Plaintiffs Maria Ayala, Rosa Duran, and Osman Nuñez appeal from an order denying their motion for class certification. Plaintiffs sought to certify a class of newspaper home delivery carriers in a lawsuit against defendant Antelope Valley Newspapers, Inc. (AVP), alleging that AVP improperly classified the carriers as independent contractors rather than employees and violated California labor laws. The trial court found there were numerous variations in how the carriers performed their jobs, and therefore common issues did not predominate. We conclude, however, that those variations do not present individual issues that preclude class certification. Instead, because all of the carriers perform the same job under virtually identical contracts, those variations simply constitute common evidence that tends to show AVP's lack of control over certain aspects of the carriers' work. Similarly, the so-called "secondary factors" that must be considered when determining the primary issue in this case — whether AVP improperly classified the carriers as independent contractors rather than employees — also may be established for the most part through common proof, since almost all of those factors relate to the type of work involved, which is common to the class. Therefore, we hold the trial court erred in finding that the independent contractor-employee issue is not amenable to class treatment.
Our holding that the independent contractor/employee issue may be determined on a classwide basis through common proof does not entirely resolve the class certification question as to all of the causes of action plaintiffs allege. The trial court also found that plaintiffs' claims of overtime and meal/rest period violations (Lab. Code, §§ 1194, 226.7, 512) were not amenable to class treatment because of wide variation in the amount of time each carrier spent performing the required work, and their varied use of helpers or substitutes. Therefore, the trial court found that individual inquiries would have to be made to determine AVP's liability as to each carrier (assuming, of course, the carriers were found to be employees). We agree, and affirm the trial court's denial of class certification as to the first, second, and third causes of action. We reverse the order denying certification as to the remaining causes of action because the court's denial as to those claims was based solely upon its determination that the independent contractor/employee
Plaintiffs, who are (or were) newspaper carriers for AVP, filed a lawsuit on behalf of themselves and a putative class of carriers who signed an "Independent Contractor Distribution Agreement" with AVP, alleging claims for (1) failure to pay overtime wages (Lab. Code, § 1194); (2) failure to provide meal periods or compensation in lieu thereof (Lab. Code, §§ 226.7, 512); (3) failure to provide rest periods or compensation in lieu thereof (Lab. Code, § 226.7); (4) failure to reimburse for reasonable business expenses (Lab. Code, § 2802); (5) unlawful deductions from wages (Lab. Code, §§ 221, 223); (6) failure to provide itemized wage statements (Lab. Code, §§ 226, 226.3); (7) failure to keep accurate payroll records (Lab. Code, § 1174); and (8) violation of Business and Professions Code section 17200 (based upon the alleged violations of the Lab. Code).
The complaint alleges that AVP publishes the Antelope Valley Press, a general circulation newspaper that is distributed under the auspices of AVP. Most of AVP's customers receive home delivery of the newspaper on a daily basis. The members of the putative class are engaged by AVP to assemble inserts, sections, preprints, samples, bags, and supplements and deliver the newspapers as directed by AVP to AVP's customers. The complaint alleges that, even though class members signed agreements that categorize them as independent contractors, AVP maintains the right to control the performance of their work, and therefore their relationship with AVP is that of employees rather than independent contractors. Thus, the complaint alleges, AVP violated various provisions of California labor laws by failing to pay overtime wages, failing to provide meal and/or rest breaks, failing to reimburse carriers for their reasonable business expenses (such as automobile expenses), making illegal deductions from their wages (for customer complaints or supplies, or by requiring carriers to pay the cost of workers' compensation insurance), failing to provide itemized wage statements, and failing to keep accurate payroll records showing the hours worked by the carriers.
