Airport Cabbies Are Independent Operators, 9th Circ. Says

March 30, 2017

By Linda Chiem

Law360, New York (March 30, 2017, 5:26 PM EDT) — The Ninth Circuit ruled Monday that Phoenix airport cab drivers are independent operators and not employees under the Fair Labor Standards Act because they are not economically dependent on the companies, rejecting a proposed collective action alleging the drivers were not paid proper minimum wage.

A three-judge panel affirmed an Arizona federal judge’s 2015 summary judgment for AAA Cab Service Inc., more commonly known as Yellow Cab in Arizona, which had a contract with the city of Phoenix to provide taxicab service at Phoenix Sky Harbor International Airport. The panel found that the companies established by clear and convincing evidence that the drivers are independent contractors under the FLSA and state law.

“Under the totality of the circumstances, the drivers were not economically dependent upon AAA Cab,” the panel said. “Rather, as a matter of economic reality, they were in business for themselves when they leased their taxicabs from AAA Cab and utilized them to earn a profit. Accordingly, the district court properly held that, as a matter of law, the drivers were not employees under the FLSA and Arizona law.”

The panel said U.S. District Judge Roslyn O. Silver had properly applied six factors established by Ninth Circuit precedent for addressing the central question of whether AAA Cab properly classified the drivers as independent contractors instead of employees. And all of those factors tilted in favor of the cab company’s position that the drivers were independent operators that leased the cabs from AAA Cab and pocketed most of the profits from airport fares themselves.

AAA Cab had relatively little control over the manner in which the drivers performed their work: The company did not maintain attendance logs, set drivers’ work schedules, or even require drivers to spend a minimum number of hours at the airport, according to the panel. On top of that, the cab company did not have that many records regarding the hours worked or fares earned by each driver, and its disciplinary policy primarily enforced the Phoenix airport’s rules and regulations on how the cab drivers should operate.

The drivers took the wheel on their own opportunities for profit or loss because they typically paid a flat fee to lease taxicabs from the defendant companies and could work as much or as little as they wanted, the panel said. The drivers kept all earnings from passenger fares except in very limited circumstances, and were free to provide taxi services away from the airport, to pass out business cards to passengers and develop their own clientele, the panel said.

The panel also said that the service rendered by the drivers did not require a special skill and that they did not need extensive training, special technical knowledge, or highly developed skills to provide taxicab services at the airport.

AAA Cab’s attorney, Laurent Badoux of Buchalter Nemer, PLC told Law360 on Thursday that his client is pleased with the ruling.

“I think that it’s the right decision and it’s the right outcome, and my clients feel vindicated after five years of litigation, and their whole business model was riding on this,” Badoux said. “Their whole process and their whole reason for doing this was to provide opportunities for drivers and for them to make legitimate profits in the process and not take advantage of anyone. It was hard for them to be painted in that particular picture, so it feels good to have been vindicated in this way.”

Counsel for the drivers were not immediately available for comment Thursday.

U.S. Circuit Judges Richard C. Tallman and Paul J. Watford and U.S. District Chief Judge Louis Guirola Jr. sat on the panel for the Ninth Circuit.

The drivers are represented by Andrew S. Friedman, Patricia N. Syverson, Ty D. Frankel of Bonnett Fairbourn Friedman & Balint PC.

The AAA Cab defendants are represented by Laurent Badoux of Buchalter Nemer PLC.

The case is Iontchev et al. v. AAA Cab Service Inc. et al., case number 15-15789, in the U.S. Court of Appeals for the Ninth Circuit.

–Editing by Edrienne Su.


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