Kairy v. SuperShuttle: Ninth Circuit Holds that District Court Has Jurisdiction to Determine Whether Drivers Are Employees or Independent Contractors

In Kairy v. SuperShuttle International, 660 F.3d 1146 (9th Cir. 11/3/11), the Ninth Circuit Court of Appeals considered whether the district court lacks subject matter jurisdiction to determine whether certain drivers are employees or independent contractors under California law. Specifically, the Court considered whether such a decision by the district court would hinder, frustrate, interfere with, or obstruct the regulatory authority exercised by the California Public Utilities Commission (“PUC”) over passenger stage corporations (“PSCs”), as prohibited by California Public Utilities Code section 1759(a). 

On review of a district court (N.D.Cal., Judge Jeffrey S. White) order granting the defendants' motion to dismiss, the Court examined the relationship of section 1759 and section 2106, which allows a private right of action against any public utility that violates the law. Applying a three-part test adopted by the California Supreme Court, the Court found:

1. The Public Utilities Commission has the authority to regulate the relationship between PSCs and their drivers. 660 F.3d at 1151. 
2. The PUC may have exercised its authority to regulate that relationship. 660 F.3d at 1153. 
3. Judicial action in this case would not hinder or interfere with the PUC's exercise, if any, of regulatory authority over the PSC-driver relationship. 660 F.3d at 1154. 

Because this third factor is not present, Public Utilities Code section 1759 is not implicated, and the district court retains subject matter jurisdiction over the case. 660 F.3d at 1155.  On remand, the Court directed the district court to determine whether the drivers at issue were employees or independent contractors under California law.  

The opinion is available here.