Ayala v. Antelope Valley Newspapers, Inc. ( 2014 )

Filed 6/30/14
IN THE SUPREME COURT OF CALIFORNIA
MARIA AYALA et al., )
)
Plaintiffs and Appellants, )
) S206874
v. )
) Ct.App. 2/4 B235484
ANTELOPE VALLEY NEWSPAPERS, )
INC., ) Los Angeles County
) Super. Ct. No. BC403405
Defendant and Respondent. )
____________________________________)
Antelope Valley Newspapers, Inc. (Antelope Valley) is the publisher of the
Antelope Valley Press, a daily newspaper. To deliver the paper to its subscribers,
Antelope Valley contracts with individual carriers. Four carriers, Maria Ayala,
Josefina Briseño, Rosa Duran, and Osman Nuñez, contend Antelope Valley
illegally treats them as independent contractors, rather than employees, and
thereby deprives them of a host of wage and hour protections to which they are
legally entitled.
The merits of the complaint are not before us. The sole question is whether
this case can proceed as a class action. The trial court concluded the case could
not, holding that on the critical question whether Ayala and others were
employees, plaintiffs had not shown common questions predominate; to determine
employee status, in the trial court‘s view, would necessitate numerous
unmanageable individual inquiries into the extent to which each carrier was
afforded discretion in his or her work. The Court of Appeal disagreed in part,
holding that the trial court had misunderstood the nature of the inquiries called for,
and remanded for reconsideration of the class certification motion as to five of the
complaint‘s claims.
We affirm. Whether a common law employer-employee relationship exists
turns foremost on the degree of a hirer‘s right to control how the end result is
achieved. (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989)
48 Cal. 3d 341, 350 (Borello).) In turn, whether the hirer‘s right to control can be
shown on a classwide basis will depend on the extent to which individual
variations in the hirer‘s rights vis-à-vis each putative class member exist, and
whether such variations, if any, are manageable. Because the trial court
principally rejected certification based not on differences in Antelope Valley‘s
right to exercise control, but on variations in how that right was exercised, its
decision cannot stand.
FACTUAL AND PROCEDURAL BACKGROUND
Defendant Antelope Valley circulates the Antelope Valley Press daily to
subscribers throughout Los Angeles and Kern Counties. To distribute the paper,
Antelope Valley operates distribution facilities in both counties and contracts with
individual carriers using a preprinted standard form contract. Named plaintiffs
Maria Ayala, Josefina Briseño, Rosa Duran, and Osman Nuñez (collectively
Ayala) are or were newspaper carriers for Antelope Valley.
In December 2008, Ayala sued on behalf of a putative class of Antelope
Valley carriers. The complaint contends that Antelope Valley treats its carriers as
independent contractors when, as a matter of law, they are employees.
Consequently, Antelope Valley denies its carriers various wage and hour
protections to which they are entitled. The complaint alleges unpaid overtime,
unlawful deductions, failure to provide breaks, and failure to reimburse for
2
business expenses, among other statutory and wage order violations (Lab. Code,
§§ 221, 223, 226, 226.3, 226.7, 512, 1174, 1194, 2802; Industrial Welf. Com.
wage order No. 1-2001, subds. 3, 7–9, 11–12 (IWC wage order No. 1-2001) (Cal.
Code Regs., tit. 8, § 11010)), as well as unfair competition based on these
violations (Bus. & Prof. Code, § 17200).
Ayala sought class certification. She contended the central question in
establishing liability was whether carriers are employees, and that this question
could be resolved through common proof, including but not limited to the contents
of the standard contract entered into between Antelope Valley and its carriers.
Antelope Valley opposed certification. Because of alleged individual variations in
how carriers performed their work, it disagreed that the question of employee
status could be resolved on a common basis. Antelope Valley further argued that
even if the carriers were employees, some of the causes of action presented
additional unmanageable individual issues that should nevertheless preclude
certification.
The trial court denied class certification. It concluded common issues did
not predominate because resolving the carriers‘ employee status would require
―heavily individualized inquiries‖ into Antelope Valley‘s control over the carriers‘
work. Moreover, the claims for overtime and for meal and rest breaks would
require additional claim-specific individualized inquiries. Because individual
issues predominated, class resolution of the claims was not superior to individual
lawsuits by each carrier.
