LOS ANGELES, CA – Last week, Asian Americans Advancing Justice - Los Angeles (Advancing Justice-LA) and Wage Justice Center secured final approval of a $5 million class action settlement brought on behalf of over 400 Latino and Korean immigrants against a port trucking company comprised of related corporate entities. Port truck drivers are the backbone of a $450 billion industry in Southern California.
“We are proud that with this settlement, hundreds of drivers will be rightfully compensated, and we hope this case sends a strong signal to other drivers that they can win if they fight back. The settlement is the first to successfully attack a dual scheme of misclassification and corporate shell games that is endemic in the port trucking industry,” stated Nicole Ochi, supervising litigation attorney from Asian Americans Advancing Justice - Los Angeles. “Unfortunately, misclassification is the port industry norm. Nearly two-thirds of all port truck drivers nationally are misclassified as independent contractors, resulting in an impoverished, mostly immigrant workforce.”
The company, QTS, Inc., and its related entities, including LACA Express and Win Win Logistics, misclassified their drivers as independent contractors in order to deny them their rightful compensation and then hid behind purported bankruptcy protections to avoid liability for wage theft and other exploitative business practices. By classifying the drivers as independent contractors but controlling them like employees, companies are able to evade taxes as well as shift all the costs of operating their businesses to the drivers, including the cost of trucks, gas, maintenance and repair, and insurance, leaving drivers with poverty wages. These high weekly deductions operate like debt bondage, forcing the drivers to work dangerously long hours to eke out a living.
“The company took money from my paycheck to pay for the truck lease, gas and insurance. Some of my fellow truckers even owed money to the company at the end of a hard week. But over 50 of us drivers stuck together for the last five years despite being fired and intimidated,” says Samuel Talavera, a former driver for QTS, Inc. “We knew we would help our fellow truckers if we stayed together down this long road.”
Judge Elihu M. Berle of the Los Angeles Superior Court ruled on the motion for final approval of the class settlement. Of the 423 drivers contacted, 243 filed claims representing 82.8 percent of the total work weeks where violations occurred. Drivers will receive an average of $13,502 each. The settlement also includes up to $7,500 to drivers who the companies retaliated against for asserting their legal rights. Forms of retaliation ranged from refusing to repair drivers’ trucks, being assigned less lucrative routes, and outright firing. For those drivers publicly involved in the litigation, who risked being blacklisted in the industry, an additional $6,500 will be awarded for their efforts.
During four years of litigation, QTS, Inc. filed for chapter 11 bankruptcy, nominally to “reorganize” its debts, but in reality to frustrate the ongoing litigation and evade any responsibility for its debts. “The defendants in this case filed for bankruptcy to try to avoid paying our drivers their hard-earned wages,” said Jay Shin, Directing Attorney at Wage Justice Center. “But we were not ready to concede the millions of dollars stolen from our drivers. We doggedly followed them into bankruptcy court and used innovative legal theories to hold the companies liable.”
In a novel move, the drivers transferred their state court litigation into bankruptcy court by suing the non-bankrupt entities as creditors of the voluntarily abandoned and bankrupt entity. They asked the bankruptcy court to consolidate the assets and debts of all the entangled business enterprises. The parties reached the current settlement after 18 months of litigation in bankruptcy court entailing the subpoena of the defendants’ major customers, review of tens of thousands of pages of documents and deposition of the officers of the business entities.