Filed 2/15/17 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF

CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

EMANUELE SECCI,

Plaintiff and Appellant,

v.

UNITED INDEPENDENT
TAXI DRIVERS

, INC., et al.,

Defendants and Respondents. B270082

(Los Angeles County Super. Ct. No. BC487145)

APPEAL from a judgment of the Superior Court of Los Angeles County, Ralph Dau, Judge. Reversed. MaryBeth LippSmith, Douglas Adam Linde, and Erica
Allen Gonzales for Plaintiff and Appellant.2 Law Office of Cleidin Z. Atanous, Cleidin Z. Atanous and Michelle L. Villarreal for Defendants and Respondents.

_______________________ Plaintiff and appellant Emanuele Secci appeals from a judgment in favor of defen dants and respondents United Independent Taxi Drivers, Inc. (U nited I ndependent ) and
United Taxi of the South west (U nited Southwest ) ( collectively, United). Secci obtained a jury verdict f or damages suffered after a motorcycle crash with defendant
Aram To nakanian. 1 Tonakanian was driving a green and white taxi marked with United’s insignia. The jury found Tonakanian to be United’s agent, but not an employee. The court granted United’s motion for judgment notwithstanding the verdict (JNOV) under Code of Civ il Proc edure
section 629 , finding the evidence insufficient to support the jury’s finding that Tonakanian was United’s agent. Secci now seeks reversal, arguing that there was substantial
evidence of agency to support the verdict. United contends
the t rial court correctly granted its JNOV motion because the only evidence supporting an agency finding were requirements imposed by public regulation or third parties. We reverse the trial court’s order and reinstate the jury’s verdict, because California la w does not preclude consideration of controls required by public regulations in finding an agency relationship.

1 Tonakanian is not a party to this appeal.3

FACTUAL AND PROCEDUR AL BACKGROUND

Relevant facts

We present the evidence in the light most favorable to Secci. ( Bufano v. San Francisco (1965) 233 Cal.App.2d 61,
68 ( Bufano ) .) Secci was driving his motorcycle through an intersection in the City of West Hollywood when Tonakanian’s taxi, coming from the opposite direction, turned left directly in front of Secci. Tonakanian’s taxi was pain ted with United’s green and white color scheme and was licensed to pick up passengers in the City of West Hollywood.
United describes itself as an association of taxicab

owner s . United had franchise agreements with the City of West Hollywood and other cities in Southern Califor nia to operate a taxi service. United Southwest was a wholly

owned subsidiary of United Independent at the time. The two companies were operated by the same people, and United dispatchers work ed for both companies out of the

sa me building

. United’s franchise agreement with the City of West Hollywood required it to maintain commercial auto liability insurance and provide a list of insured vehicles to
the director of the city’s d epartment of t ransportation.
Like other owner

- dr ivers, Tonakanian owned his taxi
and set his own hours. Tonakanian’s contract with United
stated he was an independent contractor. Drivers paid monthly dues and other fees to cover Unite d’s expenses.4

United provi ded marketing and advertising. Each Unit ed taxi had the company’s phone number painted on it. If a
customer called the number, a dispatcher would enter the location information into a computer, and the computer
woul d send out a dispatch request. In order to receive dispatch requests, a driver would check into the zone where
he or she was located. Drivers were free to accept or reject dispatch requests, and could pick up passengers on the street, so long as they were licensed to accept fares within that city. Drivers were required to use uni form credit card and dispatch equipment chosen by United. Credit card charges were initially paid to United, which would deduct credit card processing fees, monthly dues, a nd a small fee for accounting. Taxi rates were set by meter . D rivers were not free to charge flat or discounted rates. United required its drivers to accept vouchers and coupons that drivers c ould
later submit to United for payment. If a driver transferred ownership of a United t axi, the buyer and seller had to notify United and p ay a $500 transfer fee. United provided a t raining m anual to each of its
drivers. It required drivers to keep a copy of the manual in the taxi and to complete a training course before taking the city’s licensing test. There was conflicting testimony a bout
whether the C ity of West Hollywood required United to provide training to its drivers before a driver c ould be licensed in that city. The training manual made reference to
d epartment of t ransportation rules, but also described5

additional rules applic able to drivers. For example,
d epartment of t ransportation rules provide that drivers “shall provide prompt, efficient service and be courteous at all times to the general public, other City

