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Espejo v. The Copley Press, Inc.

California Court of Appeals, Fourth District, First Division

July 7, 2017

LILIANA ESPEJO et al., Plaintiffs and Appellants,
v.
THE COPLEY PRESS, INC., Defendant and Appellant.

         APPEALS from a judgment of the Superior Court of San Diego County, Super. Ct. Nos. 37-2009-00082322- CU-OE-CTL, 37-2010-00085012-CU- OE-CTL John S. Meyer, Judge. Judgment affirmed in part, reversed in part and remanded with directions.

          Cooley, Steven M. Strauss, Seth A. Rafkin, Summer J. Wynn and Heather C. Meservy for Defendant and Appellant.

          Callahan & Blaine, Daniel J. Callahan, Michael J. Sachs, Jill A. Thomas and Scott D. Nelson; Cadena Churchill and Raul Cadena for Plaintiffs and Appellants.

          McCONNELL, P. J.

         Defendant The Copley Press, Inc., owner of the San Diego Union-Tribune newspaper (collectively UT), appeals from a second amended and restated judgment (the judgment) after a court trial in this class action brought by and on behalf of persons whom UT formerly engaged as newspaper home delivery carriers (plaintiffs or carriers). The main issue at trial was whether the carriers were employees of UT or independent contractors. The trial court decided the carriers were employees.

         UT contends (1) the plaintiff class must be decertified because the class representatives were inadequate; (2) the court committed reversible error by not limiting the trial to certified issues and by granting plaintiffs' motion to amend their second amended complaint according to proof; (3) the class should be decertified and the judgment reversed because the court did not and could not manage individualized issues; (4) the court's order bifurcating plaintiffs' cause of action under Business and Professions Code section 17200[1] to be tried first deprived UT of its right to a jury trial; (5) the class award must be reversed because UT paid carriers enhanced compensation that reimbursed them for expenses the court awarded; (6) the amounts the court awarded were not restitution; (7) the court erred in awarding plaintiffs prejudgment interest; (8) substantial evidence does not support the court's determination that the carriers were employees rather than independent contractors; (9) the court erred in awarding plaintiffs attorney fees under Code of Civil Procedure section 1021.5;[2] (10) even if attorney fees could be awarded, the court erred by not substantially reducing them for limited success; and (11) the court erred by adopting plaintiffs' lodestar amount in awarding attorney fees.

         Plaintiffs appeal the portion of the judgment awarding them attorney fees, contending (1) the court abused its discretion in not awarding an enhancement of the lodestar amount of their fees; and (2) the court erred in ruling they abandoned their cause of action for damages under Labor Code section 2802[3] and therefore could not recover attorney fees under that statute. We affirm in part and reverse in part the judgment with directions to redetermine the class award, attorney fees, and prejudgment interest as explained below.

         FACTUAL AND PROCEDURAL BACKGROUND

         The trial court (Judge Lisa Foster) certified a class consisting of "[t]hose persons who signed contracts directly with [UT] as newspaper home [d]elivery carriers of the San Diego Union-Tribune newspaper in the [S]tate of California between January 2005 and the present."[4] The carriers each signed a contract with UT entitled "Independent Contractor Distribution Agreement Home Delivery." The contract provided that the carrier owned and operated an independent business enterprise and was not an employee, and that the carrier and UT "fully and freely" intended to create an independent contractor relationship under the contract.

         The contract required the carrier to deliver each newspaper "in a clean, dry, undamaged and readable condition at a time and location" that met the subscriber's reasonable requests and expectations. The carrier agreed to complete deliveries by 5:30 a.m. on weekdays and 6:30 a.m. on Saturdays, Sundays, and holidays. The carrier could not directly or indirectly engage in the delivery, sale, or distribution of any other daily or Sunday newspaper in the San Diego area without UT's written consent.

