The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge
MEMORANDUM DECISION AND PROPERLY CLASSIFIED AS ORDER FINDING PLAINTIFF AND ABSENT CLASS MEMBERS INDEPENDENT CONTRACTORS
The above-captioned class action came before the Court without a jury on December 14, 15, and 16, 2010. Attorneys Daniel A. Osborn, Elic Eliahu Anbar, and Adrianne J. Leven appeared on behalf of Fernando Ruiz, individually and on behalf of all others similarly situated ("Plaintiffs"). Attorneys James H. Hanson and Adam Carl Smedstad appeared on behalf of Affinity Logistics Corp. ("Defendant" or "Affinity"). The Court heard testimony from witnesses Fernando Ruiz, Alfonso Sanchez, Oscar Arturo Reyes, Charles Hitt, Danny Lee Hansen, Robert William Crandell, and Gabriel Mejia. The Court heard opening arguments from counsel and admitted exhibits into evidence. At the close of trial, the parties waived oral argument, electing instead to file "final briefs" with the Court. (Doc. Nos. 178 & 180.)
This memorandum decision constitutes the Court's findings of fact and conclusions of law. These are based on the testimony and evidence admitted at trial and the principles of law that apply to those facts.
Defendant Affinity Logistics*fn1 was a Georgia corporation with its principal office located in Marietta, Georgia. (Joint Pretrial Order, Section III, 6.) Affinity provided regulated, for-hire home delivery and transportation logistics support services to various home furnishing retailers, including Sears, Home Depot EXPO, J.C. Penney, Wickes and Brueners. (Id., Section III, 7; see also Transcript at 169-70, 200-01, 219, 245-46, 296.)
In November 2003 and again in 2006, Affinity entered into a Home Delivery Carrier Agreement with Sears to arrange for drivers to perform home delivery services out of the San Diego MDO, located at 960 Sherman Street. (See Ex. 56 (2006 Sears Agreement); see also Transcript at 41-42, 118-, 171-72, 375-76, 727; Joint Pretrial Order, Section III, 5, 18.) Sears owned the San Diego Market Delivery Operation (MDO), but provided Affinity with offices at the warehouse. (Transcript at 304-05, 376.)
In late 2003, Plaintiff Ruiz met with Danny Hansen, who managed the Sears account for Affinity at the San Diego MDO. (Transcript at 414, 470.) After deciding to work for Affinity, Ruiz formed R&S Logistics ("R&S") by obtaining a Federal Employer Identification Number and establishing a separate business banking account for R&S. (Transcript at 544, 546-47, 549-51; see also Ex. 25.) Ruiz thereafter entered into the Independent Truckman's Agreement ("ITA") and Equipment Lease Agreement ("ELA") with Affinity. (Exs. 77, 78.) Both the ITA and the ELA provided that the parties intended to create an independent contractor relationship. (See Ex. 77, ¶ 9, Ex. 78, ¶ 2.) Ruiz thereafter began making deliveries for Affinity to Sears' customers, the details of which are discussed below.
This putative class action was transferred to this Court from the Northern District of California on November 14, 2005. (Doc. No. 1.) Plaintiff, on behalf of himself and all others similarly situated, alleged that Defendant misclassified the drivers as independent contractors, contending that they should have been classified as employees. (Id.) On January 28, 2009, this Court granted in part and denied in part Plaintiffs' motion for class certification. (Doc. No. 105.)
The Court denied class certification on all issues except for whether Affinity should have classified the class members, defined as all current and former delivery drivers who made home deliveries for Affinity in the State of California between May 18, 2001 and the resolution of the complaint, as employees rather than independent contractors. (Id.) This limited issue went to trial before the Court without a jury on December 14, 15, and 16, 2010.
II. Independent Contractor Presumption and Governing Law
The sole issue to be determined at trial is whether Plaintiffs were misclassified as independent contractors versus employees. Georgia law governs this determination. (See Doc. No. 79 at 6; Doc. No. 154 at 2 n.1.) Under Georgia law, if the contract designates the relationship between the parties to be one of principal and independent contractor, this designation is presumed to be true "unless other evidence is introduced to show that the employer exercised control as to the time, manner and method of performing work sufficient to establish an employer-employee relationship." Fortune v. Principal Fin. Group, Inc., 465 S.E.2d 698, 700 (Ga. Ct. App. 1995).*fn2
Here, the Independent Truckman's Agreement ("ITA"), the controlling contract entered into between the drivers and Affinity, explicitly states that "[t]he parties intend to create an independent contractor relationship and not an employer-employee relationship." (Ex. 77, ¶ 9.) The Equipment Lease Agreement ("ELA") also states that "[i]t is expressly understood and agreed that Contractor is an independent contractor of Affinity . . ." (Ex. 78, ¶ 2.)*fn3 Accordingly, the Court finds that the presumption arises and the burden shifts to Plaintiffs to rebut the presumption that Plaintiffs are indeed independent contractors.*fn4
To prove an employer-employee relationship, Plaintiffs must show that "the contract gives, or the employer assumes, the right to control the time, manner, and method of executing the work as distinguished from the right merely to require certain definite results in conformity to the contract." Larmon, 647 S.E.2d at 307; see also McLaine v. McLeod, 661 S.E.2d 695, 699 (Ga. Ct. App. 2008). Further expanding on this test, Georgia law provides:
The right to control the time means the employer has assumed the right to control the person's actual hours of work. The right to control the manner and method means the employer has assumed the right to tell the person how to perform all details of the job, including the tools he should use and the procedures he should follow.
