United States District Court, N.D. California
ORDER DENYING DEFENDANT'S MOTION TO DECERTIFY THE
CLASS; GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY
JUDGMENT; GRANTING DEFENDANT'S MOTION FOR SUMMARY
JUDGMENT AS TO MAGDALENO AND DENYING AS TO COHICK AND ACKEL
RE: DKT. NOS. 152, 154, 155
William H. Orrick United States District Judge.
a classwide misclassification case involving vendors who
perform property preservation services in California for
Field Asset Services, Inc. I previously granted
plaintiffs' renewed motion for class certification after
they “limit[ed] the class to a group of vendors over
which FAS has a uniform right of control.”
Certification Order at 2 (Dkt. No. 85). FAS now moves to
decertify the class, and for summary judgment as to one of
the named plaintiffs and two absent class members. Plaintiffs
move for partial summary judgment as to their status as
employees under the law, and their resulting entitlement to
expenses and overtime pay.
FAS again highlights manageability concerns that complicate
class treatment, as it has throughout this litigation, those
concerns are not substantial enough to justify decertifying
the class. The class meets the requirements of Rule 23 and
discovery has not revealed otherwise. The overwhelming weight
of the evidence supports a finding that FAS retained and,
more often than not, actually exercised a right to
control the manner and means of the vendors' work. While
some of the secondary factors for evaluating proper
classification fall in FAS's favor, they cannot overcome
the powerful evidence of control that establishes that the
vendors are employees as a matter of law. A reasonable jury
could not return a verdict for FAS on that issue.
Accordingly, plaintiffs' motion for partial summary
judgment is GRANTED as to FAS's affirmative defense that
the vendors are independent contractors and as to its
liability for failing to pay overtime and business expenses.
FAS's motion for summary judgment is GRANTED as to
purported class member Julia Magdaleno, but DENIED as to
Matthew Cohick and Eric Ackel.
FAS's Business Model
a property preservation, maintenance, and repair services
company for foreclosed and real-estate-owned
properties. Hunter Decl. ¶¶ 2, 8 (Cubre
Decl. ¶ 46, Ex. 45, Dkt. No. 189-6, 50-2). It maintains
a network of “vendors” to perform work at the
properties for the clients. Hunter Decl. ¶ 5; Hunter
Dep. at 354:5-10 (FAS's “Person Most
Knowledgeable”)(Duckworth Decl. Ex. 2, Dkt. No. 155-3).
Vendors may range in size from sole proprietors to large
corporations. Cubre Decl. ¶ 4 (Dkt. No. 156).
owns the contracts with its property-owner clients and serves
as the intermediary between clients and vendors-forbidding
clients from contacting Vendors and hiring them directly.
Hunter Decl. ¶ 6; Hunter Dep. at 66:3-5
(“Generally the point of contact for the vendor would
be FAS, as FAS is facilitating the vendor relationship on
behalf of the client.”); Pl.'s Mot. for Partial
Summary J. at 3 (“MPSJ”)(Dkt. No. 155). A
“company” applies to become a vendor by submitting a
complete Vendor Qualification Packet (“VQP”),
which sets out the terms of the relationship between the
parties. Hunter Decl. ¶¶ 8-10; 2009 VQP
with attachments (Duckworth Decl. ¶ 20, Ex. 17, Dkt. No.
155-18); 2009-2013 VQPs (Duckworth Decl.¶ 38, Exs.
34-38, Dkt. Nos. 155-35-155-39); 2013 VQP (Duckworth Decl.
¶ 9, Ex. 6, Dkt. No. 155-7). In addition to the main
agreement, the VQP includes a Release Authorization; a Vendor
Checklist, on which vendors indicate which type of services
they offer; Insurance Requirements sheet; Errors and
Omissions Insurance Acknowledgement; Vendor Packet Checklist;
Vendor Checklist for Photos Needed; Lock Change/Securing
Service Requirements and Cost Schedule; Plywood Boarding
Panel Detail; Request for Taxpayer Identification Number; a
Letter detailing the importance of quality
control; Approved Vendor Quality Policy; and
Personal Property Policy and Acknowledgment. 2009 VQP (Dkt.
No. 155-18); 2013 VQP (Dkt. No. 155-7).
Vendor Qualification Packets contain instructions for the
standard services performed by vendors,  including
re-keys, board-ups, debris removal, hazardous material
removal, yard services, janitorial/maid services, roof tarps,
pool service, snow removal, mold/water damage, and
winterization/de-winterization. Duckworth Decl.¶ ¶
9, 38, Exs. 6, 34-38. The VQPs also dictate insurance
requirements, photo documentation specifications, pricing and
invoicing procedures, timelines for completing services, and
penalties for failing to comply with FAS's terms.
Id. By signing, vendors attest that they will carry
General Liability and Errors and Omissions (E & O)
Insurance, and will list FAS as an additional insured.
