United States District Court, N.D. California
ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL
SUMMARY JUDGMENT Re: ECF No. 241
TIGAR United States District Judge
the Court is Plaintiffs' motion for partial summary
judgment as to misclassification and willfulness. ECF No.
241. The Court will grant the motion in its entirety.
collective action, Plaintiffs allege that Defendants violated
the Fair Labor Standards Act (“FLSA”) and
California law by misclassifying their drivers as independent
contractors. The following facts are undisputed except where
in December 2009, Defendant Velocity Express, LLC
(“Velocity”) began operating its delivery
logistics, freight forwarding, and brokering business.
Wheeler Decl., ECF No. 44-1 at 3, ¶ 3. In its standard
services proposal to its customers, Velocity described itself
as “America's largest national ground shipping
provider dedicated exclusively to regional delivery.”
ECF No. 242-6 at 2. Velocity's managerial employees
testified that Velocity was primarily a delivery business.
See Curcuru Depo., ECF No. 242-12 at 70-71
(characterizing Velocity's business as
“[d]elivering product to the end user”); Healey
Depo., ECF No. 242-16 at 4-5 (affirming that “the
general operation of [Velocity] is just to move products from
one destination to the next destination”). Velocity
went defunct in December 2013. ECF No. 150 at 5.
TransForce, Inc. (“TransForce”) is a
transportation logistics company. ECF No. 150 at 6-7.
Defendant Dynamex, Inc. (“Dynamex”) is a
transportation service provider and a subsidiary of
TransForce. Id TransForce and Dynamex purchased
Velocity in 2012, before Velocity went defunct. ECF No. 147
Velocity's Driver Requirements
did not own its own vehicles, but rather hired drivers as
independent contractors to perform delivery services. Wheeler
Decl., ECF No. 44-1 ¶ 6.
qualify as a driver, an individual had to meet the minimum
age requirements, have a car and a valid driver's
license, speak English, and pass the required background and
drug screens. ECF No. 242-59; Odud Depo., ECF No. 242-7 at
126-128; see also, ECF No. 242-34 at 3. Drivers were
also required to successfully complete a Department of
Transportation-required road rest and obtain insurance that
complied with Velocity's insurance requirements (at least
an A- rating) or, alternatively, enroll in Velocity's
insurance program. ECF No. 242-59; Healey Depo., ECF No.
242-16 at 18-20. Velocity penalized drivers who did not meet
its insurance requirements by deducting $50 per week from
their pay. ECF No. 242-23. An individual did not need to have
any particular level of education, specialized training, or
special license to be a driver for Velocity. Healey Depo.,
ECF No. 242-16 at 36-37.
Independent Contractor Agreement
a driver began working for Velocity, he or she was required
to sign the “Independent Contractor Agreement for
Transportation Services.” ECF No. 242-9; Odud Depo.,
ECF No. 242-7 at 108-09; Wheeler Depo., ECF No. 242-8 at 7.
All three bellwether Plaintiffssigned this agreement.
See ECF Nos. 242-78, 242-27, 242-30 at 3.
to that agreement, the driver “shall provide and use
for the performance of his services hereunder a lawfully
registered and safe vehicle capable of satisfying
[Velocity's] and its customers' Control and Custody
standards.” Id ¶ 8(a). Drivers are also
“required to satisfy customer contractual requirements
regarding drivers' qualifications, such as minimum age,
experience, good driving records, criminal history, drug
screening, etc.” Id In addition, drivers
“shall obtain appropriate signage for its motor
vehicle” consistent with customer expectations.
Id. ¶ 8(d). Drivers were also required to
“wear the appropriate uniform at all times while
performing services under this Agreement.” Id
¶ 12. Drivers and any substitute drivers that they
employed were required to comply with Velocity's
substance abuse policy, Velocity's drivers'
qualification policy, and all similar customer qualification
requirements. Id ¶ 16.
agreement was for a monthly term that automatically renewed
unless terminated by either party. ECF No. 242-9 ¶ 2;
Wheeler Depo., ECF No. 242-8 at 7-8. The agreement could be
terminated at any time and for any reason by either party
with fourteen days prior written notice to the other party.
