand did not involve a dispute over the terms of the agreement that required a court to interpret them, and preemption could not be found based only on the fact that interpretation of the contract terms was required to determine the validity of the employer’s defense. Instead, because the legal character of the claim relied on a state law right that was not substantially dependent on the contract’s terms, the employee was permitted to proceed in court with his unpaid wages and waiting time penalty claim.

The Melendez case confirms the important principle that unless a claim under a statutory law is expressly made the subject of an agreement to arbitrate under a union agreement, or is clearly and unmistakably provided for in the arbitration clause of the agreement, such a claim may proceed even though the employer’s factual and legal defenses to the claim are based on the provisions of the agreement.

III. Preemption and the Federal Arbitration Act

(1) WSTA Litigation Update

California’s Attorney General issued the following press release:

California Attorney General Xavier Becerra today issued the following statement after U.S. District Judge Morrison C. England, Jr. dismissed a federal lawsuit filed by the Western States Trucking Association (WSTA) seeking to undermine state regulations that protect the welfare of workers. The ruling in Western States Trucking Association v. Schoorl [No. 2:2018cv01989 - Document 34 (E.D. Cal. March 28, 2019)] upholds California’s framework of laws and regulations determining the status and classification of workers as employees.

This court ruling is a victory for truck drivers and for all California workers who put in the time and labor at the behest of their employer,” said Attorney General Becerra. “The courts have once again demonstrated that it is well within a state’s right to establish standards for the welfare of those working within its borders. To all those in California who work hard to make an honest living: we’ve got your back. “This is another victory in our fight to protect truck drivers from misclassification,” said California Labor Secretary Julie A. Su. “When drivers' rights to basic workplace standards are violated, this case makes clear that the state has the right and responsibility to protect them according to California law.

In the decision, Judge England ruled that WSTA failed to demonstrate a viable claim in its challenge to the ABC test, which determines if a worker should be deemed an employee or an independent contractor. The test stems from the California Supreme Court’s 2018 decision in Dynamex Operation West, Inc. v. Superior Court and provides guidance on interpreting California’s wage orders, which are regulations issued by the California Department of Industrial Relations. The purpose of wage orders is to provide for both minimum wages and the general welfare of employees across a wide range of industries.

The favorable ruling in this court case builds on Attorney General Becerra’s efforts to protect the rights of workers across California. In February, Attorney General Becerra and the California Labor Commissioner’s Office filed a petition before the U.S. Court of Appeals for the Ninth Circuit to defend California meal and rest break rules. In January, the California Department of Justice joined a multistate comment letter opposing a National Labor Relations Board proposal that would diminish protections for millions of workers. Last year, Attorney General Becerra filed an amicus brief supporting the rights of truck drivers to receive reimbursement for certain expenses incurred in relation to their employment. Attorney General Becerra also co-led a coalition of 17 attorneys general opposing a Trump Administration rule to allow employers to pocket the tips of certain employees, threatening the loss of up to $5.8 billion of workers’ earned tips. In November 2017, Attorney General Becerra filed a lawsuit against One Source, a janitorial subcontracting company based in Orange County, to protect janitorial workers in retail establishments all over California from wage theft.

(2) Interstate Trucking and Arbitration

In Muller v. Roy Miller Freight (California Ct App 05/01/2019) the Court concluded that the Federal Arbitration Act (FAA) applied to Muller as a transportation worker employed by a licensed motor carrier engaged in interstate commerce because the near totality of the goods transported were transported in interstate commerce under 9 USC section 1 and thus exempt from FAA coverage. The Court recognized that California Labor Code Section 229 bars arbitration of claims for unpaid wages despite clear inclusive language in the arbitration agreement. For now, however, the private claim was stayed pending the arbitration of the trucker’s other claims.