- permitted taxicab drivers, and to City investigators/officers” a nd that a driver
cannot smoke wh ile the taxicab is occupied without the consent of all passengers. The manual goes farther, stating

, “Taxicab drivers are NOT ALLOWED TO SMOKE while servicing passenger(s)” and

, “Do not discuss or argue with passengers abou t controversial subjects such as politics, religion, etc

. . . . ” The training manual provided specific information about the drivers’ appearance, including a dress code, as well as specifics about driving safely, conduct ing themselves while waiting in ta xi lines, and interac ting with passengers politely. United drivers were expected to abide by the company’s rules and regulations, and drivers acknowledged their relationship with United could be terminated for violations
of those rules

. U nited had drivers working as “Road Supervisors.” According to the training manual, r oad

s upervisors were trained by United , and were available to help in an emergency and to enforce United’s rules and regulations. A road supervisor had authority to resolve dispute s between drivers, and to cite a driver for a “false first up, guzzling, dirty cabs, not conforming to the dress code, miss ing hubcaps, etc . . . .” Drivers were required to complete and submit a report if they were involved in an accident, or risk a fine or suspension.6

Procedural history

This appeal arises after Secci’s claims survived two motions for summary judgment and two jury trials. Secci’ s original complaint named U nited Independent as a defendant, but not U nited Southwest

. United Independent moved for summary judgment, but the trial court denied the
motion because United Independent had not demonstrated the lack of an agency relationship

. After the first trial ended with a jury verdict for Secci , the court granted United Independent’s motion for a new trial on the ground that the court incorrectly denied United Independent’s request to include BAJI No. 13.20
, an instruction on the factor s to be weighed in determining whether Tonakanian was acting as United’s agent or as an independent contractor. Secci later
named United Southwest as a Doe defendant and both
defendants filed a secon d motion for summary judgment. Again, the court denied summary judgment because United’s evidence did not establish the absence of an agency relationship between United and Tonakanian. In the second jury trial , the trial court instructed the jury on how to determine whether Tonakanian was United’s employee or an independent co ntractor, using CACI
No. 3704. The court also gave instructions on the question of agency, relying on both CACI No. 3705 and BAJI No. 13.20. Under CACI No. 3705, the jury could find agency if Secci proved that United gave Tonakanian a uthority to act on its behalf, and that the grant of authority “may be shown by7

words or may be implied by the parties’ conduct” but could not be shown by Tonakanian’s words alone

. BAJI No. 13.20 gave additional detail s about factors the jury should consi der in determining whether an agency relationship existed between United, as a principal, and Tonakanian, as an agent. The court instructed, “The most important but not the only factor, in determining whether one is an agent or independent contractor is w hether the principal has the right to control the manner and means of accomplishing the result desired. Strong evidence in support of a principal agent relationship is the right to discharge at

- will without cause. [¶] Other factor[s] which should be tak en into consideration in determining whether a person is an agent or independent contractor are [ : ] [¶] (a) w hether the one performing services is engaged in a distinct occupation or
business [ ; ] [¶] (b) w hether, in the locality, the kind of occupation o r business is one in which the work is usually done under the direction of a principal or by a specialist without supervision [ ; ] [¶] (c) t he skill required in the particular occupation or business [ ; ] [¶] (d) w hether the principal or the worker supplies the instrumentalities, tools and the place of work for the person doing the work, or helpers [ ; ] [¶] (e) t he length of time [ for ] which the services are to be performed [ ; ] (f) t he method of payment, whether based on time or by [the] job [ ; ] [¶] (g) w hether the work is part of the regular business of the alleged principal [ ; ] [¶] (h) w hether the parties believe they are creating a relationship of agency or independent contractor [ ; ] and [] [¶]8

