101 West Broadway, Suite 1700, San Diego, California (619) Case study An analysis of claims asserted by independent contractor drivers against a city and cab companies arising out of an airport transportation agreement Airport Ground Transportation Association conference October 9, 2012 Kevin V. DeSantis, Esq. (619)

101 West Broadway, Suite 1700, San Diego, California (619) About the speaker: Kevin V. DeSantis 24 years experience practicing law Regularly counsels ground transportation providers throughout the United States on structuring relationships and drafting agreements with independent contractors Regularly represents ground transportation providers in various jurisdictions in a wide range of litigation matters:  Class action misclassification claims  Individual classification and breach of contract claims  Trademark and trade secret enforcement  Unfair competition

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Case study A group of independent taxi drivers filed a lawsuit against the City of Phoenix, arising out of the operation of Sky Harbor International Airport, and three cab companies Drivers claim they are intended beneficiaries of Taxicab Service Agreements between the City and cab companies

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Summary of litigation and claims 20 drivers sued the City of Phoenix and the three cab companies for breach of contract, bad faith, negligent misrepresentation, fraud, intentional misrepresentation and conspiracy to commit fraud Drivers’ primary contention is that they are third party beneficiaries of the Taxicab Service Agreements Drivers assert that the Agreements provide:  all car washes to be paid by cab companies  cannot charge credit card processing fees  return trips must be provided Drivers seek millions in damages.

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix What gave rise to the lawsuit?  A number of factors contributed to drivers being able to file and maintain a lawsuit against the City and cab companies  Those factors include…

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Factor 1: Agreement between City and cab companies  Maximum Daily Lease Rate (Credit Cards and Car Washes): "[Cab company] hereby warrants and guarantees that... the maximum daily taxicab lease rate charged to a driver shall not exceed [$_____]. For purposes of this agreement, 'maximum taxicab lease rate' shall mean a single maximum lease charge, which includes the vehicle's insurance, maintenance, cleaning costs, and security costs or deposit(s). No other costs are considered or authorized as part of this change except the cost of fuel used during the period the taxicab is leased.“  Car Washes: "The exterior of each vehicle... shall be washed at least once each day... " Note: definition of "maximum taxicab lease rate" was amended in 2007 to include "... cleaning costs and/or resources for vehicles to be washed by the drivers on a weekly basis...“  Return Trips: "Operator allows return trips/fares to Airport as to enhance a livable wage for drivers."

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Factor 1 (cont’d):  Issues with agreement Definition of maximum daily lease rate Credit card charges Return trips Car washes

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Factor 2: Livable wage study  Summary  Purpose  Content  Implications

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Factor 3: Agreements between drivers and cab companies  No dispute over independent contractor status Drivers admit IC status  Driver testimony on earnings  Key terms of agreement Credit card processing fees Car washes Return trips

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Factor 4 RFP from, and proposal to, City  Clarity  Caution

101 West Broadway, Suite 1700, San Diego, California (619) Abdirzirak vs. City of Phoenix Things we learned: Recommendations to reduce risk of similar lawsuits  City perspective  Transportation provider perspective  Joint perspective

101 West Broadway, Suite 1700, San Diego, California (619) General tips for transportation providers Well crafted lease agreements  Class action waiver  Arbitration provision  Limitation of liability  Releases  IC acknowledgements  Video tapes Knowledgeable management and staff Careful review of third party contracts