E.g., 2013 VQP (Dkt. No. 155-7 at 5); 2009 VQPs
(Dkt. Nos. 155-35 at 5; 155-36 at 5; 155-37 at 5); see
also Insurance Requirements attached to 2009 VQP
(setting specific coverage requirements)(Dkt. No. 155-18 at
16-17). The 2011 version expands these requirements,
“FAS requires and you agree that you will carry general
liability, errors & omissions, workers compensation, and
auto insurance.” 2011 VQP (Dkt. No. 155-38 at 6);
see also 2013 VQP (Dkt. No. 155-7 at 5). It offers a
Master E & O policy to all approved vendors. Hunter Dep.
at 43:22-44:5. FAS instructs that “[v]endors are the
eyes and ears at a property; therefore it is necessary that
vendors report any damages, hazardous, or unsafe conditions
at a property… . Failure to do so will result in the
vendor's liability to correct the issues at no cost to
FAS.” 2013 VQP (Dkt. No. 155-39 at 5). Through the
VQPs, FAS also retains the “Right to Set-Off” and
vendors must agree to indemnify FAS. 2009-2013 VQPs (Dkt.
Nos. 155-35 at 10; 155-36 at 10; 155-37 at 10; 155-39 at
versions of the VQP explicitly designate vendors as
“independent contractors, ” and include
additional provisions. E.g., 2011 VQP (Dkt. No.
155-38 at 7). A Lien Provision precludes vendors from filing
liens on “FAS maintained propert[ies].”
Id. (Dkt. No. 155-38 at 6). A Termination Provision
states, “[t]he relationship between you or your company
and FAS may be terminated by either you or FAS at any time
and for any reason, with or without notice.”
Id. (Dkt. No. 155-38 at 8). The Master Services
Agreement, which FAS began using in 2014, provides an
agreement term of one year, which automatically renews for
one year periods, “unless either party provides thirty
(30) days prior written notice of its intent to terminate the
Agreement.” 2014 Master Services Agreement § 11.1
(Duckworth Decl. ¶ 38.f, Ex. 39, Dkt. No. 155-40 at 8).
It also includes a mutual right to terminate the agreement,
with a notice provision. Id. § 11.2.
FAS receives a complete VQP and the terms are finalized, it
performs a background check and insurance verification.
Hunter Dep. at 84:10-13. Plaintiffs cite to vendor testimony
to support their claim that FAS requires them to obtain a
business license and an Employer Identification Number or
EIN. E.g., Bowerman Dep. at 13:7-11; 40:24-41:5
(Duckworth Decl. Ex. 3, Dkt. No. 155-4); Lopez Decl. ¶ 4
(Duckworth Decl. Ex. 68, Dkt. No. 155-69); Hart Dep. at
65:21-22 (Dkt. No. 196-31). FAS disputes that it required any
vendors to obtain an EIN prior to contracting with it, and
points to the fact that the VQPs do not request it.
Id. at 13 n. 32; see Hunter Dep. at
30:10-14. But see 2013 VQP (“Please ensure the
name on Line 1 (Taxpayer) and the corresponding EIN matches
exactly your information on file with the IRS.”)(Dkt.
No. 155-7 at 6). Once a vendor is approved, FAS issues a
username and password for vendors to interface with its
proprietary software, FAStrack. Hunter Dep. at 84: 17-19; see
also 2013 VQP (Dkt. No. 155-7 at 3). It requires Vendors to
be trained on the software (FAStrack, My FAStrack, and
FAStrack Mobile) before they can accept work orders and begin
working. Hunter Dep. at 87:2-15; see also 2013 VQP
(“Completion of training is required prior to receiving
work orders.”)(emphasis in original)(Dkt. No. 155-7 at
3); FAStrack Mobile Training Guide (Duckworth Decl. ¶ 6,
Ex. 13, Dkt. No. 155-14); 1/17/12 Prentiss Email and
Authenticating Dep. (“Our vendors are NOT utilizing the
mandatory FAStrack Mobile program.”)(emphasis
in original)(Miller Decl. ¶ 5, Ex. 2, Dkt. No. 196-3) .
FAS creates a “Vendor Profile, ” which includes
vendor contact information, zip codes for service areas, list
of services, agreed upon price sheet, and a signed VQP.
Hunter Dep. at 99:6-22; 2013 VQP (Dkt. No. 155-7 at 3).
purchase their own tools and equipment and choose
which services they will provide. Hunter Dep. at 27:25-28:1.
