Sam Hargrove v. Sleepys LLC ( 2023 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 22-2040
________________
SAM HARGROVE; ANDRE HALL; and MARCO EUSEBIO, individually and on
behalf of all others similarly situated,
v.
SLEEPY’S LLC,
Appellant
v.
CURVA TRUCKING LLC; EUSEBIO’s TRUCKING CORP.; I STEALTH LLC; HC
TRUCKING LLC; ALS TRUCKING, INC.; ALS TRUCK DELIVERY LLC; UTILA
TRANSPORT, INC.; E-MAK LLC; EMAK TRANSPORT INC.; EMAK TRANSPORT;
A&P TRUCKING LLC; DJG TRANSPORT LLC; AL TRANSPORT SERVICES
CORP.; A.C. BAUTISTA LLC; FB LOGISTICS CORP.; GD DELIVERY SERVICES
LLC; RAAN TRANSPORT LLC; JONATHAN LLC; JONATHAN’s LLC; S.O.
TRUCKING LLC; SIX STARTS TRUCKING LLC; MSF TRUCKING LLC; RKC
DELIVERY LLC; GEORGIAN SHIELD INC.; and WR TRUCKING LLC
_____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 3-10-cv-01138)
District Judge: Honorable Peter G. Sheridan
________________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
on April 12, 2023
Before: CHAGARES, Chief Judge, SCIRICA, and AMBRO, Circuit Judges.
(Filed: June 12, 2023)
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OPINION*
________________
SCIRICA, Circuit Judge
In this case, the District Court allowed 111 Sleepy’s delivery drivers to sue Sleepy’s
as a class. The drivers allege that Sleepy’s has misclassified them as independent
contractors instead of employees, that it has made illegal deductions from their pay, and
that it has failed to pay them overtime. The drivers present identical legal claims based on
virtually identical facts. These claims can be proven with common evidence. Resolving
them in a single trial would be fair and efficient. Accordingly, the District Court did not
err in allowing the case to proceed as a class action. We will affirm its grant of class
certification.
I.1
Sleepy’s, a mattress retailer, relied on drivers to deliver its mattresses to customers.
More than 100 of those drivers were based at Sleepy’s facility in Robbinsville, New Jersey.
Sleepy’s classified these drivers as independent contractors and required them to sign a
contract governing their relationship with Sleepy’s. The drivers allege they were
employees—not independent contractors—and so Sleepy’s violated New Jersey law by
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
1
The facts are given more fully in our prior precedential opinion, Hargrove v. Sleepy’s
LLC, 974 F.3d 467 (3d Cir. 2020). We briefly repeat the key facts to aid the parties.
2
making improper deductions from their pay and failing to pay them overtime. Hargrove v.
Sleepy’s LLC, 974 F.3d 467, 472 (3d Cir. 2020).
In 2018, Plaintiffs sought to certify a class of “111 individuals who performed
deliveries on a full-time basis and who drove one truck for Sleepy’s.” Id. at 474. The
District Court denied certification, holding that the class was not “ascertainable based on
objective criteria” because Sleepy’s records did not identify which drivers worked full
time. Hargrove v. Sleepy’s LLC, No. 10-cv-1138, 2019 WL 8881823, at *4 (D.N.J. May 9,
2019) (quoting Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 593 (3d Cir. 2012)).
Plaintiffs appealed, and we reversed. Hargrove, 974 F.3d at 470. We concluded that
Plaintiffs satisfied the ascertainability requirement by identifying a “reliable and
administratively feasible mechanism for determining class membership.” Id. at 479
(citations omitted) (quoting Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015)). Class
membership could be determined from “pay statements,” “driver rosters,” “Sleepy’s
security gate logs,” and the drivers’ affidavits. Id. at 479-81. And we reasoned that we
could not let Plaintiffs’ class action be “thwarted by Sleepy’s lack of records,” lest we open
“a vast loophole” for employers to exploit by failing to keep records. Id. at 483.
