- Class Action Appropriate on Whether Carriers were Independent Contractors or Employees, California Court Rules
- October 26, 2012 | Author: Mark S. Askanas
- Law Firm: Jackson Lewis LLP - San Francisco Office
Whether newspaper delivery carriers were independent contractors or employees of a newspaper is a question amenable to class action treatment through common proof, the California Court of Appeal has held. Ayala v. Antelope Valley Newspapers, Inc., No. B235484 (Cal. Ct. App. Oct. 17, 2012). However, the Court affirmed the denial of class certification on the carriers’ claims for unpaid overtime and meal and rest period violations because such claims would require individual factual assessments. Accordingly, the Court reversed the denial of class certification on some of the carriers’ claims for California Labor Code violations and affirmed others.
Maria Ayala, Rosa Duran, and Osman Nuñez worked as newspaper carriers (collectively, the “carriers”) for Antelope Valley Newspapers, Inc. (“AVP”). They entered into Independent Contractor Distribution Agreements, which set forth various newspaper delivery requirements with AVP. Among other things, the Agreements required the carriers to deliver the newspapers in a safe and dry condition and prohibited them from delivering any part of the newspaper separately, or from inserting into, attaching to, or stamping upon the newspaper any additional matter. The Agreements also prohibited the carriers from inserting the newspapers into any imprinted wrapping, covering, or container that has not been approved by AVP, and required them to use certain types or colors of bags for certain products. The carriers were required to furnish their own vehicles and provide AVP with copies of their driver’s licenses, social security numbers, and proof of automobile and workers’ compensation insurance.
The carriers alleged that AVP incorrectly classified them as independent contractors and asserted claims for various Labor Code violations, including claims for unpaid overtime and meal and rest period violations (Counts 1 to 3), and claims for reimbursement of business expenses, unlawful wage deductions, wage statement and payroll records violations, and a claim for violation of Section 17200 of the Business and Professions Code (Counts 4 to 8). The carriers moved for class certification and argued the central issue was whether the carriers were employees or independent contractors and that that was amenable to common proof. The trial court denied the request for class certification on all Counts, and the carriers appealed.
An appellate court will not disturb a class certification unless it is unsupported by substantial evidence, it rests on improper criteria, or it rests on erroneous legal assumptions. The issue before the Ayala court on appeal was whether common issues regarding the carriers’ employment status predominated. That Court explained that, to assess predominance, a court “must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.”
To determine whether the carriers were employees or independent contractors, the Court primarily examined “whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (Cal. 1989).
Examining the Agreements and other documents regarding AVP’s policies in light of California law, the Court concluded that the trial court erred in denying class certification because common questions existed regarding whether AVP exercised sufficient control over the carriers’ work, when and where they performed the services, and how they performed the services. The Court found that “much of AVP’s evidence, upon which the trial court relied, merely contradict[ed] plaintiffs’ allegations that AVP had policies or requirements about how carriers must do their jobs.” Thus, while there may have been conflicts in the evidence regarding whether certain policies existed, that issue itself was common to the class. Similarly, whether the policies merely controlled the result, rather than the manner and means used to accomplish that result, also was a common issue. Accordingly, the Court determined that the carriers’ claims for reimbursement of business expenses, unlawful wage deductions, wage statement and payroll records violations turned on whether the carriers were employees and would be appropriate for class certification. The Court ordered the trial court to certify a class on these claims, unless it determined that individual issues predominated, or that class treatment was not appropriate for other reasons.
On the other hand, the Court agreed with AVP that individual issues of fact would predominate on the carriers’ claims for unpaid overtime and meal and rest period violations (Counts 1 to 3) because the number of hours the carriers worked each day and week varied significantly. Therefore, the Court found that the trial court correctly denied class certification on those claims.
Ayala provides employers guidance regarding defending against wage-hour class actions. Certain issues, such as payment of overtime or provision of meal or rest periods, are highly individualized since they depend on how many hours per day and week individuals work. Such inquiries may render class certification inappropriate. Other issues may lend themselves to class treatment, such as a determination of employee or independent contractor status, where the court is being asked to examine the nature of a particular job and the employer’s control.