A unanimous Court of Appeal affirmed in part and reversed in part. It
agreed with the trial court that Ayala had not shown how her overtime, meal
break, and rest break claims could be managed on a classwide basis. As for the
remaining claims, however, it disagreed that proof of employee status would
necessarily entail a host of individual inquiries. In the Court of Appeal‘s view,
3
although evidence of variation in how carriers performed their work might support
Antelope Valley‘s position that it did not control the carriers‘ work, such evidence
would not convert the critical question—how much right does Antelope Valley
have to control what its carriers do?—from a common one capable of answer on a
classwide basis to an individual one requiring mini-trials.
We granted Antelope Valley‘s petition for review.
DISCUSSION
I. Class Action Principles
―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).)
Here, the presence or absence of predominant common questions is the sole issue
on appeal.1
We review the trial court‘s ruling for abuse of discretion and generally will
not disturb it ― ‗unless (1) it is unsupported by substantial evidence, (2) it rests on
improper criteria, or (3) it rests on erroneous legal assumptions.‘ ‖ (Brinker,
supra, 53 Cal.4th at p. 1022.) We review the trial court‘s actual reasons for
1 While the trial court also concluded class treatment was not superior to
other means of resolving the complaint‘s claims, that determination was wholly
derivative of its conclusion that individual questions of fact and law would
predominate over common ones. Our opinion therefore focuses on the trial court‘s
predominance analysis.
4
granting or denying certification; if they are erroneous, we must reverse, whether
or not other reasons not relied upon might have supported the ruling. (Linder v.
Thrifty Oil Co. (2000) 23 Cal. 4th 429, 436.)
II. The Test for Employee Status
We begin by identifying the principal legal issues and examining the
substantive law that will govern. In doing so, we do not seek to resolve those
issues. Rather, the question at this stage is whether the operative legal principles,
as applied to the facts of the case, render the claims susceptible to resolution on a
common basis. (Brinker, supra, 53 Cal.4th at pp. 1023–1025; Sav-On Drug
Stores, Inc. v. Superior Court (2004) 34 Cal. 4th 319, 327 [the focus ―is on what
type of questions—common or individual—are likely to arise in the action, rather
than on the merits of the case‖].)
The trial court and Court of Appeal correctly recognized as the central legal
issue whether putative class members are employees for purposes of the
provisions under which they sue. If they are employees, Antelope Valley owes
them various duties that it may not have fulfilled; if they are not, no liability can
attach. In turn, whether putative class members‘ employee status can be
commonly resolved hinges on the governing test for employment.
In deciding whether plaintiffs were employees or independent contractors,
the trial court and Court of Appeal applied the common law test, discussed most
recently at length in Borello, supra, 48 Cal. 3d 341. We solicited supplemental
briefing concerning the possible relevance of the additional tests for employee
status in IWC wage order No. 1-2001, subdivision 2(D)–(F). (See Martinez v.
Combs (2010) 49 Cal. 4th 35, 57-66; Bradley v. Networkers Internat., LLC (2012)
211 Cal. App. 4th 1129, 1146–1147; Sotelo v. Medianews Group, Inc. (2012) 207
Cal. App. 4th 639, 660–662.) In light of the supplemental briefing, and because
5
plaintiffs proceeded below on the sole basis that they are employees under the
common law, we now conclude we may resolve the case by applying the common
law test for employment, without considering these other tests. (Cf. Sav-on Drug
Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 327 [the class certification
inquiry must focus on ―whether the theory of recovery advanced by the proponents
of certification is, as an analytical matter, likely to prove amenable to class
treatment‖].) Accordingly, we leave for another day the question what
application, if any, the wage order tests for employee status might have to wage
and hour claims such as these, and confine ourselves to considering whether
plaintiffs‘ theory that they are employees under the common law definition is one
susceptible to proof on a classwide basis.