         UT paid carriers on a per-piece basis and provided for "[i]nsert [f]ees"-i.e., payment for putting inserts into newspaper-and fees for delivering publications other than the San Diego Union-Tribune, such as the USA Today and the Wall Street Journal. UT tracked subscriber complaints against a carrier by documenting the number of complaints per thousand deliveries (CPT) against the carrier. The contract provided that CPT's "regarding missed or late deliveries; or wet, stolen or damaged newspapers must not exceed 1.0...." UT charged the carrier $4.00 for more than one CPT and $8.00 for more than two CPT's.

         The contract required the carriers to obtain accident insurance to cover injury to the carrier or his or her substitutes or helpers, and bonding in the amount of $1, 200 through a bonding company acceptable to UT. The minimum bonding for each route was $600, and the carrier could elect to obtain bonding with Wilson Gregory Agency, Inc., for $1.00 per month for each $600 in coverage, which would result in a monthly bond deduction of $2.00 from the carrier's pay.

         Carriers picked up the newspapers they were to deliver each morning and "mail" (written communications, including delivery instructions) from UT at one of UT's regional distribution centers. The carriers arrived at the distribution centers between 2:00 and 4:00 a.m. and spent about 45 minutes to an hour assembling their newspapers and preparing them for delivery. The contract required the carriers to assemble their papers at the distribution centers.[5] The carrier agreed to pay UT a distribution center fee and authorized UT to debit from the carrier's account "[i]nserting [f]ees" to compensate a third party for performing certain inserting services (putting inserts into the newspapers for the carriers).

         Plaintiffs filed their original class action complaint in January 2009. Plaintiffs' second amended complaint, the operative complaint at trial, named UT and various other entities as defendants and included causes of action under the Labor Code for (1) failure to pay minimum wage and overtime wages; (2) failure to provide meal breaks or compensation in lieu thereof; (3) failure to provide rest periods or compensation in lieu thereof; (4) failure to reimburse for reasonable business expenses (§ 2802);[6] (5) unlawful deductions from wages; (6) failure to provide itemized wage statements; and (7) failure to keep accurate records. The second amended complaint also included an eighth cause of action under section 17200 for unfair business practices.

         In 2011, plaintiffs filed a motion to certify a class defined as "[a]ll persons presently or formerly engaged by [UT] as newspaper home delivery carriers of The San Diego Union-Tribune newspaper in the [S]tate of California during the class period, whether engaged directly by [UT] or indirectly through its agents." UT (and other defendants) filed a motion to strike the class allegations from the second amended complaint and opposition to plaintiffs' motion to certify the class.

         The trial court granted in part and denied in part plaintiffs' motion for class certification and UT's motion to strike class allegations. With respect to plaintiffs' fourth cause of action and sixth through eighth causes of action only, the court certified a class consisting of "[t]hose persons who signed contracts directly with [UT] as newspaper home [d]elivery carriers of The San Diego Union-Tribune newspaper in the [S]tate of California between January 2005 and the present." The court denied plaintiffs' motion for certification and "concurrently grant[ed] the motion to strike the class allegations, with respect to the large class for whom certification was sought by plaintiffs and with respect to the first, second, third and fifth causes of action." The court excluded from the class persons who contracted with third-party distributors to deliver The San Diego Union-Tribune rather than with UT directly.

         In September 2012, plaintiffs filed a motion to bifurcate the trial, requesting that their eighth cause of action under section 17200 for unfair business practices (an equitable claim) be tried before their fourth cause of action under section 2802 for reimbursement of business expenses (a legal claim). In that motion, plaintiffs conceded their sixth and seventh causes of action were time-barred because the limitations period for obtaining penalties under those causes of action had expired when plaintiffs filed their original complaint in 2009. Consequently, the fourth cause of action and eighth cause of action were the only remaining causes of action to be tried.

         Plaintiffs argued that equitable claims generally should be tried before legal claims because doing so might dispense with the need to try the legal claims. Specifically, plaintiffs noted that the issue of whether they were employees of UT or independent contractors was the foundational issue under both remaining causes of action, and a determination that they were independent contractors would be dispositive of both causes of action. The court (Judge Gonzalo Curiel) granted the motion to bifurcate and ordered that plaintiffs' equitable cause of action for unfair business practices would be tried first as a bench trial before the trial of their legal claim for reimbursement of expenses under section 2802.