On remand, the District Court was again confronted with deciding whether a class
of drivers could be certified. The court certified the class.2 Hargrove v. Sleepy’s LLC, No.
2
More precisely, the court certified “a deductions class and an overtime class of
approximately 111 individuals who 1) entered into an Independent Driver Agreement (or
similar agreement) with Sleepy’s directly or through a business entity; 2) personally
provided delivery services for Sleepy’s on a full-time basis (i.e., more than 30 hours a
week) out of Sleepy’s Robbinsville, New Jersey facility; 3) operated only one truck for
3
3:10-cv-1138, 2022 WL 617176, at *1 (D.N.J. Mar. 2, 2022). It held that the requirements
of Rule 23(a)—numerosity, commonality, typicality, and adequacy—were satisfied. Id. at
*7-9. It determined Plaintiffs could prove Sleepy’s liability through common evidence.
Common issues of liability thus “predominate[d] over individual issues.” Id. at *9 (quoting
In re Prudential Ins. Co of Am. Sales Practices Litig., 148 F.3d 283, 313-14 (3d Cir. 1998)).
The court found that a class action was superior to other methods of deciding the case. Id.
at *11-12. Since the class members’ claims could be proven by common evidence,
“adjudicating liability for these claims in a single class action [was] more efficient than
potentially holding 111 trials.” Id. at *12. The court certified the class only on the issue of
liability, leaving the assessment of damages for future individual proceedings. Id.
We granted Sleepy’s request to appeal the class certification decision.
II.3
“Class certification is proper only if the trial court is satisfied, after a rigorous
analysis, that the prerequisites of Rule 23 are met.” In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d 305, 309 (3d Cir. 2008) (cleaned up). The District Court rigorously
analyzed this case and concluded those requirements were met. We will affirm.
either all of their time while working at Sleepy’s or for at least six months; and 4) who
were classified as independent contractors at any time from March 4, 2004 to the
present.” Hargrove, 2022 WL 617176, at *7.
3
The District Court had jurisdiction under 28 U.S.C. § 1332(d). We have jurisdiction
under 28 U.S.C. § 1292(e) and Federal Rule of Civil Procedure 23(f) as a result of our
grant of permission to appeal.
4
A.
Sleepy’s argues the District Court abused its discretion in deciding that issues
common to the class “predominate over any questions affecting only individual members.”
Hargrove, 2022 WL 617176, at *7 (quoting Fed. R. Civ. P. 23(b)(3)). We disagree.
The predominance requirement tests whether the common issues in the case are
more important than the individual issues. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442,
453 (2016). To meet this requirement, it suffices to show “that the plaintiffs’ claims are
capable of common proof at trial.” In re Lamictal Direct Purchaser Antitrust Litig., 957
F.3d 184, 191 (3d Cir. 2020).
Plaintiffs’ theory of the case is that “they worked for Sleepy’s, that Sleepy’s was
their employer, and that any money paid as a result was, as a matter of New Jersey law,
wages.” Hargrove Br. 2. If those wages were reduced by improper deductions, or if they
failed to include earned overtime pay, Sleepy’s violated the law. As the District Court held,
these claims are readily capable of common proof.
We begin with misclassification. At the core of this case is Plaintiffs’ allegation that
they were not independent contractors but Sleepy’s employees. To decide whether this is
so, the District Court will apply what is commonly known as the “ABC test.” Hargrove v.
Sleepy’s, LLC, 106 A.3d 449, 465 (N.J. 2015). Under this test, an individual is an employee
unless the employer can show that:
(A) Such individual has been and will continue to be free from control or
direction over the performance of such service, both under his contract of
service and in fact; and
5
(B) Such service is either outside the usual course of the business for which
such service is performed, or that such service is performed outside of all the
places of business of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established
trade, occupation, profession or business.
