Kairy v. SuperShuttle International

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROOSEVELT KAIRY; LARRY BROWN; 

WAYNE DICKSON; DRAKE OSMUN;

HARJINDER SINGHDIETZ,

Plaintiffs-Appellants, No. 10-16150

v.

 DC No.

CV 08-2993 JSW

SUPERSHUTTLE INTERNATIONAL;

SUPERSHUTTLE FRANCHISE OPINION

CORPORATION; DOES 1 THROUGH 20,

INCLUSIVE,

Defendants-Appellees.



Appeal from the United States District Court

for the Northern District of California

Jeffrey S. White, District Judge, Presiding

Argued and Submitted

October 14, 2011—San Francisco, California

Filed November 3, 2011

Before: Betty B. Fletcher, Stephen Reinhardt, and

A. Wallace Tashima, Circuit Judges.

Opinion by Judge Tashima

19857

19860 KAIRY v. SUPERSHUTTLE INT’L

COUNSEL

Michael Rubin, Altshuler Berzon LLP, San Francisco, Cali-

fornia, for the plaintiffs-appellants.

Steven C. Rice, Marron Lawyers, Long Beach, California, for

the defendants-appellees.

Patrick S. Berdge, San Francisco, California, for the Public

Utilities Commission of the State of California, as amicus

curiae.

OPINION

TASHIMA, Circuit Judge:

This case requires us to decide whether a federal district

court lacks subject matter jurisdiction to determine whether

passenger stage corporation drivers are employees or indepen-

dent contractors under California law. Specifically, we must

consider whether such a decision by the district court would

hinder, frustrate, interfere with, or obstruct the regulatory

authority exercised by the California Public Utilities Commis-

sion over passenger stage corporations, as prohibited by Cali-

fornia Public Utilities Code § 1759. We hold that it would

not.

I. Background

[1] The Public Utilities Commission (“PUC” or “commis-

sion”) is a state administrative agency created by the Califor-

nia Constitution to regulate public utilities. Cal. Const. art.

XII. The California Public Utilities Code protects the jurisdic-

tion of the PUC by limiting judicial review of commission

decisions and policies:

KAIRY v. SUPERSHUTTLE INT’L 19861

No court of this state, except the Supreme Court and

the court of appeal . . . shall have jurisdiction to

review, reverse, correct, or annul any order or deci-

sion of the commission or to suspend or delay the

execution or operation thereof, or to enjoin, restrain,

or interfere with the commission in the performance

of its official duties . . . .

Cal. Pub. Util. Code § 1759(a).

Other provisions of the Public Utilities Code, however,

make clear that public utilities are also subject to California

law generally. Chapter 11 of the Public Utilities Act

(§§ 2100-2119), entitled “Violations,” lays out a variety of

remedies available if a public utility violates the law. A num-

ber of public enforcement remedies are enumerated, but the

sole private remedy in Chapter 11 is found in § 2106:

Any public utility which does, causes to be done, or

permits any act, matter, or thing prohibited or

declared unlawful, or which omits to do any act,

matter, or thing required to be done, either by the

Constitution, any law of this State, or any order or

decision of the commission, shall be liable to the

persons or corporations affected thereby for all loss,

damages, or injury caused thereby or resulting there-

from . . . . An action to recover for such loss, dam-

age, or injury may be brought in any court of

competent jurisdiction by any corporation or person.

Cal. Pub. Util. Code § 2106. The issue we must address is the

tension between this statutory remedies provision and the

jurisdictional limitation set out in § 1759.

The Public Utilities Code also specifically grants the PUC

the power to regulate common carriers, including passenger

stage corporations (“PSCs”), which include “every corpora-

tion or person engaged as a common carrier, for compensa-

19862 KAIRY v. SUPERSHUTTLE INT’L

tion, in the ownership, control, operation or management of

any passenger stage over any public highway in this state

between fixed termini or over a regular route.” Cal. Pub. Util.

Code §§ 211(c), 216(a), 226(a). In General Order 158-A, the

PUC promulgated rules governing the operations of PSCs.