         In January 2014, plaintiffs' counsel sent UT's counsel a letter stating: "Please be advised that it is our intention to seek all of the class members' damages in the... section 17200 cause of action. This includes, but is not limited to, mileage reimbursement, insurance, bonds, warehouse rent, bags and rubber bands, insert charges, carrier collect and complaint charges. We bring this to your attention since it was previously our intention to seek the mileage damages in the... section 2802 claim. However, since mileage reimbursement is a vested right once the miles are driven, it is also a recoverable item of damage under the section 17200 claim pursuant to Cortez v. Purolater Air Filtration Products Co. (2000) 23 Cal.4th 163');">23 Cal.4th 163 [(Cortez)]."[7] In December 2012, UT filed a pretrial motion to decertify the class. The court denied the motion without prejudice.

         The case was tried to the court in May and June of 2013. After plaintiffs rested, UT moved for judgment under Code of Civil Procedure section 631.8 on the grounds the evidence proved the class representative who testified at trial, Genardo Valderrama, was an independent contractor, and plaintiffs had not met their burden of proving damages under section 2802. UT also renewed its motion to decertify the class on the grounds Valderrama was not an adequate or typical class representative and plaintiffs had failed to put on "common proof." The court denied both motions. In addition to Valderrama's testimony, the court heard testimony from 12 other witnesses, including two expert witnesses and a number of present and former UT employees.

         In December 2013, the court filed a statement of decision, in which it found "[p]laintiffs showed by a significant preponderance of the evidence that the carriers were, in fact, employees [of UT] and not independent contractors." Accordingly, the court concluded plaintiffs were "entitled to recover under... section 17200." The court rejected UT's defense that it had "provided enhanced compensation to the carriers such that it subsumed all of their expenses, including when gas prices spiked during the Class Period." In the statement of decision, the court granted plaintiffs' motion to amend their second amended complaint to conform to proof to include three "categories of damages they sought recovery for at trial" but did not specify in their complaint, namely, carrier collect charges, insert charges, and warehouse rent.

         The court awarded plaintiffs restitution under section 17200 in the total amount of $3, 188, 445, consisting of business expenses in the following amounts: $2, 280, 059 for mileage reimbursement; $618, 569 for poly bags and rubber bands; $74, 014 for insurance premiums; $29, 577 for bond premium; $116, 430 for warehouse rent; and $69, 796 for insert charges. The court denied recovery for carrier collect charges and complaint charges.

         Plaintiffs' lead counsel and associate counsel filed separate motions for attorney fees under section 1021.5 and section 2802. The court ruled that plaintiffs were not entitled to fees under section 2802 because they had abandoned that cause of action, but the court granted the motions under section 1021.5. In June 2014, the court entered a final judgment awarding plaintiffs on their eighth cause of action the principal sum of $3, 188, 445 against UT, plus prejudgment interest at the rate of seven percent from January 1, 2006 to November 27, 2013, in the sum of $1, 765, 350.27 for a total award of $4, 953, 795.27. The judgment awarded attorney fees to plaintiffs and the class members in the amount of $6, 160, 416, of which $1, 250, 000 was to be paid from the common fund-i.e., the class award.[8]

         DISCUSSION

         UT's Appeal

         I. Determination that the Carriers Were Employees and not Independent Contractors

         UT contends substantial evidence does not support the court's determination that the carriers were employees rather than independent contractors. We disagree.

         The trial court's determination of employee or independent contractor status is one of fact if it depends upon the resolution of disputed evidence or inferences and, as such, must be affirmed on appeal if supported by substantial evidence. (S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349 (Borello); Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 16-17 (Estrada).) The question is one of law only if the evidence is undisputed. (Borello, at p. 341.) "The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced." (Id. at p. 349.)

