Filed: Apr. 12, 2017
Latest Update: Mar. 03, 2020
Summary: 15-88-cv Mazhar Saleem, et al. v. Corporate Transportation Group, Ltd., et al. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT September Term 2015 (Argued: February 5, 2016 Decided: April 12, 2017) No. 15-88-cv –––––––––––––––––––––––––––––––––––– MAZHAR SALEEM, Individually and on behalf of all others similarly situated, JAGJIT SINGH, Individually and on behalf of all others similarly situated, ANJUM ALI, MALOOK SINGH, CARLOTA BRIONES, JAIRO BAUTISTA, JOSE CABRERA, MARLENE PINEDO, MIRIAM
Summary: 15-88-cv Mazhar Saleem, et al. v. Corporate Transportation Group, Ltd., et al. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT September Term 2015 (Argued: February 5, 2016 Decided: April 12, 2017) No. 15-88-cv –––––––––––––––––––––––––––––––––––– MAZHAR SALEEM, Individually and on behalf of all others similarly situated, JAGJIT SINGH, Individually and on behalf of all others similarly situated, ANJUM ALI, MALOOK SINGH, CARLOTA BRIONES, JAIRO BAUTISTA, JOSE CABRERA, MARLENE PINEDO, MIRIAM S..
More
15‐88‐cv
Mazhar Saleem, et al. v. Corporate Transportation Group, Ltd., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
September Term 2015
(Argued: February 5, 2016 Decided: April 12, 2017)
No. 15‐88‐cv
––––––––––––––––––––––––––––––––––––
MAZHAR SALEEM, Individually and on behalf of all others similarly situated,
JAGJIT SINGH, Individually and on behalf of all others similarly situated, ANJUM
ALI, MALOOK SINGH, CARLOTA BRIONES, JAIRO BAUTISTA, JOSE CABRERA, MARLENE
PINEDO, MIRIAM SOLORZANO, MOHAMMAD MIAN, MOHAMMAD SIDDIQUI, S.
PEDRO DUMAN, RAJAN KAPOOR, WILMAN MARTINEZ, JOSE SOLORZANO, LUIS A.
PEREZ, RANJIT S. BHULLAR, LUIS M. SANCHEZ, ANWAR BHATTI, AVNEET KOURA,
MAHER MAQSOOD, ATIF RAZAQ, BHAVESH SHAH, KHUSHWANT SINGH, JAMSHED
CHOUDHRY, AZIZ URREHMAN, HASAN KHALBASH, PETER PANZICA, ROBINSON
MATA, HILARIO A. SANCHEZ, MANSOR AHMED RANA, BAUDWIN KOURI, ALEXIS S.
GACIA‐ALBERTO, MUHAMMAD I. CHOUDHRY, ANA M. HERRA, MARISOL ESPINAL,
WALID HAMEHO, ALEXANDER SCHWALLB, ERIC JARMON, KEITH DANIEL, RAFAEL
RIJO, BABAB HAFEEZ, NORMAN LEVINE, MARIO GUERRERO BATANTA, LIANG HUA
MA, WILLIAM MARTINEZ, MOHAMMED A. MUSA, KERRY BOBB, HARJAR RAHMAN,
ELPIDIO HELENA, TAMER RASHDAN, MENA MICHAEL, FELIX L. CARABALLO, MARK
SHINDER, JOHN M. HIDALGO, ODISHI, INC., KIRK HAYDEN, BARTOLOME ROSARIO,
LUIS VASQUEZ, IRFAN SHAFI, MOHAMMAD A. SIDDIQUI, WADE QUASHIE, JIMMY
CHEN, JEFF M. GRAVESANDE, EDISSON BARROS, ANDRZEJ OLECHNOWICZ, NICK
WIJESINGHE, (Point to Point Car & Limo Inc.), JACK GOLDEN, FIROZ AHMED, PAUL
GLIBAUSKAS, FELIX A. PAULINO, JUAN DE LOS SANTOS, CHOWDHURY ANOWAR,
ZONG RONG ZHU, MOHAMMED GAZI ALI, MEI YAO LIU, KATELYN SANTOS, JOSE
JAIMES, IBRAHIM DESOOKI, DONGSEDG YOO, JORGE MONAKS, MALIK HUSSAIN,
MARCOS MENDEZ, LUIS AUCAPINA, ANDERSON GONZALEZ, TOWON STEWART,
1
FERAS ISSA, LENKIN PANTALEON, EDGAR AUCAPINA, CELSTINO MONTERO, MIKHAIL
GERBER, ZYDAN ELNAHAR, DEXTER PUSEY, RANGDEU MULTANI, SATNAM SINGH,
XIANGBO LI, HUANG XIONG JIE, RAFAEL A. RISO, ISMAEL MEJIA, KULDIP SINGH, JAN
A. KALDA, JEEWAN SINAH, WILSON A. SANTOS, SOHAN SINGH GILL, EUCLIDES
PENA, LESTER C. MCDONALD, NORMAN HO, GENNADI PETROVSKI, SATNAM SINGH,
ZENXIN WANG, NOBLE YOUNG, FRANCOIS FAN‐FAN, MUHAMMAD I. CHOUDHRY,
FABIAN MARTINEZ, KONSTANTIN KATZ, RAFAEL OSORIA, NWALA GABRIEL, JOSE M.
SOLORZANO, UBALDO DE LOS SANTOS, HARRIKISSOON SEEJATTAN, HARJAR
RAHMAN, ADEL ELKAZAZ, PEDRO M. PIASENCIA, KHORSHED ALAM, GARNELL
WRIGHTEN, REFAT BHUIYAN, LEO K. STEWART, JEFF M. GRAVESANDE, AHMED
NISAR, DANJIT SINGH, HUMAYUN KABIR HUSSAIN, MOHAMMED A. MUSA, HARNEK
SINGH WHAR, SHASHI BHATIA, GOGINDER SINGH, ABDELILAH ELKARHAT,
MANINDER SINGH, JO GINDER‐SINGH, WILMAN MARTINEZ, HARVINDER KHAMRA,
DAVID A. SANCHEZ, SYED FIROZUDDIN, DARIUSZ RYDZEWSKI, YASAR KAHRAMAN,
ALI GAZI MOHAMMED, AHMED M. BAKIER, ONRIS DE LA ROSA, HARVINDER S.
BHAMRA, IMTIAZ H. QUERESHI, DAMIR, AHMED ISMAIL, MUNISH KUMAR, PAUL
GLADKEVITCH, TARLOCMAN PAL SINGH, (T.P), ADAM KLAG, AL WONG ZHANG,
MUSTAPHA RAHMOUWI, MAHAMMAD ALI SIDDIQUE, SHENG ZHANG LU, GUSTAVO
GARCIA, ASHWIN KUMAR, INDERJIT SINGH, MAN CHENG, BALWINDER SINGH,
JAWAID KAYANI, SUKHDEV SINGH, FERNANDO AVENDANO, XIONG WEI MI,
MOHAMMAD ISLAM, DONGSEOG YOU, TAOJOCHAN SIHGH, RATIC SHIVIONOV,
JAGDISH KAL, GABRIEL PIZHA, ANOMWAR I. CHOWDHURY, SAMSON LIAU, NESTOR
TERAN, RAJAN DODEJA, SOCRATES GREGORIADIS, SAAD ATTIA, ANTHONY KHAN,
RAMON A. ALMONTE, BADLANI PRAKASH, JUAN A. SOTO, MUNJED SHABANEH, JOSE
SOLORE, JOSE M.S., ROXANA A. ZETINO, IRFAN SHAFI, ARCELIA BARROS, CHEUNG
YEUNG, POINT TO POINT CAR & LIMO, INC., VISHAMBER TUKREL, YING TIAN LEI,
MIKHAIL ZEMKO, TAHIR AZIZ, WEN ZHONG LI, KE GENG SHI, N. WESESINGHE,
CHRISTINA SANCHEZ MONTERO, KULYK OLEG, ARIEL RESTITUYO, SHUHRAT
KHAKBERDIYER, ANGEL M. GAYA, BAYRAM ONBASI, JORGE CONTRERAS, JUAN C.