(i) w hether the alleged employee’s opportunity for profit or loss depends on his or her managerial skills.”
T he court went on to explain, “One who contracts to act on behalf of another subject to the other’s control, except with respect to his or her physical conduct, is both an agent and an independent contra ctor. [¶] One who employs an independent contractor ordinarily is not liable to others for the acts or omissions of the independent contractor.” The jury returned a verdict in favor of Secci, finding Tonakanian was not an employee, but that he was an ag ent.
U nited filed a motion for JNOV. In its order granting JNOV, the trial court focused on whether United could be found liable under the theory of responde a t superior, as vicarious liability was only available if Tonakanian was United’s employee or a n agent. The court discussed two federal cases analyzing whether taxi drivers would be considered employees in the context of the National Labor
Relations Act. 2 The court reasoned that the evidence produced at trial was more analogous to the situation in a federal case where the Ninth Circuit found no substantial evidence supported the National Labor Relations B oard’s finding of an employment relationship. T he trial court discounted evidence that might otherwise weigh in favor of a principal

- agent relati onship

— such as the driver training

2 The National Labor Relations Act applies to employees, and defines the term employee as not including “any individual having the status of an independent contractor . . . .” (29 U.S.C. § 152(3).)9

manual, required training classes, required dispatch equipment, and standardized taxi coloring

— reasoning that such governmental requirements “are not ‘inconsistent with an independent contractor relationship, [because] su ch an incorporation benefits both parties by insuring continued operation under the contract.’ ( SIDA [ of Hawaii, Inc. v.
N. L. R. B

. ( 9th Cir. 1975) 512 F.2d 354, ] 359.)”

DISCUSSION

Secci contends the court erroneously granted United’s JNOV motion. He argues there was substantial evidence supporting the jury’s finding of agency. United contends the question on appeal is purely legal and subject to de novo
review: whether undisputed facts establish an agency relationship where public agencies or third parties require a company to impose certain controls on its independent

contractors. We reject United’s argument that we must ignore the controls required by public regulation and fi nd that Secci presented substantial evidence of agency to support the jury’s verdict

.

Standard of Review

“A motion for a judgment notwithstanding the verdict may properly be granted only when, disregarding conflicting evidence and indulging in every legitimate inference which10

may be drawn from plaintiff’s evidence, the result is a determination that there is no evidence sufficiently substantial to support the verdict. On appeal, we must read the record in the light most advantageous to plaintiff,

res olve all conflicts in his favor and give him the benefit of every fact pertinent to the issues involved and which may reasonably be deduced from the evidence [c itation]

. ” ( Bufano

, supra , 233 Cal.App.2d at p. 68; I

- CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 274.)

“ ‘The existence of an agency is a factual question within the province of the trier of fact whose determination may not be disturbed on appeal if supported by substantial
evidence. [Citation.]’ [Citation.] Infer ences drawn from conflicting evidence by the trier of fact are generally upheld. [Citation.].” ( Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1576.) “Only when the essential facts are not in conflict will an agency determination be made as a matter of law. [Citation .] ” ( Wickham v. Southland Corp. (1985) 168 Cal.App.3d 49, 55.) United contends a de novo standard of review applies because the question on appeal is primarily legal. ( Crocker
Nationa l Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888.) The legal question as framed by United is “whether controls imposed by an outside agency or third party that are passed through may constitute the control required to esta blish an agency relationship.” There is a legal question embedde d in this appeal, but it only affects11

whether we will consider externally

- imposed requirements as evidence of an agency relationship between a taxi company and its drivers. Once we answer this question, the matter is subject to a substantial evidence stan dard of review. On appeal, “[a]s in the trial court, the standard of review is whether any substantial evidence

— contradicted or
uncontradicted

— supports the jury’s conclusion. [Citations.]” ( Sweatman v. Department of Veterans Affairs (2001) 25
Cal.4th 62 , 68.)