Section 5.03 of that order provides:

DRIVER STATUS. Every driver of a vehicle shall

be the certificate holder or under the complete super-

vision, direction and control of the operating carrier

and shall be:

A. An employee of the certificate holder; or,

B. An employee of a sub-carrier; or,

C. An independent owner-operator who holds

charter-party carrier authority and is operating as a

sub-carrier.

Other provisions regulate the vehicles used by PSCs, inspec-

tion and records requirements, tariffs and timetables, and drug

and alcohol testing of drivers. General Order 158-A §§ 4.01-

10.06.

Defendant-Appellee SuperShuttle International, Inc., pro-

vides shared-ride airport shuttle service. In California, Super-

Shuttle licenses its operations to subsidiary City Licensees

which hold PUC-issued PSC certificates; thus, SuperShuttle is

considered a PSC subject to PUC regulation. Prior to 2001,

SuperShuttle classified its California drivers as “employees.”

SuperShuttle then decided to shift to a “unit franchise model,”

in which the SuperShuttle City Licensees hire drivers as inde-

pendent contractor “franchisees,” pursuant to a Unit Franchise

Agreement, or allow their franchisees to hire additional driv-

ers.

KAIRY v. SUPERSHUTTLE INT’L 19863

Plaintiffs-Appellants are current or former “franchisee”

shuttle van drivers for SuperShuttle in various parts of Cali-

fornia. The plaintiff-drivers filed a putative class action in

Alameda County Superior Court, alleging that Plaintiffs were

misclassified as “independent contractors,” when, in truth,

they were “employees” under California law. Plaintiffs

alleged that they had consequently been deprived of the full

protections provided to employees under the California Labor

Code, including overtime and minimum wages, reimburse-

ment of business expenses and deductions wrongfully taken

from wages, and meal period pay. In support of their allega-

tions, Plaintiffs asserted that SuperShuttle treats its drivers

like employees in many respects, such as requiring drivers to

work within designated geographical areas, charge set fares,

and obey detailed standards regarding their appearance and

behavior while working. Defendants removed the action to

federal court pursuant to the Class Action Fairness Act. 28

U.S.C. §§ 1332(d), 1453.1

The district court granted SuperShuttle’s motion to dismiss

Plaintiffs’ state law claims holding that it lacked subject mat-

ter jurisdiction. Kairy v. SuperShuttle Int’l, Inc., 721 F. Supp.

2d 884, 889-90 (N.D. Cal. 2009). The court applied the three-

part test laid out by the California Supreme Court in San

Diego Gas & Electric Co. v. Superior Court (Covalt), 920

P.2d 669, 687-95 (Cal. 1996), designed to resolve conflicts

between actions brought against a public utility under Public

Utilities Code § 2106 and the jurisdiction-stripping provision

in § 1759. The district court first decided that the PUC had the

authority to formulate policy regarding the classification of

PSC drivers. Kairy, 721 F. Supp. 2d at 888. It then concluded

that the PUC had actually exercised that authority by promul-

gating General Order 158-A and through its decision inter-

preting that order, In re Prime Time Shuttle Int’l, Inc., 67

1

After removal, Plaintiffs amended their complaint to add a claim for

unpaid minimum wages and overtime under the federal Fair Labor Stan-

dards Act.

19864 KAIRY v. SUPERSHUTTLE INT’L

CPUC 2d 437, 1996 WL 465519 (Cal. PUC, Aug. 2, 1996)

(“Prime Time”). Kairy, 721 F. Supp. 2d at 888-89. Finally, the

district court concluded that to allow Plaintiffs’ action to go

forward would interfere with the PUC’s exercise of its regula-

tory authority over the classification of PSC drivers. Id. at

889. Based on this three-part analysis, the district court held

that it lacked subject matter jurisdiction pursuant to § 1759;

consequently, it dismissed Plaintiffs’ state law claims. Id. at

889-90.

II. Jurisdiction and Standard of Review

The district court certified its dismissal order and this Court

granted Plaintiffs’ petition for interlocutory review. We there-

fore have jurisdiction pursuant to 28 U.S.C. § 1292(b). The

issue of whether the district court properly dismissed Plain-

tiffs’ state law claims for lack of subject matter jurisdiction is

a question of law and is reviewed de novo. U.S. ex rel.

Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963,

968 (9th Cir. 1999).

III. Discussion

In a case requiring a federal court to apply California law,

the court “must apply the law as it believes the California

Supreme Court would apply it.” Gravquick A/S v. Trimble

Navigation Int’l, Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003).

“In the absence of a controlling California Supreme Court

decision, the panel must predict how the California Supreme

Court would decide the issue, using intermediate appellate

court decisions, statutes, and decisions from other jurisdic-

tions as interpretive aids.” Id.

The California Supreme Court has on a number of occa-

sions addressed the tension between Public Utilities Code

§ 1759 and the public and private remedies provided for in

Chapter 11 of that Code, and has consistently applied a three-

part test to resolve any conflict. See, e.g., Covalt, 920 P.2d at

KAIRY v. SUPERSHUTTLE INT’L 19865

678-79 (involving claims for damages and injunctive relief

against an electric utility based on nuisance and personal

injury causes of action); Hartwell Corp. v. Superior Court, 38

P.3d 1098, 1102-03 (Cal. 2002) (concerning claims for dam-

ages and injunctive relief brought against water utilities); Peo-

ple ex rel. Orloff v. Pac. Bell, 80 P.3d 201, 210-12 (Cal. 2003)

(considering claims against communications utilities by

county district attorneys for violations of the California Busi-

ness and Professions Code).

The California Supreme Court first laid out the applicable

test in Covalt, noting in particular “the primacy of section

1759” and that the relief provided for in § 2106 correspond-

ingly must “be construed as limited to those situations in

which an award of damages would not hinder or frustrate the

commission’s declared supervisory and regulatory policies.”

Covalt, 920 P.2d at 683 (quoting Waters v. Pac. Tel. Co., 523

P.2d 1161 (Cal. 1974)). To determine whether an action was

barred by § 1759, the court asked: (1) whether the PUC had

the authority to adopt a regulatory policy on the subject matter

of the litigation; (2) whether the PUC had exercised that

authority; and (3) whether action in the case before the court

would hinder or interfere with the PUC’s exercise of regula-

tory authority. Id. at 687-95; see also Hartwell, 38 P.3d at

1106.

[2] Plaintiffs allege that SuperShuttle violated the Califor-

nia Labor Code and that their suit falls within the broad lan-

guage of Public Utilities Code § 2106, which permits private

suits against public utilities for violations of “any law of this

State.” Accordingly, we must apply the Covalt test to resolve

the potential conflict between the PUC’s statutory jurisdiction

over PSCs, protected from judicial interference by § 1759,

and the instant suit between a PSC and its drivers. We con-

clude that under the Covalt test Plaintiffs are not precluded

from pursuing their suit in the district court because a decision

by that court would not hinder or interfere with the PUC’s

19866 KAIRY v. SUPERSHUTTLE INT’L

exercise of regulatory authority over the PSC-driver relation-

ship.

A. PUC Authority to Regulate

[3] The first step in the Covalt inquiry requires us to decide

if the PUC has the authority to adopt a regulatory policy on

the subject matter of this litigation, the relationship between

PSCs and their drivers. We conclude that it does. The discus-

sion of the PUC’s powers in Covalt is instructive; the Califor-

nia Supreme Court explained there that the commission has

far-reaching duties, functions, and powers, and that the Cali-

fornia Constitution confers broad authority on the commission

to regulate utilities. Covalt, 920 P.2d at 681. The Public Utili-

ties Code authorizes the PUC to “ ‘do all things . . . which are

necessary and convenient’ in the exercise of its jurisdiction.”

Id. Moreover, the PUC is permitted to require every utility to

do “any other act which the health or safety of its employees,

passengers, customers, or the public may demand.” Cal. Pub.

Util. Code § 768. The PUC’s broad powers to protect public

health and safety apply with full force in the context of its

regulation of PSCs. Those powers give the commission

authority to regulate the types of drivers, whether employees

or independent contractors, that an airport shuttle service is

permitted to use, because the closeness of the relationship

between a company and its drivers could potentially implicate

public safety.