Palma v. Ga. Farm Bureau Ins. Co., 606 S.E.2d 341, 344 (Ga. Ct. App. 2004) (citations omitted). Courts, including Georgia courts, have also looked to so-called "common law factors" "when deciding whether one acting for another is an independent contractor or an employee." Murphy v. Blue Bird Body Co., 429 S.E.2d 530, 532 (Ga. Ct. App. 1993) (citing Moss v. Central Ga. R. Co., 219 S.E.2d 593 (Ga. Ct. App. 1975)). These factors include:
(1) the extent of control which, by agreement, the employer may exercise over the details of the work; (2) whether or not the one employed is engaged in a distinct occupation or business; (3) whether or not the work to be performed is usually done under the direction of the employer or by a specialist who needs no supervision; (4) the skill required in the particular occupation; (5) whether the employer supplies the tools and the place of work for the one employed; (6) the length of time for which the person is employed; (7) the method of payment, whether by the time or by the job; (8) whether or not the work to be performed is a part of the regular business of the employer; (9) whether or not the parties believe they are creating an agency relationship; and (10) whether the employer is or is not in business. Id. (citations omitted); see also Restatement (Second) of Agency § 220(2).
The Court has examined the evidence submitted at trial and the relevant case law. While some factors support a finding of an employer-employee relationship, the Court finds that Plaintiffs have not established this by a preponderance of the evidence, especially in light of the independent contractor presumption. Instead, the predominant evidence supports a finding that Ruiz and the unnamed class members were correctly classified as independent contractors.
III. Plaintiffs Were Not Required to Perform the Work Themselves
The most prominent evidence that Affinity did not control the time, manner and method of the drivers is that Ruiz and the other drivers did not themselves have to do the work for which they were hired-the drivers could hire other drivers to load the trucks, drive the trucks, run the routes, make the deliveries, unload the trucks, and perform virtually all other aspects of the job. (See Transcript at 83-84, 87, 140-42, 527-28, 535, 545, 557-60, 580, 620, 713-14.) In fact, some of the drivers operated multiple trucks to complete the deliveries on any given day and hired drivers and helpers to staff those extra trucks. (Transcript at 86-87, 140-42, 527-28, 535, 713-14). One witness driver, Mejia, operated up to four trucks at one time. (Id. at 713-14.) Plaintiffs presented evidence that Affinity encouraged or repeatedly asked some drivers to drive extra trucks in an attempt to establish control; yet, these drivers testified that they were the ones who ultimately made the decision to run, or stop running, multiple trucks. (See id. at 80-81, 90-91, 139-41, 714.) The Court finds that the Plaintiffs' ability to hire others to operate the trucks and perform the services they contracted with Affinity to performs is highly indicative of an independent contractor relationship. An employee is not able to hire a substitute to do their work as these drivers were permitted, and even encouraged, to do.
Plaintiffs argue that, despite the drivers' ability to run extra trucks and hire other drivers and helpers, Affinity asserted control over Plaintiffs by requiring them to have all their helpers and second drivers approved. (See Transcript at 502-03.) Each helper had to submit to a background check. (Ex. 76; see also Transcript at 284-85, 319, 512, 736.) Second drivers were subject to the same hiring criteria and had to fill out the same application as the original driver. (Compare Ex. 3 with Ex. 51; see also Transcript at 100-01, 160, 527-528.) Further, Affinity monitored the performance and appearance of the helpers and second drivers, as set forth in a two-page "Delivery Team and Staff Appearance Policy" section of the application. (See Ex. 51.) Driver witnesses Reyes and Sanchez both testified that they were told by Affinity that their helpers did not meet the appearance requirements and that if this was not corrected, the helpers and/or the drivers would not be able to go on the route that day or perhaps the next day. (See Transcript at 61, 129.)
Initially, the fact that the second drivers are required to complete substantially the same application in order to be hired by Plaintiffs weighs in favor of finding the requisite control of an employee relationship. Upon closer review of the application, however, the Court finds that the application requirements were largely dictated by federal regulations and that compliance with federal regulations does not sufficiently establish employer-employee control under these circumstances. Moreover, any ...