MOGROVEJO, XUN LI FAN, SAMEH S. BASILY, JOSE PINTO, RAMADAN S. KENAWI,
DONAVAN JAMES, IBRAHIM ONBASI, AMANDA SINGH, SULEYMAN ISSI, WAZIR
MUGHAL, ETIENNE TCHITCHUI, DIOGENES PION, IJAZ MAHBOOB, PEDRO PAZMINO,
JING JING WANG, AZID RIAZ, GURMAIL SINGH, ASAND FARA, LAWRENCE CALLISTE,
GUO BAO XUAM, JEETU MULTANI, KING WAH YIU, ANJUM ALI, GURMAIL SINGH,
2
AHMED ALJAHMI, BUO XUAN GUO, AMERICAN CAR LIMO TOURS, INC., MOHAMED
ABDELAAL, KHEMLHAND KALIKA, MUNISH KUMAR, SHAHIDULLAH DULAL,
Plaintiffs‐Appellants,
‐v.‐
CORPORATE TRANSPORTATION GROUP, LTD., CORPORATE TRANSPORTATION GROUP
INTERNATIONAL, CORPORATE TRANSPORTATION GROUP WORLDWIDE, INC., NYC 2‐
WAY INTERNATIONAL, LTD., ALLSTATE CAR & LIMOUSINE, INC., ARISTA CAR &
LIMOUSINE, LTD., TWR CAR & LIMOUSINE SERVICE, LTD., EXCELSIOR CAR AND
LIMOUSINE, INC., HYBRID LIMO EXPRESS, INC., EDUARD SLININ, GALINA SLININ,
Defendants‐Appellees.*
––––––––––––––––––––––––––––––––––––
Before: LEVAL, LIVINGSTON, AND CARNEY, Circuit Judges.
Plaintiffs‐Appellants, black‐car drivers in the greater New York City area
affiliated with Defendants‐Appellees, owners of black‐car “base licenses” and
related entities, appeal from the September 24, 2014 judgment of the United
States District Court for the Southern District of New York (Furman, J.) granting
Defendants’ motion for summary judgment, rejecting Plaintiffs’ claim that they
are “employees,” rather than “independent contractors,” within the meaning of
the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. For the reasons
stated below, we AFFIRM the judgment of the district court.
RACHEL M. BIEN, Outten & Golden LLP, New York,
N.Y. (Michael N. Litrownik, Michael J. Scimone,
Outten & Golden LLP, New York, N.Y.; Stephen H.
Kahn, Kahn Opton LLP, Fort Lee, N.J., on the brief), for
Plaintiffs‐Appellants.
*
The Clerk of the Court is directed to amend the caption of the case.
3
EVAN J. SPELFOGEL, Epstein Becker & Green, P.C., New
York, N.Y., (Samuel Estreicher, New York, N.Y., on the
brief), for Defendants‐Appellees.
JESSE ZVI GRAUMAN (M. Patricia Smith, Jennifer S.
Brand, Paul L. Frieden, on the brief), U.S. Department
of Labor, Office of the Solicitor, Washington, D.C., for
Amicus Curiae the Secretary of Labor.
Shannon Liss‐Riordan, Lichten & Liss‐Riordan, P.C.;
Catherine K. Ruckelshaus, National Employment Law
Project, New York, NY, for Amici Curiae The National
Employment Law Project, National Employment Lawyers’
Association, Legal Aid Society of New York, The Urban
Justice Center, and Make the Road New York.
RICHARD H. DOLAN (Wayne I. Baden and Elizabeth
Wolstein, on the brief), Schlam Stone & Dolan LLP,
New York, N.Y., for Amicus Curiae Black Car Assistance
Corporation.
Steven G. Mintz, Jeffrey D. Pollack, Mintz & Gold
LLP, New York, N.Y., for Amici Curiae Mark Malchikov,
Pavel Borisov, Anton Sirouka, Alex Borden, Vleriy Vishin,
Michael Baier, and Josef Nusenvaum.
WARREN POSTMAN, U.S. Chamber Litigation Center,
Inc., Washington, D.C., (Michael J. Gray, Brent D.
Knight, Jones Day, Chicago, Ill., on the brief), for
Amicus Curiae the Chamber of Commerce of the United
States of America.
4
DEBRA ANN LIVINGSTON, Circuit Judge:
Plaintiffs‐Appellants (“Plaintiffs”), black‐car drivers in the greater New
York City area, brought this action in the United States District Court for the
Southern District of New York, asserting claims against Defendants‐Appellees
(“Defendants”), owners of black‐car “base licenses” and affiliated entities,
pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and
the New York State Labor Law (“NYLL”), N.Y. Lab. Law § 650 et seq., for, inter
alia, unpaid overtime. The district court (Furman, Judge), after conditionally
certifying a collective action under the FLSA, granted Defendants’ motion for
summary judgment on both the FLSA and NYLL claims as to both the named
and opt‐in Plaintiffs, concluding that “as a matter of law, Plaintiffs are properly
classified as independent contractors rather than employees” for purposes of
both statutes. Saleem v. Corp. Transp. Grp., Ltd., 52 F. Supp. 3d 526, 543, 545
(S.D.N.Y. 2014). We agree with the district court that, “even when the historical
facts and the relevant factors are viewed in the light most favorable” to Plaintiffs,
they constitute independent contractors for FLSA purposes as a matter of law.1
Although Plaintiffs appealed from the district court’s September 24, 2014 grant
1
of summary judgment as to their FLSA and NYLL claims, Plaintiffs’ briefs on appeal
make no mention of the NYLL, and instead focus exclusively on the FLSA.
Accordingly, we deem Plaintiffs’ NYLL claims waived for purposes of this appeal. See
5
Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 144 (2d Cir. 2008).
Accordingly, we affirm the judgment of the district court.
BACKGROUND
I. Facts2
Plaintiffs are black‐car drivers in the tri‐state area who owned or operated
black‐car franchises and were affiliated with Defendants.3 Six Defendants
(collectively, “Franchisor Defendants”) each own a “base license” that allows
them to operate a black‐car dispatch base in New York City, and to sell
franchises to individual drivers.4 See 35 R.C.N.Y. § 59A‐03(c). The remaining
three Defendants are various incarnations of the “Corporate Transportation
Hughes v. Bricklayers & Allied Craftworkers Local No. 45, 386 F.3d 101, 104 n.1 (2d Cir.
2004).
2 Except as otherwise noted, the following facts are undisputed.
3 Black cars are a type of for‐hire vehicle (along with livery vehicles and
limousines) that provide ground transportation by prearrangement with customers.
Black cars are dispatched by — and must be affiliated with — bases specific to their
vehicle type. Rules of the City of New York (“R.C.N.Y.”), Tit. 35 §§ 59A‐03(e), ‐04(h)–(i).
While the rules defining livery and limousine bases do not specify who may own
affiliated vehicles, black cars affiliated with a black‐car dispatch base must be owned
“by Franchisees of the Base or . . . members of a cooperative that operates the Base.”
Compare id. §§ 59A‐03(b)–(c) with id. §§ 59A‐03(j)–(m).
4 These Defendants are NYC 2‐Way International, Ltd. (“NYC 2‐Way”); AllState
Private Car & Limousine (“AllState”); TWR Car and Limo, Ltd. (“TWR”); Excelsior Car
and Limo, Inc. (“Excelsior”); and Hybrid Limo Express, Inc. (“Hybrid”).
6
Group” (collectively, “CTG”), which provides administrative support for the
operation of the Franchisor Defendants’ dispatch bases (as well as for 126 other
for‐hire vehicle enterprises) by handling, inter alia, billing, referral, payment,
bookkeeping, accounting, voucher processing, and dispatching.5 The Franchisor
Defendants and CTG operate out of a single facility in Brooklyn and constitute “a
single integrated enterprise and/or joint employer for the purposes of the
[FLSA].” Joint Appendix [“J.A.”] 1317. Among the approximately 70 people
employed in CTG’s dispatch unit at the time relevant here, 40 were in billing, six
or seven were in customer service, five were in driver relations, and at least two
were in sales.6 There were roughly 700 black cars affiliated with the Franchisor
Defendants’ dispatch bases and operating under the CTG umbrella. CTG’s
clients were primarily corporate entities, such as Deutsche Bank and Bank of
America.