Agency 3 and vicarious liability

A corporation may be held vicariously liable as a principal for the torts of its agents. ( Meyer v. Holley (2003) 537 U.S. 280, 285

– 286.) “Whether a person performing work for another is an agent or an independe nt contractor depends primarily upon whether the one for whom the work is done has the legal right to control the activities of the

3 Although there is considerable overlap between the evidence of an employment relationship and an agency relationship, no party has argued that the jury’s finding that Tonakanian was not United’s employee affects whether there is substantial evidence of ag ency. We point this out only because the parties rely on employment and agency cases interchangeably

. This approach is supported in law because many employment cases look to agency law in defining the employer

- employee relationship. ( S ee, e.g. , S. G. Bo rello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 , 350

– 351 .)12

alleged agent.” ( Malloy v. Fong (1951) 37 Cal.2d 356, 370.) “Actual agency typically arises by express agreement. [Citati ons.] . . . . [¶] ‘“Agency is the relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.” [Citation.] “The principal must in some manner indicate that the agent is to act for him, and the agent must act or agree to act on his behalf and subject to his control.” [Citation.]’ [Citation.] Thus, the ‘formation of an agency relationship is a bil ateral

matter. Words or conduct by both principal and agent are necessary to create the relationship . . . .’ [Citation.]” ( v an’t Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571.) “‘In the absence of the essential characteristic of the
ri ght of control, there is no true agency . . . .’ [Citations.] [¶] ‘The fact that parties had a preexisting relationship is not sufficient to make one party the agent for the other

. . . . [Citation.] An agency is proved by evidence that the person
for whom the work was performed had the right to control the activities of the alleged agent. [Citation.]’ [Citations.]” ( Id . at p. 572.) “[W]hether an agency relationship has been created or exists is determined by the relation of the parties as they in fact exist by agreement or acts [citation], and the primary right of control is particularly persuasive. [Citations.] Other factors may be considered to determine if an independent contractor is acting as an agent, including: whether the ‘principal’ and ‘agent’ are engaged in distinct occupations;13

the skill r equired to perform the ‘agent’s’ work; whether the ‘principal’ or ‘agent’ supplies the workplace and tools; the length of time for completion; whether the work is part of the ‘principal ’ regular busi ness; and whether the parties intended to create an agent/principal relationship. [Citation.]” (

APSB Bancorp v. Thornton Grant (19 94) 26 Cal.App.4th 926, 932

– 933 .)

Caselaw examining the legal relationship between a taxi company and its drivers

In a 1948 case remarkably similar to the one before us, this court upheld a judgment after a jury verdict in favor of a motorcyclist plaintiff against an association of taxi drivers, based on a finding that the taxi driver at fault in the
accident was an a gent of the association. ( Smith v. Deutsch (1948) 89 Cal.App.2d 419 ( Smith ) .) In that case, there was conflicting evidence on whether the driver was a member of the association, but the evidence did show that the association “engaged in an effort to obta in a franchise in its own name to operate taxicabs in the city of Los Angeles; it had a number of taxicabs painted in uniform colors and design and with the insignia and name of the association thereon . . . ; it advertised to the public, engaged public

re lations counsel; spent more than $40,000 to obtain the franchise; made substantial deposits and performance bonds therefor and had a surplus in trust in the bank; it purchased meters and obtained a commitment on approximately 20014

new taxicabs.” ( Smith, su pra , at pp. 421

– 422.) The association maintained insurance on all taxis bearing its name and insignia. The bylaws provided that members of the association were subject to expulsion on various grounds including disorderly conduct, lewd remarks, “gross dishonesty, wilful intoxication, insubordination, inefficiency or ‘inability to perform the duties for which the member of this association was expressly employed to do.’” ( Id . at

p. 423.) The association had supervisors on the streets during the day and night shifts. ( Id . at p. 422.) “Drivers were instructed how to operate; their method of dealing with customers was prescribed; before cabs were allowed to be in operation they were examined and approved; the competency and sobriety of drivers was observ ed and instructions were given by the association to the drivers as to the use of taxicab zones.” ( Id . at p. 423.) Weighing against an agency finding was testimony that the driver in question was not a member of the association, even though he was drivin g a taxi with the association’s colors and insignia. The association did not tell drivers when or where to drive, but that approach was typical of the taxicab business. ( Ibid. ) The
court concluded that the evidence established that the driver “was opera ting under the direction and control of the defendant association.” ( Id . at p. 423.) The judgment was affirmed. ( Id