Plaintiffs moved to certify the class. They argued that "[t]he central issue to liability is whether or not the putative class members ... are `independent contractors' or `employees,'" and that this issue can be decided based upon common proof. Noting that the principal test to determine whether a worker is an employee or an independent contractor is whether the principal has the right to control the manner and means by which the worker accomplishes the
AVP opposed the motion to certify. Although AVP agreed that the independent contractor/employee issue was a threshold issue and that the primary factor in determining that issue is whether the principal has the right to control the manner and means of accomplishing the work, it argued that determination of that issue was not subject to common proof because the manner and means by which the carriers accomplish their work varies widely. AVP also argued that, even if the independent contractor/employee issue could be determined through common proof, plaintiffs failed to address whether common issues predominate as to each of the causes of action; it contended that the other elements of those claims require individual proof and therefore class treatment was not appropriate.
In a lengthy and detailed ruling, the trial court denied the motion for certification, finding that "heavily individualized inquiries are required to conduct the `control test'" to determine whether the carriers are independent contractors or employees, and that the overtime and meal/rest break claims require individualized inquiries due to the wide variation in hours and days worked by the carriers. Plaintiffs timely filed a notice of appeal from the order denying class certification.
"On review of a class certification order, an appellate court's inquiry is narrowly circumscribed. `The decision to certify a class rests squarely within the discretion of the trial court, and we afford that decision great deference on appeal, reversing only for a manifest abuse of discretion: "... A certification order generally will not be disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions."'" (Brinker, supra, 53 Cal.4th at p. 1022.)
In moving for class certification, plaintiffs argued that common proof of AVP's right to control the carriers' work can be found in the standard form
In relying upon the form agreements — the "Independent Contractor Distribution Agreement," which AVP stipulated were the standard contracts it used during the class period — as common evidence of AVP's purported right to control, plaintiffs argued that only a "handful of terms" are not preprinted, and even with respect to those terms, there is no "real negotiation."
The agreements set forth the requirements for what is to be delivered. They require the carriers to deliver the newspapers (and other products that AVP provides),
The agreements also set forth requirements related to when the newspapers are to be delivered. Some of them require the carrier to pick up their newspapers by a certain deadline each day, and all of them require the carrier to complete delivery by a certain time.
Under the agreements, the carrier is required to furnish the carrier's own vehicle and provide AVP with copies of the carrier's driver's license, Social
According to plaintiffs, all of these terms evidence AVP's right to control. In its opposition to plaintiffs' motion, AVP did not dispute the existence of the terms (although it did dispute plaintiffs' assertion that there was no real negotiation), but instead argued that the terms are irrelevant to determining whether AVP has the right to control the manner and means of accomplishing the desired result. It contended that the terms setting forth the requirements of what is to be delivered and when it is to be delivered merely define the results for which AVP is contracting, and the remaining terms have no connection to how the delivery is to be accomplished. Moreover, AVP argued that, since the form agreements expressly disclaim any right to control the means and manner in which the carriers accomplish the result (i.e., timely delivery of newspapers in a dry, readable condition), the factfinder will have to look beyond the agreements, at the actual conduct of delivery operations, to determine AVP's control. To that end, AVP submitted the declarations of 15 carriers
In addition to relying upon the form agreements to establish AVP's alleged control, plaintiffs pointed to documents known as "bundle tops" or "carrier mail," which typically are prepared by AVP and provided to all carriers each day.
Although AVP conceded that the bundle tops and route lists it provides to all the carriers include delivery instructions that include directions on how to drive to subscribers' addresses, it submitted testimony from carriers (including plaintiffs) that they are not required to, and many do not, follow those directions. Acknowledging that one of the named plaintiffs testified that she was required to comply with special customer requests, AVP noted that she was the only carrier who so testified, and it submitted testimony from other carriers that there was no such requirement.
In addition to documentary evidence, plaintiffs pointed to evidence of AVP's conduct to show AVP's control over the carriers.
First, they argued that AVP controls the carriers' performance through its use of customer complaints. Noting that the form agreements allow AVP to impose financial penalties for customer complaints (such as wet, damaged, or missing papers), plaintiffs submitted their declarations attesting to the fact that AVP made deductions from their pay for customer complaints. They also submitted invoices (which AVP stipulated were representative of invoices they provided to all carriers) that reflect those deductions. In addition, they submitted evidence showing that AVP keeps track of customer complaints against each carrier, informs the carriers of complaints from their customers, and that AVP's home delivery manager would talk to a carrier if he believed the number of complaints the carrier received was too high.
