Court Opinion

ID: 6349254
Source: CourtListenerOpinion
Date Created: 2022-06-13 17:00:48.925924+00
Date Added: 2024-06-11T09:12:11.007450
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ALFRED JOHNSON, individually and         No. 21-55501
on behalf of other members of the
general public similarly situated,          D.C. No.
                  Plaintiff-Appellant,   5:17-cv-02288-
                                           DOC-SHK
                  v.

WINCO FOODS, LLC, a Delaware               OPINION
limited liability company; WINCO
HOLDINGS, INC., an Idaho
corporation,
                 Defendants-Appellees,

                 and

DOES, 1 through 10, inclusive,
                          Defendant.

      Appeal from the United States District Court
         for the Central District of California
       David O. Carter, District Judge, Presiding

          Argued and Submitted April 4, 2022
                 Pasadena, California

                   Filed June 13, 2022
2                   JOHNSON V. WINCO FOODS

    Before: Mary M. Schroeder, Sidney R. Thomas, and
             Carlos T. Bea, Circuit Judges.

                   Opinion by Judge Schroeder

                            SUMMARY*

                  California Employment Law

   The panel affirmed the district court’s judgment in favor
of WinCo Foods, LLC in a class action brought by Alfred
Johnson on behalf of himself and other WinCo employees in
California (“plaintiffs”), claiming compensation as an
employee for the time and expense of taking a drug test as a
successful applicant for employment.

    The district court entered judgment in favor of WinCo on
the ground that under California law, plaintiffs were not yet
employees when they took the drug test.

    Plaintiffs argued that because the tests were administered
under the control of the employer, plaintiffs must be regarded
as employees, as California law applies a control test to
determine whether an employment relationship existed. The
panel rejected this contention because control over a drug test
as part of the job application process is not control over the
performance of the job. In this case, the class members were
not performing work for an employer when they took the

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                JOHNSON V. WINCO FOODS                      3

preemployment drug test; they were instead applying for the
job, and they were not yet employees.

    Plaintiffs also contended under California law that class
members were employees under a “contract theory,” and that
the drug test should be regarded as a “condition subsequent”
to their hiring as employees pursuant to Cal. Civil Code
§ 1438, meaning that the employment contract was formed
before the drug test and WinCo could terminate the
employment relationship in the event of a drug test failure.
The panel also rejected this contention, and held that there
was no condition subsequent because plaintiffs were not hired
until they established they were qualified. In this case there
was no written contract, and the drug test was a condition
precedent. Applying the principles of California contract law,
the panel concluded that the class members did not become
employees until they satisfied the condition of passing the
employment drug test.

                        COUNSEL

Melissa Grant (argued), Ryan H. Wu, and Tyler Anderson,
Capstone Law APC, Los Angeles, California, for Plaintiff-
Appellant.

Kiran Aftab Seldon (argued), Kristina M. Launey, and
Michael Kopp, Seyfarth Shaw LLP, Los Angeles, California,
for Defendants-Appellees.
4                JOHNSON V. WINCO FOODS

                         OPINION

SCHROEDER, Circuit Judge:

                          Overview

    WinCo Foods requires a drug test of successful applicants
for employment before they can begin the duties of the job.
Plaintiff Johnson represents a class of employees seeking
reimbursement for the time and travel expenses required to
take the test. The district court entered judgment in favor of
WinCo on the ground that under California law, plaintiffs
were not yet employees when they took the drug test.
Plaintiffs appeal contending that they were employees. We
affirm.

    The same issues have arisen in a number of similar cases
removed from California state courts to federal district court.
The other district courts in those cases have also ruled in
favor of the employer. See Gallegos v. Atria Mgmt. Co., No.
EDCV 16-00888 JGB (Spx), 2018 WL 7500277 (C.D. Cal.
Feb 22, 2018); Brum v. MarketSource, Inc., No. 2:17-cv-241-
JAM-EFB, 2017 WL 4883376 (E.D. Cal. Oct. 27, 2017);
Hakeem v. Transdev Servs., Inc., No. 19-cv-02161-VC, 2021
WL 1626486 (N.D. Cal. Apr. 27, 2021). There is as yet,
however, no authoritative California state court decision. We
therefore affirm in a published opinion.