Id. at 458 (quoting N.J. Stat. Ann. § 43:21-19(i)(6)). If any of the three criteria is not
met, the worker is an employee. Id.The ABC test often turns on evidence of an employer’s policies and practices, and
so often presents a common issue. See, e.g., Williams v. Jani-King of Phila., Inc., 837 F.3d
314, 321 (3d Cir. 2016) (employer’s control was common issue); Costello v. BeavEx, Inc.,
810 F.3d 1045, 1059-60 (7th Cir. 2016) (test could be resolved by “common evidence about
[Defendant’s] business model”). This case is no exception. The District Court already
applied the ABC test to three Plaintiffs and held that they were Sleepy’s employees. JA71-
76. Its decision about Part A—Sleepy’s control over the drivers—rested entirely on
common evidence. See JA72-73 (referencing, e.g., the requirements of Sleepy’s
Independent Driver Agreement and Sleepy’s control of the delivery process). This was
sufficient to resolve the issue of employment status, JA73, and is likewise sufficient to
show that employment status is a common issue. Costello, 810 F.3d at 1060.
Sleepy’s response is that, “[o]ver ten years ago, the District Court concluded, as a
matter of law, that Sleepy’s control over class members was insufficient to create employee
status under the control test.” Sleepy’s Br. 22 (emphasis omitted). No doubt Sleepy’s
prefers this ruling—which we vacated on appeal, Hargrove v. Sleepy’s LLC, 612 F. App’x
116, 118-19 (3d Cir. 2015)—to the court’s current, contrary decision. But Sleepy’s
preference for a different ruling on the merits is not an argument against certification. See
6
Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 459 (2013) (“Rule 23(b)(3)
requires a showing that questions common to the class predominate, not that those
questions will be answered, on the merits, in favor of the class.”). Common evidence will
decide who is right about employee status. Plaintiffs are required only to show that they
“can win their case based on evidence common to the class,” not that they will. Costello,
810 F.3d at 1060; accord Sullivan v. DB Investments, Inc., 667 F.3d 273, 306 (3d Cir. 2011)
(en banc). A common resolution will be no less beneficial to Defendants, who may defeat
the misclassification claims of all 111 class members in one trial.
Sleepy’s liability can similarly be determined with common evidence. Sleepy’s
alleged wrongs—making illegal deductions and failing to pay overtime—were “common
to all of the class members” and harmed them all. Sullivan, 667 F.3d at 298. “Common
corporate policies” like these “carry great weight for certification purposes,” and
“predominance is rarely defeated in cases where such uniform policies exist.” Senne v.
Kansas City Royals Baseball Corp., 934 F.3d 918, 944 (9th Cir. 2019) (cleaned up).
A closer look at the “essential elements” of Plaintiffs’ claims confirms this
prediction. See Hydrogen Peroxide, 552 F.3d at 311. To prevail on their overtime claims,
Plaintiffs must prove they worked more than “40 hours in any week” without receiving
overtime pay. Branch v. Cream-O-Land Dairy, 243 A.3d 633, 637 (N.J. 2021) (quoting
N.J. Stat. Ann. § 34:11-56a4(b)). Sleepy’s says that they cannot do so with common
evidence because class members “worked different hours,” Sleepy’s Br. 19 (quoting
JA152), and “Sleepy’s did not record” those hours. Id. at 18 (quoting JA27). But
“employees’ wage claims should not suffer” on account of an employer’s failure to record
7
hours as required by law. Hargrove, 974 F.3d at 482. Plaintiffs can prove their claims
through common evidence showing “the amount and extent of [their] work as a matter of
just and reasonable inference.” Tyson Foods, 577 U.S. at 456 (quoting Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 687 (1946)).
The record shows much common evidence which would permit that inference. The
drivers may rely, for example, on gate logs reflecting the time they spent making deliveries,
Hargrove, 2022 WL 617176, at *11, “manifests” and “scanner data” showing the duration
of drivers’ routes and the time of each stop along the route, Hargrove Br. 36, and class
members’ own testimony about their hours, Hargrove, 2022 WL 617176, at *11. Sleepy’s
argues that this evidence would not be truly “representative” of the drivers’ hours. Sleepy’s
Br. 19. But this is no obstacle to certification unless the evidence is inadmissible or so
lacking that “no reasonable juror could have believed” it. Tyson Foods, 577 U.S. at 459.