These three Defendants are Corporate Transportation Group, Ltd.; Corporate
5
Transportation Group International; and Corporate Transportation Group Worldwide,
Inc. Individually named Defendant Eduard Slinin is the president of these companies.
He and his wife, Galina Slinin, are also controlling shareholders in some of the
Franchisor Defendants.
6 CTG’s employees, unlike Plaintiffs, are issued W‐2 Forms which document their
pay.
7
The named Plaintiffs rented or purchased their franchises directly from the
Franchisor Defendants or, in some cases, from other franchisees.7 Plaintiffs who
rented franchises paid $130 to $150 per week, while Plaintiffs who purchased
their franchises directly from a Franchisor Defendant did so pursuant to
franchise agreements, which required them to pay franchise fees ranging from a
nominal amount (or even nothing) to as much as $60,000. The franchise
agreements also required franchisees to pay additional fees, some upfront and
some recurring, which varied from agreement to agreement. (For example, in
exchange for a high upfront fee, “Platinum” franchises offered by certain
Franchisor Defendants provided for a significantly lower voucher processing fee
— the percentage of a fare charged to a driver for payment processing — than
their free “Gold” franchises. See J.A. 743, 752.) Franchisees also had to obtain a
New York City Taxi & Limousine Commission (“TLC”) license, insurance, and a
vehicle which they were responsible for maintaining.
Plaintiffs’ franchise agreements describe the nature of the relationship
between franchisor and franchisee as follows:
Notably, some drivers of black‐car vehicles neither owned nor rented a
7
franchise, but instead drove for other black‐car drivers who themselves owned or
rented a franchise.
8
Franchisee is not an employee or agent of Franchisor, but merely a
subscriber to the services offered by Franchisor. Franchisee shall at
all times be free from the control or direction of Franchisor in the
operation of Franchisee’s business, and Franchisor shall not control,
supervise or direct the services to be performed by Franchisee.
J.A. 732. Each franchise agreement also contains a “non‐compete” provision
which prohibited CTG‐affiliated drivers from driving CTG customers “without
processing payment for such services through CTG.” J.A. 3477–79. Failure to
comply with this and other terms was grounds for termination of the franchise.
Significantly, however, the franchise agreements did not prohibit drivers from
transporting non‐CTG customers for a competitor black‐car company, or
independently, during their affiliation with CTG.8
The franchise agreements also required that drivers comply with
“Rulebooks” — manuals setting out certain standards of conduct — specific to
each Franchisor Defendant.9 The Rulebooks forbid, for instance, harassing
customers or other drivers and submitting fraudulent vouchers. The Rulebooks
While TLC regulations require that for‐hire drivers be affiliated with one, and
8
only one, dispatch base, 35 R.C.N.Y. § 59A‐04(h)–(i), they may legally accept work from
another dispatch base (provided certain disclosures are made to the customer), see 35
R.C.N.Y. § 59A‐11(e).
9 The parties dispute CTG’s role in formulating the rules contained within the
Rulebooks.
9
also include a dress code, which required drivers to dress neatly in specified
business attire, as well as guidelines for keeping vehicles clean. Drivers were not
required to wear a uniform, however, or to mark their cars with insignia
denoting an affiliation with the Defendants.
The Rulebooks were enforced by each Franchisor Defendant’s Security
Committee, each of which was composed entirely of drivers who served elected
terms. Security Committees could hold hearings on complaints and suspected
violations. If a Security Committee determined that a driver had broken a rule, it
could impose a monetary penalty on the driver, temporarily suspend the driver,
or even terminate the driver’s franchise agreement. Although it is undisputed
that drivers elected the members of the Security Committees, the parties dispute
whether CTG exercised influence over the Committees.
During their affiliation with the Defendants, Plaintiffs, like other drivers in
the CTG network, possessed considerable autonomy in their day‐to‐day affairs.
Drivers could, for example, choose among three principal ways of securing fares
for driving CTG customers. First, they could wait in a physical queue of cars
outside certain high‐volume CTG clients’ businesses. Second, they could elect to
drive under a CTG contract with the New York City Metropolitan Transport
10
Authority (“MTA”), transporting by prearrangement clients who were unable to
travel via public transportation.10 Third, drivers could access CTG’s proprietary
black‐car dispatch system, through which CTG transmitted requests for service
from servers in a dispatch room to an application (“app”) on drivers’ smart
phones.11 In all three cases, clients provided vouchers to the driver transporting
them in lieu of cash payment, and these vouchers were thereafter processed by
CTG.
Drivers also determined when and how often to drive, and the record
reflects that they worked vastly different amounts of time, without providing
any notice to Defendants.12 Plaintiffs likewise chose which area in which to
During the period relevant to this litigation, drivers desiring MTA work
10
informed CTG of the block of time and the zone in which they wished to work on a
given day, and CTG’s computerized dispatch system matched the drivers with
available assignments. Notably, because the MTA paid less for jobs under its contract
with CTG than many of CTG’s other accounts did (as set forth below), CTG was not
always able to provide sufficient drivers, notwithstanding its relationship with
Plaintiffs and other black‐car drivers. On such occasions, CTG reached out to other
companies for assistance.
11 Black‐car drivers signaled their availability to work by consulting the smart
phone app (which permitted them to see both how many jobs were available and how
many other affiliated drivers were operating in particular “zones” in the City), choosing
a zone, and “booking into” it.
12 Jagjit Singh, for instance, testified that he worked seven days a week,
sometimes as much as 15 to 16 hours a day, J.A. 4789, while Anjum Ali typically worked
11
work, and they were at liberty to — and did — accept or decline jobs that were
offered.13 Significantly, Plaintiffs also could — and did — drive for dispatch
bases other than the one with which they were affiliated, and they were thus free
to shift as they chose during the workday from one dispatch service to another.
Most of the named Plaintiffs drove for other black‐car companies regularly, and
some earned substantial sums as a result.14 Some drivers also transported — and
about eight hours a day, from around 4:00 p.m. until approximately midnight, J.A.
3303–04.
13 When a driver “logged in” to the dispatch system, he saw how many jobs were
available and how many other drivers were booked into each “zone” in New York City.
The driver then decided which zone to “book into.” Having chosen a zone, the driver
was placed at the end of a virtual queue, where he waited until a work offer appeared
on his phone. Once an offer appeared, the driver had 45 seconds to accept or decline
the job. If the driver rejected the job, he would be booked out of the app for five
minutes and, after booking in again, placed at the end of the queue. After accepting a
job, the driver received the pickup address, passenger’s name, destination, rate of the
fare, and the CTG account number associated with the passenger. Even with this
information in hand, however, the driver could “bail out,” i.e., decline to complete the
job. After a “bailout,” the driver was not permitted to log into the dispatch system for
one to three hours.
Once a driver picked up a client, he was free to choose the route to that client’s
destination. When the driver completed the trip, he asked the customer to sign a
voucher. The driver then dropped off the voucher at CTG’s facility in Brooklyn at his or
her convenience — there appears to have been no time limit — and CTG processed
vouchers daily, weekly, or every three weeks, according to the driver’s preference.
14 Ranjit Bhullar, for instance, earned $395,081.90 driving for “Exec. Charge” from
2006 to 2008, and Malook Singh earned $206,568.71 driving for “Elite” from 2006 to
2009. J.A. 3436–38.
12
were paid directly by — customers with whom they had made individual
arrangements, and others, though it was contrary to TLC regulations, see 35
R.C.N.Y. § 59B‐25(a), picked up street hails.15
Although CTG negotiated rates with its clients, supplied the proprietary
dispatch technology, and operated the dispatch system, the record suggests that
Plaintiffs took home the majority — in some cases up to 85% — of each CTG fare,
less some small additional fees. On this basis, Plaintiffs classified themselves as
independent contractors on their tax returns and took substantial business
deductions.