    Plaintiffs have two principal contentions. First they argue
that because the tests were administered under the control of
the employer, plaintiffs must be regarded as employees, as
California law applies a control test to determine whether an
employment relationship exists. See Martinez v. Combs,
49 Cal. 4th 35, 64 (2010). Second, and alternatively, they
                 JOHNSON V. WINCO FOODS                       5

contend that under California law the test should be regarded
as a “condition subsequent” to their hiring as employees. See
Cal. Civ. Code § 1438.

    Neither contention can succeed. The control test relates
to control over the manner of performance of the work itself,
not the manner of establishing qualifications to do the work.
There was no condition subsequent because plaintiffs were
not hired until they established they were qualified.

               Background of this Litigation

    The facts are not complicated. WinCo Foods LLC and
WinCo Holdings, Inc. (collectively “WinCo”) operate a
supermarket chain with just over 100 locations across the
western United States, including California. When WinCo
hires new employees, a Hiring Manager calls successful
applicants to extend what WinCo terms a contingent offer of
employment. The offer includes the job title, the pay, and the
job location. Using the instructions in WinCo’s “Verbal
Contingent Job Offer Talking Points,” the Manager discusses
the offer with the applicant. Per those instructions, the Hiring
Manager informs the applicant of a mandatory drug test: “as
part of your contingent job offer with WinCo Foods, we will
be conducting a pre-employment background check and drug
test on you.” When an applicant consents, WinCo instructs
applicants to report to a testing location. WinCo pays the
drug testing facility’s fee, but does not compensate for the
travel expenses and time required to undergo the testing.

    On August 23, 2017, Plaintiff Alfred Johnson, on behalf
of himself and other WinCo employees in California, filed
this class action in California state court. WinCo removed
the case to federal court under the Class Action Fairness Act,
6                JOHNSON V. WINCO FOODS

28 U.S.C. § 1332(d). Johnson filed his first amended
complaint, which forms the basis of this appeal, claiming
compensation as an employee for the time and expenses of
taking the drug test. Johnson alleges violations of the
California Labor Code relating to the payment of wages and
business-related expenses and the California Business &
Professions Code §§ 17200, et seq., proscribing unfair
business practices. The district court granted Johnson’s
motion for class certification and both sides then moved for
summary judgment. The district court held that Johnson and
class members were not employees of WinCo Foods when
they underwent drug testing and the court granted WinCo’s
motion for summary judgment.

    I. The Control Test Does Not Apply

    Johnson argues that he and his fellow class members were
employees when they took the drug tests because WinCo
exerted sufficient control over the drug testing process to
render them employees. Johnson relies on California case
law that looks to how much control the putative employer
exerts over the putative employee’s performance of the job to
evaluate whether there was an employment relationship
between the two parties. See, e.g., Martinez, 49 Cal. 4th
at 64; S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations,
48 Cal. 3d 341, 350 (1989). The parties do not dispute that
WinCo exercises control over the mandatory drug testing by
prescribing the time and date of the tests, the facility where
the tests take place, and the scope of those tests. The problem
with Johnson’s argument is that control over a drug test as
part of the job application process is not control over the
performance of the job.
                 JOHNSON V. WINCO FOODS                      7

    We look to California law. For purposes of the California
Labor Code, the Industrial Welfare Commission (“IWC”)
defines an employer as “any person . . . who . . . employs or
exercises control over wages, hours, or working conditions of
any person.” Martinez, 49 Cal. 4th at 64 (quoting Wage
Order No. 14, Cal. Code Regs. tit. 8, § 11140(2)(C), (F)).
Relying on the IWC definitions, the Supreme Court of
California established the control test, looking to whether a
person controls the manner and means of accomplishing a
desired service as the principal test of an employment
relationship. S.G. Borello & Sons, Inc., 48 Cal. 3d at 350.

    In Martinez, the Supreme Court of California used this
control test to decide whether the defendants in that case were
joint employers and thus liable for unpaid wages and
liquidated damages. 49 Cal. 4th at 48, 71. The employees
were strawberry pickers hired by a farmer who was bankrupt
and they attempted to secure wages from the merchants who
sold the strawberries. Id. at 42–43, 48. The court held the
merchants were not liable. Id. at 71–77. The plaintiffs were
working for the growers and the growers, not the merchants,
exercised the requisite control over working conditions. See
id. In this case, by contrast, the class members were not
performing work for an employer when they took the
preemployment drug test; they were instead applying for the
job. They were not yet employees.

