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Benton v. Telecom Network Specialists, Inc.

California Court of Appeals, Second District, Seventh Division

October 16, 2013

LORENZO BENTON et al., Plaintiffs and Appellants,
v.
TELECOM NETWORK SPECIALISTS, INC., Defendant and Respondent.

APPEAL from an order of the Superior Court of Los Angeles County Nos. BC349267, BC354230, John Shepard Wiley Jr., Judge.

Aiman-Smith & Marcy, Randall B. Aiman-Smith, Reed W.L. Marcy and Hallie Von Rock, for Plaintiffs and Appellants.

Cook Brown, Brian D. Bertossa and Carrie E. Bushman, for Defendant and Appellant.

ZELON, J.

INTRODUCTION

Plaintiffs filed a wage and hour class action lawsuit against Telecom Network Services alleging, among other things, violation of meal and rest break requirements and failure to pay overtime. The proposed class consisted of approximately 750 cell-phone tower technicians, most of whom were hired and paid by staffing companies that contracted with TNS. The remainder of the technicians–approximately 15% of the proposed class–were hired and paid by TNS directly. Plaintiffs alleged that TNS was the employer of both categories of technicians and moved to certify their claims.

The trial court denied the motion, concluding that, even if it assumed TNS was the employer of every class member, plaintiffs could not establish TNS’s liability through common proof because: (1) the technicians worked under “a diversity of workplace conditions” that enabled some of them to take meal and rest breaks; and (2) the staffing companies that hired and paid many of the TNS technicians had adopted different meal, rest break and overtime policies throughout the class period. We reverse the order and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

A. Background Facts

Telecom Network Specialists (TNS) provides personnel services to the telecommunication industry. TNS’s customers, which include T-Mobile and Ericsson, own cell phone towers or supply cell phone equipment. TNS, in turn, locates “skilled technical laborers” to perform installation, maintenance and repair of equipment at its customer’s cell sites. TNS retains its technicians either by hiring them directly, or through staffing agencies which locate and hire technical personnel. Under its agreements with these staffing agencies, TNS pays each agency an agreed upon hourly rate for each hour of labor worked by the technician; the agency, in turn, pays the technician a separate hourly rate.[1]

On June 27, 2006, plaintiff Lorenzo Benton filed a class action complaint against TNS alleging numerous violations of California wage and hours laws, including: failure to pay overtime (Labor Code, §§ 510, 1194; Cal. Code Regs., tit. 8, § 11040, subd. (3)); failure to provide adequate meal and rest breaks (§§ 226.7, 512; Cal. Code Regs., tit. 8, § 11040, subds. (11) & (12)); failure to furnish accurate wage statements and maintain accurate payroll records (§§ 226, 226.3, 1174, 1174.5; Cal. Code Regs., tit. 8, § 11040, subd. (7)); and unfair business practices. (Bus. & Prof. Code, § 17200.)[2]

The operative second amended complaint, filed in 2008, alleged that every technician “hired to perform work for TNS’s [c]ustomers, either directly or through [staffing companies], were TNS’s employees, regardless of whether they may have also been the employees of the [staffing companies]” or “the label TNS or any other entity purported to apply to those persons such as.... ‘independent contractor’ or otherwise.” The complaint further alleged that “[n]either TNS nor its agents paid overtime” or “had any policy of providing meal breaks [or rest] breaks to the workers as required by California law.”

Plaintiffs’ “Class Action Allegations” stated that they sought to represent a class “consist[ing] of all persons who provided skilled technical labor for the benefit of TNS’s [c]ustomers through TNS where the work was performed in California within... [the c]lass period....” The complaint alleged that there were “numerous questions of law and fact common to the [class], ” including, in part: “[w]hether TNS was the employer of the [c]lass [m]embers”; “[w]hether TNS provided meal [and rest] breaks in accordance with California law”; and “[w]hether the [c]lass [m]embers were denied premium wages for overtime worked in violation of California law.”[3]

B. Plaintiffs’ Motion for Class Certification

1. Plaintiffs’ motion and supporting evidence

a. Summary of plaintiffs’ argument

On April 4, 2012, plaintiffs filed a motion for class certification asserting that the “principle [sic] issue presented in [the] suit... [was] whether TNS is the class members’ co-employer – all other issues in the case flow closely from this one.” Plaintiffs contended that this “princip[al] issue” could be determined on a class-wide basis through common proof demonstrating TNS exerted “exclusive day-to-day control” over all its technicians, including those who were referred to TNS by a staffing company (contractor technicians).[4]

In support, plaintiffs cited to evidence that, in their view, showed: (1) TNS treated its direct hire technicians and contractor technicians in the same manner; (2) TNS told contractor technicians what job site to attend and what work to perform; (3) while on the job site, contractor technicians worked under the exclusive control of TNS supervisors; (4) contractor technicians were required to enter their hours into TNS’s “Trinity” time keeping system, which then had to be approved by TNS supervisors; and (5) the staffing companies did not have any personnel at the TNS job sites and performed no supervisory functions regarding the work that contractor technicians performed for TNS.

