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Dynamex Operations West, Inc. v. Superior Court (Lee)

California Court of Appeals, Second District, Seventh Division

October 15, 2014

DYNAMEX OPERATIONS WEST, INC., Petitioner,
v.
THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent CHARLES LEE et al., Real Parties in Interest.

[REVIEW GRANTED BY CAL. SUPREME COURT]

ORIGINAL PROCEEDINGS in mandate, Michael L. Stern, Judge, Los Angeles County Super. Ct. No. BC332016

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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COUNSEL

Littler Mendelson, Robert G. Hulteng, Damon M. Ott; Sheppard Mullin Richter & Hampton, Ellen M. Bronchetti and Paul S. Cowie, for Petitioner.

No appearance for Respondent.

Pope, Berger & Williams, A. Mark Pope; Glancy Binkow & Goldberg, Kevin Ruf; Boudreau Williams and Jon R. Williams for Real Parties in Interest.

OPINION

PERLUSS, P. J.

Charles Lee and Pedro Chevez were hired by Dynamex Operations West, Inc. (formerly Dynamex, Inc.) (Dynamex), a nationwide courier and delivery service, as drivers to make deliveries of packages, letters and parcels to Dynamex customers. Prior to 2004 Dynamex had classified its California drivers as employees and compensated them subject to this state’s wage and hour laws. In 2004 Dynamex converted the status of all drivers from employee to independent contractor. This lawsuit was filed in April 2005 alleging that drivers, as a practical matter, continued to perform the same tasks as they had when classified as employees with no substantive changes to the means of performing their work or the degree of control exercised by Dynamex and, as a consequence, the reclassification of Dynamex drivers violated California law. The plaintiff, Charles Lee, sought to represent approximately 1, 800 drivers engaged by Dynamex as independent contractors. After its initial denial of class certification was reversed by this court, respondent superior court certified the proposed class in 2011.

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Over the course of the next two years, Dynamex twice moved to decertify the class. When its second motion was denied, Dynamex filed this petition for a writ of mandate, arguing the superior court had improperly adopted the definition of “employee” found in Industrial Welfare Commission (IWC) wage orders[1] to ascertain the status of class members (see Martinez v. Combs (2010) 49 Cal.4th 35 [109 Cal.Rptr.3d 514, 231 P.3d 259] (Martinez)), and had failed to use the common law test for distinguishing between employees and independent contractors discussed in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 [256 Cal.Rptr. 543, 769 P.2d 399] (Borello). According to Dynamex, if the Borello common law test, rather than the IWC standard approved in Martinez, is applied, the class must be decertified because the predominance of individual issues relevant to that test would make it infeasible to litigate plaintiffs’ claims as a class action.

We issued an order to show cause why respondent superior court should not be compelled to vacate its order denying the motion to decertify the class. We now grant the petition in part. We conclude the superior court correctly allowed plaintiffs to rely on the IWC definition of an employment relationship for purposes of those claims falling within the scope of IWC Wage Order No. 9-2001 (Wage Order No. 9). (Cal. Code Regs., tit. 8, § 11090.) With respect to those claims falling outside the scope of Wage Order No. 9, the common law definition of employee will control. As to those claims, we grant the petition to allow the superior court to reevaluate whether, in light of the Supreme Court’s recent decision in Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522 [173 Cal.Rptr.3d 332, 327 P.3d 165] (Ayala), class certification remains appropriate by focusing its analysis “on differences in [the defendant’s] right to exercise control” rather than “variations in how that right was exercised.” (Id. at p. 528.)

Factual And Procedural Background

1. The Motions to Certify and to Decertify the Class

Lee and his co-plaintiff, Pedro Chevez, are former same-day delivery drivers who were engaged by Dynamex as independent contractors. The operative second amended complaint alleges Dynamex’s classification of

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drivers as independent contractors rather than employees violated provisions of Wage Order No. 9, as well as various sections of the Labor Code, [2] and it had engaged in unfair and unlawful business practices under Business and Professions Code section 17200.

Lee’s first motion for class certification, filed in November 2006, was denied on two grounds—the inascertainability of the class and a lack of common issues. We reversed that ruling. (Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325 [83 Cal.Rptr.3d 241].) Based on the Supreme Court’s intervening decision in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 [53 Cal.Rptr.3d 513, 150 P.3d 198], we concluded the trial court had improperly denied Lee’s “motion to compel Dynamex to identify and provide contact information for potential putative class members, ” a ruling that ...


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