Case On Cross-State Service Worth Watching

Posted on May 30, 2012 by - Also by this author

In a Nevada case affecting the even flow of chauffeured transportation service, Bob Fairman, owner of ARF Corp., has been battling the Nevada Transportation Authority (NTA) since at least March 2005 claiming he is exempt from their oversight as he provides service from the Reno-Tahoe airport into California on a regular route. The NTA however says that the trip originates at a Nevada based airport and includes stops within Nevada thereby placing it squarely in the jurisdiction of the NTA.

The matter has now been moved into a Federal court and out of the Nevada State court system. It is so contentious that the Nevada attorney general’s office arrested Fairman on charges he failed to provide workers compensation insurance for his drivers. In a major slap in the face to the AG’s office, a Carson City Justice Court ruled in Fairman’s favor and determined his drivers were actually contractors and he was acquitted of the charges. I love when that happens! Fairman filed a suit in federal court to settle his issues once and for all.

His complaint, filed by Nevada attorney Justin Clouser, cites that state efforts to regulate Fairman’s business violate the Commerce Clause of the U.S. Constitution as well as provisions of the Federal Motor Carrier Act. That act “confers exclusive jurisdiction on the Federal Motor Carrier Safety Administration” to regulate limousine and bus businesses engaged in interstate commerce. His attorney asserts that by virtue of crossing state lines on regularly scheduled routes that the business is engaged in interstate commerce and thereby regulated by the FMCSA and is exempt from state agency oversight.

The U.S District Court in Reno has been asked to issue a declaration that the business is “interstate in character,” although it may stop at various points within the state of Nevada. In his complaint, Fairman cites case law that has “consistently affirmed that portions of a route that take place completely within a single state “have been consistently interpreted by the appropriate federal regulatory agency and the courts, including the U.S. Supreme Court, to be transportation in interstate commerce and therefore subject exclusively to federal, not state, jurisdiction as to licensing.” The suit asks the federal court to ban NTA and the airport authority from any legal enforcement action and to declare it is a federally regulated business, not state regulated. If this court rules in the favor of ARF Corp it could have a wide reaching effect on all states and airport authorities.

In my humble opinion, such an outcome is highly uncertain, but until then, I am closely watching this case. — Jim Luff, LCT contributing editor

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