ECF No. 242-9 ¶ 18. Velocity also had the right to
terminate the agreement at any time with five days notice if
it determined in its sole discretion that the route was no
longer profitable. Id If either party committed a
material breach of the agreement, the other party could
immediately terminate the agreement. Id
Velocity's Right to Control Drivers' Work
negotiated directly with potential customers, designed the
delivery routes, and determined what the route would pay
before they hired a driver to perform the route. Wheeler
Depo., ECF No. 242-8 at 67-68, 5-6; Curcuru Depo., ECF No.
242-12 at 11-12; Healey Depo., ECF No. 242-16 at 2
(testifying that the operations manager “design[s] the
routes”). Once the route was established, Velocity
advertised to find a driver to work the route. Wheeler Depo.,
ECF No. 242-8 at 66-68.
required its drivers to wear a Velocity uniform and an
identification badge. See ECF No. 242-9 at 5; ECF
No. 242-31. Several of Velocity's managerial
employees admit that Velocity required drivers to wear
uniforms pursuant to customer requirements. Healey Depo., ECF
No. 242-16 at 21; Odud Depo., ECF No. 242-7 at 25; Curcuru
Depo., ECF No. 242-12 at 41-42. Certain customers also
required the drivers to place signage on their vehicles. ECF
No. 245 1 at 266; Odud Depo., ECF No. 242-7 at 95- 104
(discussing signage requirements). For example, one of
Velocity's customers expected drivers to comply with best
practices regarding “[s]ignage” and
“[professional appearance Both Driver &
Vehicle.” ECF No. 242-40 at 13.
gave its drivers a manifest each day that told them what
packages to deliver by what time. Healey Depo., ECF No.
242-16 at 38. And Velocity's drivers were required
to deliver their packages by a certain time pursuant to
customer requirements. Odud Depo., ECF No. 242-7 at 55-56,
73; Healey Decl., ECF No. 245-1 at 262, ¶ 4; Curcuru
Depo., ECF No. 242-12 at 26-27. Before making their
deliveries, drivers had to arrive at Velocity's warehouse
to scan and load parcels, which could take up to two or more
hours. Odud Depo., ECF No. 242-7 at 48, 50, 55-61, 48. Some
drivers were also required to return to the warehouse at the
end of the day. Id at 29, 79.
required drivers to follow a series of rules when delivering
products to its customers. Odud Depo., ECF No. 242-7 at 23.
Some of these “standard operating procedures”
were developed by Velocity's customers, and Velocity
enforced its own standard operating procedures as well.
See Curcuru Depo., ECF No. 242-12 at 59-63
(discussing standard operating procedures regarding building
security). Drivers were expected to comply with standard
operating procedures regarding building security and, in some
cases, best practices regarding customer service. ECF No.
242-37; ECF No. 242-40. Velocity also briefed its drivers on
“the Velocity Promise” regarding customer service
expectations. Odud Depo., ECF No. 242-7 at 22-23. Regardless
of whether drivers elected to purchase separate insurance or
enroll in Velocity's insurance program, they were
required to report even minor accidents to Velocity. Wheeler
Depo., ECF No. 242-8 at 71-72.
Plaintiff James Mack
James Mack worked for Velocity in San Diego for approximately
four or five years. Mack Depo., ECF No. 242-28 at 1-3, 7-8,
41, 61. While he was working for Velocity, Mr. Mack worked
five or six days a week, depending on the time of year, from
around 4:00 a.m. until 7:00 p.m. Id at.61-63, 21-24.
perform services for Velocity, Mr. Mack invested in two vans
and, a rental truck, and a Velocity shirt. Id at
36-37, 55-56. Mr. Mack also purchased insurance through
Velocity's insurance program, the payments for which were
deducted from his weekly settlement check. Id. at
46-47. Mr. Mack hired his wife and son as helpers while
working at Velocity, both of whom had to go through
Velocity's hiring process. Id at 25-30, 34.