That is not the case here, and Sleepy’s does not contend otherwise. Sleepy’s may ultimately
be correct that this evidence is “unrepresentative or inaccurate.” Id. at 457. But “[t]hat
defense is itself common to the claims made by all class members,” and so supports class
certification. Id.
Plaintiffs’ illegal deductions claim is much the same. This claim requires Plaintiffs
to “prove money was deducted from [their] earned wages and that the deduction was
impermissible.” Sleepy’s Br. 13; N.J. Stat. Ann. § 34:11-4.4. Sleepy’s admits that it made
deductions from the payments it made to class members, and does not appear to contest
that these deductions would have been impermissible had the payments been the drivers’
wages. See Sleepy’s Br. 14 (“[I]t would have been illegal for an employer to make such
8
deductions . . . .” (citing N.J. Stat. Ann. § 34:11-4.4)). It instead argues that it did not pay
drivers “wages” for their work—rather, it gave the workers’ LLCs “lump-sum payments”
that “were not wages.” Reply Br. 9.4 Whatever its merits, this defense is common to the
class. See Prudential, 148 F.3d at 310 (observing that “defenses which were common to
all class members . . . would satisfy the predominance requirement”). Indeed, Sleepy’s
argument on the issue relies only on common evidence—not any individualized facts about
a particular driver’s wages. See Sleepy’s Br. 3-4, 13; Reply Br. 7-9. Because Plaintiffs can
prove their case with common evidence, they have satisfied the predominance requirement.
B.
The District Court held that a class action was the most fair and effective way of
resolving this case. We agree.
Before certifying this class, the District Court was required to conclude that “a class
action is superior to other available methods for fairly and efficiently adjudicating the
controversy.” Fed. R. Civ. P. 23(b)(3). It “balance[d], in terms of fairness and efficiency,
the merits of a class action against those of alternative[s],” and concluded that a class action
was the superior method of adjudication. Hargrove, 2022 WL 617176, at *11 (quoting In
re NFL Players Concussion Injury Litig., 821 F.3d 410, 434 (3d Cir. 2016)). We agree that
“adjudicating liability for these claims in a single class action is more efficient than
4
Of course, if the drivers are Sleepy’s employees, then it may be problematic that
Sleepy’s has apparently not paid them any wages. See, e.g., N.J. Stat. Ann. § 34:11-
4.10(a) (“Any employer who knowingly fails to pay the full amount of wages to an
employee . . . shall be guilty of a disorderly persons offense . . . .”). Regardless, this
dispute underscores the importance of the common question of employee status.
9
potentially holding 111 trials.” Hargrove, 2022 WL 617176, at *12. Moreover, a single
class verdict will be fairer than 111 potentially conflicting individual verdicts about the
“same legal claims based on very similar sets of facts.” Id.Sleepy’s argues that this conclusion was wrong for two reasons. First, it repeats its
predominance arguments that “there is no way” to resolve the case “without an individual
analysis.” Sleepy’s Br. 26. We have already rejected this point, and it fails here for the
same reasons.
Second, Sleepy’s argues that Plaintiffs’ claims are simply too significant to be
aggregated. They point out a “core purpose of the class action lawsuit is the aggregation of
small claims cases.” Sleepy’s Br. 26 (quoting 2 William Rubenstein, Newberg and
Rubenstein on Class Actions § 4.65). Since Plaintiffs each “stand, on average, to recover
$33,000,”5 Sleepy’s says they should be required to proceed individually. Id. at 27.
