Filed 3/26/21 Parada v. East Coast Transport CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

ERICK V. PARADA et al.,

Plaintiffs and Appellants,

v.

EAST COAST TRANSPORT, INC.,

Defendant and Respondent.

B296566

(Los Angeles County

Super. Ct. No. BC681293)

APPEAL from a judgment of the Superior Court of Los 

Angeles County. William H. Fahey, Judge. Reversed and 

remanded with directions.

Gomez Law Group and Alvin M. Gomez for Plaintiffs and 

Appellants.

Vanderford & Ruiz, Todd A. Picker and Zeeshan Kabani for 

Defendant and Respondent.

_________________________________
2

Erick V. Parada, Felipe Alfonso Sergio Alonso Reyes, Jose 

Antonio Alfaro, and Rony Manual Arana (Appellants) appeal

from a judgment against them following a court trial. Appellants 

are truck owner/operators who performed work as putative 

independent contractors for respondent East Coast Transport, 

Inc. (East Coast). East Coast is a drayage company that 

arranges for the pick-up and delivery of goods from Los Angeles 

area ports to nearby locations. Appellants sued East Coast, 

claiming that they were actually employees rather than 

independent contractors and were therefore wrongfully deprived 

of statutory protections and benefits given to employees, such as 

provisions for rest breaks and meal periods, reimbursement of 

expenses, and itemized wage statements.

Following the first portion of a bifurcated trial on 

Appellants’ claim under the Unfair Competition Law (UCL; Bus. 

& Prof. Code, § 17200), the trial court ruled that Appellants were 

independent contractors rather than employees. The court 

concluded that this finding disposed of each of Appellants’ claims 

and entered judgment accordingly.

In finding that Appellants were independent contractors, 

the trial court ruled that our Supreme Court’s decision in 

Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 

903 (Dynamex) did not apply retroactively. Dynamex held that a

three-factor test (the so-called “ABC” test) should be used to 

determine if a worker qualifies as an independent contractor for 

purposes of California’s wage orders (which establish many 

entitlements for employees). (Id. at pp. 916–917.) One of the 

requirements of that test is that an independent contractor must

perform work that is outside the usual course of the hiring 

entity’s business. Instead of the Dynamex test, the trial court 
3

applied the multi-factor definition of an independent contractor

described in S. G. Borello & Sons, Inc. v. Department of 

Industrial Relations (1989) 48 Cal.3d 341 (Borello).

Since the trial court’s ruling, our Supreme Court has 

decided that Dynamex should be applied retroactively. In

Vazquez v. Jan-Pro Franchising International (2021) 10 Cal.5th 

944 (Vazquez), the court reached that conclusion primarily 

because Dynamex “addressed an issue of first impression” and did 

not change a settled rule on which the parties had relied. 

(Vazquez, at p. 948.)

Our Supreme Court’s decision in Vazquez controls here. 

The judgment therefore may not be affirmed on the legal ground 

that the trial court adopted.

East Coast also argues as an alternative ground for 

affirmance that federal law preempts the ABC test as applied to 

its business. In People v. Superior Court (Cal Cartage 

Transportation Express, LLC) (2020) 57 Cal.App.5th 619 (Cal 

Cartage), Division Four of this appellate district recently rejected 

an identical argument. We agree with the decision in that case 

and conclude that federal law does not preclude application of the 

ABC test here.

Because the judgment was based on an incorrect legal 

standard, we reverse it and remand the case for further 

proceedings on Appellants’ complaint.

BACKGROUND

1. The Parties

As a drayage company, East Coast handles the 

transportation of shipping containers to and from ports in the Los 

Angeles area. East Coast hires commercial truck drivers such as 

Appellants for this task. Before working for East Coast, 
4

Appellants had all worked as drivers for other trucking 

companies.

Each Appellant signed an Independent Contractor 

Agreement provided by East Coast. Under that agreement, 

Appellants acknowledged that they were independent “ ‘owneroperators’ ” and not employees. They agreed to provide their own 

trucks and to supply their own labor to load and unload the 

trucks. They had the option to accept or reject loads offered by 

East Coast and were permitted to accept work from other 

trucking companies.

Appellants in fact owned their own trucks, which they 

purchased from a company owned by Jose Serrano, a co-owner of 

East Coast. Appellants paid for the trucks through deductions 

from their weekly paychecks.

As owner-operators, Appellants made more money than

employees. East Coast also compensated them for their driving 

distance, fuel, and expenses.

2. Proceedings in the Trial Court

Appellants sued East Coast in October 2017. The crux of 

their complaint was that East Coast willfully misclassified 

Appellants as independent contractors rather than employees to 

avoid the legal requirements associated with employee status.