[4] Moreover, the PUC itself has asserted that it has the

authority to determine what type of relationship a PSC may

maintain with its drivers, stating in an administrative decision,

“If we find a failure to provide good service, . . . that finding

might lead us to consider adopting rules to restrict PSC reli-

ance on nonemployee drivers, if such reliance is demonstrated

to be the main source of Prime Time’s service problems.”

Prime Time, 1996 WL 465519, at *13 (emphasis added); see

also PUC Amicus Br. at 4 (“The Commission contends it

could prohibit independent-contractors from operating shuttle

KAIRY v. SUPERSHUTTLE INT’L 19867

vans on grounds of service or safety to the public . . . .”

(emphasis added)). Such warnings suggest that the PUC con-

siders it well within its jurisdiction to limit the classes of driv-

ers available to PSCs if safety concerns so demand.

Therefore, both the general regulatory powers granted to the

PUC and the PUC’s own interpretation of its jurisdictional

authority in a decision concerning PSCs indicate that the dis-

trict court was correct in concluding that the PUC has the

authority to regulate the type of relationship between airport

shuttle services and their drivers.

B. PUC Exercise of Its Authority to Regulate

[5] The second part of the Covalt inquiry requires this

Court to ask whether the PUC has exercised its authority to

regulate the PSC-driver relationship. The district court below

concluded that the PUC had actually exercised such authority,

relying on General Order 158-A and the PUC’s decision in

Prime Time. Kairy, 721 F. Supp. 2d at 888. As noted above,

General Order 158-A § 5.03 permits PSCs to use either

employee drivers or independent contractor drivers, as long as

the PSC maintains “complete supervision, direction and con-

trol” over those drivers. In Prime Time, the PUC reiterated

that it had no institutional preference for employee or non-

employee drivers and that the “complete supervision” require-

ment in § 5.03 could be compatible with an independent con-

tractor relationship. Prime Time, 1996 WL 465519, at *21,

*47-*48.

In response, Plaintiffs argue that General Order 158-A and

Prime Time do not represent an actual exercise of PUC

authority over the specific question of driver classification,

because they do not require a PSC to use any particular sort

of driver and so do not alter what would be the default rule

absent any PUC action. They emphasize that both General

Order 158-A § 5.03 and Prime Time express agnosticism

towards whether a PSC chooses to use employees or indepen-

dent contractors, leaving the choice to each PSC. See Prime

19868 KAIRY v. SUPERSHUTTLE INT’L

Time, 1996 WL 465519, at *16 (“We do not regulate . . . a

PSC’s preference for employee or nonemployee drivers

. . . .”). As a result, Plaintiffs argue, the PUC has declined to

exercise its power to control or limit the types of drivers a

PSC can use.

SuperShuttle relies on a California Court of Appeal deci-

sion addressing a related question. In Sarale v. Pacific Gas &

Electric Co., 117 Cal. Rptr. 3d 24 (Ct. App. 2010), the Court

of Appeal considered a claim by private individuals against

Pacific Gas & Electric Company (“PG&E”) based on an

increase in the amount that the company was trimming off

walnut trees owned by the plaintiffs near power lines. Id. at

27-29. The plaintiffs sought, among other relief, a declaration

that PG&E was not authorized to trim further than the mini-

mum trim distance specified in a PUC general order. Id. at 29.

The plaintiffs argued that the second part of the Covalt test

was not satisfied because the PUC had specifically declined

to exercise its authority to regulate excessive trimming, the

subject matter of the litigation, and had merely regulated

minimum trimming requirements. Id. at 34. The court rejected

this argument, stating:

For purposes of applying the Covalt test, it does not

matter whether we characterize the commission’s

actions broadly, as addressing “the management of

vegetation near power lines,” or narrowly, as

addressing “minimum [tree] trimming clearances.”

What matters is that the commission has exercised

its authority to adopt a regulatory policy relating to

tree trimming around power lines—regardless of

how that policy may be characterized.