We are not persuaded. It is true that class actions are especially important when the
individual stakes are low. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 616 (1997). But
potential recoveries of $33,000 are small enough to support a finding of superiority. See
Prudential, 148 F.3d at 316 (citing In re Prudential Ins. Co. of Am. Sales Practices Litig.,
962 F. Supp. 450, 523 (D.N.J. 1997) (“The majority of class members in this case own
relatively modest life insurance policies with death benefits averaging $35,000.”)). This is
not a case in which “[e]ach plaintiff if successful is apt to receive a judgment in the
5
Plaintiffs dispute the accuracy of this figure, arguing that many class members have
claims of around $1,000 or even less. See Hargrove Br. 41. Sleepy’s argument is not
compelling even if its figures are accepted.
10
millions.” In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300 (7th Cir. 1995). Besides,
class certification can be proper even if “individual damages run high.” Amchem, 521 U.S.
at 617. The benefits of avoiding over a hundred “duplicative lawsuits” justify the District
Court’s decision. See NFL, 821 F.3d at 424, 434-35 (finding superiority on this basis
despite individual awards in the millions).
C.
In granting certification, the District Court found that the class’s representatives
would “fairly and adequately protect” its interests. Hargrove, 2022 WL 617176, at *9
(quoting Fed. R. Civ. P. 23(a)(3)). The court held that there were no “conflicts of interest
between [the] named parties and the class.” Id. (quoting Amchem, 521 U.S. at 625).
Sleepy’s contends this was error. According to Sleepy’s, some class members are “joint
employer[s]” of other Sleepy’s “drivers and helpers.” Sleepy’s Br 28. Sleepy’s therefore
worries that a judgment against it could prove disastrous for those class members, who
might be “sued by [their] former employees” and “bankrupte[d].” Id. at 30.
The District Court was right to reject this argument. If some class members are liable
to their own employees for violating the wage and hour laws, they are so liable regardless
of the outcome of this suit. A win for the class would establish only that Sleepy’s had failed
to pay overtime and illegally deducted money from the drivers’ pay—not that the class
members had done the same to their employees. Cf. Sleepy’s Br. 20. The two claims attack
different conduct and will be proven with different evidence. A “hypothetical” conflict like
this does not defeat adequacy. In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig.,
795 F.3d 380, 395 (3d Cir. 2015).
11
These class representatives “possess the same interest” and have “suffere[d] the
same injury as the [other] class members.” In re Pet Food Prods. Liab. Litig., 629 F.3d
333, 343 (3d Cir. 2010) (quoting Amchem, 521 U.S. at 625-26). Success in this suit will
only benefit Plaintiffs. They have every “incentive to represent the claims of the class
vigorously” to maximize their own recovery and that of the other class members. Dewey v.
Volkswagen Aktiengesellschaft, 681 F.3d 170, 184 (3d Cir. 2012) (quoting In re Cmty.
Bank of N. Va., 622 F.3d 275, 290 (3d Cir. 2010)). The court did not abuse its discretion in
finding they were adequate representatives.
D.
Sleepy’s complains that “the certification order failed to define the class and the
class claims, issues, or defenses, and failed to appoint class counsel.” Sleepy’s Br. 2. We
disagree. The certification order precisely defined the class and the issues. See supra note
2 (class definition); Hargrove, 2022 WL 617176, at *1, *11 (defining the issues as
“whether Plaintiffs were misclassified as independent contractors,” “Sleepy’s liability for
wage deductions,” and Sleepy’s liability for unpaid overtime). These definitions were
“readily discernible, clear, and complete”—more than adequate to enable our review. See
Reinig v. RBS Citizens, N.A., 912 F.3d 115, 126 (3d Cir. 2018).
Sleepy’s makes only “a passing reference” to the issue of class counsel, and so has
forfeited the argument. Higgins v. Bayada Home Health Care Inc., 62 F.4th 755, 763 (3d
Cir. 2023). We are confident the District Court will appoint class counsel.
***
12
We will affirm the order of the District Court granting class certification, and
remand for further proceedings consistent with this opinion.
13