   This conclusion is further supported by California case
law recognizing the ubiquity of preemployment drug tests.
See Loder v. City of Glendale, 14 Cal. 4th 846, 886 (1997).
The Supreme Court of California recognized that there is a
“general societal understanding that . . . all job applicants
submit to a medical examination prior to hiring” and that
“[p]re-employment physical examination, including
8                JOHNSON V. WINCO FOODS

urinalysis, is simply too familiar a feature of the job market
on all levels.” Id. (internal citations omitted). The court held
that preemployment tests constituted a lesser invasion of
privacy than requiring testing of those already employed. Id.
at 886–87.

    Drug testing, like an interview or preemployment physical
examination, is an activity to secure a position, not a
requirement for those already employed. As the district court
below observed,

        There are many ways in which employers
        exercise some degree of control over job
        applicants. They may require that applicants
        appear at a certain time and place for an
        interview; that they undergo a writing or skills
        test; that they interview in a certain
        fashion—such as on a panel with other
        applicants; that they pass a background check;
        and so on. The fact that employers control the
        “manner” in which these activities take place
        does not magically convert applicants into
        employees.

Johnson v. WinCo Foods, LLC, No. ED CV 17-2288-DOC
(SHKx), 2021 WL 71435 at * 4 (C.D. Cal. Jan. 5, 2021).

    Johnson relies on a case involving staffing agencies,
Betancourt v. Advantage Human Resourcing, Inc., No. 14-cv-
01788-JST, 2014 WL 4365074 (N.D. Cal. Sept. 3, 2014). It
does not further plaintiffs’ position. In Betancourt, the
defendant was an agency supplying temporary staff. Id. at
*1. The defendant hired the plaintiffs as its temporary
workers so that they could be considered for hire by
                JOHNSON V. WINCO FOODS                      9

defendant’s clients. Id. The plaintiffs were considered
employees of the staffing agency because it controlled the
time, location, and manner of the placement interviews. Id.
at *4–*5.

    The key difference is that the plaintiffs in Betancourt
were doing the employment agency’s work when they went
to the job interviews, whereas Johnson and fellow class
members were not doing work for WinCo when they took the
drug tests. The court in Betancourt concluded that the
plaintiff class members were required to report for job
interviews as a part of their work for the agency. Betancourt,
2014 WL 4365074, at *7. The agency controlled the manner
in which the class members did their work for the agency, and
that work was applying for jobs with third parties. Id. at
*4–*5. The employment agency was their employer. Id. By
contrast, Johnson and the class members were not yet doing
work for WinCo. The fact that WinCo controlled the manner
in which they took the drug test did not make them
employees before they were qualified to report for work.

   II. The Drug Test Is Not a Condition Subsequent to
       Employment

    Johnson also argues that class members were employees
under what plaintiffs term a “contract theory.” That theory
looks to whether the contract of employment is created
before, or after, a condition is satisfied. Johnson contends
that the drug test is a condition subsequent, meaning that the
employment contract was formed before the drug test, and
WinCo could terminate the employment relationship in the
event of a drug test failure. See Cal. Civ. Code § 1438 (“A
condition subsequent is one referring to a future event, upon
the happening of which the obligation becomes no longer
10               JOHNSON V. WINCO FOODS

binding upon the other party, if he chooses to avail himself of
the condition.”). WinCo counters that the drug test is a
condition precedent, meaning that the applicant is not hired,
and the employment contract is not enforceable, until the
applicant successfully passes the drug test. See Cal. Civ.
Code § 1436 (“A condition precedent is one which is to be
performed before some right dependent thereon accrues, or
some act dependent thereon is performed.”).

    To determine whether a condition subsequent or
precedent exists, courts must look to the terms of the contract.
Int’l Bhd. of Teamsters v. NASA Servs., Inc., 957 F.3d 1038,
1043 (9th Cir. 2020) (citing Realmuto v. Gagnard, 110 Cal.
App. 4th 193, 199 (2003)). For example, in Teamsters, the
Ninth Circuit held that a contract providing that the “terms of
this Agreement shall only become operative if all of the
conditions set forth in paragraph 15 are satisfied” made the
stipulations in paragraph 15 a condition precedent to the
formation of a contract under California law. Id. at 1044.