Id. (alteration in original). SuperShuttle contends that under

Sarale, the second Covalt inquiry would be satisfied here if

the PUC adopted a policy merely related to the relationship

between PSCs and their drivers, even if it did not specifically

limit the types of drivers that could be used or how those driv-

KAIRY v. SUPERSHUTTLE INT’L 19869

ers should be classified; accordingly, that the PUC has acted

to regulate the requisite degree of supervision that must exist

in the PSC-driver relationship.

[6] Plaintiffs dispute this analogy, arguing that a policy

merely relating to the PSC-driver relationship is far too broad

to constitute an exercise of authority over determinations

whether particular drivers are employees or independent con-

tractors. More important, the PUC itself asserts in its amicus

brief that it “has not exercised authority over the . . . employ-

ment classification of shuttle van drivers.” PUC Amicus Br. at

6. The PUC was well aware of the decision in Sarale, and

had, in fact, actively asserted during that litigation its position

that the commission had exercised authority over the matter

at issue. Nonetheless, the PUC has maintained in this case that

the district court’s determination that the PUC had exercised

its authority over the subject-matter underlying Plaintiffs’

claim was based on a misreading of the Prime Time decision

and was contrary to fact. We recognize that a resolution of

this issue presents a close question. Because we conclude that

Plaintiffs’ claim would not frustrate or hinder any existing

policy of the PUC and, thus, can proceed under part three of

Covalt, it is unnecessary for us to decide the question whether

General Order 158-A represents an exercise of PUC authority

over the instant matter.

C. Hindrance to PUC Policy

[7] The final prong of the Covalt test is whether judicial

action would hinder or interfere with the PUC’s exercise of

regulatory authority over the PSC-driver relationship. Under

normal circumstances, a district court would determine

whether the SuperShuttle drivers were de facto employees

pursuant to California law by applying a multi-factor test. See

Borello & Sons, Inc. v. Dep’t of Indus. Relations, 769 P.2d

399, 404 (Cal. 1989) (explaining that while the principal test

of an employment relationship is the right to control the man-

ner and means of accomplishing the result desired, the “con-

19870 KAIRY v. SUPERSHUTTLE INT’L

trol” test cannot be applied in isolation); Narayan v. EGL,

Inc., 616 F.3d 895, 900-01 (9th Cir. 2010) (detailing the many

factors the California Supreme Court has enumerated that

indicate an employment relationship, which must all be

assessed and weighed together). The central question of the

final Covalt inquiry, then, is whether application of the multi-

factor California de facto employee test to Plaintiffs in this

case would hinder, frustrate, or interfere with the PUC’s

requirement in General Order 158-A § 5.03 that drivers,

regardless of their employment status, be under the “complete

supervision, direction and control” of the PSC.

Defendants and Plaintiffs take very different views of the

meaning of the supervision requirement in § 5.03. Defendants

argue that “complete supervision, direction and control”

demands total control over PSC drivers and is in all important

respects synonymous with the method under California law of

determining which workers are de facto employees. Thus,

Defendants argue, the PUC permits and, in fact, requires a

PSC to treat independent contractor drivers just as if they

were employees. Adopting Defendants’ definition would

require us to conclude that the PUC redefined the term “inde-

pendent contractor” with respect to PSC drivers, such that a

PSC could treat a worker exactly like a de facto employee as

defined by California law, and yet choose to call them an

independent contractor and thereby deprive them of the pro-

tections of California employment law.

[8] Plaintiffs take a different approach to the meaning of

§ 5.03. They contend that the “complete supervision” lan-

guage in § 5.03 was not meant to change the definition of “in-

dependent contractor.” In their view, it simply means that

PSCs must have complete supervision, direction, and control

over safety- and service-related issues, but is not synonymous

with the California test for employee status, which Plaintiffs

point out goes beyond looking at mere “control” over the

employee. They suggest that SuperShuttle’s regulation of the

minute details of drivers’ behavior and appearance, down to

KAIRY v. SUPERSHUTTLE INT’L 19871

sock color and a requirement that drivers be “neatly shaven,”

goes beyond the “complete supervision” required by § 5.03

and instead makes the drivers de facto employees under Cali-

fornia law.