They are not required to have prior experience and frequently
did not have any. E.g., McLain Dep. at 149:11-16
(Dkt. No. 196-25); Pyzer Dep. at 30:3-13 (Dkt. No. 196-26);
Bowerman Dep. at 50:1-3 (Dkt. No. 196-27); Montes Dep. at
22:9-21 (Dkt. No. 196-28). FAS then assigns work to vendors
through work orders on FAStrack which vendors must accept or
reject within 24 hours. Hunter Dep. at 126:20-22; 174:15-20;
see also 2011 (Dkt. No. 155-38 at 2). FAS reserves the right
to reassign work orders if vendors fail to respond within 24
hours. E.g., 2013 VQP (“We expect acceptance
or decline responses within a few hours, but will reassign a
work order to another vendor, with or without notification,
if a response has not been received within 24 hours.”).
Work orders include the name of the vendor, the amount the
vendor will be paid, the address of the property, the FAS
contacts for the property, and a set of “work
instructions, ” which include detailed tasks to
complete per client specifications. Hunter Dep. at 37:10-13;
see e.g., FAS Work Order (Duckworth Decl. ¶ 10,
Ex. 7, Dkt. No. 155- 8). Once a vendor accepts a work order,
the work must be completed within three days. Hunter Dep. at
175:22-24; see also VQPs “Vendor Service
Schedule” (Dkt. Nos. 155-35 at 13; 155-36 at 13; 155-37
at 13). Vendors performing certain services are required to
post a notice, provided by FAS through a work order, that the
property is maintained by FAS. Id. at 115:9-23;
see also Vinson Dep. at 40:11-18 (Dkt. No. 196-21).
the work is completed, the invoice and required photo
documentation must be uploaded to the FAS system within 24
hours. FAS Work Order (Dkt. No. 155-8 at 3); see
also 2013 VQP (Dkt. No. 155-39 at 3). “Failure to
do so will result in loss of payment[, ] but if a vendor is
providing more than one service, “[l]ate invoices will
result in a 10% penalty assessed to the full invoice
amount.” 2013 VQP (Dkt. No. 155-39 at 3). Payment is
approved only after FAS has reviewed all before, during, and
after photos. FAS Work Order (Dkt. No. 155-8 at 3). Work
orders inform vendors that if work is “not completed in
accordance with the instructions provided and conditions set
forth in the work order, no fee will be paid[.]” FAS
Work Order (Duckworth Decl. ¶ 10, Ex. 7, Dkt. No. 155-8
set a cap on the number of work orders they can handle, but
FAS can lower it. Hunter Dep. at 164-165; see also
Pilisko Email and Authenticating Dep. (Miller Decl. ¶ 4,
Ex. 1, Dkt. No. 196-2)). Plaintiffs contend that vendors
“[i]n theory” can decline a work order, but FAS
will penalize them by, “among other things, providing
less work in the future.” MPSJ at 6; see,
e.g., FAS Email Exchange and Authenticating Dep.
(“[H]e [the vendor] is continuing to decline many work
orders on or past day 3 and not communicating with FAS on a
daily basis. … he has been placed on hold and been
removed from preferred vendor status.”)(Miller Decl.
¶ 10, Ex. 7, Dkt. No. 196-8 at 2); Bowerman Dep. at
39:9-22; 152:20-153:10 (Duckworth Decl. ¶ 6, Ex. 3, Dkt.
No. 155-4); Purkett Vendor Profile Notes (Duckworth Decl.
¶ 37, Ex. 33, Dkt. No. 155-34 at 3)(“The declining
of jobs that are listed in your coverage area can result in
the lowering of your status as a top tier vendor.”);
Kleisner Vendor Profile Notes (Duckworth Decl. ¶ 44, Ex.
45, Dkt. No. 155-46 at 4)(“When I [FAS vendor
administrator] send out emails like the ones I did today
[warning against ‘cherry-picking' work orders] to
CA vendors, usually they'll respond that they can accept
the order, once they realize the ramifications they started
by declining.”). FAS asserts that vendors are permitted
to select amongst the work orders. Hunter Dep. at 168:14-25.
FAS's PMK maintains that FAS does not track how often
vendors decline work, “however, it is captured as one
of the factors on the scorecard.” Id. at
uses “vendor blasts … to communicate information
that could apply to a large group of vendors.” Hunter
Dep. at 295:5-7; see also Valentino Dep. at 71:16-23
(Miller Decl., Ex. 10, Dkt. No. 196-11). Examples of
“vendor blasts” include a pricing guideline for
submitting invoices for lawn service, Valentine Email (Miller
Decl. ¶ 13, Ex. 10, Dkt. No. 196-11), and a Letter
regarding changes to Vendor Scorecards. Duckworth Decl., Ex.
16 (Dkt. No. 155-17). The “metrics” captured in
the scorecards includes: on time completion percentage,
inspections scores, broker signoff score, work order response
time, vendor work order acceptance, QC approval percentage,
and photo request percentage. Id. FAS's PMK
frames the scorecards as “primarily a tool for the
vendor to use and being able to manage their businesses and
to see how certain areas they were doing.” Hunter Dep.
at 225:16-18. But the vendor blast notifying vendors of
changes to the scorecard system discloses that FAS is
“increasing the number of metrics we will look at to
assess your performance.” Ex. 16 (Dkt. No. 155-17).