    In this case we have no written contract, but we have a
verbal offer of employment. WinCo went to great lengths
when the verbal offer was made to communicate that its job
offer was conditional. The WinCo Hiring Manager has been
instructed in WinCo’s “Verbal Contingent Job Offer Talking
Points” to offer the applicant a contingent job offer (emphasis
added). The Hiring Manager must tell the applicant that the
preemployment drug test is a condition of WinCo’s
contingent job offer. WinCo also emails successful
applicants the “instructions related to the preemployment drug
test” (emphasis added). Class members who accepted such
offers must have known that they were accepting an
employment offer contingent on a successful drug test. See
Int’l Bhd. of Teamsters, 957 F.3d at 1044. The drug test is a
                JOHNSON V. WINCO FOODS                     11

condition precedent. As the district court below observed, “A
ruling for Plaintiff in this case would essentially suggest to
employers that there is nothing they can do to demarcate drug
testing as a pre-employment condition rather than a condition
subsequent.” Johnson, 2021 WL 71435 at *4.

    Johnson relies in major part on a workers’ compensation
case, Bowen v. Workers’ Compensation Appeals Board,
73 Cal. App. 4th 15 (1999). At issue in Bowen was whether
an injured baseball player had been hired in California, where
he accepted an offer subject to approval by the Commissioner
of Baseball, or out of state, where the Commissioner was
located and where the plaintiff worked. Id. at 17–18. The
question before the California Court of Appeal was whether
Bowen could receive benefits under California workers’
compensation law. Id. at 19.

    To answer this question, the court had to decide whether
the contract was made in California, where the player signed,
or out of state, where the Commissioner approved. See id.
at 26. The California court ultimately held that the
Commissioner’s approval was a condition subsequent to the
employment contract, so the contract was formed when
Bowen signed it in California, and Bowen could accordingly
receive benefits pursuant to California’s workers’
compensation law. Id.

   Johnson argues that this case is like Bowen and the
employment contract was made when the class members
accepted a comprehensive offer of employment over the
phone. According to Johnson, we should hold that the
WinCo employment contract was subject to a condition
subsequent, just as the court in Bowen held that the
Commissioner’s approval was a condition subsequent.
12               JOHNSON V. WINCO FOODS

    The court in Bowen, however, went to great lengths to
explain that it was deciding a workers’ compensation case
and its decision was guided by the policy of liberally
construing contracts in favor of employees in accordance with
California workers’ compensation law. It was not applying
common law contract principles.               The Workers’
Compensation Appeals Board (“WCAB”) had applied
common law contract principles to deny benefits, concluding
that Bowen’s employment relationship was not formed until
the Commissioner signed the contract out of state. Id.
at 20–21. The California court reversed, admonishing the
WCAB for applying the common law of contract instead of
applying the liberal policies of California workers’
compensation law. Id. at 19, 21. “[T]he matter before us is
not merely a suit on a contract. Rather, it is a workers’
compensation case which evokes the public policy of the
State of California reflected in section 3202 directing the
courts to construe liberally sections 3600.5 and 5305.” Id.
at 21. The Bowen court relied on numerous workers’
compensation cases to support its holding, distinguishing
them from common law contract cases because of the public
policy underlying workers’ compensation. See id. at 19–26.

    The Bowen opinion suggests that if the court had applied
California contract law, rather than workers’ compensation
principles, there would not have been a contract until all of
the conditions were satisfied. See id. at 21. This is not a
workers’ compensation case and therefore, applying the
principles of California contract law articulated in Bowen, the
class members did not become employees until they satisfied
the condition of passing the preemployment drug test.

    The California law is clear. There is no need to delay
resolution of this case and others that may be pending in the
                 JOHNSON V. WINCO FOODS                       13

federal district courts by certifying any questions to the
California Supreme Court.

                          Conclusion

    The judgment of the United States District Court for the
Central District of California, holding in relevant part that the
class members were not employees at the time of the drug test
and did not need to be compensated, is AFFIRMED.