The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge
ORDER ON CR0SS-MOTIONS FOR CLASS CERTIFICATION
Now pending before the Court are cross-motions on class certification, which, naturally, Defendants oppose and Plaintiffs support. Defendants filed their motion first, on November 19, 2009, and Plaintiffs filed theirs on November 23, 2009. It's ironic for Plaintiffs to argue that Defendants' "maneuver", as they call it, "gratuitously results in duplicate briefing and leads to an unnecessarily exhausting discussion." (Doc. No. 44, p. 1.) "Nothing in the plain language of Rule 23(c)(1)(A) either vests plaintiff with the exclusive right to put the class certification issue before the district court or prohibits a defendant from seeking early resolution of the class certification question." Vinole v. Countrywide Home Loans, 571 F.3d 935, 939--40 (9th Cir. 2009). There's certainly duplicate and excessive briefing in the docket, but Defendants aren't entirely to blame.
Having considered the pleadings and the record, the Court GRANTS class certification in part and DENIES it in part.
This case is typical as far as employment actions go. Plaintiffs allege that Delta-T Group ("DTG") "willfully and maliciously" classified them as "independent contractors" in order to avoid treating them like the employees they are. (Compl. ¶ 1.) The difference, of course, is that under California law employees are entitled to things that independent contractors aren't: overtime pay, meal and rest breaks, comprehensive wage statements, and reimbursement of business-related expenses. The essence of Plaintiffs' complaint is that they were wrongfully denied each of these. They allege six claims, five arising under the California Labor Code and one, for unfair competition, arising under the California Business and Professions Code.
DTG is in the behavioral healthcare business. Its "good" - to pick a neutral word - is healthcare professionals: psychiatrists, psychologists, nurses, counselors, child and family therapists, special educators, and the like. Its clients are institutions that require the work of those professionals: outpatient clinics, hospitals, psychiatric inpatient facilities, residential treatment facilities, individual family homes, community centers, long-term care facilities, shelters, drug and alcohol treatment facilities, schools, foster care homes, child care centers, adult day care centers, and independent living centers. This much the parties can agree on.
So how exactly to describe the relationship between DTG, the healthcare professionals, and DTG's clients? That's where the parties' disagree and apply their own spin to the facts. DTG calls itself a "referral agency for independent contractor services" - a "broker" that "bring[s] together independent behavioral healthcare professionals with clients who need their services." (Doc. No. 34-1, p.3.) Plaintiffs, on the other hand, call DTG "a temporary staffing agency, supplying temporary staffing relief to the mental and behavioral healthcare industry." (Doc. No. 36-1, p. 3.) Plaintiffs also insinuate that DTG knows it's a staffing agency and goes to "great pains" not to sound like one. (Id. at p. 3 n. 1.) For example, an internal DTG training manual, under the heading "Do's and Don'ts," says, DTG provides Independent Contractors not employees.
Therefore, we must use the correct terminology when speaking to our customers. We have to be mindful of words that would imply we have an employer/employee relationship with our professionals for legal and liability reasons. (Doc. No. 36-2, Ex. X, DT 7589.) It goes on to advise using the words: "Referral Service" not "Employer"; "Independent Contractor" not "Employee"; "Assignment/Contract/Opportunity" not "Position/Job"; "Retain Services" not "Hired"; "Contracted" not "Worked"; "Invoice" not "Timecard"; "Compensated" not "Paid." (Id. at DT 7590--91.) In Plaintiffs' eyes this is evidence of a guilty conscience.
III. Legal Standard - Class Certification
Class certification is governed by Rule 23 of the Federal Rules of Civil Procedure, and it's appropriate when each of the four requirements of Rule 23(a), and one requirement of Rule 23(b), have been met. Dukes v. Wal-mart, Inc., 509 F.3d 1168, 1176 (9th Cir. 2007). The four requirements of Rule 23(a) are: "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a). These are commonly referred to as the numerosity, commonality, typicality, and adequacy requirements. The three requirements of Rule 23(b) are:
(1) prosecuting separate actions by or against individual class members would create a risk of:
(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;
(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
(3) the court finds that questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.
Fed. R. Civ. P. 23(b). It is on the basis of Rule 23(b)(3) that Plaintiffs seek class certification in this case.
Plaintiffs bear the burden of showing that these requirements are met and that class certification is warranted. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). The burden isn't shifted simply because Defendants moved to deny class certification first. Kimoto v. McDonald's Corps., No. CV 06-3032, 2008 WL 4690536 at *3 (C.D. Cal. Aug. 19, 2008). The burden, however, is slight, as "a court need only be able to make a reasonable judgment that Rule 23 requirements are satisfied." Marlo v. United Parcel Serv. Inc., 251 F.R.D. 476, 487 (C.D. Cal. 2008). Ultimately, it is within the discretion of the Court whether to certify a class. United Steel , Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Service Workers Int'l Union, AFL-CIO, CLC v. ConocoPhillips Co., 593 F.3d 802, 807 (9th Cir. 2010).