In its opposition, AVP noted that the way customer complaints are treated can weigh in favor of or against a finding of independent contractor status, and argued that commonality is lacking because, although the form agreements provide for a charge against the carrier for customer complaints (which would tend to indicate an independent contractor relationship), the practices have varied among carriers and over time. It presented evidence that some carriers have not always been charged for customer complaints while others
Second, plaintiffs argued that AVP's monitoring of carriers' work evidenced its control. They submitted evidence that AVP conducts routine field inspections to verify deliveries of complementary newspapers and the weekly newspaper (the Antelope Valley Express), and occasionally conducts field inspections to see if advertisements were properly placed on newspapers that had been delivered. AVP did not dispute that it conducts field inspections. Instead, it contended that monitoring to ensure the desired result is being accomplished does not evidence control over the manner and means of delivery, but that if it does, it is not subject to common proof because the frequency and circumstances of inspections vary from carrier to carrier.
Third, plaintiffs submitted evidence that AVP provides training to some of the carriers, which it contends shows its control. AVP argued that this issue was not subject to common proof, based upon evidence it provided showing that some carriers had a drive-along with AVP and some did not, and some carriers received training and/or documents on how to make deliveries while others did not. AVP provided evidence, however, that carriers were not required to follow any instructions that were given. Moreover, although two of the named plaintiffs testified that they were instructed on how to fold the newspapers and were required to fold them as instructed, AVP's home delivery manager testified that AVP does not require carriers to fold or throw the newspapers in any particular way.
Finally, plaintiffs argued that AVP's control is demonstrated by evidence that it requires carriers to pick up their newspapers for delivery by a certain deadline, and controls the order in which carriers pick up their newspapers by giving carriers numbers in the order of their arrival at the loading dock. AVP disputed plaintiffs' assertion that its specification is evidence of a right to control, but submitted evidence to show that, even if it could show control, not every carrier signed contracts that included a deadline and some carriers testified that they were free to decide when to pick up their newspapers and/or were not fined or disciplined if they picked them up after the stated deadline. In addition, some of the carriers testified that they could choose whether to arrive early to pick up their newspapers and receive a pick-up number, and that even if they did choose to do so, they were free to leave the area after receiving their pick-up numbers and could do whatever they wish while waiting for their number to be called.
Addressing the secondary factors used to determine independent contractor or employee status, plaintiffs contended that many of those factors are subject to common proof.
They submitted evidence that carriers get supplies such as rubberbands and plastic bags from AVP, as well as the newspapers and advertisements the carriers deliver. They also submitted evidence that carriers use AVP's facilities to pick up materials needed for their work, that AVP provides carts that carriers can use to carry the newspapers to their vehicles, and that AVP will, if requested, provide maps of the carriers' routes. They argued that this evidence shows that AVP supplies the instrumentalities, tools, and the place of work for the person doing the work.
Plaintiffs provided evidence that AVP controls the overall newspaper business operations, that delivery of the newspapers is an integral part of its business, and that it holds itself out to the public as the entity responsible for delivery of the newspapers. They also pointed to provisions of the common agreements to show that AVP has the right to terminate carriers at will (on 30 days' notice), and that carriers are engaged in prolonged service to AVP. Finally, plaintiffs argued that the carriers' work did not require any specialized skill, relying upon a finding in a case, Antelope Valley Press v. Poizner (2008) 162 Cal.App.4th 839 [75 Cal.Rptr.3d 887] (Poizner), in which Division Three of this District affirmed a decision of an administrative law judge that carriers are employees for purposes of worker's compensation insurance.
In its opposition, AVP argued there was no commonality with regard to several of the factors, based upon evidence it submitted showing that: (1) some carriers delivered other publications (such as the Los Angeles Daily News or the Los Angeles Times) at the same time they delivered for AVP; (2)
Plaintiffs in their moving papers did not address commonality with respect to any issue other than the independent contractor/employee issue, except to argue that once employee status is determined, individual damages may be determined through "efficient and easily managed procedures."
