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With the LA City Attorney suing three major port trucking subsidiaries of NFI Industries over their business model classifying drivers as independent contractors, NFI may be having second thoughts on its recent acquisition of the California Cartage Companies. Together the three companies – California Cartage Express, CMI and K&R Transportation – have approximately 600 drivers, combining to make the largest employer of port drivers serving the ports of Los Angeles and Long Beach with over 243,000 gate moves in 2016.

In announcing the lawsuits, LA City Attorney Mike Feuer alleged the drivers are misclassified, causing “disgraceful exploitation” that has to stop.  Using California’s “Unfair Competition Law,” Feuer brought the suits on behalf of the People of the State of California, distinguishing them from previous lawsuits or claims filed with the California Labor Commissioner.

The suits charge that these three NFI subsidiaries engage in unfair competition by misclassifying their drivers, and therefore “have obtained an unfair advantage over their competitors, deprived employees of benefits and protections to which they are entitle under California law, harmed their truck driver employees, harmed the general public, and deprived the State of California of payments of required taxes.” The first remedy the City Attorney is seeking is to permanently enjoin these companies from misclassifying their drivers, which means NFI will not be able to settle these lawsuits simply with money.

You can read copies of the complaints here:

So could this be the beginning of the end for the “independent contractor” model for port trucking or will NFI decide to just dump its California Cartage acquisition before the ink dries?