We conclude that Plaintiffs have the better argument and

adopt their interpretation of § 5.03 as the more reasonable

reading of the regulation.2 We also find the PUC’s own state-

ments regarding its jurisdictional interests to be very persua-

sive. In an amicus brief filed with this Court, the PUC insists

that § 5.03 does not alter preexisting employment law defini-

tions:

The Commission has held, and continues to hold,

that both the courts and appropriate governmental

agencies, such as California’s Department of Indus-

trial Relations (“DIR”) have the necessary jurisdic-

tion to determine employment status such as

employee or independent contractor . . . . [T]he

Commission, however, does not look at various fac-

tors for determining employee status of a

Commission-licensed shuttle van carrier’s drivers,

unless there is a specific jurisdictional reason to do

so.

PUC Amicus Br. at 2. Accordingly, the PUC maintains that it

will continue to defer to employment status decisions made

by the traditional decision-makers in this area.

2

Under California rules of statutory interpretation, the words of a statute

must be read in context, considering the nature and purpose of the statu-

tory enactment. Phelps v. Stostad, 939 P.2d 760, 765 (Cal. 1997). The

court must give the provision a reasonable, commonsense interpretation

that is consistent with the intention of the lawmakers and that “will result

in wise policy rather than mischief or absurdity.” In re McSherry, 5 Cal.

Rptr. 3d 497, 501 (Ct. App. 2003). Generally, the same rules of interpreta-

tion which apply to statutes govern the construction and interpretation of

administrative agency regulations. Hoffman v. Smithwoods RV Park, 102

Cal. Rptr. 3d 72, 78 (Ct. App. 2009).

19872 KAIRY v. SUPERSHUTTLE INT’L

[9] California courts have made reference to the PUC’s

amicus briefs filed in § 1759 cases for aid in assessing the

third question in the Covalt analysis. See Orloff, 80 P.3d at

214 (“Indeed, the PUC itself, in an amicus curiae brief . . .

agrees that nothing in the present action undermines or hin-

ders any ongoing policy, program, or other aspect of its

authority.”); Koponen v. Pac. Gas & Elec. Co., 81 Cal. Rptr.

3d 22, 30 (Ct. App. 2008) (“Our conclusion on this point is

supported by the commission itself, which filed an amicus

curiae brief at our request.”). Moreover, in Orloff, the Califor-

nia Supreme Court suggested that, in future cases, a court

considering whether a civil action was barred by § 1759 “may

deem it appropriate to solicit the views of the PUC regarding

whether the action is likely to interfere with the PUC’s perfor-

mance of its duties.” Orloff, 80 P.3d at 215 n.12. The Califor-

nia courts’ reliance on the PUC’s view of the third Covalt

inquiry means that, in this case, the PUC’s assertion that it did

not mean to alter or even involve itself in employment status

determinations should be given persuasive effect in deciding

what § 5.03 requires.

Further, the Prime Time decision does not support the idea

that the PUC was attempting to alter the general California

common law definition of “independent contractor” when it

promulgated § 5.03. In that decision, the PUC stated:

We do not regulate . . . a PSC’s preference for

employee or nonemployee drivers . . . . Prime Time

may have committed improprieties, under laws that

we do not administer . . . but if such is the case,

relief lies elsewhere. If and when Prime Time is

found to have committed such improprieties, we may

reconsider Prime Time’s fitness to continue to hold

a PSC certificate, but such reconsideration would

come only after a court or agency with jurisdiction

over the underlying subject matter has taken action.

Prime Time, 1996 WL 465519, at *16. The PUC thus made

clear that it does not wish to exercise jurisdiction over dis-

KAIRY v. SUPERSHUTTLE INT’L 19873

putes involving employment status. The PUC’s repeated insis-

tence, both in Prime Time and its amicus briefing, that it will

not exercise jurisdiction over employment status issues means

that, if we adopted Defendants’ argument that the district

court lacks subject matter jurisdiction in this case, Plaintiffs

would have no forum at all for their employment status

claims. This provides yet more support for the conclusion that

the “complete supervision” requirement was not meant to

require employee-like control over independent contractor

drivers.