While FAS maintains that it stopped using the scorecard
system sometime in 2013, Hunter Dep. at 226:8-10, plaintiffs
point to evidence that the system was used as late as
December 2016. Olivier Decl. ¶ 82, Ex. 70, Dkt. No.
191-71[placeholder]; Dkt. No. 190-4 [unredacted version filed
also supervises vendors' work through frequent updates,
photo documentation requirements,  and quality control site
inspections. MPSJ at 8-11. Clients are not part of the
quality process. Hunter Dep. at 238:3-4. FAS's
“quality control program  ensures all service work is
performed according to specifications and done in a timely,
competent manner.” See, e.g., 2009 VQP (Dkt.
No. 155-35 at 12). The program includes “frequent
random inspections” inspections, after which FAS's
“QC department will contact [a vendor] immediately if
[the vendor's] invoice is insufficient and will give 24
hours for a resolution.” Id.; 2013 VQP (Dkt.
No.155-39 at 4). Vendors are required to correct
“unacceptable or incomplete work” at no cost.
Id. If vendors fail to respond to quality control
representatives, FAS reserves the right to use another vendor
to remedy the problem at the expense of the original vendor.
Id.; see also Hunter Dep. at 195:4-11. This
section of the VQP also dictates, “Your score and
standing with FAS will, in no small part, depend on the
reviews completed by our Field QC team.” Id.
Approved Vendor Quality Policy attached to the 2009 VQP
Vendor Status Recommendations and Reporting:
Through the findings and results of FieldQC Inspections, each
Field QC Team member is responsible for providing
recommendation(s) to Vendor Management pertaining to
promotions, adjustments, or denial of Vendor use and/or
Vendor status. Furthermore, Field QC Team members are charges
with the task of recommending whether or not a non compliant
offense is significant repetition or magnitude to be
considered for stages of progressive discipline, as defined
and outlined below.
Approved Vendor Quality Policy (Dkt. No. 155-18 at 28). The
policy details the progressive discipline scale, which
includes: stage one (10 percent or $100 penalty, verbal
warning, and requirement to submit written description of in
house quality control program), stage two (15 percent or $150
penalty, reduction in work order capacity, and written
warning placed in vendor's permanent FAS vendor profile),
stage three (25 percent or $250 penalty, loss of preferred
vendor status, revocation of payment, reduction in work order
capacity, immediate 30 day probationary period and mandatory
field meeting with FAS representatives), stage four (50
percent or $500 penalty, immediate 90 day suspension of
approved status, mandatory inspection of all work orders,
chargeback for correction costs, reduction in work order
capacity, and follow up conference at end of suspension), and
stage five (immediate termination without recourse and no
eligibility for rehire). Id. (Dkt. No. 155-18 at
29-30); e.g., Rangel (FAS Operations Supervisor)
Recommendation to Proceed with Stage 3 Discipline for a
particular vendor (Miller Decl. ¶ 11, Ex. 8, Dkt. No.
196-9); see generally Hunter Dep. at 211-238
(describing general quality control program).
approximately 2010, ” FAS reduced the Five Stage
program to Three Stages, “in order to be more effective
in recommending action due to quality deficiencies.”
Hunter Dep. at 218:21- 22; FAS Vendor Blast and Authenticated
Dep. (Miller Decl. ¶ 7, Ex. 4, Dkt. No. 196-5). The new
stages are no longer numbered, but labeled initial
notification of non compliance, final notification of non
compliance, and non compliance termination. Id. When
an invoice is declined for quality control reasons, it is
automatically captured in a vendor's
“scorecard.” Id. at 211:3-8.
point to “mandatory training” provided by
FAS-pertaining to FAS proprietary software and also to the
specific tasks performed by vendors. 2013 VQP
(“Completion of training is required prior to receiving
work orders.”)(emphasis in original)(Dkt. No. 155-7 at
3); see also FASTrack Mobile Training (Duckworth
Decl. Ex. 13, Dkt. No. 155-14); Winterization Training
(Duckworth Decl. Ex. 14, Dkt. No. 155-15); Email Exchange Re:
Mandatory Training Follow Up and Authenticating Dep. (Dkt.
No. 196-34); Mezin Dep. at 91:1-22. FAS counters with vendor
testimony that they were never offered any training.
Opp'n to MSPJ at 9 n.18. However, FAS's own marketing
material indicates that it provides “initial and
ongoing training.” Our National Vendor Network
(Duckworth Decl. ¶ 7, Ex. 4, Dkt. No.
