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.