Mack would start his work day at Velocity's San Diego
warehouse, where he was required to sort and scan his
packages for the day and load them onto his vehicle.
Id at 9-12. Before Velocity used scanners, it
provided Mr. Mack with a paper log that he was required to
fill out and turn into Velocity on a weekly basis.
Id at 13-15. Mr. Mack also ended his day at the
warehouse, where he unloaded any returns and scanned packages
back in. Id at 9-12, 17. While performing work for
Velocity, Mr. Mack was required to wear a Velocity uniform
and identification badge and place a magnetic sign on his
vehicle. Id at 10-13, 55-56.
the first “couple of months” that Mr. Mack
provided services to Velocity, he also provided services to
another company, Central Freight. Id at 1-2. In
addition, Mr. Mack did a few short-term assignments for other
companies during his last three months of employment with
Velocity. Id at 32. Other than that, Mr. Mack
testified that he did not perform work for any other company
and that 100 percent of his income came from Velocity.
Id at 37-38. He further testified that, although he
could have worked for another company while he was working
for Velocity, he “didn't have enough time.”
Id Mr. Mack eventually started looking for another
job because Velocity was going out of business. Id
Plaintiff Claude Boconvi
Claude Boconvi began providing services for Velocity in
January 2011. Boconvi Depo., ECF No. 242-14 at 60. Mr.
Boconvi worked exclusively for Velocity for approximately six
weeks, during which time he worked Monday through Friday
between 6:00 a.m. and 8:00 p.m. or 9:00 p.m., and sometimes
as late as 10:15 p.m. Boconvi Depo., ECF No. 242-14 at 1-2,
4-6, 9, 49-50.
perform services for Velocity, Mr. Boconvi purchased a used
van for less than $10, 000, two dollies for less than $300
total, a uniform for under $50, and an employer
identification number for approximately $9. Id at
14-17, 29; ECF No. 245-1 at 103. Mr. Boconvi also purchased
insurance through Velocity's insurance program, the
payments for which were deducted from his weekly settlement
check. Boconvi Depo., ECF No. 242-14 at 17-18. Mr. Boconvi
testified that he never hired a helper because he could not
afford it. Id at 56.
assigned Mr. Boconvi a route making deliveries between
Houston and Huntsville, Texas. Id at 1-2, 39. Mr.
Boconvi asked for another route during his first couple of
days because his assigned route had too many stops, but he
was told that there were no other routes available.
Id at 39-41. Defendants also gave Mr. Boconvi a
manifest each day listing all of the stops on his route.
Id at 43. Mr. Boconvi followed the sequence listed
on the manifest for the first two weeks, but then he began
delivering out of sequence to be more efficient. Id
at 44-45. At each stop, Mr. Boconvi was required to gather a
signature on his manifest list. Id at 52-53. At the
end of the day, Mr. Boconvi had to return to the warehouse to
turn in the signed manifest and drop off any returned mail.
Id at 35, 38. Mr. Boconvi was required to wear a
uniform while providing services to Velocity, but he did not
have any Velocity signage on his vehicle. Id at
55-56. Because Velocity had not started using scanners yet,
Plaintiff Boconvi was not required to use a scanner.
Id at 102.
Boconvi testified that he could not provide services for any
other companies while he was working at Velocity because he
was “working all day from 6:00am to 10:00.”
Id at 57. Mr. Boconvi testified that he stopped
working at Velocity because he had a transmission problem
with his van and did not have enough money to repair it.
Id at 63.
Plaintiff Charles Chambers
Charles Chambers began providing services to Velocity through
his company, Titan Trucking Services, in approximately April
2010. Chambers Depo., ECF No. 242-25 at 14-15. He worked for
Velocity for about a year or a year and a half, during which
time his routes typically ran Monday through Friday for
between twelve and a half to fourteen hours each day.
Id. at 82, 29, 41.
perform his work for Velocity, Mr. Chambers purchased two box
trucks (one $3, 000 and one unknown price), uniforms,
carrying straps ($40), blankets, tie down straps ($30), and
safety equipment like fire extinguishers, extra fuses,
flares, and a log book. Id at 12-14, 43-44, 85-87.