(3) Dynamex and Retroactivity

In a decision that is certain to increase the volume of Prong B litigation against transportation industry companies, Vazquez v. Jan-Pro Franchising International, (, the Ninth Circuit concluded that implementation of the so-called “ABC” test by the California Supreme Court was declarative of California law and thus potentially applicable retroactively to other pending cases. In this case, the Court concluded that the unique aspects of franchise arrangements were not an exception.

It is possible that transportation sub-industries, such as brokerage transport, will have a chance to be treated differently, especially if a court recognizes the highly regulated licensure and ownership relationships of drivers to their industry not present in the Dynamex case. The future is more uncertain for other mode related sub-industries, such as air related industries like fixed base operators and shuttle services, along with gig drivers, as well as the drivers engaged in port services.


In so far as California is, on occasion, the tipping point in the litigation universe, the California legislature may be, with the consideration of current legislation on independent contractors, the most crucial predictor of what the law nationally will be. Robert Fried handles legislative affairs as a part of his policy practice and was amicus counsel at the California Supreme Court in Dynamex. He can be contacted for the latest details.

2019 May - June Highlights: Railroads

This article summarizes the recent Surface Transportation Board (STB or Board) activities and decisions.

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2019 May - June Highlights: Motor Regulatory

Broker C.H. Robinson can’t be held liable for negligent carrier selection … Enbridge Energy, LP v. Imperial Freight, Inc., et al., 2019 WL 1858881 (S.D. Tex. 2019)

Consignee Enbridge Energy purchased natural gas pipeline equipment from shipper Toshiba International Corp. in an arrangement that included Toshiba’s delivery of the product from Texas to Michigan. Toshiba had a longstanding freight brokerage contract with broker C.H. Robinson for such shipments, and the broker hired motor carrier Imperial Freight to make the haul.

Imperial’s driver apparently miscalculated an offramp’s curvature, causing a rollover accident that damaged Enbridge’s cargo to the tune of some 675 grand. The driver was cited for careless vehicle operation. Enbridge sued C.H. Robinson and Imperial in the U.S. District Court for the Southern District of Texas, and the broker wanted out.

As C.H. Robinson was a broker not subject to Carmack, all of Enbridge’s claims against the broker were different flavors of common law liability (there was no written Enbridge-C.H. Robinson contract). The court dismissed the consignee’s breach of fiduciary duty claim (there is no such broker-customer duty). It also dismissed various negligence claims based on FAAAA preemption – including negligent carrier selection (Imperial didn’t have enough insurance coverage for the load).

Other courts finding FAAAA preemption of negligence claims against brokers have left carrier selection sacrosanct, outside the concept of state meddling in rates and routes of interstate transportation, such that they can be liable for a bad carrier pick. Brokers have statutory duties to book cargo only with competent carriers. This court nonetheless found preemption on that ground without explanation, noting that the record didn’t suggest C.H. Robinson had selected an improper carrier and that Imperial passed FMCSA muster.

… but can be for failing to clarify it’s a broker!
Tryg Insurance v. C.H. Robinson Worldwide, Inc., 2019 WL 1766995 (3rd Cir. 2019)

Brokers can’t be too careful, and should err on the side of specifying in contracts and other documentation that they’re indeed brokers and not carriers. Just ask C.H. Robinson, which recently saw the Third Circuit Court of Appeals affirm a decision from the U.S. District Court for the District of New Jersey that leaves it on the hook for 124 grand in melted chocolate.

The courts concluded C.H. Robinson had “held itself out as a carrier” in its arranging transport of the candy load from Pennsylvania to New Jersey. Again, it had no written contract with its customer, and the broker’s account manager had suggested that C.H. Robinson’s services were a “seamless” process by which it would “transport the goods,” taking responsibility for safe delivery.

The shipper had prepared a bill of lading which named C.H. Robinson as the carrier of record (without the latter’s objection), and the broker’s invoicing contained such service terms as “line haul” and “fuel surcharge.” Nothing suggested a broker commission or what role C.H. Robinson was claiming to have played. Never mind that evidence confirmed the broker never even touched the cargo – as it hadn’t in many years of the parties’ relationship. Thus, the trial court didn’t err by reaching the conclusion it did.