155-5). Its PMK states that “FAS offers
certain informational sessions to the vendors which we call
REO Training Wagons.” Hunter Dep. at 282:7-9 (Dkt. No.
198-4). These training wagons are offered
“approximately a dozen [times] per year per
region.” Id. at 282:12-13. Although FAS
insists that these trainings were not mandatory, they are
labeled as “MANDATORY.” Id. at
282:17-25; see Personal Invitation to the REO
Training Wagon and Authenticating Dep. (Dkt. No. 196-35). It
also hosts a vendor convention in Texas, but the parties
dispute whether attendance was mandatory. Compare
Mezin Dep. at 69:12-70:2, 92:8-18 (Dkt. No. 155-26),
with Ackel Dep. at 78:24-80:5.
Particular Class Members
Julia Magdaleno (f.k.a. Bowerman)
2008, Julia Magdaleno married plaintiff Fred Bowerman, owner
of “sole proprietorship” BB Home Services
(“BBHS”), a company that contracted with FAS
beginning in 2007. See BBHS 2012 W-9 (Perez Decl.
¶ 2, Ex. 2, Dkt. No. 152-2 at 7); Magdaleno Dep. at
12:23-25 (Dkt. No. 152-4 at 57). Prior to that, Magdaleno was
an employee of BBHS. Magdaleno Responses to FAS RFA (Perez
Decl. ¶ 6, Ex. 5 (Dkt. No. 152-2 at 17). After the
marriage, Magdaleno ceased collecting paychecks from BBHS,
and considered herself a “manager” but not an
“owner” of BBHS. Magdaleno Dep. at 28:11-16.
Subsequent testimony states that she considered herself an
owner of BBHS when she married Bowerman. Id. at
174:13-16. She became a co-signor on BBHS's bank account,
entered into contracts on BBHS's behalf, and received
work orders from FAS with her name. Magdaleno Dep. at
2003, Cohick started Monster Mowers as a sole proprietorship
dedicated to a range of landscaping services, “from
installation to maintenance.” Cohick Dep. at 21,
22:11-23:12 (Dkt. No. 152-4 at 98). Cohick worked for
homeowners and operated the company with a single truck, a
lawnmower, a weed whacker, a leaf blower, and a chainsaw.
Cohick Dep. at 29:12-14; 78:13- 79:2. He started servicing
properties for FAS in 2006, and soon grew into “a
full-service vendor … from trash outs to initials to
winterizations to landscape to other repairs… .”
Id. at 23:6-12. He reportedly ran one advertisement
during the time frame from 2003 to present, “but
nothing to do with property preservation work.”
Id. at 51:22-25. He later clarified that the
advertisement had to do with landscaping services, targeted
at homeowners. Id. at 52:1-14. He operated a home
office and reportedly “bought office equipment for
Field Asset Services.” Id. at 46:11-13. FAS
required him to “have a cell phone, download their
program, their software, cameras, cell phones, computers, fax
and printer… .” Id. at 47:3-16.
2006 and 2014, Monster Mowers employed between 15 and 30
people, and sometimes used 15 to 30
subcontractors. Id. at 60:14-61:3, 64:8-65:8.
He testified that he had to secure workers to help him meet
FAS's work orders. Id. at 70:20-21; 77:14-78:4.
According to Cohick, “Field Assets trained [his]
employees.” Id. at 70:15-16.
2010, Monster Mowers incorporated and elected Cohick as a
director. Articles of Incorporation (Perez Decl., Ex. 6, Dkt.
No. 152-2 at 29). It received its California State
contractor's license in 2011. Cohick initially declared
that he “worked exclusively for FAS from 2006 until
late 2012, ” but later stated he worked 99.9 percent of
the time for FAS. Cohick Decl. ¶ 2; Cohick Dep. at
31:9-31:23. He recalled a specific period between August 2012
and May 2013 in which he worked for Asset Management
Specialists, another property preservation company.
Id. at 33:10-15. Between 2006 and 2008, he worked
for FAS seven days a week for 12 to 19 hours a day.
Id. at 138:16-139:11 (Dkt. No. 188-4). A
“[c]ouple of times a year or more” FAS inspectors
would inspect the way work was done, how it was done, the
quality of the work, and to make sure it was done to
completion. Id. at 110:24-111:18. FAS terminated
Cohick around May 2013. Monster Mowers Profile Notes (Perez
Decl. ¶ 17, Ex. 21, Dkt. No. 152-4 at 1).
company Kurb Appeal, Inc., began doing work for FAS around
2008 or 2009, and continued for about two to three years.
Ackel Dep. at 44:13-15; 53:9-11 (Perez Decl. Ex. 29, Dkt. No.