In addition, basic rules of statutory interpretation support a

reading of § 5.03 that incorporates the general common law

definition of “independent contractor” rather than creating a

new category of independent contractors in the context of

PSC drivers. Nowhere in General Order 158-A are the terms

“employee” or “independent owner-driver” defined. Under

the California Civil Code, words and phrases that “have

acquired a peculiar and appropriate meaning in law . . . are to

be construed according to such peculiar and appropriate

meaning.” Cal. Civ. Code § 13; see also People v. Lopez, 79

P.3d 548, 553 (Cal. 2003) (“[I]f a term known to the common

law has not otherwise been defined by statute, it is assumed

that the common law meaning was intended.”). In the absence

of any indication that § 5.03 was meant to alter the meaning

of “independent owner-driver” or “employee,” they should be

read in light of the common law definitions of those terms as

described in Borello and Narayan.

In sum, Prime Time, the PUC’s amicus brief, and the plain

language of § 5.03 all support a reading of § 5.03 in which

“employee” and “independent owner-driver” retain their

meaning under California employment law. In addition, Plain-

tiffs’ argument that the “complete supervision, direction and

control” requirement in § 5.03 is limited to safety- and

service-related issues also finds support in PUC decisions.

The rulemaking decision that promulgated General Order

158-A did not discuss § 5.03 specifically, but described § 5.01

19874 KAIRY v. SUPERSHUTTLE INT’L

through § 5.04 in passing as “fitness and safety” provisions.

Re Regulation of Passenger Carrier Servs. Decision, 33

CPUC 2d 5 (Cal. CPUC, Oct. 12, 1989). Moreover, in Prime

Time, the PUC considered whether certain practices used by

a shuttle service provider satisfied the “complete supervision”

requirement, although the commission did so without provid-

ing a comprehensive definition of that requirement. Prime

Time, 1996 WL 465519, at *13-*23. The kinds of issues the

PUC considered in deciding if Prime Time was exercising

“complete supervision” were all closely related to safety and

service standards, such as driver reliability, safety of opera-

tions, unsafe shift length, van inspection rules, and passenger

understanding of what recourse they could take if something

went wrong. Id.

[10] These two precedents of the PUC, coupled with the

general mission of the PUC to protect public health and safety

with respect to public utilities, indicate that the more reason-

able reading of § 5.03 is that it allows a PSC to use drivers

that are either employees or independent contractors, as tradi-

tionally defined by California law, as long as it maintains

“complete supervision, direction and control” over those driv-

ers with respect to health, safety, and service reliability issues.

To the extent that the level of supervision and control required

by § 5.03 may be in tension with the level of control that is

one factor in the creation of an employment relationship, that

tension may cause some uncertainty for airport shuttle compa-

nies. The proper response to such uncertainty, however, is not

to insist that a de facto employee under California law is

somehow transformed into an independent contractor, but to

seek clarification of § 5.03’s precise meaning from the PUC.

[11] Accordingly, because the requirements of § 5.03 are

not synonymous with the test used by California courts to

determine employment status, the district court would be

making a distinct inquiry from the one that would be made by

the PUC in a regulatory proceeding concerning the PSC-

driver relationship. Thus, the court’s actions would not hinder

KAIRY v. SUPERSHUTTLE INT’L 19875

or interfere with the jurisdiction of the PUC as forbidden by

§ 1759. In fact, by determining the SuperShuttle drivers’

employment status, the court would likely be acting in aid of

the PUC’s jurisdiction, as approved of in Hartwell, because

that is a determination that the PUC itself has repeatedly

stated is outside of its jurisdiction. Hartwell, 38 P.3d at 1112;

PUC Amicus Br. at 4.

[12] For the foregoing reasons, the third Covalt prong is

not satisfied, California Public Utilities Code § 1759 is not

implicated, and the district court retains subject matter juris-

diction over this case. On remand, the district court may

determine whether the SuperShuttle drivers were employees

or independent contractors under California law without hin-

dering or interfering with PUC decisions or policies.

IV. Conclusion

For the reasons set forth above, we reverse the district

court’s order dismissing Plaintiffs’ California state law claims

and remand for further proceedings consistent with this opin-

ion.

REVERSED and REMANDED.