The opinion of the court was delivered by: Honorable Janis L. SammartinoUnited States District Judge
MEMORANDUM DECISION AND ORDER FOLLOWING REMAND FINDING PLAINTIFF AND ABSENT CLASS MEMBERS PROPERLY CLASSIFIED AS INDEPENDENT CONTRACTORS
On remand from the Ninth Circuit, this matter is before the Court to resolve a limited issue that is central to this class-action lawsuit: Whether, under California law, Affinity Logistics Corporation ("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. This Memorandum Decision and Order Following Remand is based on the testimony and evidence admitted at the December 2009 bench trial,*fn1 as well as the arguments presented in the parties' briefs following remand. (ECF Nos. 209, 210, 214, 215) Having considered the evidence presented, the parties' arguments, and the law, the Court concludesthat Affinity met its burden of establishing that Plaintiffs were correctly classified as independent contractors and finds in favor of Affinity.
This putative class action was transferred to this Court from the Northern District of California on November 14, 2005. (Transfer Order, ECF No. 1) Plaintiff Fernando Ruiz ("Ruiz"), on behalf of himself and all others similarly situated (collectively, "Plaintiffs"), alleged that Affinity misclassified the drivers it hired to perform home delivery services as independent contractors, contending that they should have been classified as employees. On January 28, 2009, the Court certified the class on the lone issue of whether Affinity should have classified the class members as employees, rather than independent contractors, (Class Cert. Order 1, ECF No. 105), and this limited issue went to trial.
Following a three-day bench trial in December 2009,*fn2
the Court-applying Georgia law-found that Affinity properly
classified Ruiz and the absent class members as independent
contractors, as summarized in a Memorandum Decision and Order Finding
Plaintiff and Absent Class Members Properly Classified as Independent
Contractors ("Memorandum Decision"). (Mem. Decision, Mar. 22, 2010,
ECF No. 186) Ruiz appealed, and the Ninth Circuit-concluding that
California, not Georgia, law applied-vacated and remanded in a
February 8, 2012, opinion. Ruiz v. Affinity Logistics Corp., 667 F.3d
1318 (9th Cir. 2012).
Accordingly, the Court now revisits this issue, this time applying California law to the facts as established at the December 2009 bench trial. The Court accepted and reviewed briefs following remand from Plaintiffs, (Pls.' Brief, ECF No. 210), and Affinity, (Def.'s Brief, ECF No. 209), and replies from both parties, (Pls.' Reply, ECF No. 214); (Def.'s Reply, ECF No. 215).
2. Factual Background*fn3
Affinity,*fn4 a Georgia corporation, 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. 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 Market Delivery Operation ("MDO"). Sears owned the San Diego MDO, but provided Affinity with offices at the warehouse.
Ruiz worked as a driver for Affinity during the class period, making deliveries for Affinity to Sears customers. Ruiz decided to work for Affinity in late 2003 after meeting with Dan Hansen, who managed the Sears account for Affinity at the San Diego MDO. Before starting his work for Affinity, Ruiz formed his own business, R&S Logistics ("R&S"), by obtaining a Federal Employer Identification Number and establishing a separate business banking account for R&S.
To work as a driver for Affinity, Ruiz and the other Plaintiff drivers were required to enter into the Independent Truckman's Agreement ("ITA") and Equipment Lease Agreement ("ELA") with Affinity. Both the ITA and the ELA provided that the parties intended to create an independent contractor relationship:
Control and Exclusive Use. . . . The parties intend to create an independent contractor relationship and not an employer-employee relationship.(Trial Ex. 77, at ¶ 9 (ITA))
Independent Contractor (a) Contractor, in the performance of this Agreement, will be acting in his own separate capacity and not as an agent, employee, partner, joint venture or associate of Affinity. It is expressly understood and agreed that Contractor is an independent contractor of Affinity in all manners and respects and that Contractor is not authorized to bind Affinity to any liability or obligation or to represent that it has any such authority. (Trial Ex. 78, at ¶ 2 (ELA))
Additionally, under the ELA, Affinity leased "the equipment with a driver" from Plaintiffs. (Trial Ex. 78, at ¶ 1) Among the "equipment" Affinity leased from Plaintiffs under the ELA was the truck the drivers used to complete their deliveries. In a somewhat circular arrangement, Affinity actually leased the trucks from Ryder Truck Rental and subleased the Ryder trucks to Plaintiffs, who in turn leased the truck and driver back to Affinity under the ELA.