152-4 at 169). Before that, Ackel operated several other
corporations. Id. at 15:21-17:1. When Kurb Appeal
entered the property preservation business, it only provided
services for FAS. Id. at 26:9-18. Kurb Apeal had its
own office space where it stored its equipment. Id.
at 32:17- 35:1. It did not advertise, but may have had
business cards. Id. at 35:2-12. Kurb Appeal hired
twenty different people to help with property preservation
work, but Ackel only met four of them in person. Id.
at 37:25-38:12; 73:15-17. He would post an advertisement for
work on craigslist and explain the work over the phone.
Id. at 72:3-4. FAS did not tell Ackel to hire
people, nor did they ask him if he had. Id. at
personally performed property preservation work on average 14
to 16 hours a day, seven days a week. Id. at 62:6:9;
64:21 (Dkt. No. 188-5). He recalls about 30 occasions when
FAS came to properties unannounced to inspect the work.
Id. at 66:12-16; 74:6-11. FAS representatives might
spend anywhere from 20 minutes to three hours on a property.
Id. at 67:1-3. FAS profile notes indicate that it
ended its relationship with Kurb Appeal due to “lack of
communication.” Id. at 84:24-85:2. Ackel
reports that he decided not to do FAS work anymore
“[b]ecause of the money.” Id. at 85:5-9.
filed this class action complaint against FAS on January 7,
2013 (Dkt. No. 1), and filed an amended complaint on February
15, 2013. First Amended Compl. (“FAC”)(Dkt. No.
4). The first amended complaint brings causes of action for:
(1) breach of contract; (2) breach of the covenant of good
faith and fair dealing; (3) willful misclassification of
independent contractor status, Cal. Labor Code §§
226.8, 2753; (4) failure to pay overtime compensation, Cal.
Labor Code §§ 510, 1194, 1198; (5) failure to pay
wages due and owing, Cal. Labor Code § 200 et
seq.; (6) failure to indemnify employees for business
expenses, Cal. Labor Code § 2802; (7) violations of the
Unfair Competition Law (“UCL”), Cal. Bus. &
Prof. Code § 17200 et seq.; and (8) failure to
comply with Labor Code provisions in violation of the Private
Attorney General Act (“PAGA”), Cal. Labor Code
§ 2699 et seq. FAC ¶¶ 36-83.
September 17, 2014, I denied plaintiffs' motion for class
certification, but left open the possibility “that a
better defined, narrower class would be certifiable.”
Order on Mot. for Class Certification (“Prior
Order”)(Dkt. No. 61). Within 60 days, plaintiffs filed
a renewed motion to certify a class under Federal Rule of
Civil Procedure 23(b)(3), which proposed narrowing the class
definition. Pls.' Renewed Mot. (Dkt. No. 65). On January
26, 2015, I supplied a summary order granting plaintiffs'
renewed motion, Summary Order (Dkt. No. 78), and on March 24,
2015, I issued a reasoned decision “explain[ing] that
the modifications plaintiffs made to the proposed class
definition allow for common questions of law and fact to
predominate over questions affecting only individual class
members[.]” Order Granting Renewed Mot. for Class
Certification at 1 (“Certification Order”)(Dkt.
No. 85). The certified class is defined as:
All persons who at any time from January 7, 2009 up to and
through the time of judgment (the “Class Period”)
(1) were designated by FAS as independent contractors; (2)
personally performed property preservation work in California
pursuant to FAS work orders; and (3) while working for FAS
during the Class Period, did not work for any other entity
more than 30 percent of the time. The class excludes persons
who primarily performed rehabilitation or remodel work for
Pl.'s Renewed Mot. at 1: 7-10.
25, 2015,  the class administrator mailed notice to
628 individuals at 729 addresses, based on a list of 680
vendors identified by FAS as having provided services in
California during the class period. Cubre Decl. ¶ 14;
Olivier Decl. ¶ 4 (Dkt. No. 191-1). To aid in discovery,
I identified a group of “Discovery Vendors” as
“(1) vendor declarants in this case; (2) vendor
deponents in this case; and (3) an additional ten percent of
vendors to whom the class notice was sent.” Further
Order on Discovery Disputes at 1:24-25 (Dkt. No. 118). The
parties agreed upon a list of 107 Discovery Vendors
(Discovery Vendor Group or “DVG”). Mot. to
Decertify at 6; Cubre Decl. ISO Mot. to Decertify ¶ 15;
Cubre Decl. ISO Defs.' Opp'n to Pls.' MPSJ ¶
2 (Dkt. No. 189-2). Plaintiffs assert that 47 have
self-identified as class members, 40 have self-identified as
non-class members, while the remaining 21 had either
confidentially settled claims with FAS, or were unreachable.
Opp'n at 4; Olivier Decl. ¶ 6.
2, 2016, class administrator mailed a copy of the
“Class Member Questionnaire” to the 107 discovery
vendors; verified responses were received from just thirteen
vendors. Mot. to Decertify at 6; Cubre Decl.