         "California decisions applying statutes enacted for the protection of employees 'uniformly declare that "[t]he 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...." [Citations.]' [Citation.] But courts 'have long recognized that the "control" test, applied rigidly and in isolation, is often of little use in evaluating the infinite variety of service arrangements.' [Citation.] So, while the right to control work details 'is the "most important" or "most significant" consideration, the authorities also endorse several "secondary" indicia of the nature of a service relationship.' [Citation.] Thus, ' "the right to discharge at will, without cause, " ' is ' "[strong] evidence in support of an employment relationship...." ' [Citation.] Additional factors include '(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.' " (Arzate v. Bridge Terminal Transport, Inc. (2011) 192 Cal.App.4th 419, 426, quoting Borello, supra, 48 Cal.3d at pp. 350-351.)

         Regarding the right-to-control test, "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. [Citations.] 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.' " ' " (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 533 (Ayala).)

         The trial court in its statement of decision identified the facts and evidence that supported its finding that the carriers were employees of UT. The court found that although the contract provided that the carriers were independent contractors, it was a contract of adhesion that the carriers entered into "on a take-it-or-leave it basis." The court cited testimony of former UT management employee Scott Zimmerman that a carrier never requested a new rate from him, [9] and Valderrama's testimony that there was no negotiation of rates he was to be paid, which were filled in when he was provided the contract. The court also cited evidence that the occasional rate increases the carriers received were not the result of negotiations with the carriers, but rather were "pragmatic business decision[s]" and an effort by some UT "distribution centers to determine whether the carriers were making similar compensation to occupations that competed with the pool of persons who worked as carriers."

         The court noted that UT's carrier contract was revised 11 times during the class period, and that all of the revisions were unilateral by UT and for UT's sole benefit. As examples, the court cited a liquidated damages provision added to the contract in 2006 "on a take-it-or-leave it basis, " and UT's unilateral decision to have carriers pay others to do the inserts for their Sunday papers. The court found credible Valderrama's testimony that there was no negotiation regarding any amendments or addendums to the contract.

         The court cited the following provisions in the contract that showed UT's right to control the carrier's manner and means of delivery: (1) the contract required the carriers to prepare and fold their newspapers in the distribution centers unless they had written waivers of that requirement; (2) the carriers could not insert messages into their papers with the exception of holiday cards; (3) the carriers could use only bags that were approved by UT; (4) the carriers could not add a delivery surcharge; (5) the carriers were required to deliver their papers by a specified deadline; (6) the carriers could not sell their subscriber lists; (7) the carriers had to be properly attired and wear closed-toed shoes in the distribution centers; (8) the carriers could deliver only publications authorized by UT; (9) the carriers could not assign their contracts; and (10) a carrier's compensation would be reduced if his or her CPT exceeded one.

         There was evidence of certain control measures that the court incorrectly cited as contract provisions, including UT's requirement that the carriers prepare the papers in accordance with daily specifications that UT provided in order to comply with advertiser requests, and UT's policy that the carriers could not communicate directly with the home delivery subscribers.[10]

         In addition to the contract, the court specified other evidence of control supporting its conclusion that the carriers were employees of UT, including "substantial testimony regarding [UT's] employees training, mentoring, and coaching carriers." Zimmerman testified about a comprehensive "Orientation Procedures" checklist that UT employees used to train new carriers. The checklist covered every aspect of the carrier's work, including warehouse safety, how to bill and maintain records for carrier-collect accounts, double bagging on rainy days, procedures at the distribution center, how Sunday procedures differed from weekday procedures, how and where to order and pick up supplies, how to interpret a route/delivery list, how to handle paper shortages, customer complaint procedures, and contractual obligations and procedures for using substitutes. The carrier's daily mail from UT included instructions specifying how particular customers wanted their papers delivered, and the carrier had to comply with those demands or risk being charged with a customer complaint.

         The court noted Savoie's testimony that UT employees were evaluated on their training, mentoring, and supervision of carriers. Savoie also testified that UT sought to have uniform policies at the distribution center, including policies regarding the training of carriers.