. at p. 426.)
In Yellow Cab Cooperative

, Inc. v. Workers’ Comp. Appeals Bd. (1991) 226 Cal.App.3d 1288 ( Yellow Cab ), the
court held a tax i driver who leased his taxi from the lessor15

taxi company was an employee, not an independent contractor, for the purpose of workers’ compensation law. Discussing S. G. Borello & Sons, Inc. v. Department of
Industrial Relations

, supra , 48 Cal.3d 341 ( S. G. Borello ) , a seminal case for distinguishing employees from independent contractors, the Yellow Cab court noted, “The traditional definition of ‘employment’ evolved at common law to delineate the hirer’s vicarious liability for the tortious acts of the p erson hired.” ( Yellow Cab

, supra , 226 Cal.App.3d at pp.
1294

– 1 295.) The court found that the taxi company
exercised a sufficient level of control over its drivers to conclude that the drivers were employees, not independent contractors. The lease agreem ent between the driver and the company stated that the driver was self

- employed, but
the court found that to be non

- dispositive, because the parties’ actions determine the relationship, not the labels they use. ( Yellow Cab

, supra , at p. 1297.) Drivers we re trained on how to conduct themselves, including rules of good driving behavior. The company emphasized that drivers possessed a large degree of independence, with freedom to not take radio calls or to use the cab to carry family members rather than pay ing passengers. The court
found such freedoms were inherent in the nature of the work, because economic reality dictated that a cab driver would need to carry paying passengers during the lease time frame. In addition, the company exercised control over the drivers by prohibiting them from driving for other companies, and possessed the ability to terminate leases16

based on write

- ups or customer complaints. “Liability to discharge for disobedience or misconduct is strong evidence of control.” ( Id . at p. 1 298.) The Yellow Cab court also rejected the argument that the lease arrangement created an entrepreneurial relationship more characteristic of an independent contractor, pointing out that drivers did not set their own rates, and there was no evidence to warrant such a finding. ( Id . at p. 1301.) Neither Smith nor Yellow Cab contained any discussion of the argument pressed by United. In other words, those courts did not examine whether controls required by local government or third parties could
be consi dered in deciding whether a taxi driver was the taxi company’s agent.
Two Ninth Circuit Court of Appeals opinions have analyzed whether a taxi driver was an employee of a taxi company, in the context of determining whether the
National Labor Relations A ct applied. ( N. L. R. B. v. Friendly Cab Co., Inc. ( 9th Cir. 2008) 512 F.3d 1090 ( Friendly ) and SIDA of Hawaii, Inc. v. N. L. R. B. (9th Cir. 1975) 512 F.2d 354, ( SIDA ) .) In SIDA , the Ninth Circuit
found there was not substantial evidence to support the National Labor Relations Board’s finding of an employer

employee relationship between SIDA, an association of taxi

owner

- operators, and its members. ( SIDA , at p. 357.) Applying common law principles of agency to the f acts before it, and noting that the “essential ingredient of the agency test is the extent of control exercised by the ‘employer