¶ 2; Olivier Decl. ¶ 9. According to FAS, only 27
of the 65 noticed depositions of Discovery Vendors took
place. Mot. to Decertify at 6. Plaintiffs
contend that 45 individuals in the DVG were deposed, and 39
submitted declarations (with some overlap between deponents
and declarants). Olivier Decl. ¶ 8. Eighteen Discovery
Vendors produced responsive documents, but none of them
provided information on the number of hours or percentage of
time they contracted with FAS. Mot. to Decertify at 6. Fact
discovery closed on December 5, 2016.Id.
January 4, 2017, FAS moved for class decertification, Mot. to
Decertify (Dkt. No. 154), and summary judgment as to
potential class members Julia Magdaleno (f/k/a Bowerman),
Matthew Cohick, and Eric Ackel, Mot. for Summary J.
(“FAS MSJ”)(Dkt. No. 152[redacted], Dkt. No.
151-4[under seal]). The same day, plaintiffs moved for
summary judgment on (1) “FAS's affirmative defense
that Plaintiffs and Class Members are independent
contractors”; (2) “FAS's liability under
California law for failing to pay the Class overtime”;
and (3) “FAS's liability under California law for
failing to reimburse the Class for reasonable and necessary
business expenses.” Pls.' Mot. for Partial Summary
J. (“Pls.' MPSJ”)(Dkt. No. 155).
argument from the parties on February 22, 2017, during which
I asked the parties to submit a joint table of identified
class members, listing FAS's objections and
plaintiffs' response. Dkt. No. 199. The parties submitted
that table, listing 126 class members, on March 2, 2017. Dkt.
FEDERAL RULE OF CIVIL PROCEDURE 23
Rule of Civil Procedure 23 governs class actions.
“Before certifying a class, the trial court must
conduct a rigorous analysis to determine whether the party
seeking certification has met the prerequisites of Rule
23.” Mazza v. Am. Honda Motor Co., Inc., 666
F.3d 581, 588 (9th Cir. 2012) (internal quotation marks
omitted). The burden is on the party seeking certification to
show, by a preponderance of the evidence, that the
prerequisites have been met. See Wal-Mart Stores, Inc. v.
Dukes, 131 S.Ct. 2541, 2551 (2011); Conn. Ret. Plans
& Trust Funds v. Amgen Inc., 660 F.3d 1170, 1175
(9th Cir. 2011).
under Rule 23 is a two-step process. The party seeking
certification must first satisfy the four threshold
requirements of Rule 23(a), numerosity, commonality,
typicality, and adequacy. Specifically, Rule 23(a) requires a
(1) the class is so numerous that joinder of all members is
(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).
party seeking certification must then establish that one of
the three grounds for certification applies. See
Fed. R. Civ. P. 23(b). Plaintiffs invoke Rule 23(b)(3), which
provides that a class action may be maintained where the
court finds that the 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. The matters pertinent to these
(A) the class members' interests in individually
controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).
order certifying a class “may be altered or amended
before final judgment.” Fed.R.Civ.P. 23(c)(1).
“In considering the appropriateness of decertification,
the standard of review is the same as a motion for class
certification: whether the Rule 23 requirements are
met.” Ridgeway v. Wal-Mart Stores,
Inc., 2016 WL 4529430, at *12 (N.D. Cal. Aug. 30, 2016).
The burden of proof remains on the plaintiff. Marlo v.
UPS, 639 F.3d 942, 947 (9th Cir. 2011). Parties should
be able to rely on a certification order and “in the
normal course of events it will not be altered except for
good cause, ” such as “discovery of new facts or
changes in the parties or in the substantive or procedural
law.” O'Connor v. Boeing N. Am., Inc., 197
F.R.D. 404, 409-10 (C.D. Cal. 2000).
judgment on a claim or defense is appropriate “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). In order to
prevail, a party moving for summary judgment must show the
absence of a genuine issue of material fact with respect to
an essential element of the non-moving party's claim, or
to a defense on which the non-moving party will bear the
burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
made this showing, the burden then shifts to the party
opposing summary judgment to identify “specific facts
showing there is a genuine issue for trial.”
Id. The party opposing summary judgment must then
present affirmative evidence from which a jury could return a
verdict in that party's favor. Anderson v. Liberty
Lobby, 477 U.S. 242, 257 (1986).
summary judgment, the Court draws all reasonable factual
inferences in favor of the non-movant. Id. at 255.
In deciding a motion for summary judgment,
“[c]redibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge.”