Driver’s claim to invasion of privacy based on in-cab surveillance camera may proceed to trial.
Mousavi v. John Christner Trucking, LLC, 2019 WL 1756539 (N.D. Okla. 2019)

Those surveillance cameras have always been a little controversial, especially when they point inwards at the driver, and record his/her every movement and sound. You have to imagine what it’d be like to have a camera trained on you at your desk, recording your every movement, phone call, make up fix, and other unmentionables…

A driver for motor carrier John Christner Trucking (JCT) recently took his employer to task in the U.S. District Court for the Northern District of Oklahoma. An American citizen of Iranian dissent, driver Kazem Mousavi thought he’d made clear by agreement with JCT that the surveillance camera would record only what transpires outside after a “triggering event” turns it on. After learning he’d been taped for months, Mousavi claimed he suffered such anxiety that he became medically unfit to drive. He did anyway and, yes, was involved in accident. JCT suspended and later fired him.

JCT moved to dismiss Mousavi’s lawsuit for failure to state a claim for which relief may be granted, claiming its driver has no reasonable right to privacy within his workplace; that he consented to the camera which he should have known might record him; and the cab’s Bluetooth system, which Mousavi concededly was aware of, could’ve picked up the same sights and sounds. The court rejected these points, finding Mousavi’s complaint adequately alleged that JCT’s device exceeded his consent; he was told he wouldn’t be recorded inside; and reasonable expectation inherently is a question of fact not proper for summary disposition. The latter question involves a subjective analysis and a determination of what society is prepared to accept.

The court noted Mousavi’s argument that a cab isn’t a traditional workplace, as drivers can be inside “almost every waking moment,” including time off from duty for sleeping.

Mousavi alleges that JCT’s treatment of him was discriminatory based on ethnicity. The court did dismiss that claim, finding that nothing suggested that JCT’s actions, including firing Mousavi, had anything to do with the driver’s Iranian background. Mousavi also had alleged negligence per se against JCT for causing his accident, i.e., allowing him to drive when he was medically unfit. This claim was based on federal regs that require carriers to ensure driver fitness. However, those regs are designed to protect the public, and not drivers. Thus, the alleged violation couldn’t support a negligence per se claim, which was dismissed.

Ambiguity regarding delivery impacts cargo liability analysis.
Total Quality Logistics, LLC v. Balance Transportation, LLC, 2019 WL 1531208 (Ct. Comm. Pleas Ohio 2019)

This damaged cargo claim at first appeared to be garden variety, with shipper C&C North America engaging broker Total Quality Logistics (TQL) to arrange transit of a flatbed load of granite to consignee Sun City Granite, and TQL arranging transit with motor carrier Balance Transportation. TQL paid C&C’s damaged cargo claim of about 30 grand after Sun City claimed slabs were damaged, and as C&C’s assignee, sued Balance in Ohio state court.

Balance claimed the damage occurred after delivery. Sun City signed a clean bill of lading, and then asked Balance’s driver to move his truck a short distance for offloading. He did so, and then removed the straps. Only a short while later did he hear the crash of falling granite while Sun City personnel we’re unloading the cargo. The Sun City rep took back the bill of lading and noted damage on it.

So on whose watch did the damage occur? The court, granting Balance’s motion for summary judgment and denying TQL’s, found that delivery had been consummated before the damage. TQL urged that Balance’s driver hadn’t completed all necessary tasks, which included moving his truck to the proper place for offloading and taking off the straps, before the damage. The court didn’t find that persuasive, as Sun City had taken “control” over the load by the time. It told Balance’s driver what to do and where to do it under its own supervision. That, along with the original version of the signed bill of lading (which the driver had photographed and sent to Balance’s factoring agent) were enough to pass the responsibility baton to Sun City.