Velocity helped Mr. Chambers to obtain the necessary
insurance. Id at 72-73. Mr. Chambers hired his
cousin and his friend to help him, and he testified that
Velocity could have rejected his helpers if they didn't
meet Velocity's requirements. Id at 32, 95.
told Mr. Chambers which routes were available for a given day
and how much each route would pay. Id at 24-25, 38.
Mr. Chambers testified that he could turn down routes, but
that he “didn't turn down too many” for
revenue purposes. Id Mr. Chambers began his day at
the warehouse, where he loaded his truck for about half an
hour. Id at 42. Velocity also gave him paperwork
listing all of the stops on the route and the time at which
each package had to be delivered. Id at 93-94. While
providing services to Velocity, Mr. Chambers was required to
wear a uniform and to place Velocity signage on his vehicle.
Id at 73, 8, 44-45.
testified that he sometimes performed “freelance”
work on the side for individuals while he was working for
Velocity, such as moving a couch, but that he did not provide
services for any other companies during his time at Velocity.
ECF No. 242-25 at 45-46, 57. He further testified that the
majority of his income came through Velocity and that it was
“hard” to work for another company because
“you're driving so many hours a day and you get
back, get a little bit of rest and you're gone
again.” Id at 46-47.
Defendants' Knowledge of Litigation Risk Associated with
Independent Contractor Classification
early as 2008, the Judicial Panel on Multidistrict Litigation
consolidated eight different actions against Velocity that
“share[d] factual questions arising from the
classification of certain package delivery drivers as
independent contractors rather than employees.” ECF No.
2012, when TransForce and Dynamex were in the process of
acquiring Velocity, due diligence revealed that there was a
significant litigation risk related to Velocity's
classification of its delivery drivers as independent
contractors. Leveridge Depo., ECF No. 242-11 at 5-7; Langlois
Depo., ECF No. 242-71 at 1-5; Smith Depo., ECF No. 244-68 at
8; ECF No. 244-77 at 3, 54 (noting that “the issue of
I/C vs Employee Status is one risk that they have to deal
with on a regular basis” and that “the IC vs
Employee issue is a major risk for the company”).
Specifically, Velocity's disclosures revealed that
Velocity was appealing two decisions in which state
regulatory boards in New York and Washington concluded that
Velocity's drivers were employees, not independent
contractors, for the purpose of state unemployment and
workers' compensation, respectively. Langlois Depo., ECF
No. 242-71 at 6-17; see also, ECF No. 242-73
(disclosing pending litigation). Those disclosures further
revealed that the Washington state decision prompted an audit
by the Washington State Department of Labor and Industries.
ECF No. 242-73 at 2-3. Defendants also knew that there was a
pending collective action against Velocity in the Northern
District of California. See Smith Depo., ECF No.
244-68 at 1-4, 15; Langlois Depo., ECF No. 242-71 at 16-17;
ECF No. 242-73 at 2 (disclosing “[c]ollective/class
action instituted by two IC drivers . . . alleging Fair Labor
Standards violations in conjunction with misclassification as
November 9, 2012, Plaintiffs brought this case as a
collective action under the Fair Labor Standards Act
(“FLSA”) and as a class action pursuant to
California's Labor Code and Unfair Competition Law. ECF
No. 1, ¶ 1.
operative Fourth Amended Complaint, ECF No. 140
(“FAC”), Plaintiffs allege that Defendants
misclassified their delivery drivers as independent
contractors when they were, in fact, employees. Id.,
¶ 3. Because of this misclassification, Plaintiffs
allege that Velocity Express failed to pay Plaintiffs minimum
wages and overtime. Id. ¶¶ 2, 3.
