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Ruiz v. Affinity Logistics Corp.

November 6, 2006


The opinion of the court was delivered by: John S. Rhoades, Judge United States District Court


I. Introduction

Defendant Affinity Logistics ("Affinity") moves for summary judgment as to Count I of the complaint filed by plaintiff Fernando Ruiz ("Mr. Ruiz"), an employee of Affinity. Count I alleges that Affinity has violated the Fair Labor Standards Act ("FLSA") by failing to pay Mr. Ruiz for overtime worked. For the reasons set forth below, the motion for partial summary judgment is granted.

II. Statement of Facts

Affinity "is a motor carrier engaged in the business of providing regulated, for-hire transportation services in interstate commerce operating under the authority of the Federal Motor Carrier Safety Administration." Affinity's Ex. 1, Hitt Decl. ¶ 2. Affinity hauls and delivers a variety of products, including appliances, for companies such as Sears.*fn1 Hitt Decl. ¶ 3. Mr. Ruiz was, at all relevant times, a driver for Affinity. See Affinity's Ex. 2, House Decl. ¶ 5. As such, Mr. Ruiz would deliver appliances to Sears' customers.

Greg Inwood, formerly the Divisional Vice President, Inventory Management, for Sears, Roebuck and Co. and currently a Divisional Merchandise manager with Sears, orders the appliances that are sold at Sears' retail outlets. See Affinity's Ex. 3, Inwood Decl. ¶¶ 1, 5; Inwood Depo. 5:15-24. According to Mr. Inwood, "[t]he orders are based on the forecasting of sales that will be made by the stores." Inwood Decl. ¶ 5. "The forecasts are based on historical sales information and anticipated appliance promotions." Id. The objective of the forecasts is to have enough appliances available to fill all customer orders without running out of appliances while, at the same time, not stocking any excess inventory." Id. Forecasts "are reviewed and adjusted as needed on a weekly basis." Id.

Appliances sold by Sears are manufactured at various locations throughout the United States, including Iowa, Indiana, Ohio, Kentucky, Arkansas, and Minnesota, as well as Mexico. Id. ¶ 4. "Sears takes title to and control of the appliances from the manufacturers through to home delivery." Id. ¶ 7. Sears is responsible for the shipment of these appliances although Sears' wholly-owned subsidiary, SLS, assists Sears in arranging for the shipment of the appliances. See Id. ¶¶ 4, 7; Affinity's Ex. 4, Miranda Decl. ¶ 9. In most cases, appliances are shipped from the manufacturers' locations to Sears' Direct Distribution Centers ("DDCs"), which are located through the United States and Canada. Miranda Decl. ¶ 6. Then the appliances are shipped from the DDCs to local "MDOs" for delivery to Sears' customers' homes. Id. However, special orders are shipped directly from the manufacturer to the MDO, from which they are delivered to the customer's home. Inwood Depo. at 31:3-13; 108:15-22.

When appliances arrive at the Ontario, California DDC from the manufacturing plant, they are checked in. Christina Miranda, the General Manager of the Ontario, California DDC that supplies the San Diego MDO, explains in her declaration that when appliances have already been sold, the turnaround time between the arrival of the appliances at the DDC and delivery to the MDO is generally between one and three days. Miranda Decl. ¶ 6. When appliances have not been sold by the time they reach the DDC, they are offloaded and "stored in the warehouse temporarily until the appliances are sold." Id. ¶ 7. "The appliances that have not already been sold remain at the Ontario DDC for generally no longer than two to three weeks before they are sold, delivered to one of the Sears retails stores or the MDOS and then delivered to the Sears retail customer." Id. It is undisputed that Mr. Ruiz delivered appliances from the San Diego Market Delivery Operation ("MDO") in San Diego, California, to Sears' customers within California.

According to Mr. Inwood, it is Sears' intent "that the appliances move from the manufacturers' facilities. . . . to its DDCs and then to its MDOs for delivery to Sears retail customers while stopping only long enough to maintain control over the inventory." Inwood Decl. at ¶ 8.

III. Analysis

Whether Mr. Ruiz is exempt from the FLSA overtime provision is a question of law. See Jones v. Giles, 741 F.2d 245, 248 (9th Cir. 1984) ("The district court's holding on the applicability of the 29 U.S.C. § 213(b)(1) exemption is a question of law and therefore we review de novo.").

A. Independent Contractor Exception to the FLSA

Affinity argues in a conclusory fashion that Mr. Ruiz is not covered by the FLSA because he is an independent contractor, as supposedly evidenced by the fact that Mr. Ruiz signed an "Independent Truckman's Agreement" in which he acknowledges he is an independent contractor. "[C]ontractual language, however, is not conclusive . . . . Economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA." Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748, 755 (9th Cir. 1979). As explained in Real,

The courts have identified a number of factors which may be useful in distinguishing employees from independent contractors for purposes of social legislation such as the FLSA. Some of those factors are:

1) the degree of the alleged employer's right to control the manner in which the work is to be performed;

2) the alleged employee's opportunity for profit or loss depending upon his managerial skill;

3) the alleged employee's investment in equipment or materials required for his task, or his employment of helpers;

4) whether the service rendered requires a special skill;

5) the degree of permanence of the working relationship; and

6) whether the service rendered is an integral part of the alleged employer's business.

Id. at 754. "The presence of any individual factor is not dispositive of whether an employee/employer relationship exists." Id. "Such a determination depends "upon the circumstances of the whole activity." Id. (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947)).

Because Affinity does not undertake to explain why, as a matter of law, these factors establish that Mr. Ruiz is an independent contractor, the court concludes that Affinity has not met its burden of ...

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