While the court described the pilot as the licensee's employee, it also accurately stated that effective regulation would be impossible if a licensee could immunize himself from disciplinary action by contracting away the daily operations of his business to independent contractors.
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Youde (1979) 95 Cal.App.3d 161, 165, italics added.) In Camacho the court held that the holder of an agricultural pest control license was subject to discipline because his pilot negligently dumped pesticide on a man during aerial spraying of a field. of Pharmacy (1968) 265 Cal.App.2d 179, 192, italics added.)Ī licensee "may not insulate himself from regulation by electing to function through employees or independent contractors." ( Camacho v. ) "If a licensee elects to operate his business through employees he must be responsible to the licensing authority for their conduct in the exercise of his license and he is responsible for the acts of his agents or employees done in the course of his business in the operation of the license." ( Arenstein v. (2) The owner of a license is obligated to see that the license is not used in violation of the law. (1a) The DMV contends that even if salesperson Litsey was an independent contractor, licensee Rob-Mac was subject to discipline for Litsey's conduct.
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Rob-Mac's license was suspended for 15 days the suspension was stayed on condition of satisfactory completion of a two-year probationary period.īased on its conclusion that Litsey was an independent contractor rather than an employee, the trial court granted Rob-Mac's petition for writ of mandate and ordered the DMV to set aside its decision and reconsider its action against the dealer.
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However, pursuant to Government Code section 11517, the DMV rendered its own decision, and concluded that (1) cause for disciplinary action under Vehicle Code section 11705, subdivision (a)(14), was established, as the purchasers of the vehicles suffered loss or damage by reason of Litsey's constructive fraud and (2) Rob-Mac was legally responsible for the conduct of its salespersons acting under its license.
The administrative law judge found that cause for disciplinary action against Rob-Mac had not been established. One of the vehicles had been sold at retail Pascal ordered his attorney to return that purchaser's money. When he finally did inform Pascal, the dealer ordered that the purchasers be put on notice that the odometers were not correct. At the time of their sale, he did not tell Pascal or the purchasers that the odometers did not reflect the vehicles' true mileage.
Sometime after Litsey purchased seven vehicles and before he sold them, he became aware that their odometers had been reset. However, if the inventory was too large, he would tell Litsey not to buy any more vehicles. Pascal exercised no day-to-day supervision over Litsey. Pascal provided all the funds, and the net profits were to be split 50/50. An accusation was filed by the DMV alleging that Rob-Mac, directly or through its agent Barry Litsey, reset odometers on seven vehicles in violation of Vehicle Code sections 11713, subdivision (n), and 28051, and caused purchasers of those vehicles to suffer loss by misrepresenting mileage in violation of Vehicle Code section 11705, subdivision (a)(14).Īt a hearing before an administrative law judge, the evidence was that Litsey entered into an agreement with Matthew Pascal, president of Rob-Mac, whereby Litsey would buy vehicles for Imports of Palo Alto and wholesale them to other dealers. Respondent Rob-Mac, Inc., does business as Imports of Palo Alto under a license issued by appellant Department of Motor Vehicles. The question in this appeal is whether a licensed automobile dealer can be disciplined by the department for the conduct of a salesperson acting under the dealer's license even if that salesperson is an independent contractor rather than an employee. (hereafter Rob-Mac), a California corporation. The Department of Motor Vehicles and its director (hereafter the DMV) appeals from a judgment granting a petition for writ of mandate and ordering it to set aside its decision imposing discipline on respondent Rob-Mac, Inc.
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