, ’” the
court found that SIDA did not exercise sufficient control over17

its members to be considered an employer. SIDA had a
ske leton corporate structure, and one of the key reasons for
its existence was its exclusive contract with the State of Hawaii to provide taxi service at the airport. Drivers were free to choose their hours, to work for other taxi companies,
and to make thei r own arrangements with clients. Fare

amounts were set by local ordinance, not by SIDA, and drivers collected and kept their own fares. SIDA kept no income records for its member drivers, and drivers paid for their own insurance. The Ninth Circuit rejec ted the Board’s reliance on those rules and regulations as evidence of SIDA’s control over its drivers, finding them to be “standards of
conduct to which all of the drivers should adhere in order to promote the SIDA image for the mutual benefit of [SIDA]

a nd its drivers.” ( Id . at pp. 358

– 359.) SIDA’s rules and regulations required drivers to display SIDA identification, follow dispatcher instructions, and be neat and courteous.
The Ninth Circuit reasoned that when contractual or regulatory requirements b enefit both the association and the drivers, such requirements were not inconsistent with an independent contractor relationship. ( Id . at p. 359.) On different facts, the Ninth Circuit affirmed the Board’s finding of an employer

- employee relationship b ased on evidence of control exercised by the Friendly Cab Company. ( Friendly, supra , 512 F.3d at p. 1093.) In that case, the company leased taxis to its drivers at a weekly rate that varied based on the type of vehicle and the driver’s history, and the c ompany retained discretion to decide what18

type of vehicle a driver would receive. Although the leases stated no employer

- employee relationship was being created, drivers agreed to comply with requirements set forth in the company’s policy manual and its s tandard operating procedures, including safety requirements, a dress code, and a prohibition against drivers using personal business cards. ( Id . at pp. 1093

– 1094.) Drivers could not solicit customers independently, and were prohibited from using personal cell phones while driving for any reason, including accepting calls for service. ( Id . at p. 1098.) In addition, the company would sometimes dispatch drivers to provide voucher service, where the passenger would pay using a voucher that
the driver must r edeem through the company, and the company retained a portion of the voucher amount. Drivers could not refuse vouchers, but sometimes received less than the metered rate for those trips. ( Id . at p. 1094.) Drivers were required to attend annual classes o n company policies and laws concerning discrimination, and the Ninth Circuit observed that the Board “reasonably found that Friendly’s training requirements exceed those required by [municipal] ordinance and constitute some degree of control over the
drive rs.” ( Friendly

, at p. 1101.)19

California law does not require the trial court to ignore evidence of control when United claimed that its policies were based on local regulations.

United urges this court to follow the approach taken by the trial court, arguing that as a matter of law, when a taxi company exercises control over its drivers in order to comply with public regulations or third party requirements, such activity cannot be considered in determining whether an

agency or e mployment relationship exists. United argues
that SIDA and Friendly permit courts to ignore any requirements imposed upon taxi drivers derived from government

- imposed requirements or regulations. United attempts to bolster its argument with additional federal cases, most of wh ich cite back to SIDA for the proposition
that rules enforced for the mutual benefit of the taxi company and its drivers are not a relevant consideration in determining whether an individual is an employee, rather than an independent contractor. ( E.g., Ch as e v

. Trustee s o f
W. Con. o f T

. Pensio n T.F. (9t h Cir

. 1985 ) 75 3 F.2 d 744
, 75 1 [no employment relationship where company directors have
authorit y to mak e an d e nforc e rul e s concernin g th e persona l
conduc t o f th e driver s an d powe r t o supervis e th e vehicle s]; Local 777, Democratic U

. Organizing Com

. v

. N

. L

. R

. B

. ( D.C. Cir. 1978 ) 603 F

. 2d 862, 876 [“to the extent that municipal ordinances prescribe the conduct of lessee drivers they are regulated by law, not supervised or controlled by” the taxi company ] .)20 United’s argument relies exclusively on federal cases. 4 United does not point to any California law permitting courts to ignore controls imposed by an employer or a principal solely because the controls are rooted in such government regulations, nor are we aware of any California law to that effect. In addition, United’s argument does not address the fact that California law recognizes that an individual hired as an independent contractor may be an agent. “ ‘ Agency and independent contractorship are not necessarily mutually exclusive legal categories as independent contractor and servant or employee are. In other words, an agent may also be an independent contractor. [Citation.] ’ ” ( Jackson v. AEG Live, LLC (2015) 233 Cal.App.4th 1156, 1184.)
Based on our analysis of California law governing vicarious liability for an independent contractor’s negligence, we reject the federal cases United relies upon. We instead conclude that public regulation of an industry does not, as a matter of law, shield a pa rty from vicarious liability when it
hire s independent contractors, rather than employees.