II. Procedural History
On November 19, 2012, Plaintiffs Mazhar Saleem and Jagjit Singh filed a
complaint in district court, seeking to recover unpaid overtime and other wages
under the FLSA and the NYLL on behalf of a class of similarly situated drivers.
On June 17, 2013, the district court conditionally certified a collective action
pursuant to Section 216(b) of the FLSA, 29 U.S.C. § 216(b), and approved a notice
to be sent to potential opt‐in plaintiffs. The court subsequently denied class
Drivers generally collected payment for such services themselves, sometimes
15
through accounts established with credit card merchant companies. The record
indicates that some Plaintiffs earned significant sums in this way – one driver, for
instance, processed over $70,000 through a credit card merchant service account in an
18‐month period. J.A. 5427–56.
13
certification of their NYLL claims, a determination not before us on appeal.
Saleem v. Corp. Transp. Grp., Ltd., No. 12 Civ. 8450(JMF), 2013 WL 6061340, at *7
(S.D.N.Y. Nov. 15, 2013).
On September 16, 2014, Judge Furman granted Defendants’ motion for
summary judgment and denied Plaintiffs’ motion for partial summary judgment
as to both the named Plaintiffs and those Plaintiffs who had opted into the
collective action. Saleem, 52 F. Supp. 3d at 545. In concluding that Defendants
were entitled to summary judgment because Plaintiffs were not, as a matter of
law, employees of Defendants for FLSA purposes, the district court applied the
five factors enumerated by this Court in Brock v. Superior Care, Inc., 840 F.2d 1054,
1058–59 (2d Cir. 1988), analyzing each factor individually and considering
whether the “totality of the circumstances” suggested that Plaintiffs were
“employees” or “independent contractors,” Saleem, 52 F. Supp. 3d at 535–36, 544.
The district court concluded that “[n]otwithstanding that the final [Superior Care]
factor,” the degree to which employees are integral to a business, “favors
employment status,” “[w]eighing all of the [Superior Care] factors and
14
considering the totality of the circumstances,” “the drivers here fall into the
[independent contractor] category as a matter of law.”16 Id.
On January 6, 2015, Plaintiffs timely appealed.
DISCUSSION
I.
We review the district court’s grant of summary judgment de novo, and we
will affirm only if the evidence, when viewed in the light most favorable to the
party against whom it was entered, demonstrates that there is no genuine issue
as to any material fact and that judgment was warranted as a matter of law.
Barfield, 537 F.3d at 140 ; see also Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d
Cir. 2014). Here, we examine the district court’s conclusion that, “as a matter of
law, Plaintiffs are properly classified as independent contractors rather than
employees for purposes of the FLSA.” Saleem, 52 F. Supp. 3d at 543. We begin,
then, with a brief explication of our case law, as is relevant to this distinction.
The district court also rejected Plaintiffs’ claim that the drivers were
16
“employees” within the meaning of the NYLL. Because the factors for determining
whether an individual is an “employee” under the NYLL are similar to the Superior Care
factors, the court referred to much of its FLSA analysis in concluding that “all five
NYLL factors favor independent contractor status.” Saleem, 52 F. Supp. 3d at 545. This
part of the ruling, concerning whether Plaintiffs constitute “employees” under the
NYLL, is not at issue in the present appeal.
15
The FLSA defines an “employee” as “any individual employed by an
employer.” 29 U.S.C. § 203(e)(1). “An entity ‘employs’ an individual under the
FLSA” if it “‘suffer[s] or permit[s] that individual to work.’”17 Zheng v. Liberty
Apparel Co., 355 F.3d 61, 66 (2d Cir. 2003) (alterations in original) (quoting 29
U.S.C. § 203(g)); see also 29 U.S.C. § 203(d) (defining “employer” as “any person
acting directly or indirectly in the interest of any employer in relation to an
employee”). In light of the definition’s circularity, courts have endeavored to
distinguish between employees and independent contractors based on factors
crafted to shed light on the underlying economic reality of the relationship.18 As
the district court recognized, this Court has focused on “the totality of the
circumstances” in addressing our “ultimate concern . . . whether, as a matter of
economic reality, the workers depend upon someone else’s business for the
The Supreme Court has noted that the FLSA “stretches the meaning of
17
‘employee’ to cover some parties who might not qualify as such under a strict
application of traditional agency law principles.” Nationwide Mut. Ins. Co. v. Darden, 503
U.S. 318, 326 (1992).
18 This Court has devised many such “economic reality” tests in the context of the
FLSA. See, e.g., Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 534–38 (2d Cir. 2016)
(distinguishing “interns” from “employees” under the FLSA); Barfield, 537 F.3d at 140–
50 (determining whether entity qualifies as “joint employer” under the FLSA); Zheng,
355 F.3d at 66–71 (same); Carter v. Dutchess Cmty. Coll., 735 F.2d 8, 12–15 (2d Cir. 1984)
(determining whether outside entity constitutes an “employer” of prison inmate
pursuant to the FLSA).
16
opportunity to render service or are in business for themselves.” Superior Care,
840 F.2d at 1059; see also Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33
(1961) (“‘[E]conomic reality’ rather than ‘technical concepts’ is to be the test of
employment.” (quoting United States v. Silk, 331 U.S. 704, 713 (1947))); Bartels v.
Birmingham, 332 U.S. 126, 130 (1947) (“[E]mployees are those who as a matter of
economic reality are dependent upon the business to which they render
service.”).
Our case law has identified certain factors, first set out in Silk, 331 U.S. at
716, as relevant to separating employees from independent contractors in the
context of the FLSA,19 see Superior Care, 840 F.2d at 1058–59. Nevertheless,
“[t]hese factors are merely aids to analysis,” Thibault v. Bellsouth Telecomms., Inc.,
In Silk, the Supreme Court addressed whether truck drivers in two
19
consolidated cases constituted “employees” for the purpose of the Social Security Act.
Silk set out the following factors as relevant to this determination:
(1) the degree of control exercised by the employer over the workers, (2)
the workers’ opportunity for profit or loss and their investment in the
business, (3) the degree of skill and independent initiative required to
perform the work, (4) the permanence or duration of the working
relationship, and (5) the extent to which the work is an integral part of the
employerʹs business.
Superior Care, 840 F.2d at 1058–59 (citing Silk, 331 U.S. at 716). “The existence and
degree of each factor is a question of fact while the legal conclusion to be drawn from
those facts — whether workers are employees or independent contractors—is a
question of law.” Id. at 1059.
17
612 F.3d 843, 846 (5th Cir. 2010), and are helpful only insofar as they elucidate the
“economic reality” of the arrangement at issue, Superior Care, 840 F.2d at 1059.
Relevant FLSA precedent, despite endorsing the Silk factors, cautions against
their “mechanical application.” Id. As we stated in Barfield v. New York City
Health & Hospitals Corp., 537 F.3d at 141, “[t]he determination of whether an
employer‐employee relationship exists for purposes of the FLSA should be
grounded in ‘economic reality rather than technical concepts,’ . . . determined by
reference not to ‘isolated factors but rather upon the circumstances of the whole
activity,’” (citation omitted) (first quoting Goldberg, 366 U.S. at 33, and then
quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947)).20 Thus, while
the following discussion draws upon and discusses the Silk factors where
relevant, it trains on the “ultimate question”: the economic reality of Plaintiffs’
relationship with CTG.
This caution is merited because the Silk factors, while helpful in identifying
20
relevant facts, overlap to a substantial degree. For instance, at least in the abstract, the
more substantial the “control” (factor one) a company asserts, the less “initiative”
(factor three) it allows on the part of its workers. In addition, the same facts are often
relevant to multiple Silk factors. In Superior Care, for example, we categorized the fact
that the alleged employer “unilaterally dictated the nurses’ hourly wage [and] limited
working hours to 40 per week where nurses claimed they were owed overtime” as
indicative of the extent of defendant Superior Care’s control over its workers. 840 F.2d
at 1060. But this fact was similarly indicative of the scarce “opportunit[ies] for profit or
loss” available to the nurses in that case.
18
II.