Although Ruiz and the other Plaintiff drivers could accomplish the deliveries themselves, they were not required to do so. Indeed, many Plaintiffs hired other drivers or operated multiple trucks, hiring second drivers and helpers to run these additional delivery routes. Further details of the contractual arrangement for delivery services between Plaintiffs and Affinity are discussed below.
"[U]nder California law, once a plaintiff comes forward with evidence that he provided services for an employer, the employee has established a prima facie case that the relationship was one of employer/employee." Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010) (citing Robinson v. George, 105 P.2d 914, 917 (Cal. 1940)). "'[T]he fact that one is performing work and labor for another is prima facie evidence of employment and such person is presumed to be a servant in the absence of evidence to the contrary.'" Id. (quoting Robinson, 105 P.2d at 116). Under these principals-and as directed by the Ninth Circuit in applying these principals to the facts of this case*fn5 -Affinity carries the burden to "prove, if it can, that the presumed employee was an independent contractor." Id. (citing Cristler v. Express Messenger Sys., Inc., 89 Cal. Rptr. 3d 34, 43 (Cal. Ct. App. 2009)).
Under California law, that the parties placed a label on their relationship "is not dispositive and will be ignored if their actual conduct establishes a different relationship." Estrada v. FedEx Ground Package Sys., Inc., 64 Cal. Rptr. 3d 327, 335 (Cal. Ct. App. 2007) (citing S.G. Borello & Sons, Inc. v. Dep't of Industrial Relations, 769 P.2d 399, 403 (Cal. 1989)). Instead, "the most important factor [informing the employee/independent contractor distinction] is the right to control the manner and means of accomplishing the result desired." Cristler, 89 Cal. Rptr. 3d at 38 (internal quotation marks omitted); accord Estrada, 64 Cal. Rptr. 3d at 335 ("The essence of the [common law] test [of employment] is the 'control of details'-that is, whether the principal has the right to control the manner and means by which the worker accomplishes the work . . . .").
California courts also look to several secondary factors to ascertain the nature of a service relationship. Borello, 769 P.2d at 404. Thus, in addition to the control test, "strong evidence in support of an employment relationship is the right to discharge at will, without cause." Id. (internal quotation marks and brackets omitted). And Courts also look to the following factors derived from the Restatement Second of Agency: (1) whether the worker is engaged in a distinct occupation or business, (2) whether, considering the kind of occupation and locality, the work is usually done under the principal's direction or by a specialist without supervision, (3) the skill required, (4) whether the principal or worker supplies the instrumentalities, tools, and place of work, (5) the length of time for which the services are to be performed, (6) the method of payment, whether by time or by job, (7) whether the work is part of the principal's regular business, and (8) whether the parties believe they are creating an employer-employee relationship.
Estrada, 64 Cal. Rptr. 3d at 335 (citing Borello, 769 P.2d at 404 (citing Restatement (Second) of Agency § 200)). Finally, in addition to those factors covered by the Restatement, Borello noted several other relevant factors including "the alleged employee's opportunity for profit or loss depending on his managerial skill" and "the alleged employee's investment in equipment or materials required for his task, or his employment of helpers." Borello, 769 P.2d at 407.
According to Affinity, "[a]pplying California law to [the Court's factual] findings will not alter the conclusion this Court previously reached." (Def.'s Brief 1, ECF No. 209) Affinity places much emphasis on the fact that the Memorandum Decision "addressed and resolved" several of the same factors that are applicable under California law. (Def.'s Reply 1, ECF No. 215 (referring to Mem. Decision 5, ECF No. 186 (concluding that "some factors support a finding of employer-employee relationship" but that "the predominant evidence supports a finding that Ruiz and the unnamed class members were correctly classified as independent contractors"))) And, even for the factors the Court did not previously consider, Affinity argues that "the evidence bearing on [these factors] also weighs in favor of finding that Affinity properly classified Ruiz and the [drivers] as independent contractors." (Id.)
Plaintiffs disagree, arguing that Affinity has failed to carry the burden that now falls on them, and that "[t]he overwhelming weight of the evidence establishes that the drivers were misclassified." (Pls.' Brief 2, ECF No. 210) Plaintiffs correctly point out that the above factors should be applied by reference to and with deference for the remedial purposes of California's protective legislation. (Pls.' Brief 3--4, ECF No. 210); see also Ruiz, 667 F.3d at 1324 ("The California Supreme Court recognized that [the multi-factor test for determining employment status] 'must be applied with deference to the purposes of the protective legislation' that the worker seeks to enforce."(quoting Borello, 769 P.2d at 406 (emphasis added))). But Plaintiffs also challenge the Court's prior credibility and ...