4 Because we found no state cases analyzing whether the federal approach would apply under California law, we invited the parties to submit additional briefing addre ssing the applicability of both Smith

, supra , 89 Cal.App.2d 419, where the court found a driver to be an agent of the taxi association, and Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425 , which discussed the regulated hirer exception imposing vicarious liability o n publicly regulated companies that hire independent contractors.21 A company is generally not liable for the negligent acts of its independent contractors, subject to a growing body of exceptions to that general rule. (See, e.g.

, Privette v. Superior Court (1993) 5 Cal.4th 689, 693 ( Privette ) [general
common law rule of non

- liability for negligence of an independent contractor is subject to exceptions so numerou s as to render the rule a mere preface to the inventory of its exceptions ]; Kinney v. CSB Const ruction, Inc. (2001) 87 Cal.App.4th 28, 32 [same].) A company that hires an independent contractor can be held liable to third parties under the doctrine of peculiar risk (see Privette

, supra , 5 Cal.4th at pp. 695

– 698 [revi ewing history and evolution of peculiar risk doctrine]), the non

- delegable duty exception (see Sea B right Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, 596), and the regulated hirer exception ( Eli v. Murphy (1952) 39 Cal.2d 598 ( Eli ) ; Vargas v. FMI, I nc. (2015) 233 Cal.App.4th 638, 644 ( Vargas ) [trucking company regulated by the d epartment of t ransportation and state law cannot delegate its responsibility to the public by characterizing its drivers as independent contractors]). The regulated hirer

exc eption to the general rule of non

- liability for an independent contractor’s negligence is most pertinent to this case, as United grounds its defense of the trial court’s order granting JNOV on the premise that government regulation and municipal franchise requirements immunize it from being held liable under an agency theory of vicarious liability. United’s argument runs counter to the policies behind the regulated hirer exception.22 In Millsap v. Federal Express Corp. , supra , 227 Cal.App.3d 425, 433

– 435 ( Millsap ), the court of appeal discussed the regulated hirer exception to the general rule of

non

- liability, pointing out that the hirer of an independent contractor may be held liable when “‘an individual or corporation undertakes to carry on an activity involving possible danger to the public under a license or franchise granted by public authority subject to certain obligations or liabilities imposed by the public authority . . . .’” ( Id . at

p. 434, quoting Taylor v. Oakland Scavenger Co. (1941) 17
Cal .2d 594, 604 ( Taylor ) .) As the California Supreme Court
has explained

, “The effectiveness of safety regulations is necessarily impaired if a carrier conducts its business by engaging independent contractors over whom it exercises no control. If by the sa me device it could escape liability for the negligent conduct of its contractors, not only would the incentive for careful supervision of its business be reduced, but members of the public who are injured would be deprived of the financial responsibility o f those who had been granted the privilege of conducting their business over the public highways. Accordingly, both to protect the public from financially irresponsible contractors, and to strengthen safety regulations, it is necessary to treat the carrie r’s duties as nondelegable.” ( Eli, supra , 39 Cal. 2 d at p. 600.) United argues that when public regulations require a company to exert control over its independent contractors, evidence of that government

- mandated control cannot support a finding of vicar ious liability based on agency. This23

argument conflicts with the policy behind the regulated hirer exception , which emphasizes that the effectiveness of public regulations “would be impaired if the carrier could circumvent them by having the regulated ope rations conducted by an independent contractor.” ( Millsap, supra

