Special Report on California Cartage: While leading drayage companies modernize, litigation and government investigations expose risk and hamper operations nationwide
As we reported in our previous post, port drayage firms large and small are modernizing their business models to adapt to changes in the marketplace and government regulatory enforcement priorities. Hub Group and Old Dominion Freight Line have both reacted by making announcements of moving to an employee driver model in order to avoid costly litigation and to improve reliability. Upstart Eco Flow Transportation has promoted “free flow” in order to reduce marine terminal congestion.
Meanwhile, the largest drayage provider at the Ports of Los Angeles and Long Beach — California Cartage – seems to be ignoring its own problems and doubling down on an out-of-date business strategy.
California Cartage, LLC, as the largest drayage provider at the Ports of Los Angeles and Long Beach, is the company that has the biggest impact on the port trucking in Southern California as well as nationwide. In the past two years, Cal Cartage has become heavily embroiled in the litigation that is roiling the port trucking industry. The Long Beach company has 965 trucks registered at the port of Los Angeles and Long Beach, through its subsidiaries California Cartage Express, LLC, K & R Transport, LLC, California Multimodal Inc., and F&S Distributing
There are misclassification claims or suits against many of the Cal Cartage’s trucking companies, including:
Cal Cartage Express LLC
Class Action Lawsuit:
- In January 2015, Bramson, Pultizk, Mahler and Berkhaeuser filed a class action on behalf of Marin Campos against California Cartage Company LLC, and Cal Cartage Express, LLC for alleged willful misclassification, wage violations, illegal deductions, and unfair competition.
California Division of Labor Standards Enforcement (DLSE) Claim
- Angel Green, a driver from Cal Cartage Express, LLC, filed a claim at the California Division of Labor Standards Enforcement in May 2013. In March 2014, he won a ruling for $158,725 in back wages, deductions and penalties. The company has appealed the ruling and a decision remains pending.
- Jose Becerra and Jose Lopez, drivers from a Cal Cartage drayage subsidiary, ContainerFreight EIT, LLC, filed claims at the DLSE in February 2013. In December 2014, Lopez won a ruling for $92,965 and Becerra for an undetermined amount in back wages, deductions and penalties. The company has appealed both rulings and they remain pending.
K & R Transportation, LLC
Mass Action Suit
- On April 1, 2015, Attorney Alvin Gomez filed individual complaints, under one lawsuit, against California Cartage and its drayage subsidiary K & R Transportation on behalf of 20 drivers, alleging willful misclassification, wage violations, and illegal deductions—potentially summing an estimated $6-8 million for 3-4 years of liability if successful.
California Multimodal, LLC
- In 2014, 6 drivers filed individual complaints under one lawsuit against California Multimodal for wage and hour violations arising due to the misclassification of these drivers as “independent contractors.” The case remains pending.
Cal Cartage Express, Savannah, GA
- The US Department of Labor is investigating Cal Cartage’s operations in Savannah, GA for alleged misclassification of its drivers and illegal deductions.
Ayala vs. Cal Cartage and Orient Tally, LLC- Wilmington Warehouse- Most recently, Cal Cartage’s operations at the port have been affected in recent months due to litigation, administrative claims and organizing at their massive distribution center of Pacific Coast Highway on property owned by the Port of Los Angeles. The POLA property, which also hosts Cal Cartage trucking company K & R, is a site of major controversy, where BNSF plans to build a major railyard, the Southern California International Gateway (SCIG).
Cal Cartage has been fighting this action, claiming that they have the right to the property they lease or compensation for their eviction. They claim that the site is worth $45 million per year to the company. At the same time, environmental justice groups including the Natural Resource Defense Council, representing communities just to the east of the site, are suing to prevent the railyard on environmental grounds. The City of Long Beach joined in the environmental litigation in 2013, suing BNSF and the city of Los Angeles. The issue of the environmental operations was heard in Contra Costa County Superior Court on November 16-17, though few expect the issue to be settled anytime soon.
This mess has been compounded by the litigation and organizing that is occurring at the warehouse. The decrepit facility, which has been operated by California Cartage for decades at the site, employs hundreds of workers who are paid at or close to minimum wage. These workers filed a class-action lawsuit about a year ago, Ayala vs. Cal Cartage et al., alleging they should be paid the City of Los Angeles Living Wage, which is currently $12.42 per hour. The suit also claims unpaid show-up hours, where workers are required to show up to work, after which it is determined whether they will work. The workers allege that in situations when they don’t work, they aren’t paid. This case will go to trial next year; the company’s motion for demurrer was dismissed on October 9.
The workers in the facility have been organizing around other issues, as well. They have demanded revised scheduling, an immediate raise to $15 per hour, and a safe workplace. Twice in the past two months, these workers went on strike, demanding that they be allowed to organize without retaliation. And in late October, Teamster General President James Hoffa joined the workers as they walked off the job, a clear signal that the company has a fight ahead of it.
In summary, the litigation related to wage theft affects each of their major operations in Southern California. Legal action at California Cartage appears to be expanding to a national level as well with the DOL’s investigation. As long as these claims and suits continue, it is clear that Cal Cartage’s operations in California and nationwide are less than stable, and unlikely to improve.