The state’s highest court ruled Tuesday that three taxi fleet owners were right to classify cabbies as independent contractors instead of employees, derailing a lawsuit that could have upended the city’s billion-dollar taxi industry.
The Supreme Judicial Court ruled that Edward J. Tutunjian, whose corporations own 1 in 5 of the city’s 1,825 taxi medallions, and two smaller fleet owners have not been violating state law by treating drivers who lease cabs as independent contractors instead of as employees entitled to protections such as overtime and minimum wage.
Four licensed cabdrivers had sued the fleet owners in 2012, challenging a system in which drivers pay about $100 to lease cabs for 12-hour shifts and pick up customers. The system in Boston resembles that in a number of large US cities.
Unlike true employees of companies, the high court said, cabdrivers have considerable freedom.
“The drivers choose the shifts they work and are free to transport as many or as few passengers as they wish during those shifts,’’ Justice Robert J. Cordy wrote on behalf of the court.
He said the fleet owners “merely complied with a regulatory framework’’ established under a 1930 state law that gave Boston Police the authority to regulate the taxi industry.
Shannon Liss-Riordan, the lawyer for the cabdrivers, said she was “really shocked’’ by the decision, which reversed a 2013 lower court ruling.
“The court agreed with many of my arguments and still came to the conclusion it came to,’’ she said. “This is just not what I was expecting from the SJC.’’
Boston Cab Dispatch Inc., which is owned by Tutunjian and was one of the defendants in the suit, issued a statement saying it was pleased the court ruled that “cabdrivers are not and never were employees of our companies.’’
Tutunjian figured prominently in a 2013 Globe Spotlight Team series, which documented many ways in which some taxi fleet owners took advantage of drivers. The report found that many cabdrivers felt pressured to pay Tutunjian’s staff small bribes to get keys to Boston Cab taxis they lease.
Drivers were also pressured to buy gasoline at above-market prices from Tutunjian’s gas pump at his mammoth Kilmarnock Street garage. And they faced frequent demands that they cover phantom shortfalls in shift payments — demands they could not dispute because cab firms seldom provided legally required receipts, the Globe reported.
Tutunjian told the Globe he treated drivers fairly, having started as a cabbie himself in the late 1960s.Jonathan Saltzman can be reached at email@example.com