, 227 Cal.App.3d at p. 434.) United acknowledges that the regulated hirer exception applies to entities engaged in activities involving enhanced risk to the public. United argues that in contrast to the danger posed in those cases, the controls imposed on the taxi industry are “quality of life” regulations, affecting public convenience, not public safety. Because the regulated hirer exception to the general rule of non

- liability only applies to activities that involve an increased risk of danger to the public, they argue it would not

— or should not

— apply. We disagree.
P ublic regulations require taxi companies to impose controls upon their drivers for the sake of publi c safety. They are a valid exercise of police power. “The regulation of the taxicab industry is a traditional subject of the police power of cities and counties. [Citations.] [¶] Local authorities act pursuant to their police power in regulating
virtu ally all aspects of the taxicab business, including who may operate a cab, how many cabs may be operated, how much cabs may charge, where cabs may travel, and where cabs may pick up passengers. [Citations.]” ( Cotta v. City and County of San Francisco (20 07) 157 Cal.App.4th 1550, 1560.) The Government Code directs municipalities to24

regulate taxi service, providing that “every city or county shall protect the public health, safety, and welfare by adopting an ordinance or resolution in regard to taxicab

tra nsportation service . . .

. ” (Gov. Code, § 53075.5 , subd. (a) .) Cities rely on franchisees to exercise sufficient control over taxi drivers to remain in compliance with regulations intended to protect the public. If a franchisee taxi company
were to dec line to carry out its obligations under the franchise agreement, it would place itself at risk of losing its
franchise with the city . The fact that the state and local municipalities impose public regulations upon the taxi industry reflects the same polic y considerations that led California courts to hold common carriers vicariously liable for their independent contractor drivers in other regulated hirer cases. (See, e.g., Eli v. Murphy , supra , 39 Cal.2d at pp.
599

– 600 ; Taylor v. Oakland Scavenger Co. , su pra , 17 Cal.2d at p. 604; Vargas v. FMI, Inc. , supra , 233 Cal.App.4th at p. 644.) While driving a taxi is not as potentially dangerous as transporting hazardous materials or driving a large vehicle on public highways, the regulations are a matter of publi c safety . T o the extent the regulations require taxi companies to exercise a significant level of control over their drivers, they do not, as a matter of law, preclude holding the companies vicariously liable for the negligence of the drivers
under their control. In the absence of any California case law to the contrary, and in light of the decision in Smith

, supra , 89 Cal.App.2d 419, holding a taxi association liable even when25

it was not publicly regulated, we choose to depart from the
line of fede ral ca ses United relies upon. The fact that many of the controls imposed by the taxi association on its drivers are based on gove rnmental rules and requirements or operate for the mutual benefit of the taxi company and its drivers does not give courts or factfi nders license to ignore those controls in deciding whether a principal

- agen t relationship exists. Once we have established that the status of the taxi industry as a publicly regulated industry

may expose taxi companies to vicarious liability for the negli gent acts of drivers who act as the companies’ agents, it would be illogical to exclude from consideration the control s required by such regulations.

The jury’s agency finding was supported by substantial
evidence

Because the test for agency is a multi

- factored test, and
there was substantial evidence that United controlled significant aspects of its drivers’ work, we cannot say that there was insufficient evidence as a matter of law to support the jury finding of a gency. United retained the authority to terminate its relationship with any of its drivers, as well as the ability to fine or discipline them for violating United’s rules and regulations. United supplied each driver a training manual with detailed rules of conduct. Drivers were required to participate in training and to use equipment purchased by United. According to the training26

manual, drivers were trained and deployed by United as

r oad s upervisors to assist in emergenc ies and enforce the company’s ru les and regulations. Viewed in the light most favorable to Secci, t he evidence presented at trial was sufficient to support a jury finding that Tonakanian was United’s agent and United was vicariously liable for Tonakanian’s acts. The court’s order grant ing JNOV was in

error.

DISPOSITION

The judgment is reversed. Costs on appeal are
awarded to Secci.

KRIEGLER, J.

We concur:

TURNER, P.J.

KIN, J. 

 Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.