Plaintiffs assert the following causes of action: (1) failure
to pay minimum wage under the FLSA (29 U.S.C. § 201,
et seq.); (2) failure to pay overtime wages under
the FLSA (29 U.S.C. § 201, et seq.); (3)
failure to pay minimum wage and overtime under California law
(California Labor Code §§ 510, 1194 and IWC Wage
Order No. 9); (4) willful misclassification of individuals as
independent contractors under California law (California
Labor Code § 226.8); (5) failure to provide meal periods
(California Labor Code §§ 226.7, 512 and IWC Wage
Order No. 9); (6) failure to provide mileage reimbursement
(California Labor Code § 2802); (7) failure to furnish
accurate wage statements (California Labor Code §§
226, 226.3 and IWC Wage Order No. 9); (8) failure to keep
accurate payroll records (California Labor Code §§
1174, 1174.5 and IWC Wage Order No. 9); (9) waiting time
penalties (California Labor Code §§ 201-203); (10)
violation of California Business and Professions Code, §
17200, and the Unfair Competition Act; and (11) federal
common law successor liability as to Defendants Dynamex and
3, 2013, the Court conditionally certified a collective
action under the FLSA. ECF No. 57. On April 16, 2015, the
Court granted partial summary judgment for Plaintiffs on the
issue of successor liability as to Defendants TransForce and
Dynamex, but denied Plaintiffs' motion for partial
summary judgment as to Defendants' joint-employer status.
ECF No. 156. The parties agreed to conduct three bellwether
trials. ECF No. 188.
now move for partial summary judgment as to misclassification
and willfulness with respect to bellwether Plaintiffs Claude
Boconvi, Charles Chambers, and James Mack. ECF No. 241.
MOTION FOR PARTIAL SUMMARY JUDGMENT
moves for partial summary judgment on the following three
issues: (1) whether all three bellwether Plaintiffs were
misclassified as independent contractors under FLSA; (2)
whether bellwether Plaintiff Mack was misclassified as an
independent contractor under the California Labor Code; and
(3) whether Defendants willfully misclassified the bellwether
Plaintiffs. ECF No. 241.
judgment is proper when a “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). “A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by”
citing to depositions, documents, affidavits, or other
materials. Fed.R.Civ.P. 56(c)(1)(A). A party also may show
that such materials “do not establish the absence or
presence of a genuine dispute, or that an adverse party
cannot produce admissible evidence to support the
fact.” Fed.R.Civ.P. 56(c)(1)(B). An issue is
“genuine” only if there is sufficient evidence
for a reasonable fact-finder to find for the non-moving
party. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248- 49 (1986). A fact is “material” if the
fact may affect the outcome of the case. Id. at 248.
“In considering a motion for summary judgment, the
court may not weigh the evidence or make credibility
determinations, and is required to draw all inferences in a
light most favorable to the non-moving party.”
Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir.
the party moving for summary judgment would bear the burden
of proof at trial, that party bears the initial burden of
producing evidence that would entitle it to a directed
verdict if uncontroverted at trial. See C.A.R. Transp.
Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480
(9th Cir. 2000). Where the party moving for summary judgment
would not bear the burden of proof at trial, that party bears
the initial burden of either producing evidence that negates
an essential element of the non-moving party's claim, or
showing that the non-moving party does not have enough
evidence of an essential element to carry its ultimate burden
of persuasion at trial. If the moving party satisfies its
initial burden of production, then the non-moving party must
produce admissible evidence to show that a genuine issue of
material fact exists. See Nissan Fire & Marine Ins.
Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir.
2000). The non-moving party must “identify with
reasonable particularity the evidence that precludes summary
judgment.” Keenan v. Allan, 91 F.3d 1275, 1279
(9th Cir. 1996). Indeed, it is not the duty of the district
court to “to scour the record in search of a genuine
issue of triable fact.” Id. “A mere
scintilla of evidence will not be sufficient to defeat a
properly supported motion for summary judgment; rather, the
nonmoving party must introduce some significant probative
evidence tending to support the complaint.” Summers
v. Teichert & Son, Inc., 127 F.3d 1150, 1152 (9th
Cir. 1997) (citation and internal quotation marks omitted).
If the non-moving party fails to make this showing, the
moving party is entitled to summary judgment. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986).