People v. Miles & Sons Trucking Service, Inc.
65 Cal. Rptr. 465, 1968 Cal. App. LEXIS 2496, 257 Cal.App.2d 697 (1968)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Obtaining labor through a fraudulent scheme, such as misrepresenting an employment relationship and compensation structure to evade wage and tariff laws, can constitute grand theft by false pretenses. Criminal courts have exclusive jurisdiction to prosecute criminal violations of the Public Utilities Code, independent of any administrative proceedings by the Public Utilities Commission.
Facts:
- In 1965, defendant Miles entered a contract with the State of California to construct a highway.
- Miles subcontracted with defendant Fratianno Trucking Company, represented by defendant Fratianno, to haul dirt on an hourly basis.
- To evade Public Utilities Commission tariff regulations, Miles and Fratianno agreed to calculate payment based on the number of loads hauled rather than actual hours worked, using 'guideline' charts created by Miles.
- Fratianno Trucking required its drivers to submit daily freight bills with hours conforming to these charts, which were almost always less than the hours actually spent working.
- To avoid paying the legally mandated prevailing wage, which did not apply to owner-operators, defendants pretended the employee drivers were owner-operators.
- Fratianno Trucking had drivers sign sham 'security agreements' to 'purchase' their trucks, but the drivers never received the agreements or any indicia of ownership, and the company's books did not reflect any such purchase plan.
- The drivers received 27% of the truck's gross income, which amounted to an average of $3.78 per hour, instead of the prevailing wage of $4.78 per hour.
- Wage records were inaccurate, sometimes falsely showed overtime payments, and had been altered by employees of both Miles and Fratianno Trucking Company.
Procedural Posture:
- The People filed a 36-count information against defendants Miles, Fratianno, and Fratianno Trucking Company in the Superior Court.
- Defendants moved to set aside the information under Penal Code § 995, arguing a lack of probable cause and jurisdiction.
- The Superior Court granted the defendants' motions and set aside the information.
- The People, as appellant, appealed the dismissal to the Court of Appeal, challenging the ruling on specific counts of the information.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does evidence of a coordinated scheme to misrepresent employee status and compensation to evade wage and tariff regulations establish probable cause for charges of conspiracy and grand theft by false pretenses?
Opinions:
Majority - Coughlin, J.
Yes, evidence of a coordinated scheme to misrepresent employee status and compensation establishes probable cause for charges of conspiracy and grand theft by false pretenses. The court found sufficient evidence to support a strong suspicion that the defendants conspired to violate labor, public utilities, and penal codes through a scheme involving falsified records and a sham 'owner-operator' system. This scheme constituted theft by false pretense because the defendants fraudulently obtained the labor of truck drivers by misrepresenting the terms of their compensation—specifically, by promising them an owner-operator arrangement where they would receive the truck's gross income less expenses, while intending to pay them a much lower amount based on fabricated hours. The court clarified that for reliance, the false pretense need only be a material influence, not the sole inducement for the employment. Furthermore, the value of the stolen labor is measured by the fraudulently promised contract price, not just the unpaid portion of the prevailing wage. The court also held that the trial court erred on jurisdiction, stating that criminal courts have exclusive jurisdiction to prosecute criminal offenses under the Public Utilities Code, and this authority is not dependent on a prior determination by the Public Utilities Commission.
Analysis:
This decision is significant for establishing that complex worker misclassification schemes can be prosecuted as felony grand theft, rather than being treated solely as civil or misdemeanor wage and hour violations. It reinforces the principle that the 'value' of labor obtained by false pretense is determined by the total compensation fraudulently promised, not merely the statutory wage deficiency, which can elevate the crime to a felony. The ruling also clarifies the jurisdictional lines between administrative bodies like the Public Utilities Commission and the criminal courts, affirming that criminal prosecution for statutory violations can proceed independently of any agency action. This precedent strengthens the legal tools available to prosecutors targeting systemic labor fraud.