         The court referenced testimony of former UT employee Richard Conahan that UT set goals for employees to assist with carrier training and that employees mentored carriers, and the testimony of former UT employee Victor Diep, who testified that he trained carriers by taking them on their routes and showing them where to put the papers, how to read their daily mail and delivery instructions, and how to use a RouteSmart list, which was a computer program that provided specific instructions on delivering papers according to customer demands. The court also cited former UT employee Harold Button's testimony about a UT "best practices" document, which was an interoffice memorandum that established uniform policies for dealing with carriers at UT's distribution centers.[11]

         As additional evidence of UT's control of the carriers, the court noted that UT employees at the distribution centers watched over the carriers to make sure they were assembling their papers correctly and "would counsel, mentor, and supervise the carriers." The court specifically noted former UT management employee Phillip Prather's testimony that he would walk around his distribution center and make sure the carriers were assembling papers correctly, and Valderrama's testimony that UT employees supervised him while he was assembling papers at the distribution center. The court also noted "unrefuted" evidence that if carriers failed to arrive at their distribution centers in a timely fashion, UT employees would call them and sometimes go to a carrier's residence to wake up the carrier.

         The court cited testimony by Zimmerman and Valderrama, whom the court found to be credible witnesses, that UT employees conducted audits and field checks of the carriers' deliveries to determine whether the papers delivered by the carriers had been prepared correctly, and Conahan's testimony that field checks were done on a regular basis. As additional evidence of UT's right to control the carriers, the court cited Savoie's testimony that the UT unilaterally changed carrier routes to satisfy advertisers who wanted their advertisements delivered to specific subscribers.

         The court found that the carriers delivered "alternate publications" (e.g. the New York Times and Wall Street Journal) under instructions from UT, and that "[t]here was no evidence that a carrier who did not want to deliver any or all of the alternate publications could have chosen to do so. Indeed, it was clear that the carriers had to deliver these publications, regardless of their preference." These findings are supported by Zimmerman's and Valderrama's testimony and the provision of the contract stating: "[UT] agrees to provide [the carrier]... with sufficient copies of publications other than The San Diego Union-Tribune... for delivery to locations designated by [UT], which may include The San Diego Union-Tribune subscriber stops and other designated stops." Valderrama initialed that provision in the appendix to his contract but testified that the carriers had no choice whether to sign contract addendums, stating, "We had to sign." Zimmerman testified that there was no negotiation on the alternate publication addendums. He stated, "I believe the first one was the Los Angeles Times, and we pretty much approached the carrier and said, 'You're going to have 12 weekly customers, and you might have 20 Sunday customers that are Los Angeles Times...."

         The court cited the following as additional evidence of UT's right to control the carriers' work: the carriers had to purchase bonds and accident insurance from UT's broker; the carriers' invoices were prepared by UT rather than the carriers; and UT limited the carriers' right to use substitutes. The court cited evidence that if a nonfamily member substituted for a carrier, UT had to know who the substitute was and "when the substitute would be there." The court noted Zimmerman's testimony that UT routinely obtained information about a substitute, particularly the substitute's name and phone number.

         After discussing the evidence showing UT's right to control the carriers' manner and means of performing their work, the court addressed the secondary factors under Borello that showed the carriers were employees as follows:

         (1) The right to discharge at will: The court noted that all of the carrier's contracts provided that the contract was terminable on 30 days' notice, indicating the contract was terminable at will. The contract also gave UT the right to terminate the contract immediately for a "material breach."

         (2) Whether the carriers were engaged in a distinct occupation or business: The court initially addressed this factor by noting UT employees did the same job as the carriers. The court cited testimony that during the class period up to 10 percent of UT's home-delivery routes were delivered by UT employees, who delivered the routes in the same way as the carriers and used their own vehicles.[12] However, the employees were reimbursed for their mileage.

