Opening a new legal chapter in the labor flap roiling the county's twin ports, a lawyer Thursday filed a class-action lawsuit on behalf of 30 harbor truck drivers against 40 transportation companies, alleging that the firms bilked drivers out of $250 million with bogus insurance policies and other improper paycheck deductions.
The lawsuit, which seeks to represent as a class the estimated 6,500 truck drivers who haul freight to and from the adjacent ports of Los Angeles and Long Beach, could force a major upheaval in the way trucking companies operate and could lead to increases in shipping rates.
The dispute is about whether the drivers should be considered independent contractors--essentially self-employed business people--or employees of the transportation firms, which assign drivers to pick up and deliver cargo containers for a variety of businesses.
Since the trucking industry was deregulated in the early 1980s, standard practice for company owners has been to purchase a basic liability insurance policy, then ask each new independent driver--who often lack insurance--to buy into that policy. The drivers contend that they should be considered full employees and that the companies should cover the cost of insurance.
The lawsuit, filed in Los Angeles Superior Court, alleges that a number of trucking companies profited illegally by deducting excessive fees for insurance payments, and in at least one case charged a driver for insurance without actually adding him to the policy.
"These companies are in the business of insurance. They're in the business of insurance illegally. They're making a profit from it. And that has to be stopped," said attorney Fred J. Kumetz.
He accused trucking companies of a raft of other insurance and tax charges.
Trucking officials contacted by the Times declined to comment, and a California Trucking Assn. spokesman said its legal staff was reviewing the lawsuit.
Attorney Greg P. Stefflre, who expects to defend one or more of the companies cited in the lawsuit, said some firms subtract "administrative fees" on top of insurance payments and state it in their contracts with the drivers. He said National Labor Relations Board rulings have found the truck drivers to be independent contractors, and he predicted Kumetz's class-action lawsuit would fail.
"If he really believes these people are employees, he's in for a rude awakening," Stefflre said.
The lawsuit is the latest jolt to harbor trucking company owners, who found themselves at the center of a labor imbroglio in May when an upstart businessman tried to start a trucking firm and hire 4,200 drivers as full employees with a $25 hourly wage. The firm, Transport Maritime Assn., contends it was locked out of the industry and is considering litigation of its own.
The drivers have tried to organize for the past 20 months. They are represented by Local 9400 of the Communications Workers of America, which has struggled to find new members in the wake of nationwide telecommunications industry layoffs.
"Even if we get these people declared as employees, it doesn't solve everything," said Laura Reynolds, a union director. "They wouldn't be represented."
Kumetz, who has filed lawsuits in other insurance and workers' compensation-related cases, said he was approached by several truck drivers and is not associated with the union or Transport Maritime.
Kumetz said the drivers, nearly all Latino immigrants, frequently are coerced by "fly-by-night" companies into signing exploitative contracts without understanding the contents and are duped into paying for workers' compensation and liability insurance without understanding the law.
At a news conference, Kumetz appeared with hundreds of drivers and their families to announce the lawsuit and symbolically deliver a copy to officials of K&R Transportation Inc.
One plaintiff, Paul A. Cardoza, said he purchased a tractor-trailer because he was "seeking the American Dream--being in business for myself."
Cardoza, 34, said he grossed $42,000 last year, but that deductions and the costs of maintaining the truck left him with only $12,000. With his daughters Samantha, 3, and Jennifer, 11, at his feet, he told reporters that he has been borrowing money from family members to make ends meet.