Corporate Shell Games Played by Port Trucking Companies to Cheat Workers

USA Today Network continues its deep investigation into industry-wide norms that contribute to wage theft in the port trucking industry.

This current report uncovered what we experienced securing justice for over 200 workers in our landmark QTS case: port trucking companies in Southern California play corporate shell games to cheat workers out of collecting wage theft judgments. They also try to use bankruptcy protection to dodge the punishment that labor court judges have handed down.

We again see that for many companies, wage theft is not a one-off clerical mistake, but rather a business model that drives full-time workers into poverty.

Read the report here.

COURT APPROVES LANDMARK $5 MILLION SETTLEMENT OF CLASS ACTION LAWSUIT ON BEHALF OF PORT TRUCK DRIVERS

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 Jr., 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% 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.

USA Today Sheds Light on Wage Theft in Port Trucking

USA Today Network investigated industry-wide factors that contribute to wage theft in the port trucking industry.  This report uncovered what we knew to be true from our landmark QTS case:  port trucking companies in Southern California forced drivers to finance their own trucks by taking on debt they could not afford. Companies then used that debt as leverage to extract forced labor and trap drivers in jobs that left them destitute. Wage theft is not a one-off clerical mistake, but rather a business model that drives full-time workers into poverty.

Read the report here.

Victory by Truckeros, Wage Justice and Asian Americans Advancing Justice

The Los Angeles Times and a number of other news outlets covered our clients’ recent victory in Talvera, et al v. QTS, et al.
Check out some of the stories below:

Hundreds of Port Truck Drivers Settle Landmark Class-Action Lawsuit for $5 Million

On July 14, 2016, the Wage Justice Center and Asian Americans Advancing Justice-Los Angeles (Advancing Justice-LA) reached a $5 million class action wage and hour settlement on behalf of nearly 400 immigrant Latino and Korean American port truck drivers against a port trucking company comprised of intertwined corporate entities.

“When I chose to stand up and fight for fair wages for myself and my co-workers, I was fired,” says a former driver. “It’s been a long, hard road, but I’m happy that we will see some of our stolen wages, and more importantly, that drivers are no longer held captive by agreements that exploited us in order to benefit the company.”

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.

The parties reached a settlement after the drivers followed the company into bankruptcy court and asked the court to act in the interest of justice by consolidating the assets of all of the related business entities in order to overcome the company’s disingenuous claims of poverty.

“The settlement is the first to successfully attack this 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. 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.”

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 just to eke out a living.

“The trucking company dictated how much I got paid, which loads I took, and from whom, yet they denied that I was their employee,” says Victor Vitela, a former driver for QTS, Inc. “I was forced to work 80 or more hours per week, sacrificing my health and my family relationships in order to make just a few hundred dollars after all the expenses they took out of my paycheck.”

“The defendants in this case filed for bankruptcy to try to avoid paying our drivers their hard-earned wages,” said Jay Shin, senior staff 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.”

Los Angeles and Long Beach Port Truck Drivers File Class-Action Lawsuit to Recover Stolen Wages

The Wage Justice Center filed a class-action lawsuit on behalf of an estimated 100 port truck drivers who were mis-classified as “independent contractors” and systematically denied basic labor protections.

The drivers allege serious violations, including nonpayment of minimum wages, by a cluster of intertwined companies operating under various names, including: “QTS, Inc.”, “WinWin Logistics Inc.”, and “Laca Express Inc.”

The lawsuit, filed with the Los Angeles Superior Court on February 22, 2013, alleges that drivers worked punishing hours while frequently earning less than minimum wage due to illegal paycheck deductions.

The lawsuit also alleges a violation of a new state law that prohibits willful mis-classification of employees as independent contractors for the purpose of evading labor protections.

Plaintiff Cuahutemoc Cabuto explains: “I filed this lawsuit because I wanted to fight back against the injustices at this company. I work all the time, day and night, and have no money left to take home after all the deductions the company takes out of my paycheck.”

The vast majority of truck drivers working in the Ports of Los Angeles and Long Beach, the largest port complex in North America, are classified as independent contractors. Advocacy groups such as the Los Angeles Alliance for a New Economy (“LAANE”) and the Coalition for Clean and Safe Ports contend that most of these drivers are mis-classified.

Driver mis-classification allows law-breaking companies to reduce costs by 30%-40%, as they do not pay payroll taxes, giving them an unfair advantage over law-abiding companies. Additionally, drivers are deprived of key rights, including minimum wage, unemployment, and the right to form a union.

Workers like those who filed this lawsuit are demanding fair treatment and respect for their basic legal and human rights.