         Later in its statement of decision, the court stated: "When the class members first applied to become carriers, they were not independent newspaper delivery businesses. They were people looking for a job. They did not have any fictitious business names or business licenses. The only thing [UT] required was that the carriers had a driver's license, acceptable automobile insurance, and a Social Security card." The court's findings were supported by testimony of Zimmerman and Savoie.

         (3) Provision of instrumentalities, tools, and place of work: The court found that the carriers had to use bags and rubber bands they purchased from UT. The court stated: "The court supposes that the carriers may have been able to purchase bags and rubber bands from another source if they were acceptable to [UT], but there is no credible evidence that actually occurred. Instead, the evidence showed carriers purchased their supplies from [UT], by filling out a required form." The court cited testimony by Zimmerman that new carriers were provided a kit they purchased for one dollar to use while they were learning to be a carrier. The kit provided the necessary supplies for the carrier's first month. Valderrama testified that when he started working as a carrier for UT, he was told he was going to be buying rubber bands and plastic bags for the papers from UT. When he asked if he could buy bags or rubber bands elsewhere, he was told by a UT management employee that he had to buy them from UT. Zimmerman testified he was not aware of any carriers that bought supplies from anyone other than UT.

         (4) Delivery as part of UT's business: The court correctly noted it was undisputed that newspaper delivery is an integral part of UT's business. Savoie testified to that effect.

         (5) Duration of services: The court noted the evidence showed a large percentage of carriers stayed contracted with UT for many years, which is indicative of employment status. Zimmerman estimated that 25 percent of the carriers stayed four years or longer, and there were carriers who had delivered for UT for decades. He testified that the average amount of time a carrier would stay with UT was one to three years.

         (6) Investment in equipment:[13] The court correctly noted there was no evidence that the carriers had a substantial investment in their work other than their vehicles, which they also used for their personal needs.

         The evidence discussed above sufficiently supports the court's finding that the carriers were employees of UT rather than independent contractors. California case law also supports that finding. As the court noted in its statement of decision, Antelope Valley Press v. Poizner (2008) 162 Cal.App.4th 839 (Antelope Valley) is persuasive authority because the Court of Appeal in that case affirmed the insurance commissioner's determination, under facts similar to those presented here, that newspaper carriers were employees rather than independent contractors for purposes of workers' compensation insurance. (Id. at pp. 842-843.)

         Applying the substantial evidence test and the common law test for employment approved in Borello, the Antelope Valley court concluded there was substantial evidence that the Antelope Valley Press (AVP) controlled the manner and means by which its carriers accomplished their tasks, even though the form contract between AVP and the carriers stated that the carrier " 'has the right to control the manner and means of delivery' of AVP's publications and 'has the right to determine the equipment and supplies needed to perform delivery services.' " (Antelope Valley, supra, 162 Cal.App.4that p. 853.) Like UT, AVP permitted its customers to dictate where they wanted the papers placed on their property. (Id. at pp. 853-854.) Any harm to or loss of the paper could result in financial loss to the carrier, like the charges against the carriers for customer complaints in the present case. (Id. at p. 854.) The carriers in Antelope Valley had to abide by the pick up and delivery times specified in the contract or face economic consequences or termination. (Ibid.) AVP controlled the price paid by customers to AVP, which included the cost of the delivery service. (Ibid.)

         The Antelope Valley court also concluded substantial evidence supported the finding that most of the secondary factors under Borello indicated an employer-employee relationship between AVP and its carriers. Like the carriers' contract in the present case, the carriers' contract in Antelope Valley provided that AVP could terminate the contract on 30 days' notice to the carrier, which provision the Antelope Valley court viewed as clearly giving AVP "the right to discharge at will without cause." (Antelope Valley, supra, 162 Cal.App.4th at p. 854.) The Antelope Valley court further noted the evidence did not show that in delivering AVP's publication, the carriers were engaged in a distinct occupation or business of their own; that any of the carriers held themselves out as being an independent delivery service that happened to have AVP as one of its customers; or that the carriers had a substantial investment in their AVP delivery duties other than their time and the vehicles they used, which were the same vehicles they used for their personal activities. (Id. at pp. 354-355.) Similarly, there was no evidence in the present case that the carriers operated as independent newspaper delivery businesses with fictitious business names or business licenses or that the carriers had a substantial investment in their work other than their time and their vehicles, which they also used for their personal needs.