The underlying merits of a case shouldn't cloud the class certification analysis. The question is only whether the requirements of Rule 23 are met. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177--78 (1974). "[N]either the possibility that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the suit might unforeseeably prove the original decision to certify the class wrong, is a basis for declining to certify a class which apparently satisfies the Rule." Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975).
Finally, although it is no license to approach the class certification question with insouciance, Rule 23 further provides that "[a]n order that grants or denies class certification may be altered or amended before final judgment." Fed. R. Civ. P. 23(c)(1)(C). The Court's decision whether to certify Plaintiffs' case as a class action is therefore "inherently tentative." Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.11 (1978). "Even after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation." Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 160 (1982); see also United Steel, 593 F.3d at 809 (district court "retains the flexibility to address problems with a certified class as they arise, including the ability to decertify").
IV. Legal Background - California Labor Law
As Plaintiffs put it, "all causes of action rest on resolution of a single common issue: whether Defendants' temporary workforce operate as employees or independent contractors under the law." (Doc. No. 36-1, p. 9.)
Under California law, "the principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired . . . ." S.G. Borello & Sons, Inc. v. Dep't of Industrial Relations, 48 Cal.3d 341, 350 (1989) (quoting Tieburg v. Unemployment Ins. App. Bd., 2 Cal. 3d 943, 946 (1970)) (internal quotations omitted). There are also "secondary indicia of the nature of a service relationship," including whether an alleged employer has the right to discharge at will and without cause. Id. at 350--51. Additional factors that have been derived principally from the Restatement Second of Agency include:
(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee. (Id. at 351.)
DTG denies that Plaintiffs can satisfy the commonality, typicality, and adequacy requirements of Rule 23(a), as well as the superiority requirement of Rule 23(b)(3). It concedes, as it should, that Plaintiffs can satisfy the numerosity requirement of Rule 23(a).
Because the failure to satisfy any one requirement is fatal to class certification, the Court will consider them in sequence.
A. Arguments on the Merits
First, however, it's worth observing that neither party, in briefing the class certification question, can help itself from making arguments that go to the underlying merits of this case. This is especially detrimental to DTG's cause because it implicates the company in a kind of contradiction: They argue that Plaintiffs are truly independent contractors - a merits argument - and at the same time that individual issues predominate and a class-wide determination of Plaintiffs' proper job classification is impossible. It's hard to see how both things could be true. "Defendant cannot, on the one hand, argue that all reporters and account executives are exempt from overtime wages and, on the other hand, argue that the Court must inquire into the job duties of each reporter and account executive in order to determine whether that individual is exempt." Wang v. Chinese Daily News, 231 F.R.D. 602, 613 (C.D. Cal. 2005). Now, it may be that DTG believes its workers are in fact independent contractors for reasons unique to each individual, but it's more likely the case the DTG believes the independent contractor classification is universally appropriate. That runs at cross-purposes with the reason for objecting to class certification, which is that it's impossible to reach general conclusions about the putative class as a whole.
DTG's moving memo starts out on the right note: "Individual questions of fact and law clearly predominate in this case because it will be necessary to undertake an individual examination of each class member under the multi-factored, fact-intensive independent contractor test." (Doc. No. 34-1, p. 2.) But the "Statement of Facts" that follows reads as though it's right out of a summary judgment brief.
For example, DTG describes the relationship between it and healthcare professionals in a manner intended to justify the independent contractor classification:
Defendants serve as referral agencies in the behavioral healthcare industry. This process entails: (I) DSD or DLA receives a request from a client regarding the need for certain behavioral healthcare services; (ii) searches its registry for qualified professionals; (iii) the opportunity is offered to one or more qualified professionals; (iv) the professional is free to accept or reject the offer; (v) if the professional accepts the offer, he or she is put into contact with the client; (vi) the professional and client then determine the schedule, scope of responsibilities, and length of contract; (vii) the professional provides services to the client at the client's facility or at the homes of individual consumers; and (viii) the professional submits an invoice to DSD or DLA documenting the services provided, and based on the invoice, the client is billed and a compensation check is provided to the professional. (Id. at pp. 3--4.)
It insists that named Plaintiffs Norris-Wilson and Papa weren't provided with training, assigned tasks, held to schedules, or required to submit assignments - all indicia ...