Court Rejects Owner-Operator L.A. Port Ban

A federal appeals court has rejected the Port of Los Angeles’ plan to ban independent truckers from drayage operations, a major victory for American Trucking Associations after a three-year legal fight.

The court said that federal law prohibited the port from requiring that all drayage trucks operating in the port be driven by employees of licensed companies, rather than independent owner-operators.

“While the port may impose conditions on licensed motor carriers seeking to operate on port property, it cannot extend those conditions to the contractual relationships between motor carriers and third parties,” the court stated.

ATA, which sued to block the concessionaire-only portion of the port’s clean-truck program, has said the Teamsters union was pushing to ban owner-operators as a way to make it easier to unionize truckers at the port.

“This is a win for all involved — trucking companies, small business owner-operators, freight shippers, and, ultimately, average American consumers,” said Bill Graves, ATA’s president.

“This plan was never about clean air; it was about promoting special interests of a few well-connected labor groups,” Graves said.

Although ATA prevailed in convincing the U.S. 9th Circuit Court of Appeals to reject the employee-only provision, the judges upheld a lower court decision affirming port officials’ right to impose requirements for drayage companies related to financial capability, maintenance, off-site parking and placarding.

The three-judge panel based in San Francisco said the port has a financial interest in ensuring that drayage services are provided in a manner that is “safe, reliable and consistent with the port’s overall goals for facilities management,” and therefore are not pre-empted by federal law granting the federal government the sole authority to regulate interstate commerce.

“We hold, however, that the employee-only driver provision is pre-empted because it is tantamount to regulation,” the court said in its Sept. 26 ruling.

The ruling ends the longstanding court battle over the independent-operator ban, unless the port or ATA decides to appeal the case to the U.S. Supreme Court. At press time, both said they were undecided on whether they would move forward.

“We are pleased that almost all aspects of our concession program have again been upheld by the U.S. Court of Appeals for the 9th Circuit,” Geraldine Knatz, the port’s executive director, said in a Sept. 26 statement. “The measures upheld in this ruling allow for significant accountability from the trucking companies that call at the Port of Los Angeles.”

But the court rejected what had been the core of the port’s argument that its employee-only plan should be exempt from federal law because the port is a business and not a regulatory entity. The judges also rejected claims by port officials and environmental groups that independent operators should be banned because many do not have the financial ability to purchase newer trucks.

ATA Chief Counsel Robert Digges Jr. called the decision a “major win,” that was well worth the more than $2.5 million it cost ATA in legal expenses to defend an “assault on the independent contractor business model.”

However, Digges said some of the port’s requirements affirmed by the appeals court will be “a headache for motor carriers, and some are a financial burden.”

The ruling “is good news for owner-operators,” said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association. “The employee driver requirement was a flawed effort based on unfounded assumptions about small-business truckers and showed a lack of any real comprehension about how the problems in the ports came to be.”

The Port of Los Angeles and neighboring Port of Long Beach each had clean-truck programs that included a five-year phase-out plan for independent operators. However, in 2009, Long Beach settled a lawsuit with ATA and adopted its own registration agreement that eliminated the employee-only requirement.

A Port of Long Beach spokesman declined to comment last week.

The two ports said that as of Sept. 26, they had a total of 10,960 trucks registered to pick up and drop off containers. Even without the employee-only provision, the clean-truck program in both ports has replaced about 10,000 old trucks, with new ones and has cut truck-related pollution by 90%.

On Jan. 1, the ports will begin to enforce the final ban on the remaining 150 trucks with 2006 and older engines that are still working within the ports.

Los Angeles Mayor Antonio Villaraigosa, a vocal advocate of the employee-only plan, said he was “deeply disappointed” that the court struck down the ban on independent drivers.

“By failing to uphold the employee driver provision, today’s ruling hurts the long-term sustainability of the clean-truck program,” Villaraigosa said in a statement.

Patricia Castellanos, Los Angeles chair of the Coalition for Clean and Safe Ports, said, “It is unconscionable that a backwards-looking Beltway lobby will stop at nothing to put profit before people and public health.”

The Teamsters union did not comment on the ruling, but spokeswoman Leigh Strope said the coalition also speaks for the union.