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 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.

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, (https://cdn.ca9.uscourts.gov/datastore/opinions/2019/05/02/17-16096.pdf, 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.

IV. CONCLUSION

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 https://www.billtrack50.com/BillDetail/996562, 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.

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

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.

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.

Sources:

• 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.

IMO FAL Convention Now Requires Mandatory Electronic Information Exchange

The Federal Motor Carrier Safety Administration (FMCSA) has announced a notice of proposed rulemaking, which if made final would allow drivers a bit more flexibility in complying with hours of service requirements.  84 Fed. Reg. 44190 (Aug. 22, 2019).  This proposed rulemaking is the direct result of the impact of electronic logging devices (ELD), and demonstrates that the agency has been listening to the industry.

While an infrastructure funding deal remains elusive in Washington, passenger rail transportation on both the east and west coasts is facing special challenges because some major projects in jeopardy. On the west coast, California’s High Speed Rail project continues to be constructed in the Central Valley, but plans to extend high speed rail to the State’s major population centers look as doubtful as ever. In February of this year, then newly inaugurated Governor Newsom offered a realistic assessment that plans to expand the line into Los Angeles and into the Bay Area were not at this time feasible and would require further assessment. He did not kill the project, as widely reported at the time, but rather said that the State would continue to build the Central Valley segment between Merced and Bakersfield, while continuing to study how to connect the ends of that segment with the major metropolitan areas. In fact, rail lines, albeit not high speed, already exist between Merced and the Bay Area, thus opening the possibility of some combined traditional rail/high speed rail service between San Francisco and at least Bakersfield.

PHMSA Public Meeting Will Solicit Input for 2020 Emergency Response Guidebook

Hours of Service Notice of Proposed Rulemaking May be Released Soon