         Other factors supporting the determination that the carriers in Antelope Valley were employees were that delivering newspapers required no particular skill; AVP supplied many of the materials used by the carriers, such as the newspapers, bags, and subscriber lists; and a large percentage of carriers had been contracted with AVP for a period of more than a year, unlike an independent contractor "hired to achieve a specific result that is attainable within a finite period of time, such as plumbing work, tax service, or the creation of a work of art for a building's lobby...." (Antelope Valley, supra, 162 Cal.App.4th at p. 855.) The Antelope Valley court also noted that payment for the carriers was "essentially in a piecework fashion" and that delivery of its publications was "part and parcel of the newspaper business, " as evidenced by the fact that AVP employees also delivered AVP's publications. (Id. at pp. 855-856.) Finally, the Antelope Valley court noted that although the carrier contract allowed the carriers to hire employees and substitutes, the contract limited that right in certain respects. (Id. at p. 856.) Each of these factors is also present in this case.

         The instant case is also similar to Gonzales v. Workers' Comp. Appeals Bd. (1996) 46 Cal.App.4th 1584 (Gonzalez), in which the Court of Appeal applied the Borello right-to-control test in determining that a newspaper carrier was an employee of the newspaper rather than an independent contractor for purposes of workers' compensation. The Gonzalez court noted the carrier "had very little control over the mode and manner in which he performed his service. [The newspaper] specified the time at which the newspapers were to be picked up for distribution and specified the time each day by which the newspapers were to be delivered to the customers. [The newspaper] furnished both the customers and the routes by which the customers were served. [The carrier] had almost no interaction with the customers, as the customers paid their subscription fees directly to [the newspaper] and rendered complaints about delivery directly to [the newspaper]. Although [the newspaper's] supervision of the performance of the services was indirect, it was focused on and totally responsive to the complaints received from customers." (Id. at p. 1593.) The Gonzalez court further noted that the newspaper could discharge a carrier at will (ibid.); the carriers made no capital investment aside from their vehicles; the publisher provided bags and rubber bands; newspaper delivery was a form of manual labor that required no special skill; newspaper delivery was an integral part of the newspaper's business operation; and "no finite time for service was involved as is normally the case with a true independent contractor relationship." (Id. at p. 1594.) Each of these circumstances described in Gonzalez is present in the instant case.

         Finally, just as the trial court here found the carriers' form contract was not controlling on the issue of independent contractor/employment status because it was an adhesion contract that the carriers entered into "on a take-it-or-leave it basis, " the Gonzalez court noted "there was no indication that [the carrier] had any real choice of terms of employment or contract." (Gonzalez, supra, 46 Cal.App.4th at p. 1594.) The Gonzalez court concluded: "The totality of the circumstances substantiates the... conclusion that [the publisher's] carrier agreement, which purported to 'disavow' an employer-employee relationship, was a subterfuge to avoid the workers' compensation laws of California. 'The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.' " (Ibid., quoting Borello, supra, 48 Cal.3d at p. 349.)

         UT argues that Antelope Valley and Borello are inapposite because they were decided in the context of workers' compensation law. We disagree that the common law test discussed in Borello for determining an employment relationship is limited to workers' compensation cases. The California Supreme Court in Borello stated that its answer to the question of whether agricultural laborers engaged to harvest cucumbers under a written " 'sharefarmer' " agreement were independent contractors exempt from workers' compensation coverage had "implications for the employer-employee relationship upon which other state social legislation depends." (Borello, supra, 48 Cal.3d at p. 345, fn. omitted.)

