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 defendants and respondents United 

Independent Taxi Drivers, Inc. (United Independent) and 

United Taxi of the Southwest (United Southwest) 

(collectively, United). Secci obtained a jury verdict for

damages suffered after a motorcycle crash with defendant 

Aram Tonakanian.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 Civil Procedure 

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 trial 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 law 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 PROCEDURAL 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 

painted 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 

owners. United had franchise agreements with the City of 

West Hollywood and other cities in Southern California to 

operate a taxi service. United Southwest was a whollyowned subsidiary of United Independent at the time. The 

two companies were operated by the same people, and 

United dispatchers worked for both companies out of the 

same 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 department of transportation. 

Like other owner-drivers, 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 United’s expenses. 
4

United provided marketing and advertising. Each United 

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 

would 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 uniform 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, and a small fee for 

accounting. Taxi rates were set by meter. Drivers were not 

free to charge flat or discounted rates. United required its 

drivers to accept vouchers and coupons that drivers could 

later submit to United for payment. If a driver transferred 

ownership of a United taxi, the buyer and seller had to notify 

United and pay a $500 transfer fee. 

United provided a training manual 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 about 

whether the City of West Hollywood required United to 

provide training to its drivers before a driver could be 

licensed in that city. The training manual made reference to 

department of transportation rules, but also described 
5

additional rules applicable to drivers. For example, 

department of transportation 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” and that a driver 

cannot smoke while 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 about 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, conducting 

themselves while waiting in taxi lines, and interacting 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. United had drivers working as “Road 

Supervisors.” According to the training manual, road 

supervisors 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 

disputes between drivers, and to cite a driver for a “false 

first up, guzzling, dirty cabs, not conforming to the dress 

code, missing 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 United Independent as a 

defendant, but not United 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 factors 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 second 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 contractor, 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 authority to act on its 

behalf, and that the grant of authority “may be shown by 
7

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 details about factors the jury should consider 

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 whether 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 taken into 

consideration in determining whether a person is an agent 

or independent contractor are[:] [¶] (a) whether the one 

performing services is engaged in a distinct occupation or 

business[;] [¶] (b) whether, in the locality, the kind of 

occupation or business is one in which the work is usually 

done under the direction of a principal or by a specialist 

without supervision[;] [¶] (c) the skill required in the 

particular occupation or business[;] [¶] (d) whether the 

principal or the worker supplies the instrumentalities, tools 

and the place of work for the person doing the work, or 

helpers[;] [¶] (e) the length of time [for] which the services 

are to be performed[;] (f) the method of payment, whether 

based on time or by [the] job[;] [¶] (g) whether the work is 

part of the regular business of the alleged principal[;] [¶] 

(h) whether the parties believe they are creating a 

relationship of agency or independent contractor[;] and[] [¶] 
8

(i) whether the alleged employee’s opportunity for profit or 

loss depends on his or her managerial skills.” 

The 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 contractor. [¶] 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 agent. 

United 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 respondeat superior, as 

vicarious liability was only available if Tonakanian was 

United’s employee or an 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 Board’s 

finding of an employment relationship. The trial court 

discounted evidence that might otherwise weigh in favor of a 

principal-agent relationship—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] such 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 find 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 which 
10

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, 

resolve 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 [citation].” 

(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.] Inferences 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 

National 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 establish an agency relationship.” There is a 

legal question embedded in this appeal, but it only affects 
11

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 standard 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.) 

Agency3 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 independent 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 agency. 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. (See, e.g.,

S. G. Borello & 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. 

[Citations.] . . . . [¶] ‘“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 bilateral 

matter. Words or conduct by both principal and agent are 

necessary to create the relationship . . . .’ [Citation.]” (van’t 

Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 

571.) “‘In the absence of the essential characteristic of the 

right 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 required 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 business; and whether the parties 

intended to create an agent/principal relationship. 

[Citation.]” (APSB Bancorp v. Thornton Grant (1994) 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 agent 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 obtain 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 

relations 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 200 
14

new taxicabs.” (Smith, supra, 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 observed 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 driving 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 operating 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 taxi driver who leased his taxi from the lessor 
15

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 person hired.” (Yellow Cab, supra, 226 Cal.App.3d at pp. 

1294–1295.) 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 agreement 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 were 

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 paying 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 leases 
16

based on write-ups or customer complaints. “Liability to 

discharge for disobedience or misconduct is strong evidence 

of control.” (Id. at p. 1298.) 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 considered 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 Act 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 employeremployee relationship between SIDA, an association of taxi 

owner-operators, and its members. (SIDA, at p. 357.) 

Applying common law principles of agency to the facts 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 over 
17

its members to be considered an employer. SIDA had a 

skeleton 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 their 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 rejected 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] 

and 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 benefit 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 based 

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 company retained discretion to decide what 
18

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 standard 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 redeem 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 on 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 

drivers.” (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 employment 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 which 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., Chase v. Trustees of

W. Con. of T. Pension T.F. (9th Cir. 1985) 753 F.2d 744, 751

[no employment relationship where company directors have 

authority to make and enforce rules concerning the personal

conduct of the drivers and power to supervise the vehicles];

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 party from vicarious liability when it

hires 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 addressing 

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 on 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 numerous 

as to render the rule a mere preface to the inventory of its 

exceptions]; Kinney v. CSB Construction, 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 [reviewing history and evolution of 

peculiar risk doctrine]), the non-delegable duty exception 

(see SeaBright 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, Inc. (2015) 233 

Cal.App.4th 638, 644 (Vargas) [trucking company regulated 

by the department of transportation and state law cannot 

delegate its responsibility to the public by characterizing its 

drivers as independent contractors]). The regulated hirer 

exception 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 same 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 of 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 carrier’s duties 

as nondelegable.” (Eli, supra, 39 Cal.2d 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 vicarious liability based on agency. This 
23

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 operations 

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. 

Public regulations require taxi companies to impose 

controls upon their drivers for the sake of public 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 

virtually 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 (2007) 157 Cal.App.4th 1550, 

1560.) The Government Code directs municipalities to 
24

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 

transportation 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 decline 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 policy 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., supra, 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 public 

safety. To 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 when 
25

it was not publicly regulated, we choose to depart from the 

line of federal cases United relies upon. The fact that many 

of the controls imposed by the taxi association on its drivers 

are based on governmental rules and requirements or 

operate for the mutual benefit of the taxi company and its 

drivers does not give courts or factfinders license to ignore 

those controls in deciding whether a principal-agent

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 

negligent acts of drivers who act as the companies’ agents, it 

would be illogical to exclude from consideration the controls

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 agency. 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 training 
26

manual, drivers were trained and deployed by United as 

road supervisors to assist in emergencies and enforce the 

company’s rules and regulations. Viewed in the light most 

favorable to Secci, the 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 granting 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.