Id. However, conclusory and speculative testimony
does not raise genuine issues of fact and is insufficient to
defeat summary judgment. See Thornhill Publ'g Co.,
Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
CALIFORNIA LAW GOVERNING CLASSIFICATION OF WORKERS AS
EMPLOYEES OR INDEPENDENT CONTRACTORS
have varying responsibilities with respect to persons
performing services on their behalf. These responsibilities
depend, in part, on whether those persons are classified as
employees or independent contractors under the Labor
Code.” Cristler v. Express Messenger Sys.,
Inc., 171 Cal.App.4th 72, 76 (2009). “Whether a
worker is classified as an employee or an independent
contractor has great consequences. California law gives many
benefits and protections to employees; independent
contractors get virtually none.” Cotter v. Lyft,
Inc., No. 13-cv-04065-VC, 2015 WL 1062407, at *5 (N.D.
Cal. Mar. 11, 2015). Of particular relevance here, employees
are generally entitled to overtime compensation, Cal. Labor
Code §§ 510, 1194, and indemnification for business
expenses, Cal. Labor Code § 2802. Independent
contractors are not.
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). “[T]he rule is that
the fact that one is performing work [ ] 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. (internal quotation marks and
modifications omitted). “Once the employee establishes
a prima facie case, the burden shifts to the employer, which
may prove, if it can, that the presumed employee was an
independent contractor.” Id.
the California Labor Code does not define “employee,
” courts generally apply the common law test to
distinguish between employees and independent contractors.
See Estrada v. FedEx Ground Package Sys., Inc., 154
Cal.App.4th 1, 10 (2007). Under this test, the
defendant's right to control the manner and means by
which the plaintiff's work is accomplished, rather than
the amount of control actually exercised, is the principal
factor in assessing whether a plaintiff is an employee or an
independent contractor. See Ayala v. Antelope Valley
Newspapers, Inc., 59 Cal.4th 522, 533-34
(2014)(“What matters under the common law is not how
much control a hirer exercises, but how much control
the hirer retains the right to
exercise.”)(emphasis in original). Courts have
consistently emphasized the significance of this factor.
See, e.g., S.G. Borello & Sons, Inc. v. Dep't of
Indus. Relations, 48 Cal.3d 341, 350 (1989)(“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.”)(internal quotation marks and modifications
omitted); Estrada, 154 Cal.App.4th at 10 (“The
essence of the test 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.”); see also Ruiz v. Affinity Logistics
Corp., 754 F.3d 1093, 1100 (9th Cir. 2014) (“[T]he
right to control work details is the most important or most
significant consideration.”) (emphasis omitted).
defendant's right to control need not extend to every
possible aspect of the plaintiff's work for this factor
to indicate the existence of an employee/employer
relationship. The relevant question is whether the defendant
retains “all necessary control” over the
plaintiff's performance of his job duties.
Borello, 48 Cal.3d at 357. In other words,
“the fact that a certain amount of freedom is allowed
or is inherent in the nature of the work involved does not
change the character of the relationship, particularly where
the employer has general supervision and control.”
Air Couriers Int'l v. Employment Dev. Dep't,
150 Cal.App.4th 923, 934 (2007) (internal quotation marks
omitted); see also Toyota Motor Sales U.S.A., Inc. v.
Superior Court, 220 Cal.App.3d 864, 875 (1990). The
right to terminate at will, without cause, provides
“strong evidence” of a right to control and an
employment relationship. Borello, 48 Cal.3d at 350
(internal quotation marks omitted); see also Ayala,
59 Cal.4th at 533 (“Whether a right of control exists
may be measured by asking whether or not, if instructions
were given, they would have to be obeyed on pain of at will
discharge for disobedience.”) (internal quotation marks
and modifications omitted).
the right to control factor “is often of little use in
evaluating the infinite variety of service arrangements,
” Borello, 48 Cal.3d at 350, courts applying
the common law test may also consider the following
(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, 154 Cal.App.4th at 10. “Regarding the
final secondary factor, the California Court of Appeal has
noted that the label that parties place on their employment
relationship ‘is not dispositive and will be ignored if
their actual conduct establishes a different
relationship.'” Ruiz, 754 F.3d at 1101
(quoting Estrada, 154 Cal.App.4th at 10-11).
Borello court listed additional factors developed by
other jurisdictions considering the issue “in light of
the remedial purposes of the legislation”:
(1) the alleged employee's opportunity for profit or loss
depending on his managerial skill; (2) the alleged
employee's investment in equipment or materials required
for his task, or his employment of helpers; (3) whether the
service rendered requires a special skill; (4) the degree of
permanence of the working relationship; and (5) whether the
service rendered is an integral part of the alleged
Borello, 48 Cal.3d at 355.
secondary factors “cannot be applied mechanically as
separate tests; they are intertwined and their weight depends
often on particular combinations.” Germann v.
Workers' Comp. Appeals Bd., 123 Cal.App.3d 776, 783
(1981). “[T]o determine whether a worker is an employee
or independent contractor, a court should evaluate each
service arrangement on its facts, and the dispositive