Source: http://bryanschwartzlaw.blogspot.com/2014/08/
Timestamp: 2017-05-29 11:24:44
Document Index: 754309631

Matched Legal Cases: ['§226', '§218', '§218', '§226', '§2699', '§203', '§1102']

Bryan Schwartz Law: August 2014
Today, the Ninth Circuit Court of Appeals held, under California law, that FedEx drivers are employees, not independent contractors. As a result, Fed Ex, which had required the 2300 California drivers included in the case to pay for their own trucks, equipment and expenses, and work 9.5 to 11 hour days, is liable for violating the Labor Code. The case is Alexander v. FedEx, 12-17458, __F.3d__ (9th Cir. Aug. 27, 2014).
The contract that the FedEx drivers were required to sign appears to have been drafted in an effort to persuade a reviewing court that the drivers are independent contractors – it refers to the drivers as “contractors,” and says that no FedEx officer or employee would “have the authority to direct [the driver] as to the manner or means employed … [or] have the authority to prescribe hours of work … or other details of performance.” The problem for FedEx, however, was that, in the contract and elsewhere, FedEx did tell the drivers in great detail how, when and where to do their work. As Judge Trott wrote in his concurring opinion, in a quote (reportedly) attributable to Abraham Lincoln: “If you call a dog’s leg a tail, how many legs does a dog have? …. Four. Calling a dog’s tail a leg does not make it a leg.”
In applying the principal factor of California’s “right-to-control” test, the Ninth Circuit observed that FedEx’s detailed control over drivers included: control over the appearance of the drivers, from their mandatory uniforms to the color of their shoes and socks and the appearance of their hair; the specific shade of white paint to be used on their trucks, the mandatory use of FedEx logos on trucks, mandatory truck dimensions, and interior shelves in the truck of particular materials and dimensions; and the structuring of work-loads such that drivers had to work 9.5 to 11 hours per day, with requirements that they not leave the FedEx terminal in the morning until all of their packages were available, and return to the terminals no later than a specified time.
FedEx argued that drivers had some flexibility in the order in which they made their deliveries, and that they were permitted to be “entrepreneurial” by hiring helpers to allow them to handle multiple routes, but the Court, observing that FedEx maintained close control over the assignment of work and the right to reject proposed helpers, concluded that even if drivers had control over some aspects of the job, FedEx maintained “all necessary control.” Other relevant factors included the fact that the drivers worked for FedEx under long (one- to three-year contracts), which suggested that they were really employees, and that they were assisting the Company by carrying out its core business function – the delivery of packages.
The case was procedurally interesting in that it was filed in California but then consolidated into multi-district litigation in the District Court for Northern District of Indiana. The Indiana court, applying California law, granted summary judgment to FedEx. The Ninth Circuit Court of Appeals not only disagreed that FedEx was entitled to summary judgment, but held that the drivers were entitled to summary judgment.
The case stands for the proposition that if an employer’s workforce is doing the work of employees, the employer cannot avoid complying with the Labor Code’s employee protections by artful contract language: calling a dog’s tail a leg does not mean a dog has five legs.
The Court’s order is available here. If you have questions about your employment rights or about class actions seeking wages, please contact Bryan Schwartz Law.
Bill Jhaveri-Weeks
In Arias v. Superior Court (2009) 46 Cal.4th 969, the plaintiff brought a representative PAGA claim for wage and hour violations, among other claims. Id. at 976. The trial court granted defendant’s motion to strike the PAGA claim and other causes of action, for failure to comply with the pleading requirements for a class action. Id. Subsequently, the Court of Appeal issued a peremptory writ of mandate directing the trial court to strike other causes of action, but not the PAGA claim. Id. The California Supreme Court agreed with the Court of Appeal – holding that a plaintiff suing under PAGA did not need to comply with California’s class action requirements. Id. at 988. Arias addressed and dismissed three arguments posed by defendants: (1) the Court of Appeal’s construction of PAGA would lead to absurd results because one subdivision in the statute allows for class actions, while another subdivision does not, (2) the legislative history indicates the legislature intended actions under the act to be brought as class actions, and (3) the act violates due process rights of defendants. Id. at 982-84. Rejecting these positions, the Court held that a PAGA plaintiff sues as the “proxy or agent” of the state's labor law enforcement agencies. Id. at 986. As such, a PAGA plaintiff represents the same legal rights and interests as state labor law enforcement agencies. Id. Ultimately, the PAGA claim is an enforcement action, not a class action brought for recovery of civil penalties, so it need not comply with class action pleading requirements. Most federal courts have likewise held that a PAGA claim need not be certified under Rule 23. See, e.g., Cardenas v. McLane Foodservices, Inc. (C.D. Cal., Jan. 31, 2011) SACV 10-473 DOC FFMX, 2011 WL 379413, *3 (a PAGA claim neither purports to be a class action nor intends to accomplish the goals of a class action); Sample v. Big Lots Stores, Inc. (N.D. Cal., Nov. 30, 2010) C 10-03276 SBA, 2010 WL 4939992, *3 (the Class Action Fairness Act (CAFA) “applies only to state statutes or procedural rules that are similar to a federal class action brought under Rule 23” – but PAGA claims are distinct from class actions). But see Fields v. QSP, Inc. (C.D. Cal., June 4, 2012) CV 12-1238 CAS PJWX, 2012, WL 2049528, *5 (plaintiff must meet requirements of Rule 23 because PAGA is a procedural mechanism). II. PAGA Claims Cannot be Forced to Individual Arbitration.
In AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, the U.S. Supreme Court relied on the FAA to abrogate Discover Bank v. Superior Court (2005) 36 Cal.4th 148, which had held that the party with superior bargaining power unconscionably carried out a scheme to cheat large numbers of consumers out of individually small sums of money, using an arbitration agreement with a class action waiver to prevent class action and meaningful relief. This blog has discussed Concepcion previously on several occasions: here, here, and here. Yet, while Concepcion stunted class action litigation, it did not address PAGA representative actions brought on behalf of the LWDA. Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, review denied (Oct. 19, 2011), cert. denied, 132 S.Ct. 1910 (Apr. 16, 2012), held that PAGA claims are not subject to individual arbitration agreements. In Brown, the plaintiff brought both a class action claim and a PAGA claim against her employers for various labor code violations. Id. at 494. The employers moved to compel individual arbitration based on a provision in the employment contract, which they argued prohibited both class actions and representative PAGA claims. Id. at 495. While the class claim fell to arbitration, the PAGA claim averted arbitration. The Brown court concluded Concepcion did not address – and thus could not be binding on – PAGA, which is an enforcement action in which employees and their counsel act as an “agent or proxy” of the state. Id. at 503. See also Reyes v. Macy's, Inc. (2011) 202 Cal.App.4th 1119, 1124 (PAGA is not within the scope of individual arbitration because a PAGA claim is not an individual claim). Other courts disagreed with Brown and Reyes, including Iskanian v. CLS Transp. Los Angeles, LLC (Cal. Ct. App. 2012) 142 Cal.Rptr.3d 372. In Iskanian, the Court of Appeal declined to follow Brown and Reyes in a case brought by drivers, who brought a PAGA representative action but had signed an employment contract with an individual arbitration agreement. Id. at 375, 384.
The Court also reaffirmed Arias’ holding that a plaintiff bringing a PAGA claim acts as an “agent or proxy” of the state’s labor law enforcement agencies. Id. at 380-381. The Court also drew from the Supreme Court’s decision in EEOC v. Waffle House, Inc. (2002) 534 U.S. 279, which held that an employment arbitration agreement governed by the FAA did not prevent the Equal Employment Opportunity Commission (EEOC) from suing an employer on behalf of an employee bound by that agreement for victim-specific relief, because the EEOC was not a party to the arbitration agreement and could bring an enforcement action regardless of the private agreement. Iskanian, 59 Cal.4th at 386. Similarly, a PAGA claim lies outside the FAA's coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship. It is a dispute between an employer and the state. Id. III. PAGA Creates An Unwaivable Public Policy Right.
PAGA allows workers their day in court when the cost of litigation would otherwise impede access to justice. In Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, plaintiffs brought an unsuccessful class action for violation of wage and hour laws and unfair competition laws. The employer sought to recover fees for the defeated meal and rest period claims under Labor Code §226.7, invoking §218.5’s two-way fee-shifting provision. The court concluded that §218.5 did not apply to meal/rest claims and that neither party could recover attorneys’ fees for an action brought under §226.7. Id. at 1248. While the Kirby ruling shielded plaintiffs from having to pay an employer’s attorneys’ fees when they are unsuccessful in vindicating claims for denied meal and rest breaks, it also would have left workers in most cases without representation in bringing such claims. PAGA to the rescue. Under §2699(g)(1), a plaintiff who brings a PAGA claim to recover payment for missed meal and rest breaks can recover attorneys’ fees. PAGA may also be used to seek attorneys’ fees for other statutory provisions which vindicate public policy but do not contain separate fee provisions, such as waiting time penalty claims under Labor Code §203, and whistleblower claims under Labor Code §1102.5.The fee-shifting provision levels the playing field, especially for low-income workers going up against employers that would otherwise drown the workers’ claims in insurmountable litigation costs. V. PAGA Penalties
Additionally, in Sarkisov v. StoneMor Partners, L.P. (N.D. Cal., Apr. 3, 2014) C 13-04834 WHA, 2014 WL 1340762, *5, the Northern District of California held that a PAGA plaintiff can sue for PAGA penalties applicable to his own individual action – that is, for the injuries done just to him—without having to prove all PAGA penalties for everyone else in the same workplace. VI. PAGA and Joint Employers