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Pasadena California Business & Commercial Law Blog

California Court Demonstrates Impact of FMCSA Preemption Decision

As discussed on this blog, late last year the Federal Motor Carrier Safety Administration ("FMCSA") determined that California's Meal and Rest Break rules are pre-empted by federal law, as applied to property-carrying commercial motor vehicle drivers covered by the FMCSA's Hours of Service regulations. Less than five months later, the implications of this are being seen in court.

On May 3, 2019, the United States District Court for the Central District of California granted partial summary judgment in the case of Ayala v. U.S. Xpress. In the case, the plaintiffs argued the U.S. Xpress had failed to comply with the meal and rest break requirements mandated under California law. The court dismissed this claim citing the FMCSA decision, stating it did not possess authority to review the decision.

Uber Looks to Avoid Lyft's Struggles

It has been a little over a month since Lyft's trading debut, which after a strong start quickly struggled and continues to decline. Now Uber looks to avoid the same fate is it prepares for its upcoming debut.

Uber recently announced an initial valuation of between $80 and $91 billion dollars, a number that towers over Lyft's $24 billion, but which some suggest could be an undervaluation. This apparent undervaluation may be Uber's attempt to avoid the slide that Lyft's stock saw after its debut. Yet, Uber still faces some of the same pitfalls, as it, like Lyft, is still unprofitable.

Brick and Mortars Store Closures A Warning Sign to the Market

As discussed on this blog, the retail industry, specifically brick and mortar stores, have found some perhaps unexpected good signs and wins as of late in their bid to maintain a model that looks to be displaced by online retailers.

However, recent events indicate brick and mortars may not be taking an upward swing, as the planned closings of retail stores in the US has already exceeded the number in all of 2018. The high number of closings appears to be a mix of profitable companies closing locations while struggling companies head into bankruptcy.

Lyft IPO Looks to Plant Flag for Gig Economy

As discussed on this blog recently, gig economy companies have been changing the face of employment with more and more people being employed and impacted by the rising industry. On March 29, Lyft added to this evolving story with its successful trading debut.

Lyft's shares rose 8.7%, rising to $87.24 from its $72 offering price. This, it's noted, makes Lyft "one of the most valuable American companies to go public in the last decade." However, things haven't been entirely rosy.

Obtaining Employee Background Checks? Get It Right or Get Ready!

It is entirely common for employers to seek consumer reports and background checks on prospective and current employees. However, the law governing how the employer can go about this can be tricky, and if done wrong leads to a massive legal nightmare. The most recent example of this is Gilberg v. Cal. Check Cashing Stores, LLC.

When seeking these consumer reports, employers are required to provide disclosure and obtain consent from the prospective or current employee. The manner in which the disclosure and consent are handled is strictly proscribed by the Fair Credit Reporting Act ("FCRA").

FedEx Looks to Shake Up Delivery Industry

As discussed previously on this blog, the transportation market is rapidly evolving both in terms of the laws governing it and in the nature of the business itself. Now, FedEx is looking to bring the next innovation along as it announced plans for last-minute robot delivery for companies such as Pizza Hut and Walmart.

This new development will be tested over the summer of 2019. The plan is to use robots, drones, and self-driving cars to deliver goods to customers that reside near store locations. It is believed that this could account for fifty percent or more of deliveries.

Beyond California, Litigation in Other States Could Also Upend the Trucking Industry

In California, the ongoing litigation around the definition of an employee versus independent contractor and the rules for meal and rest breaks threaten to upend the trucking industry. While these issues are understandably garnering significant attention, there are others across the country that could also have a large impact. Currently, a case in Arkansas may leave the industry forced to undergo massive change.

In October 2018, a federal court in Arkansas took on a case against PAM Transport. The lawsuit centered on the time and activities drivers were required to be paid minimum wage for. Notably, this included time on the road sleeping that may normally be logged as off duty. PAM transport sought to have the case dismissed but their motion was denied.

Supreme Court Deals Blow to Trucking Companies Seeking Arbitration

In a recent Federal Arbitration Act ("FAA") decision, the United States Supreme Court unanimously made getting to arbitration more difficult for trucking companies. In Oliveira v. New Prime, the Supreme Court determined that it was for a court, not an arbitrator, to decide if the exemption in Section 1 of the FAA applies. More importantly for truckers, the Court decided that the Section 1 exemption applied to all truck drivers, whether employees or independent contractors. This means the FAA cannot be used to compel arbitration of claims involving truck drivers.

In this case, Oliveira was a driver who provided services for New Prime, an interstate transportation company, as an independent contractor. He brought suit arguing New Prime violated minimum wage requirements and various labor statutes. New Prime's contract with Oliveira required the parties to arbitrate. However, when New Prime sought to have the case taken to arbitration their motion was denied. New Prime's appeal eventually made its way to the Supreme Court

New Labor Commissioner Decision Demonstrates Continuing Attacks on Independent Contractor Truck Driver Model

As discussed previously on this blog, recent legal developments have complicated the business plans of trucking companies that use independent contractors as drivers. These have included the Dynamex decision that changed the 30-year-old test of whether a worker is an employee or an independent contractor, but appears applicable only in certain circumstances and for only certain legal claims. This was followed by lawsuits to invalidate Dynamex and a federal district court decision finding that Dynamex was pre-empted by federal law. Compounding this confusion, California passed a law late last year that exposed large retailers to new potential liability. The bill, SB 1402, meant companies could be jointly liable when they hire companies that have violated state employment laws. Now shippers could be liable for violations caused by the motor carriers they hire.

A New Year Brings New Hope to Retailers

Despite untimely obituaries written for brick and mortar stores, your everyday physical stores staved off extinction. Lately, they've also started to pick up some wins over online sellers, as they not only defend their business models but also strike back. As we kick off 2019, these brick and mortars appear to be finding new hope.

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