The complaint alleged nine causes of action, including 

claims under the Labor Code for alleged failure to pay wages 

when due; failure to pay minimum wages; failure to provide 

mandated rest periods and meal breaks; and failure to furnish 

timely and accurate wage statements.

A number of Appellants’ Labor Code claims were based on 

Industrial Welfare Commission Wage Order No. 9-2001 (Wage 

Order No. 9), which establishes requirements for minimum 
5

wages, overtime rates, and meal and rest periods for employees 

in the transportation industry. (See Cal. Code Regs., tit. 8, 

§ 11090.) The complaint also included a cause of action under the 

UCL alleging that East Coast unfairly evaded classification of its 

drivers as employees and engaged in unlawful conduct by 

committing the alleged Labor Code violations.

In pretrial proceedings, the trial court ruled that Dynamex 

did not apply to Appellants’ claims. The court reasoned that:

(1) Dynamex “was decided after all of the events at issue in this 

case took place and after the complaint was filed”; (2) the opinion

in Dynamex applied existing law to the parties in that case and 

was “notably silent” as to whether the ABC test should be applied 

retroactively; and (3) applying a new legal standard in the form of 

the ABC test to a “decades old and industry-wide business model” 

would violate due process.

The trial court ordered a bifurcated trial, with Appellants’ 

UCL claim to be tried first to the court. At the conclusion of the 

first phase of trial, the trial court issued a statement of decision 

finding in favor of East Coast.

Applying the Borello standard, the trial court found that

East Coast had met its burden to show that Appellants were 

independent contractors rather than employees. The court found 

that East Coast exercised only limited control over Appellants’ 

work and did not supervise them; Appellants were skilled drivers 

who owned their own vehicles and were paid by the job; the 

independent contractor agreements between East Coast and 

Appellants were short-term and easily canceled; and Appellants 

and East Coast “firmly believed that their relationship was not 

that of an ‘employer-employee.’ ”
6

The trial court therefore found in favor of East Coast on 

Appellants’ UCL claim. Based upon its finding that Appellants 

were independent contractors rather than employees, the court 

also concluded that Appellants’ remaining claims were 

“untenable as a matter of law” and entered judgment in favor of 

East Coast.

DISCUSSION

1. Our Supreme Court’s Decision in Dynamex 

Applies Retroactively

In Dynamex, our Supreme Court considered the standard 

that should be applied when deciding whether a worker is an 

employee or an independent contractor for purposes of California 

wage orders. (Dynamex, supra, 4 Cal.5th at pp. 913–914.) Such 

wage orders “impose obligations relating to the minimum wages, 

maximum hours, and a limited number of very basic working 

conditions (such as minimally required meal and rest breaks) of 

California employees.” (Ibid.)

The plaintiffs in Dynamex sought to certify a class of 

drivers for a nationwide package and document delivery company

(Dynamex). (See Dynamex, supra, 4 Cal.5th at pp. 914–915.) 

The drivers alleged that Dynamex had misclassified its delivery 

drivers as independent contractors rather than employees. 

(Ibid.) Like Appellants here, the drivers in Dynamex sought 

relief under Business and Professions Code section 17200 for 

Dynamex’s alleged violations of the relevant wage order and of 

various sections of the Labor Code. (Ibid.)

As in this case, in Dynamex the applicable wage order was 

Wage Order No. 9. (Dynamex, supra, 4 Cal.5th at pp. 914, 925.) 

That wage order defines “ ‘employ’ ” as “ ‘to engage, suffer or 

permit to work.’ ” (Id. at p. 926.) After considering the historical 
7

origins of the “suffer or permit to work” language and the 

remedial purpose of wage orders, the court concluded that “the 

suffer or permit to work standard must be interpreted and 

applied broadly to include within the covered ‘employee’ category 

all individual workers who can reasonably be viewed as ‘working 

in [the hiring entity’s] business.’ ” (Dynamex, 4 Cal.5th at p. 953, 

quoting Martinez v. Combs (2010) 49 Cal.4th 35, 69.) The court 

also considered the disadvantages of a multifactor test, such as 

the one applied in the context of workers’ compensation under 

Borello, and concluded that the comparatively simple ABC test 

was preferable for California wage orders. (Dynamex, at pp. 929, 

954–957.)

The ABC test contains three requirements. To show that a 

worker is an independent contractor, an employer has the burden 

to prove “(A) that the worker is free from the control and 

direction of the hiring entity in connection with the performance 

of the work, both under the contract for the performance of the 

work and in fact; and (B) that the worker performs work that is 

outside the usual course of the hiring entity’s business; and (C) 

that the worker is customarily engaged in an independently 

established trade, occupation, or business of the same nature as 

the work performed.” (Dynamex, supra, 4 Cal.5th at p. 957.)