Plaintiffs also argued that TNS’s liability for violating meal and rest period requirements could be determined on a class-wide basis. Plaintiffs contended that, under the applicable wage order, TNS was obligated to adopt a policy authorizing and permitting all of its technicians to take their statutorily-mandated meal and rest breaks. They further asserted that the evidence showed TNS had failed to adopt any such policy. Plaintiffs raised similar arguments regarding their overtime claims, asserting that common proof could be used to determine whether TNS had violated overtime laws by failing to ensure its staffing companies had paid the contractor technician’s overtime.

b. Summary of evidence filed in support of motion for certification

Plaintiffs’ motion was supported by: (1) more than 40 declarations from putative class members; (2) deposition testimony from two TNS employees and six staffing company employees; (3) numerous documents, including various TNS employee handbooks and several “master services agreements” that TNS had entered into with its staffing companies; and (4) a declaration from plaintiffs’ counsel.

The content of the plaintiffs’ class member declarations (only one of which was from a direct hire technician) was essentially identical. The declarants each stated that, after being hired by a staffing company, they were told to contact TNS to obtain information about their assignment. “Once [the contractor technician] made the initial contact at TNS, the day-to-day working conditions... were controlled exclusively by TNS.” The technicians’ assignments were distributed by a TNS supervisor, who told the technicians where to go and what work needed to be performed when they arrived. The technicians generally travelled from cell site to cell site, working either alone or with a team of other technicians. The work generally “consisted of performing installation, upgrading, testing and maintenance of cellular telephone sites in the field according to the direction of TNS.” According to the declarants, once they had received their assignment from TNS, the staffing company did not provide “any instructions, direction or supervision... regarding either what work [to] do or how to perform it....”

On the issue of rest periods, each of the declarants asserted: “No one at TNS ever told me what a rest break or meal break was, or whether I was permitted or entitled to take breaks, or when to take breaks, or anything else about breaks.” The technicians reported that although they were occasionally able to take breaks, they were rarely able to take an uninterrupted 10-minute rest break, or a 30-minute meal period. The inability to take uninterrupted breaks was caused, in part, by the technicians’ schedules and the nature of the cellular communications business. The declarants explained that TNS sought to avoid disruptions in cell service and therefore required its technicians to complete their job assignments “as quickly as possible”; frequently, work had to be completed during a “maintenance window” that ran between 10:00 p.m. and 6:00 [a].m., when “customer demand for service coverage is lowest.” TNS placed “considerable pressure” on technicians to “finish the work within the window and not to go into the peak service hours.” Thus, it was “usually not practical to take either rest or meal breaks while the work was ongoing. This was particular true when [a technician] was working alone....”

The declarants also stated that the staffing companies did not have any way of knowing if technicians were taking meal and rest periods. Each declarant also alleged that he or she had not considered any information the staffing company had provided regarding break periods, explaining: “Regardless of any policies regarding breaks that [the staffing company] might have had, I was being directly told what to do and supervised by TNS and I never considered whether the [staffing company] wanted me to take breaks... ”

The declarants also reported that they were required to enter their hours into a TNS time-keeping system called “Trinity.” A TNS supervisor was required to approve the technician’s reported time before it was finalized and reported to the staffing company. The Trinity system did not record whether technicians had taken rest or meal breaks, nor were technicians told to record when they had missed a break.[5]

Plaintiffs also submitted excerpts from depositions of two individuals TNS had designated as “persons most knowledgeable” (see Code of Civil Proc., § 2025.230[6]): Jeffrey Ellis, who provided testimony about TNS’s practices regarding contractor technicians; and Neal Gee, who provided testimony about TNS’s practices regarding direct hire technicians. Ellis had worked for TNS since 2001 and supervised technicians in California between 2001 and 2003, and again in 2009. As a supervisor, he was responsible for creating a work schedule, deploying technicians and ensuring the quality of the technicians’ work. Ellis stated that TNS maintained “ultimate control” of the work sites and was “responsible for the final quality of the work.” Ellis reported that, while on the job sites, TNS treated its direct hire technicians and contractor technicians in exactly the same way; both groups of technicians performed the same work, attended the same meetings and used the same type of equipment. Ellis also stated that a supervisor would not be able to distinguish a direct hire technician from a contractor technician based on their day-to-day duties.