Upon de novo review, “even when the historical facts and the relevant
factors are viewed in the light most favorable” to Plaintiffs, id. at 144, and despite
the broad sweep of the FLSA’s definition of “employee,” Darden, 503 U.S. at 326,
the record here does not permit the conclusion that Plaintiffs were employees,
but instead establishes that they were in business for themselves. As discussed
below, Plaintiffs independently determined (1) the manner and extent of their
affiliation with CTG; (2) whether to work exclusively for CTG accounts or
provide rides for CTG’s rivals’ clients and/or develop business of their own; (3)
the degree to which they would invest in their driving businesses; and (4) when,
where, and how regularly to provide rides for CTG clients. While none of these
facts is determinative on its own, considered as a whole with the goal of
discerning the underlying economic reality of the relationship here, the district
court correctly determined that Plaintiffs are, as a matter of law, “properly
classified as independent contractors rather than employees for purposes of the
FLSA.” Saleem, 52 F. Supp. 3d at 543. As a result, Defendants were properly
granted summary judgment.
19
A. Affiliation with CTG
From the start, Plaintiffs were “driver‐owners” who made significant
decisions regarding the operation of their small businesses. Silk, 331 U.S. at 719.
Plaintiffs chose not only to enter into a franchise agreement with a CTG
Franchisor Defendant instead of seeking more conventional employment, but
also exercised considerable discretion in choosing the nature and parameters of
that affiliation. Some Plaintiffs elected to purchase a franchise, either directly
from a Franchisor Defendant or on the secondary market, while others opted to
rent one. Further, because the franchise agreements contained different terms,
and particularly because there was wide variation in both the price of the
franchises and the fees associated with using them, Plaintiffs had to strike a
balance between a franchise’s upfront cost and the favorability of its terms, a
choice which ultimately affected its profitability.
The franchise agreements’ termination provisions also are indicative of
Plaintiffs’ independence. While Plaintiffs could reassess their choice to affiliate
with CTG (not to mention the nature of that affiliation) and “terminate the
[franchise] agreements” as they pleased,21 Saleem, 52 F. Supp. 3d at 542, the terms
The franchise agreements did provide that drivers receive franchisors’ “prior
21
written consent . . . , which consent [could] not be unreasonably withheld,” before
20
of the agreements committed the Franchisor Defendants to maintaining them for
substantial durations, or even indefinitely, absent Plaintiffs’ breach of those
terms. Because Plaintiffs were free to drive for competitors, for personal clients,
or not at all without violating their franchise agreements, the termination
provisions constituted a significant restriction on the ability of Franchisor
Defendants to exercise control.
In addition, each of Plaintiffs’ agreements also designated them as
independent contractors, and some Plaintiffs formed corporations to operate
their franchises. “Though an employer’s self‐serving label of workers as
independent contractors is not controlling,” Superior Care, 840 F.2d at 1059; see
also Thibault, 612 F.3d at 845–46 (noting that “contractual designation of the
worker as an independent contractor is not necessarily controlling” (emphasis
added)), such a designation in the franchise agreement is pertinent to “the
parties’ beliefs about the nature of the relationship,” Estate of Suskovich v. Anthem
Health Plans of Va., Inc., 553 F.3d 559, 564 (7th Cir. 2009); see also Johnson v. City of
Saline, 151 F.3d 564, 568‐69 (6th Cir. 1998) (observing, in ADA case, that “the
contractual relationship reads unmistakably as one with an independent
leasing or renting a franchise. See, e.g., J.A. 3377. It is not clear whether this
requirement was enforced in practice.
21
contractor as opposed to one with an employee”).22 Thus, in the language of the
Silk factors, Plaintiffs demonstrated independence and initiative in selecting
franchise agreements that best fit their business plans, and in choosing —
independent of Franchisor Defendants —to persist in those affiliations, all of
which suggests, in the circumstances of this case, that Plaintiffs were “in business
for themselves.” Superior Care, 840 F.2d at 1058–59.
B. Entrepreneurial Opportunities
The fact that Plaintiffs could (and did) work for CTG’s business rivals and
transport personal clients while simultaneously maintaining their franchises
without consequence suggests, in two respects, that CTG exercised minimal
control over Plaintiffs. First, on its face, a company relinquishes control over its
workers when it permits them to work for its competitors. Second, when an
individual is able to draw income through work for others, he is less
economically dependent on his putative employer. This lack of control, while
In this vein, CTG issued Plaintiffs 1099 Forms, not W‐2 Forms, and Plaintiffs
22
classified themselves as independent contractors for tax purposes and took deductions
for business expenses. Likewise, Plaintiffs did not receive health insurance, 401(k),
retirement, or other benefits. See Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 171 (2d Cir.
1998) (affirming finding of independent contractor status when, inter alia, the worker
“did not have the company withhold income or Social Security taxes [and] did not
receive employee benefits such as health insurance”).
22
not dispositive, weighs in favor of independent contractor status. See, e.g., Keller
v. Miri Microsystems LLC, 781 F.3d 799, 807 (6th Cir. 2015) (“If a worker has
multiple jobs for different companies, then that weighs in favor of finding that
the worker is an independent contractor.”); Herman v. Express Sixty‐Minutes
Delivery Serv., Inc., 161 F.3d 299, 303 (5th Cir. 1998) (noting fact that “[t]he drivers
can work for other courier delivery systems” supported independent contractor
status); Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 171 (2d Cir. 1998) (affirming
finding of independent contractor status when, inter alia, the worker “was
allowed to sell merchandise on behalf of other companies”); see also Freund v. Hi‐
Tech Satellite, Inc., 185 F. App’x 782, 784 (11th Cir. 2006) (per curiam) (affirming
district court’s finding that worker’s ability “to take jobs from” competitors, and
to “take as many or as few jobs as he desired,” supported district court’s
conclusion that there was not a “significant degree of permanence” in the
relationship at issue); cf., e.g., Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436,
1442 (10th Cir. 1998) (stating that, generally speaking, “‘[e]mployees’ usually
work for only one employer and such relationship is continuous and indefinite in
duration” (quoting Dole v. Snell, 875 F.2d 810, 811 (10th Cir. 1989))).
23
More specifically, Plaintiffs here operated “business organization[s] that
could or did shift as a unit from one [car‐service] to another,” suggesting
Defendants did not exercise significant control. Rutherford Food Corp. v. McComb,
331 U.S. 722, 730 (1947). Neither Plaintiffs’ franchise agreements nor TLC
regulations barred Plaintiffs from either providing rides arranged through
dispatch bases other than the Franchisor Defendant with whom they had
affiliated, or from driving for other, competing black‐car companies.23 The
agreements likewise did not prohibit Plaintiffs from driving clients of their own
(provided that payment by any CTG client was processed through the CTG
system), or from picking up street hails (though doing so was forbidden by TLC
rules).
To be clear, pursuant to the economic reality test, “it is not what [Plaintiffs]
could have done that counts, but as a matter of economic reality what they
The Secretary of Labor incorrectly describes this practice as barred by TLC
23
regulations. As Plaintiffs admit in a post‐argument letter brief, TLC regulations permit
black‐car drivers to provide rides for other black‐car companies provided certain
disclosures are made to the customer. See 35 R.C.N.Y. § 59A‐11(e); Ltr. from Appellants
to Court (Feb. 12, 2016); cf. N.Y.C. Taxi & Limousine Comm’n, Notice of Public Hr’g and
Opportunity to Comment on Proposed Rules, Amendment of For Hire Dispatch Rules,
TLC‐71, at unnumbered 3 (Sept. 12, 2014), http://rules.cityofnewyork.us/
sites/default/files/proposed_rules_pdf/fhv_dispatch_rules_final_9_12_14.pdf (noting the
practice of dispatch bases to “dispatch[] vehicles affiliated with other bases . . . without
the knowledge or consent of the vehicles’ affiliated bases,” giving rise to issues “not
addressed in the TLC’s rules”).