In Vazquez, the court subsequently held that its decision in 

Dynamex applies retroactively to all cases that were not yet final

at the time of that decision.

1 (Vazquez, supra, 10 Cal.5th at 

1 Our Supreme Court considered the issue in the context of 

answering a certified question from the Ninth Circuit Court of 

Appeals concerning the retroactivity of Dynamex. (See Vazquez 

v. Jan-Pro Franchising Int’l, Inc. (2021) 986 F.3d 1106, 1116–

1117 (Vazquez II).)
8

p. 948.) Vazquez relied on the general rule that “ ‘judicial 

decisions are to be applied retroactively.’ ” (Vazquez, supra, 10 

Cal.5th at p. 951, quoting Waller v. Truck Ins. Exchange, Inc. 

(1995) 11 Cal.4th 1, 24.) The court concluded that no exceptions 

to that rule applied. The court explained that Dynamex decided 

an issue of first impression, and that “the ABC test articulated in 

Dynamex was within the scope of what employers reasonably 

could have foreseen.” (Vazquez, at pp. 953, 955–956.)

Importantly, the court in Vazquez considered, and rejected, 

the same fairness arguments that East Coast makes here. East 

Coast argues that it reasonably relied on the Borello standard

and that it could not have anticipated that the ABC standard 

would govern the status of its drivers. The court in Vazquez 

reasoned that such arguments carried “little weight when, as 

here, the underlying decision changes no settled rule.” (Vazquez, 

supra, 10 Cal.5th at p. 949.) The court also explained that 

“public policy and fairness concerns, such as protecting workers 

and benefitting businesses that comply with the wage order 

obligations, favor retroactive application of Dynamex.” (Ibid.)

East Coast also argues that applying the ABC standard 

here would violate its due process rights. The court’s decision in 

Vazquez forecloses that argument. The court expressly rejected 

the proposition that “reliance or fairness considerations” 

precluded retroactive application of Dynamex under due process 

principles. (Vazquez, supra, 10 Cal.5th at p. 957, fn. 4.)

Thus, under Vazquez, it is clear that the Dynamex standard 

applies to this case. The trial court’s decision that Dynamex 
9

should not be applied retroactively to this case must therefore be 

reversed.

2

2. Federal Law Does Not Preempt Application of 

the ABC Test to Motor Carriers

In a brief alternative argument in support of affirmance, 

East Coast claims that the Federal Aviation Administration 

Authorization Act (FAAAA; Pub.L. No. 103-305 (Aug. 23, 1994) 

2 The decision in Dynamex applied only to the definition of 

“employ” for purposes of wage orders and did not reach the 

question of whether the ABC test should apply to claims under 

the Labor Code. (See Dynamex, supra, 4 Cal.5th at pp. 916, fn. 5, 

942.) In 2020, the Legislature subsequently adopted the 

Dynamex test for purposes of the entire Labor Code. (Lab. Code, 

§ 2775; see Cal Cartage, supra, 57 Cal.App.5th at pp. 626–627.) 

After the decision in Dynamex, but before the legislative change, 

several Courts of Appeal decided that the Borello standard rather 

than the ABC test should apply to claims under the Labor Code 

that are not based upon wage order violations. (See Gonzales v. 

San Gabriel Transit, Inc. (2019) 40 Cal.App.5th 1131, 1157, 

review granted Jan. 15, 2020, S259027 [“the ABC test applies to 

Labor Code claims which are either rooted in one or more wage 

orders, or predicated on conduct alleged to have violated a wage 

order,” but the Borello test applies to other Labor Code claims]; 

Garcia v. Border Transportation Group, LLC (2018) 28 

Cal.App.5th 558, 571 [Borello provides the proper standard for 

non-wage-order claims].) East Coast does not argue that the 

Borello test applies to any of Appellants’ claims under these 

decisions. We therefore do not consider whether any of

Appellants’ claims fall outside the scope of the Dynamex decision 

under prior law.
10

108 Stat. 1569) preempts any state rule that applies the ABC test

to motor carriers.3 We disagree.

Under the FAAAA, a “State, political subdivision of a State, 

or political authority of 2 or more States may not enact or enforce 

a law, regulation, or other provision having the force and effect of 

law related to a price, route, or service of any motor carrier.” (49 

U.S.C. § 14501(c)(1); see People ex rel. Harris v. Pac Anchor 

Transportation, Inc. (2014) 59 Cal.4th 772, 775 (Pac Anchor).) 