In its opposition, AVP noted that plaintiffs failed to address other elements of their causes of action, and argued that common issues do not predominate as to some of those elements. It contended that plaintiffs' overtime and meal/rest period claims are not suitable for class treatment, based upon evidence it presented showing that the number of hours and days each carrier worked varied widely. Thus, it argued that individual inquiry would be required to determine if each carrier worked sufficient hours to be entitled to meal or rest breaks or overtime pay. Because this issue goes to AVP's liability in the first instance (i.e., whether there were damages at all) rather than the amount of damages, AVP contended class certification was not appropriate for those causes of action. In addition, AVP contended that plaintiffs' reimbursement claim was not suitable for class treatment because reimbursement is required (assuming employee status) only for expenses that are necessarily incurred, and individual inquiries must be made to determine whether each expenditure was "necessary."
In denying class certification, the trial court agreed with AVP that no commonality exists regarding AVP's right to control because individualized questions predominate as to who performs the services, when and where they perform the services, and how they perform the services. Many of the court's observations (and AVP's arguments), however, actually point to conflicts in the evidence regarding AVP's right to control rather than individualized questions. For example, the court noted that AVP's home delivery manager declared that AVP does not have a policy or practice to instruct or direct carriers on how to fold and deliver their papers, and some carriers testified that they were never so instructed, but two of the plaintiffs testified that AVP had rules on folding the papers and how to deliver them. Similarly, the court noted that the home delivery manager and some carriers testified that AVP does not require carriers to bag or rubberband the newspapers, but one of the plaintiffs testified that carriers were required to bag them.
Just as AVP's evidence that the way that the carriers accomplished their work varied widely is evidence of its lack of control over the carriers as a class, much of its evidence regarding the secondary factors — e.g., that some
Before we leave this issue, we need to address the Poizner case, upon which plaintiffs heavily rely. In their reply brief on appeal, plaintiffs criticize the trial court for failing to address this case, arguing that all of the facts that led the court in Poizner to conclude that the carriers were employees are present in this case. Poizner, however, was not a class action. It was a review of a decision by the Insurance Commissioner, adopting the proposed decision of an administrative law judge, who concluded that AVP's carriers were employees for purposes of workers' compensation insurance. (Poizner, supra, 162 Cal.App.4th at p. 842.) While it might be relevant to the merits of plaintiffs' case,
As noted, plaintiffs did not in their moving papers address commonality as to any issues related to their causes of action other than the independent
As the Supreme Court has instructed, in assessing whether common or individual issues predominate, the trial court "must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence." (Brinker, supra, 53 Cal.4th at p. 1024.) To establish liability for failure to provide meal or rest breaks or overtime pay, plaintiffs must establish that they worked sufficient hours or days to be entitled to such breaks or pay. (See, e.g., Cal. Code Regs., tit. 8, § 11010, subd. 11(A) ["No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes...."]; id., § 11010, subd. 12 ["a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 1/2) hours"]; id., § 11010, subd. 3(A)(1) [overtime pay required for "[e]mployment beyond eight (8) hours in any workday or more than six (6) days in any workweek"].) In light of AVP's evidence, it is clear that plaintiffs cannot establish that element of its meal/rest period and overtime claims through common proof.
With respect to the remaining claims, the trial court denied certification based solely upon its determination that the independent contractor/employee issue was not amendable to class treatment. In light of our conclusion that the trial court erred in that determination, we must reverse the court's order as to those claims. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436 [97 Cal.Rptr.2d 179, 2 P.3d 27] [order denying class certification must be reversed if based upon improper criteria or incorrect legal assumptions even if there may be substantial evidence to support the court's order]; Bartold v.
The order denying class certification is affirmed as to the first, second, and third causes of action, and reversed as to the remaining claims. On remand, the trial court shall certify the class as to the fourth through eighth causes of action unless it determines that individual issues predominate as to some or all of them, or that class treatment is not appropriate for other reasons. The parties shall bear their own costs on appeal.
Manella, J., and Suzukawa, J., concurred.