24
actually do that is dispositive.” Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1047
(5th Cir. 1987). It is undisputed, however, that Plaintiffs here actually did
provide rides to non‐CTG clients in at least three different ways. 24
First, many Plaintiffs provided rides by driving for competing black‐car
companies. Tax returns demonstrate that Plaintiffs derived substantial revenue
from this practice. Ranjit Bhullar, for instance, earned $395,081.90 driving for
“Exec. Charge” between 2006 and 2008, and Malook Singh earned $206,568.71
driving for “Elite” between 2006 and 2009. Indeed, some 71% of deposed
Plaintiffs earned at least some income by driving for non‐CTG black‐car
companies.
Second, it is undisputed that some Plaintiffs regularly drove personal
clients. Anjum Ali, for example, had a repeat, non‐CTG customer who first
hailed him in 2010 and later arranged for pick‐up in various places in New York
It is certainly not unheard of for an individual to maintain two jobs at the same
24
time, and to be an “employee” in each capacity. Plaintiffs, however, unlike traditional
employees, were free — without compromising their franchises or facing adverse
consequences — to divide their time as they saw fit between CTG, its competitors, and
personal clients. See Reyes v. Remington Hybrid Seed Co., 495 F.3d 403, 408 (7th Cir. 2007)
(describing an independent contractor as an individual who “appears, does a discrete
job, and leaves again”). Mazhar Saleem, for example, drove for five black‐car
companies in addition to CTG between 2009 and 2012, earning sums that ranged
between $539.10 at the low end to $11,052.00.
25
City by calling Ali at his home number.25 Jose Solorzano, for his part, also had
one personal client for eight to ten years,26 and Avneet Koura was contacted
directly “[o]nce or twice a week” by repeat personal clients between 2006 and
2008. J.A. 404–05. Plaintiffs made investments to build these relationships, too.
Some created business cards describing their services, while others placed
advertisements.27
Third, for the sake of completeness, many Plaintiffs also picked up
passengers via street hail, despite TLC’s (apparently under‐enforced) prohibition
of this practice. See 35 R.C.N.Y. § 55‐19. In fact, one driver admitted doing so
while “logged in” to the CTG app and waiting in the dispatch queue. As with
individual, non‐CTG clients, street hail passengers paid in cash or via
independent merchant accounts, rather than through the CTG voucher system.
Ali did not turn over any of that money to CTG for processing, nor was he
25
required to do so, since the customer was not a CTG client.
26 Despite CTG rules to the contrary, Solorzano billed this repeat CTG customer
using his personal credit card merchant processing account, rather than the CTG
voucher system.
27 Though “customer rapport” is arguably not “an initiative characteristic,” Mr.
W Fireworks, 814 F.2d at 1053 (quoting Usery v. Pilgrim Equip. Co., Inc., 527 F.2d 1308,
1314 (5th Cir. 1976)), these long‐term relationships, at a minimum, demonstrate drivers’
independence, their exercise of initiative, and Defendants’ relative lack of “control” —
all indicia of independent contractor status, Superior Care, 840 F.2d at 1058.
26
Moreover, these alternate means of generating revenue aside, Plaintiffs
also wielded considerable independence and discretion when working under
CTG’s umbrella. To offer rides to CTG clients, Plaintiffs could join a physical
queue outside of a high volume client business, offer assistance to disabled
customers seeking prearranged rides pursuant to CTG’s contract with the MTA,
or book into CTG’s dispatch system. Further, some Plaintiffs who owned
franchises chose not to drive at all and, instead of letting their franchises lie
dormant, permitted other individuals to drive for them.28 See Silk, 331 U.S. at 718
(observing that truck‐drivers’ practice of “hir[ing] their own helpers” supported
finding of independent contractor status).
Accordingly, far from a circumstance, like that in Superior Care, where the
individuals seeking “employee” classification “depended entirely on [the
putative employer’s] referrals to find job assignments,” 840 F.2d at 1060,
Plaintiffs here possessed considerable independence in maximizing their income
through a variety of means. By toggling back and forth between different car
companies and personal clients, and by deciding how best to obtain business
from CTG’s clients, drivers’ “profits increased” through “‘the[ir] ‘initiative,
Anwar Bhatti testified that Rajeev Kumar paid him $75 per week to drive for
28
Bhatti’s franchise. Jamshed Choudhry similarly rented the use of his franchise to third
parties on two occasions for $75 per week and $130 per week, respectively.
27
judgment[,] or foresight’” — all attributes of the “typical independent
contractor.” Keller, 781 F.3d at 809 (quoting Rutherford, 331 U.S. at 730).
Whatever “control” CTG exerted over negotiated fares and its rolls of
institutional clients, Plaintiffs retained “viable economic status that [could] be
[and was] traded to other [car companies].” Usery, 527 F.2d at 1312. Thus, as a
matter of economic reality, Plaintiffs’ affiliation with Defendants was but one
means by which they generated income from their driving businesses.
C. Investment and Return
Regardless whether they actually purchased a franchise, the record also
shows that Plaintiffs invested heavily in their driving businesses — another
indication that they were “in business for themselves.” Superior Care, 840 F.2d at
1059. In the economic reality test, “large capital expenditures” — as opposed to
“negligible items, or labor itself” — are highly relevant to determining whether
an individual is an employee or an independent contractor. Dole, 875 F.2d at 810;
see also id. at 810–11 (deeming “annual investment of $400 in tools or equipment”
to be “negligible”); cf. Berger Transfer & Storage v. Cent. States, Se. & Sw. Areas
Pension, 85 F.3d 1374, 1378 (8th Cir. 1996) (affirming finding of independent
contractor status under common law agency test in part because “[t]he owner‐
28
operators were responsible for . . . purchasing and maintaining the leased
equipment, [and] paying operating expenses such as fuel and repairs”). In
assessing such expenditures, we ask whether the alleged employee made
financial commitments in an attempt to generate a “return on . . . investment.”29
Dole, 875 F.2d at 811; see, e.g., Silk, 331 U.S. at 716 (affirming truck‐drivers’
independent contractor status when they, inter alia, “own[ed] their trucks”).
Here, Plaintiffs indisputably did.
In disclosures to the New York State Attorney General, each Franchisor
Defendant presented an “estimated initial investment” to be expected in
acquiring a franchise. See, e.g., J.A. 1817–20. One Franchisor Defendant
estimated expenses for an individual purchasing a franchise as totaling between
$68,838 and $89,038.30 J.A. 1817–20. Such sums constitute a substantial financial
While “investment in the business” is, itself, indicative of independent
29
contractor status, Dole, 875 F.2d at 810, it also gives rise to other economic realities
relevant to the FLSA “employee” inquiry. “The capital investment factor is,” for
example, “interrelated to the profit and loss consideration.” Sec’y of Labor, U.S. Dep’t of
Labor v. Lauritzen, 835 F.2d 1529, 1537 (7th Cir. 1987). Economic investment, by
definition, creates the opportunity for loss, but investors take such a risk with an eye to
profit. In addition, a personal stake can create incentives for the exercise of
“independent initiative,” see Superior Care, 840 F.2d at 1058–59, so as to recover one’s
investment.
30 The NYC 2‐Way franchise disclosure statement, by way of example, lists the
following expenses:
29
outlay on Plaintiffs’ part, even beyond the purchase or rental of the franchise
itself, and in essential facets of Plaintiffs’ business operations: vehicle
acquisition,31 fuel, repair, and maintenance, license, registration, and insurance
fees, and tolls, parking, and tickets. CTG did not provide reimbursements for
Initial franchise fee: $40,000*
Vehicle: $15,000–$33,000
Smart phone: $350–$500
Installation fee (for dispatch system app): $500*
Security deposit (returned at end of franchise agreement): $5,000*
Administrative fee: $1,000*
Training fee: $250*
TLC vehicle license fee: $550
New York vehicle registration inspection fee and tax stamp: $473–
$523
Liability insurance: $5,500–$7,500 per year
Magnetic window signs: $150
Gasoline: $65 per tank
J.A. 1817–20. Asterisks denote payments made to NYC 2‐Way, with all other payments
notably going to third parties. In addition, drivers paid weekly fees of $56 or $80,
depending on whether they were a “sole proprietor” and operating on a single shift or,
instead, they “operated [a] double‐shift[].” J.A. 1341.