East Coast argues that, at least as interpreted by Appellants, the 

ABC test would interfere with the FAAAA’s objectives by 

compelling a motor carrier such as East Coast to use employees 

rather than independent contractors to perform the services that 

it provides.

The court in Cal Cartage rejected an identical argument. 

In that case, Division Four of this appellate district concluded 

that the ABC test is a law of general application that “does not 

mandate the use of employees for any business or hiring entity.” 

(Cal Cartage, supra, 57 Cal.App.5th at p. 631.) Accordingly, the 

court held that the FAAAA did not preclude applying the ABC 

test to a UCL claim by the Los Angeles City Attorney alleging 

3 Appellants object to this argument on the ground that 

East Coast did not raise it below. We have discretion to consider 

an issue of law raised for the first time on appeal if the issue does 

not depend upon disputed facts. (Frink v. Prod (1982) 31 Cal.3d 

166, 170; Sheller v. Superior Court (2008) 158 Cal.App.4th 1697, 

1709.) East Coast’s preemption argument raises a legal issue

that may be resolved without regard to the specific facts of this 

case. (See Cal Cartage, supra, 57 Cal.App.5th at p. 629.) 

Moreover, the trial court would likely need to consider the 

argument on remand if we do not address it now. So we exercise 

our discretion to consider the issue.
11

that various trucking companies had misclassified their owneroperators as independent contractors. (Id. at pp. 624–625, 634.)

The court in Cal Cartage relied upon our Supreme Court’s 

decision in Pac Anchor. (See Cal Cartage, supra, 57 Cal.App.5th 

at pp. 630–631.) In Pac Anchor, the court similarly concluded 

that the FAAAA did not preempt a UCL claim brought by the 

State of California alleging that trucking companies had 

misclassified drivers as independent contractors.

The court in Pac Anchor first rejected the argument that 

the FAAAA preempts all UCL claims against motor carriers 

because such claims “regulate the effect that unfair business 

practices have on the quality and price of goods and services.” 

(Pac Anchor, supra, 59 Cal.4th at pp. 782–784.) The court 

explained that the UCL is a broad law of general application that 

does not mention motor carriers specifically. (Id. at p. 783.) The 

court concluded that a “UCL action that is based on an alleged 

general violation of labor and employment laws does not 

implicate” the concerns about the “regulation of motor carriers 

with respect to the transportation of property” that underlie the 

FAAAA. (Ibid.)

The court in Pac Anchor also held that the FAAAA did not 

preempt the UCL as applied in that action. In that case, the 

state had alleged a single cause of action under the UCL 

“premised on violations of the Unemployment Insurance Code, 

the Labor Code, and IWC Wage Order No. 9.” (Pac Anchor, 

supra, 59 Cal.4th at p. 784.) The court concluded that the 

provisions of law underlying the state’s UCL claim did not relate 

to motor carrier prices, routes, or services. Rather, they were 

laws of general application applicable to all employers that fell 

outside the scope of provisions that the FAAAA preempts under 
12

controlling United States Supreme Court precedent. (Id. at pp. 

784–785, citing Morales v. Trans World Airlines, Inc. (1992) 504 

U.S. 374, 388.)

Of particular importance here, the court in Pac Anchor also 

rejected the argument that the UCL claim in that case would 

significantly affect motor carrier prices, routes, and services 

because its application would prevent motor carriers from using 

independent contractors. (Pac Anchor, supra, 59 Cal.4th at 

p. 785.) The court agreed with the defendants that the state 

“may not prevent them from using independent contractors.” 

(Ibid.) However, the court decided that the state’s UCL claim 

would not have that effect. The court explained that “[t]he 

People merely contend that if defendants pay individuals to drive 

their trucks, they must classify these drivers appropriately and 

comply with generally applicable labor and employment laws.” 

(Ibid.) The court concluded that “Defendants are free to use 

independent contractors as long as they are properly classified.” 

(Id. at p. 787.)

Our Supreme Court’s decision in Pac Anchor preceded its

opinion in Dynamex. However, as explained above, Dynamex did 

not change the law, but simply interpreted the language “suffer 

or permit to work” in Wage Order No. 9 in a manner that 

employers “reasonably could have foreseen.” (See Vazquez, 

supra, 10 Cal.5th at pp. 955–956.) Thus, there is no reason to 

believe that Dynamex had any effect on the court’s conclusion in 

Pac Anchor that the state may permissibly apply its general 

employee classification rules to motor carriers.