         In Ayala, the Supreme Court considered whether a complaint alleging that a newspaper publisher illegally treated its carriers as independent contractors and thereby deprived them of various administrative and statutory wage and hour protections could proceed as a class action. The Ayala court applied the Borello right-to-control test and secondary factors in considering "whether the operative legal principles, as applied to the facts of the case, render[ed] the claims susceptible of resolution on a common basis." (Ayala, supra, 59 Cal.4th at pp. 530, 531-540.) Finally, the Court of Appeal in Estrada held that "[b]ecause the Labor Code does not expressly define 'employee' for purposes of section 2802, the common law test of employment applies." (Estrada, supra, 154 Cal.App.4th at p. 10.) The trial court did not err in applying the common law test discussed in Borello to determine whether the carriers were employees or independent contractors.

         UT also argues the trial court erred in disregarding regulations adopted by the Employment Development Department (EDD) to define what constitutes an independent contractor relationship with a carrier in the newspaper industry. Specifically, UT contends that the court should have applied California Code of regulations, title 22, section 4304-6 (section 4304-6), which sets forth various factors to consider in determining whether a carrier is an employee or an independent contractor in newspaper distribution industry, and that had it done so, it would have concluded the carriers were independent contractors.

         The court did not err in not specifically applying section 4304-6 to determine the employment status of the carriers. The EDD regulations expressly apply the same common law test for determining employment status articulated in Borello. (Cal. Code Regs., tit. 22, §§ 4304-1 & 4304-6.) Section 4304-6, subdivision (a) provides that "determination of whether a carrier is an employee or an independent contractor in the newspaper distribution industry will be determined generally by the rules set forth in [section] 4304-1...." California Code of regulations, title 22, section 4304-1 states: "Whether an individual is an employee for the purposes of [unemployment compensation] will be determined by the usual common law rules applicable in determining an employer-employee relationship. Under those rules, to determine whether one performs services for another as an employee, the most important factor is the right of the principal to control the manner and means of accomplishing a desired result. If the principal has the right to control the manner and means of accomplishing the desired result, whether or not that right is exercised, an employer-employee relationship exists. Strong evidence of that right to control is the principal's right to discharge at will, without cause." Subdivision (a) of section 4304-1 lists the same factors to be considered in applying the right-to-control test that the Borello court listed. (Borello, supra, 48 Cal.3d at pp. 350-351.)

         Section 4304-6, subdivision (c) sets forth "Basic Guidelines" or factors to be considered in determining the employment/independent contractor status of newspaper carriers, some of which evidence employment status and some of which evidence independent contractor status. However, the factors listed in section 4304-6 are merely what they purport to be-i.e., guidelines; they do not establish an absolute test or compel a particular finding of employment or independent contractor status under particular circumstances. The trial court was not required to specifically consider the section 4304-6 guidelines in making its employment status determination; it could properly make that determination by applying the common law factors set forth in Borello and section 4304-1. Substantial evidence and California law supports the court's determination that the carriers were employees rather than independent contractors.

         II. Class Action Certification and Trial

         A. Adequacy of class representatives

         UT contends the class must be decertified because the class representatives were inadequate. "The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives. [Citations.] 'In turn, the "community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class." ' " (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021 (Brinker).)

         Typically, "[t]he adequacy of representation component of the community of interest requirement for class certification comes into play when the party opposing certification brings forth evidence indicating widespread antagonism to the class suit." (Capitol People First v. Department of Developmental Services (2007) 155 Cal.App.4th 676, 696-697.) " 'It is axiomatic that a putative representative cannot adequately protect the class if his interests are antagonistic to or in conflict with the objectives of those he purports to represent. But only a conflict that goes to the very subject matter of the litigation will defeat a party's claim of representative status.' " (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.)

         In the present case, there was no evidence of antagonism to the class suit by any class members. Thus, representation of the class was adequate as long as the representative(s) had claims typical of the class (Brinker, supra, 53 Cal.4th at p. 1021) and could "adequately represent the class by vigorously and tenaciously protecting the class members' interests." (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 432.) A relevant factor in the latter analysis is "the competency of class counsel, if the firm is representing the class as a whole and not simply the interests of the named ...


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