Ellis testified that the technicians normally worked alone at a cell site. When asked what “instruction [he] would give... worker[s] as far as meal breaks and rest breaks, ” Ellis stated: “I would not tell them... you need to take a lunch now. They are in charge at the site.... [T]hey take their breaks, and they take their lunches when they take them.” Ellis was also asked what he did to ensure technicians working in the field took a 30-minute meal period for every five hours of work. In response Ellis stated, “[a]t the time I was out there, I was unaware that that was a California law requirement, ” adding, “[b]ut as far as lunches and breaks, [technicians] understood that was all right” and decided on “an individual basis on how... [to take] their meals.” Ellis explained that he first learned about California’s meal and rest period requirements through this lawsuit, which was “not common knowledge within the company.” After learning about California’s meal and rest period requirements, Ellis began informing technicians that they needed to read wage and hour posters that appeared at some of the TNS job sites and take their required meal and rest breaks. Ellis did not know if any other TNS supervisors or managers told technicians that they were entitled to meal and rest periods.

Ellis also stated, however, that in 2009 the president and vice president of TNS informed supervisors that technicians should start recording their meal periods into the “notes” section of Trinity. In 2010, Ellis received an email from management reminding supervisors to tell their technicians that they were required to comply with this requirement.

Neal Gee testified that, prior to 2009, TNS hired very few technicians directly, relying “primarily” on contractor technicians. Gee authenticated TNS employee handbooks from 2004, 2008 and 2008 and confirmed that TNS provided a handbook to all of its direct hire technicians. Each of the handbooks contained an identical “Meal and Rest Period Breaks” section stating: “Your supervisor will inform you when meals or breaks are to be taken and will designate the area to be used. Short rest breaks will usually be paid time and may be interrupted as necessary. You must remain on [TNS] premises when taking a [TNS]-paid break. Meal periods are usually non-paid time; therefore you should not work during that time. During exceptionally busy times, it may be necessary to shorten or interrupt scheduled lunch periods....” Gee also testified that contractor technicians did not receive an employment manual or any other documents describing “any kind of policies and procedure[s]... they were supposed to do or not do.” Gee also reported that, currently, all its technicians were required to record their meal and rest break periods in the notes section of Trinity.

Plaintiffs also submitted deposition testimony from six different staffing company employees, which showed that some of the companies had adopted meal and rest break policies and others had not. All of the staffing company employees, however, indicated that their company had “no way of knowing” whether the contractor technicians were “taking breaks when they were working on TNS jobs.” Several of the staffing company employees also stated that their company had no supervision, control or involvement in the day-to-day activities of contractor technicians who were working on a TNS project.

The documentary evidence plaintiffs submitted in support of their motion included numerous different “master service agreements” (MSAs) that TNS had entered into with its staffing companies between the years of 2003 and 2011. Although the terms of the MSAs were largely consistent, the wording of some provisions differed. Each of the MSAs stated that TNS had agreed to pay the staffing company a fixed, hourly rate for each contractor technician’s time; the staffing company, in turn, was “solely responsible” for compensating the contractor technician. The MSAs required the staffing company to submit weekly invoices, which were to be supported by copies of “Trinity time sheets, approved by TNS’s designated Site Manager.” The hourly rate that TNS paid to the staffing company did not have an overtime component, meaning that it paid the same hourly rate to the staffing company regardless of how many hours the technician worked during that time period.

All of the MSAs provided that TNS was “responsible for accepting or rejecting the [w]ork performed by [the contractor technician]” and retained sole discretion to remove any contractor technician from the work site. MSAs entered into in or before 2009 further provided that TNS was entitled to designate a site manager to maintain “control of the Work site” and required that contractor technicians “follow his direction at all times.”

MSAs entered into in 2010 and 2011 included a provision stating that the staffing company would “notify employees in writing of their rights and responsibility under applicable state and federal wage and hour laws including but not limited to, where applicable, any entitlement to overtime and/or double time, [and] any entitlement to meal and rest periods....” MSAs entered into in 2008 and 2009 contained a similar provision under which the staffing company coveted to comply with all applicable “federal and state wage and hour laws.” MSAs entered into in 2003 and 2005 contained no reference to compliance with wage and hour laws.

Plaintiffs also submitted a declaration from their attorney indicating that she had reviewed “payroll records” that several staffing companies had produced during discovery. The attorney stated that, based on her review, it “appear[ed] that six [staffing companies] paid overtime rates in accordance with California law. The payroll records provided by other [staffing companies] appear[ed] to show that ...


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