We therefore agree with the conclusion of Division Four in 

Cal Cartage that Pac Anchor is “dispositive” on the question 

whether the FAAAA preempts a claim against a motor carrier 
13

seeking to enforce the ABC test. (See Cal Cartage, supra, 57 

Cal.App.5th at p. 631.) Like the labor laws at issue in Pac 

Anchor, including Wage Order No. 9, “the ABC test is a law of 

general application” that “does not mandate the use of employees 

for any business or hiring entity.” (Cal Cartage, at p. 631.)4

3. The Trial Court Should Consider in the First 

Instance Whether Appellants Were 

Misclassified as Independent Contractors 

Under the ABC Test.

Appellants argue that, under the facts presented at trial, 

East Coast could not meet its burden to establish that Appellants 

were independent contractors under the ABC test because East 

Coast is “in the trucking business and Appellants performed 

truck driving services for it.” Thus, East Coast could not show 

that Appellants performed work that is “outside the course of the 

hiring entity’s business” under prong “B” of the ABC test. 

(Dynamex, supra, 4 Cal.5th at p. 957.) Appellants therefore 

4 The court in Cal Cartage also noted that the statutory 

scheme that the Legislature enacted in 2020 clearly does not 

prohibit motor carriers from using independent contractors

because it establishes a “business-to-business” exception to the 

ABC test in Labor Code section 2776. (See Cal Cartage, supra, 

57 Cal.App.5th at pp. 632–634.) Section 2776 first became 

effective in September 2020. We therefore presume, without 

deciding, that this provision would not apply to the claims in this 

case. However, that fact does not change our analysis. Our 

Supreme Court did not rely upon the current statutory scheme in 

Pac Anchor, and, as the court in Cal Cartage persuasively 

explained, that decision is dispositive here. (See Cal Cartage, at 

p. 631.)
14

request that we decide this issue as a matter of law rather than 

remanding to the trial court to consider it.

We agree that, based on the trial record, it appears unlikely 

that East Coast will be able to meet its burden under the ABC 

test. As Appellants point out, the testimony at trial showed that 

East Coast is a trucking company that must have truck drivers to 

operate.

The trial court also made comments during argument 

indicating that the court shared this view. The trial court stated 

to East Coast’s counsel that, “[u]nder Dynamex, you lose right off 

the bat because it’s the same—your trucking company and your 

employee truckers; right? . . . Trucking was your client’s 

business.”

However, the trial took place under the assumption that 

the Borello test, not the Dynamex test, governed whether 

Appellants were independent contractors. The trial court’s 

comments concerning the effect of the ABC test were therefore 

hypothetical. And the issue is of course highly factual.5

East Coast argues that determining the Appellants’ status

under the ABC test “raises a host of procedural and substantive 

issues, e.g., new defenses, that were not litigated below.” It 

5 As Appellants point out, courts in other jurisdictions have 

considered different factors to determine whether work was 

“outside the course of the hiring entity’s business,” including 

“whether the work of the employee is necessary to or merely 

incidental to that of the hiring entity, whether the work of the

employee is continuously performed for the hiring entity, and 

what business the hiring entity proclaims to be in.” (See 

Vazquez II, supra, 986 F.3d at p. 1125.)
15

claims that it would therefore be unfair for this court to grant 

what amounts to a “summary judgment” on the issue.6

Regardless of our decision on this issue, remand will be 

necessary. The trial court would need to consider appropriate 

relief on Appellants’ UCL claim even if we were to hold as a 

matter of law that Appellants were employees under the ABC 

test. And Appellants’ Labor Code claims have yet to be tried.

Because the issue is highly factual; the trial took place 

under the assumption that the Borello test applied; and remand 

is necessary anyway, we conclude that the best course is to 

permit the trial court to consider in the first instance whether 

Appellants were independent contractors under the ABC test. 

(See Vazquez II, supra, 986 F.3d at p. 1122 [remanding for the 

district court to consider whether the plaintiffs were employees 

under the Dynamex standard “[g]iven the fact-intensive nature of 

the Dynamex inquiry”].) We will therefore remand for that 

purpose and for further proceedings on Appellants’ claims.

6 Citing decisions from other jurisdictions, East Coast 

argues that one such defense may be based on a showing that 

Appellants’ work was outside the “usual course” of East Coast’s 

business because Appellants performed the work outside of East 

Coast’s place of business. The decision in Dynamex forecloses 

that specific argument. (See Dynamex, supra, 4 Cal.5th at p. 956, 

fn. 23.)
16

DISPOSITION

The judgment is reversed and the case is remanded for 

further proceedings on Appellants’ complaint. Appellants are

entitled to their costs on appeal.

NOT TO BE PUBLISHED.

LUI, P. J.

We concur:

CHAVEZ, J.

HOFFSTADT, J.