To be sure, not all Plaintiffs spent this projected amount; some may have opted
for franchise arrangements which entailed a smaller upfront payment with greater
recurring fees. Plaintiffs who rented franchises avoided paying this upfront fee
altogether, although the record shows that they made other, significant investments in,
inter alia, their vehicles, license and registration, fuel, maintenance, and repairs.
31 Some drivers purchased their vehicles, while others rented.
30
these expenses,32 never mind for discretionary investment in business cards,
advertising, or other ventures designed to attract customers.
Because Plaintiffs were free under their franchise agreements to branch out
on their own, or to drive for other, competing black‐car companies, the degree to
which these expenditures yielded returns was a function not only of CTG’s
network, but also of the business acumen of each Plaintiff, who thus had
significant control over “essential determinants of profits in [the] business.”33
All franchise agreements contained the following language: “Franchisee shall
32
be solely responsible for all fees, taxes, charges, fines, inspections, repairs, summonses,
and all other aspects involving Franchisee and Franchisee’s vehicle.” J.A. 3408–09.
33 Indeed, seven black‐car franchisees filed an amicus brief emphasizing their
“freedom” as “entrepreneurs,” and arguing that finding they were employees would
jeopardize “the future viability of their investment in black car franchises.” Br. for
Amici Curiae Mark Malchikov et al. in Support of Appellees and in Favor of Affirmance
2, 9.
To be sure, compensation on a piecework basis has sometimes been likened to
“wages,” rather than a return on investment. Mr. W Fireworks, 814 F.2d at 1050–51. But
see Freund, 185 F. App’x at 783 (per curiam) (plaintiff, deemed an independent
contractor by the lower court, “was almost entirely compensated by the job and not the
hour; therefore, by accepting more jobs, performing his work more efficiently and
hiring employees, he could earn greater sums of money”). Because we evaluate the
“totality of the circumstances,” however, the form of payment does not dictate a finding
of employee status. In Herman, for instance, the Fifth Circuit determined that the
district court did not err in finding courier delivery drivers, “compensated on a
commission basis,” and for whom “customer volume and the amount charged to
customers” were “control[led]” by the entity, to be independent contractors. 161 F.3d
at 304–05. The Herman panel concluded that, despite these facts, other factors
supported the district court’s conclusion that the couriers were independent
contractors. The couriers, inter alia, “set their own hours and days of work and [could]
31
Dole, 875 F.2d at 810. Further, while Plaintiffs ultimately all chose to affiliate
with the Franchisor Defendants, their investments were valuable — and likely
necessary — even had they chosen to affiliate with a different black‐car dispatch
base. Thus, Plaintiffs’ expenditures created the platform for a black‐car business
that could be operated throughout the tri‐state area, whether for Defendants or
otherwise, again suggesting Plaintiffs were independent contractors, and not
employees.
D. Schedule Flexibility
The ability to choose how much to work also weighs in favor of
independent contractor status. See Herman, 161 F.3d at 304; Arena v. Plandome
Taxi, Inc., No. 12 CV 1078(DRH)(WDW), 2014 WL 1427907, at *5 (S.D.N.Y. Apr.
reject deliveries without retaliation[, and] . . . work for other courier delivery systems,”
since their franchise agreement did not contain a non‐compete clause. Id. at 303.
When employees are compensated “on a piecework basis,” Dole, 875 F.2d at 809,
moreover, the FLSA economic reality inquiry asks how much revenue flows to the
worker. Compare, e.g., Delux Transp. Servs., Inc., 3 F. Supp. 3d at 11 (“There is also no
dispute that [the driver, deemed an independent contractor,] received all revenues
generated by the fares [the driver] picked up.”), with Dole, 875 F.2d at 809 (cake
decorators, classified as employees, were paid only 20% of the price of each cake) and
Mr. W Fireworks, 814 F.2d at 1046 (operators of firework stands, also classified as
employees, made only a “15% commission on fireworks sold”). And as Eduard Slinin,
CTG’s president, testified here, a “majority of the revenue [went] . . . to the driver” for
CTG rides. J.A. 616–17. CTG generally applied a small, flat processing fee for each
voucher, and also took a percentage fee on the entire voucher amount upon Defendant
Franchisor’s payment of vouchers to franchisees (in the range of 15–33% of the voucher
amount).
32
14, 2014) (noting fact that transportation company “dictated the hours the drivers
worked” supported employee status); Arena v. Delux Transp. Servs., Inc., 3 F.
Supp. 3d 1, 10 (E.D.N.Y. 2014) (noting fact “that Defendants had little control
over when Plaintiff drove, how much he dr[o]ve, or how frequently” “very
persuasive[ly]” supported independent contractor status.); cf. Berger Transfer &
Storage, 85 F.3d at 1378 (affirming finding of independent contractor status based
in part on “considerable autonomy regarding when and how long they would
work” under common law agency test). Here, Plaintiffs’ schedules were not
merely “relatively flexible,” Doty v. Elias, 733 F.2d 720, 723 (10th Cir. 1984)
(emphasis added), but rather were entirely of their making.
After purchasing or leasing a franchise and securing a suitable vehicle,
Plaintiffs set their own schedules, selecting when, where, and how often to work
(if at all). Defendants provided no incentive structure for Plaintiffs to drive at
certain times, on particular days, or in specific locations, leaving the decision to
work “to the whims [and] choices” of its drivers. Dole, 875 F.2d at 806. Likewise,
Defendants required no notice on the part of drivers as to when they intended to
work, nor did they make any effort to coordinate drivers’ schedules.
33
Here, as always with the “economic reality” inquiry, it is not merely that
Plaintiffs nominally could set their own schedules, but also that they actually did
so. Id. at 808. Some Plaintiffs took vacations for weeks at a time without ever
notifying Defendants. Anjum Ali, for example, took five weeks off to travel
abroad, and regularly took off long weekends. Mazhar Saleem took a three‐to‐
four month vacation in 2010 and vacationed for over two months in 2011. Jose
Cabrera “t[ook] the entire year of 2011 off” from driving for Defendants, and
resumed doing so in 2012. J.A. 3393 ¶ 148.
On the days when Plaintiffs did work, their hours varied — again, based
on their own preferences, and without Defendants making any attempt to
coordinate schedules or set lower or upper limits on working hours. Cf. Dole, 875
F.2d at 806 (holding that workers were employees because they did not “act[]
autonomously, or with any degree of independence which would set them apart
from what one would consider normal employee status”). Jagjit Singh
sometimes worked as many as fifteen to sixteen hours a day, while Anjum Ali
would typically log in from 4:00 p.m. until approximately midnight. Others
drove on a far more sporadic basis.
34
Plaintiffs also exercised considerable discretion in choosing when and
where to drive. Superior Care, 840 F.2d at 1059. Marlene Pinedo, for instance,
explained that she drove “[f]rom Sunday to Friday . . . [b]ecause those are the
days when there is the most work.” J.A. 416. Pinedo made a similar calculation
when determining the times of day during which she would drive, performing
two separate shifts, 4:00 a.m. to 10:00 a.m. and 4:00 p.m. to 10:00 p.m., because
“they used to give good jobs at those times.” J.A. 417. Anjum Ali, on the other
hand, preferred to drive in the evenings in part because, with friends driving at
the same time, he could count on them if he needed help. Similarly — and
predictably — drivers often selected a geographic zone based on the available
jobs there, and record testimony indicates that certain zones in Manhattan were
more active than others.34
Additionally, the record demonstrates that, as a matter of economic reality,
Plaintiffs accepted and rejected (despite the penalty of being placed at the end of
the queue) varying numbers of job offers, a fact indicative of the discretion and
independence associated with independent contractor status. Cf. Berger Transfer
& Storage, 85 F.3d at 1378 (affirming district court finding that it was indicative of
34 For example, Zone 4, in midtown Manhattan, appears to have been particularly
popular due to the volume of business there.