Airline Wins Motion to Dismiss Arising From Flights Canceled Because Airlines Ran Out of De-icer Fluid

Southwest Airlines ran out of de-icer fluid at Midway Airport in Chicago on February 11, 2018, and thus cancelled a number of flights to and from Midway. Plaintiff Brian Hughes was among those whose flights were cancelled. Hughes then brought class action claims against Southwest for breach of contract and negligence for Southwest’s failure to maintain a sufficient amount of de-icer fluid on that date, as well as several prior dates in December 2017 and January 2018. Southwest moved under Rule 12(b)(6) to dismiss all claims on the basis that both the Airline Deregulation Act (ADA), and the Federal Aviation Act (FAA) preempted plaintiff’s claims, and that he failed to state a claim for breach of contract. The court granted Southwest’s motion.

The court first set forth the relevant provisions of Southwest’s contract of carriage, which governed Hughes’ flight, and provided the applicable remedies for cancellation. Those remedies were limited to: (1) transport of the passenger on the next available Southwest flight on which space is available; or (2) a refund for the unused portion of the passenger’s fare. The contract of carriage also contained a limitation of liability excluding Southwest’s liability for cancellation or delay for reasons of aviation safety or due to force majure events.

Accordingly, Southwest argued that plaintiff did not and could not cite to the specific portions of the contract of carriage that it violated, and that the contract of carriage permitted Southwest to cancel the flights at issue. The court first weighed whether the federal pleading standard requires that Hughes specifically identify the provisions of the contract that were breached, but ultimately determined that it did not matter whether Hughes had or could do so because Hughes failed to provide sufficient detail in his complaint to put Southwest on notice of the duty it breached. Specifically, the court held that Hughes failed to allege that he asked Southwest for transport on the next flight with available space, or for a refund. Rather, Hughes sought reimbursement for inconvenience and expenses caused by the delay, which the contract of carriage precluded. Thus, the contract of carriage precluded his claim as made.

The court then analyzed Southwest’s ADA preemption argument. Frequent readers will recall that the ADA preempts all state law relating to an air carrier’s prices, routes and services. But as the court noted, the ADA does not preempt lawsuits seeking to recover for an airline’s breach of its own self-imposed undertakings, such as those in its contract of carriage. Thus, the ADA preempts plaintiff’s negligence claim, which did not relate to Southwest’s contract of carriage.

The court then declined to analyze whether the ADA preempts plaintiff’s contract-based claims. It noted that plaintiff’s pleading failure prevented the court from determining whether the ADA preempted his breach of contract claims or arose from Southwest’s voluntarily duties under its contract of carriage. For the same reason, the court did not analyze FAA preemption; in fact, the court did not even mention FAA preemption apart from its note that Southwest argued the FAA preempted plaintiff’s claims.

Although Southwest asked the court to dismiss plaintiff’s contract claims with prejudice, it declined to do so, holding that plaintiff’s pleading failure prevented a proper assessment of plaintiff’s claim and Southwest’s defense. The court noted plaintiff could amend his complaint to allow the court to undertake that analysis. Thus, ironically, plaintiff’s pleadings failure allowed his claim potentially to proceed.


  • Specifically, 49 U.S.C. § 41713(b)(1).
  • 49 U.S.C. § 40101 et seq.
  • Hughes v. Southwest Airlines, Co., No. 1:18-cv-05315, Dkt. No. 26 (N.D. Ill. Mar. 26, 2019).
  • The court also dismissed with prejudice the plaintiff’s negligence claim on the grounds that the contract of carriage is governed by Texas law which barred plaintiff’s negligence claim.

2019 May - June Highlights: Maritime

IMO FAL Convention Now Requires Mandatory Electronic Information Exchange

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2019 May - June Highlights: HazMat

PHMSA Public Meeting Will Solicit Input for 2020 Emergency Response Guidebook


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2019 May - June Highlights: Motor Regulatory

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