35
independent contractor status that long‐distance truckers could and did refuse
assignments without penalty); Herman, 161 F.3d at 303 (noting that couriers could
reject job offers “without retaliation” in making the same determination). For
example, in March 2011, Bhavesh Shah accepted 83 jobs, Jamshed Choudhry
accepted 148, and Jose Solorzano accepted fifteen. Likewise, from May 2010 to
May 2013, Ranjit Bhullar rejected 949 job offers, while Wilman Martinez rejected
none.35
Plaintiffs’ flexible work schedules and considerable control over when,
where, and in what circumstances to accept a CTG fare not surprisingly resulted
in wide disparities in gross earnings for rides provided through Defendants.36
For example, while Jagjit Singh grossed more than $170,000 in 2009 and 2011, J.A.
3433, Anjum Ali earned between $38,928 and $42,445 a year from 2010 through
2012, J.A. 3431. These differences only underscore the economic reality, namely
that the “work force [was] composed of individuals who came and went as they
Likewise, after accepting and receiving information concerning a job, some
35
Plaintiffs “frequently bail[ed] out” of jobs despite the three hour lockout penalty, while
others “rarely” did so. J.A. 3395 ¶¶ 153–54.
36 The franchise agreements made no guarantees about how much work Plaintiffs
could expect.
36
alone pleased,” Dole, 875 F.2d at 807, an undisputed fact that is all the more
remarkable given the volume‐driven nature of the business.
In the language of the Silk factors, these undisputed facts demonstrate that
Defendants did not “exercise control,” and that Plaintiffs demonstrated
“initiative.” Superior Care, 840 F.2d at 1060. They also show that, whatever “the
permanence or duration” of Plaintiffs’ affiliation with Defendants, id. at 1059,
both its length and the “regularity” of work was entirely of Plaintiffs’ choosing,
cf. Keller, 781 F.3d at 807 (“We may look at the length and regularity of the
working relationship between the parties [in assessing the nature of their
relationship].”).
These circumstances are readily distinguishable from those in which courts
have identified an employer‐employee relation. In Superior Care, for instance, the
employer “limited working hours to 40 per week where nurses claimed they
were owed overtime,” 840 F.2d at 1060, and in Reich v. Circle C. Investments, Inc.,
the employer “exercise[d] a great deal of control over the [plaintiffs],” who were
“required to comply with weekly work schedules,” 998 F.2d 324, 327 (5th Cir.
1993). In Dole v. Snell, the plaintiff cake‐decorators’ schedules were “totally
controlled” by their employer: they were expected to arrive at the premises at a
37
particular hour, prevented from leaving until they had decorated all the cakes to
their bosses’ satisfaction, and required to seek their employer’s approval for
vacation. 875 F.2d at 806. In short, “[t]he demands of the business controlled the
[workers’ schedule],” id., which was indisputably not the case for Plaintiffs here.
Instead, this case resembles those in which we and other Circuits have
recognized independent contractor status. In Kirsch v. Fleet Street, for example,
we upheld a jury finding that the plaintiff was an independent contractor when,
inter alia, he “was not required to spend time in the company’s offices [and] was
free to set his own schedule and take vacations when he wished.” 148 F.3d at
171. Likewise, in Herman v. Express Sixty‐Minutes Delivery Service, Inc., the Fifth
Circuit concluded that a courier service “had minimal control over its drivers”
such that they were independent contractors because, inter alia, “[t]he drivers set
their own hours and days of work.” 161 F.3d at 303. Similarly here, Plaintiffs’
freedom in choosing when, where, and with what regularity to drive CTG clients
shows the extent of their economic independence — that they operated their
“business organization[s]” on their own terms, and as they saw fit. Rutherford,
331 U.S. at 730.
* * *
38
In sum, Plaintiff black‐car drivers exercised their business acumen in
choosing the manner and extent of their affiliation with CTG; were able to work
for rival black‐car services, cultivate their own clients, and pick up street hails;
made substantial investments in their businesses; and determined when, where,
and how regularly to work. They owned or operated enterprises which were
flexible and adaptable to market conditions. In short, based on the record here,
“[t]hese driver‐owners [were] small businessmen.” Silk, 331 U.S. at 719.
III.
Plaintiffs, for their part, rely on record evidence that they contend shows
that Defendants exercised control over black‐car drivers, so as to make them
economically dependent on CTG. Such evidence, Plaintiffs contend, creates a
genuine issue as to whether Defendants exercised control over drivers such that
they constituted “employees” pursuant to the FLSA. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). We disagree. “Only disputes over facts that
might affect the outcome of the suit under the governing law will properly
preclude the entry of summary judgment.” Id. Here, the evidence on which
Plaintiffs rely does not change the “economic reality” of their business
relationship with Defendants. Superior Care, 840 F.2d at 1059.
39
Plaintiffs marshal evidence principally in support of two propositions.
First, they argue that the record shows that Defendants exercised control over
“all significant aspects of its black car business.”37 Appellant’s Br. 11. Plaintiffs
point, inter alia, to CTG’s roll of organizational clients, its development and
operation of the dispatch system, and the fact that CTG negotiated rates with
clients and charged a per‐ride fee to drivers. Second, in Plaintiffs’ telling,
Defendants exerted influence over drivers by enforcing the Rulebooks indirectly
through the Security Committees and, at times, directly through Eduard Slinin,
CTG’s president.
Neither proposition, even viewing the evidence in the light most favorable
to Plaintiffs, changes the analysis. While Defendants did exercise direct control
over certain aspects of the CTG enterprise, they wielded virtually no influence
over other essential components of the business, including when, where, in what
Plaintiffs fault the district court for pointing out that the first Superior Care
37
factor “concerns ‘degree of control exercised by the [Defendants].’” Saleem, 52 F. Supp.
3d at 538 (alteration in original) (quoting Brock, 840 F.2d at 1058). Plaintiffs contend this
is the incorrect test: “It is well established that the ‘power to control’ is . . . the
‘overarching concern’ of the control factor.” Appellant’s Br. 32 (citing Irizarry v.
Catsimatidis, 722 F.3d 99, 105, 114 (2d Cir. 2013)). But it is Plaintiffs who mistake the
“joint employer” test, which does have such a formulation, for the “independent
contractor” test, which turns on — consistent with our focus on “the economic reality”
— the actual exercise of control. Compare, e.g., Barfield, 537 F.3d 149; Zheng, 355 F.3d at
68, with Superior Care, 840 F.2d at 1058.
40
capacity, and with what frequency Plaintiffs would drive. “[A]ccepting that
Defendants engaged in some monitoring and discipline” with respect to
Rulebook standards does not alter this picture. Saleem, 52 F. Supp. 3d at 539.
While it may reflect a degree of control over Plaintiffs’ conduct, here, as in
Herman, the “opportunity for profit and loss was determined by the drivers to a
greater degree than [it was by Defendants].” 161 F.3d at 304. Drivers decided
with which dispatch base to affiliate (even among those integrated with CTG),
whether to purchase or rent franchises, and, once affiliated, how to go about their
work. They could and did provide rides in three separate ways for CTG, for
multiple car services concurrently, for independent, personal clients, and
through street hails (albeit in contravention of TLC rules). In short, the economic
reality was that Plaintiffs, with the assistance of CTG and as a “subscriber to [its]
services,” J.A. 732, operated like small businesses; they decided to affiliate with
Defendants based on their perceived economic interests, and not those of CTG.
To be clear, we note in conclusion the narrow compass of our decision.
Specifically, we do not here determine that it is irrelevant to the FLSA inquiry
that the Defendants provided Plaintiffs with a client base, that Defendants
charged fees when Plaintiffs utilized Defendants’ referral system, or that
41
Defendants had some involvement, if limited, in rule enforcement among
franchisees. We conclude only that assessing the totality of the circumstances
here in light of each Silk factor, undisputed evidence makes clear as a matter of
law that these Plaintiffs were not employees of these Defendants. In a different
case, and with a different record, an entity that exercised similar control over
clients, fees, and rules enforcement in ways analogous to the Defendants here
might well constitute an employer within the meaning of the FLSA. Plaintiffs
here, however, have raised no material issue to this effect. The district court
therefore properly found them to be independent contractors as a matter of law.
CONCLUSION
We have considered Plaintiffs’ remaining contentions and find them to be
without merit. For the foregoing reasons, we AFFIRM the judgment of the
district court.
42