Under the common law, ― ‗[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.‘ ‖ (Borello,
supra, 48 Cal.3d at p. 350, quoting Tieberg v. Unemployment Ins. App. Bd. (1970)
2 Cal. 3d 943, 946; accord, Empire Star Mines Co. v. Cal. Emp. Com. (1946) 28
Cal. 2d 33, 43.) What matters is whether the hirer ―retains all necessary control‖
over its operations. (Borello, at p. 357.) ― ‗[T]he fact that a certain amount of
freedom of action is inherent in the nature of the work does not change the
character of the employment where the employer has general supervision and
control over it.‘ ‖ (Burlingham v. Gray (1943) 22 Cal. 2d 87, 100; see Toyota
Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal. App. 3d 864, 876; Grant
v. Woods (1977) 71 Cal. App. 3d 647, 653.) Perhaps the strongest evidence of the
right to control is whether the hirer can discharge the worker without cause,
because ―[t]he power of the principal to terminate the services of the agent gives
him the means of controlling the agent‘s activities.‖ (Malloy v. Fong (1951) 37
Cal. 2d 356, 370; see Borello, at p. 350; Kowalski v. Shell Oil Co. (1979) 23 Cal. 3d
6
168, 177; Isenberg v. California Emp. Stab. Com. (1947) 30 Cal. 2d 34, 39;
Burlingham, at pp. 99–100.)2
While the extent of the hirer‘s right to control the work is the foremost
consideration in assessing whether a common law employer-employee relationship
exists, our precedents also recognize a range of secondary indicia drawn from the
Second and Third Restatements of Agency that may in a given case evince an
employment relationship. Courts may consider ―(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.‖ (Borello, supra,
48 Cal.3d at p. 351; see, e.g., Tieberg v. Unemployment Ins. App. Bd., supra, 2
Cal.3d at pp. 949–950 & fn. 4; Empire Star Mines Co. v. Cal. Emp. Com., supra,
28 Cal.2d at pp. 43–44; Futrell v. Payday California, Inc. (2010) 190 Cal. App. 4th
1419, 1434; Rest.3d Agency, § 7.07, com. f, pp. 210–211; Rest.2d Agency, § 220,
subd. (2).)3
2 The worker‘s corresponding right to leave is similarly relevant: ― ‗An
employee may quit, but an independent contractor is legally obligated to complete
his contract.‘ ‖ (Perguica v. Ind. Acc. Com. (1947) 29 Cal. 2d 857, 860.)
3 As Justice Chin‘s concurrence notes, Borello recognized ―the concept of
‗employment‘ embodied in the [Workers‘ Compensation] Act is not inherently
limited by common law principles‖ (Borello, supra, 48 Cal.3d at p. 351) and
(footnote continued on next page)
7
III. Predominance and Common Law Employee Status
A. Control
The trial court considered the various criteria relevant to certification,
concluding the proposed class was sufficiently numerous and ascertainable and the
class representatives had claims typical of the class and could adequately represent
it. It further concluded, however, that common questions did not predominate;
instead, ―numerous individual inquiries‖ would be ―required to determine whether
carriers are member of the class,‖ and thus a class action was not a superior way of
proceeding. This was so because the record demonstrated ―heavily individualized
inquiries [would be] required to conduct the ‗control test‘ ‖ and decide the central
question whether any given worker was an employee.
As the parties and trial court correctly recognized, control over how a result
is achieved lies at the heart of the common law test for employment. (Borello,
supra, 48 Cal.3d at p. 350.) Indeed, absent a common (or individual, but
manageable) means of assessing the degree of the hirer‘s control, we doubt claims
dependent on application of the common law test could be certified.
Significantly, 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.
(footnote continued from previous page)
identified a handful of other considerations that might ―overlap those pertinent
under the common law‖ (id. at p. 354; see id. at pp. 351–355 [discussing
additional considerations relevant in light of the remedial purposes of the statutory
scheme there at issue]). Strictly speaking, however, those further considerations
are not part of the common law test for employee status. The concurrence‘s
assertion they are relevant here (conc. opn. of Chin, J., post, at pp. 12–14) rests on
the legal assumption they play a role in deciding employee status for wage claims,
an assumption we decline to embrace, leaving for another day resolution of its
validity. (See Martinez v. Combs, supra, 49 Cal.4th at pp. 64, 73.)
8
(Perguica v. Ind. Acc. Com., supra, 29 Cal.2d at pp. 859–860 [―The existence of
such right of control, and not the extent of its exercise, gives rise to the employer-
employee relationship.‖]; Empire Star Mines Co. v. Cal. Emp. Com., supra, 28
Cal.2d at p. 43 [―If the employer has the authority to exercise complete control,
whether or not that right is exercised with respect to all details, an employer-
employee relationship exists.‖]; Industrial Ind. Exch. v. Ind. Acc. Com. (1945) 26
Cal. 2d 130, 135 [―The right to control and direct the activities of the alleged
employee or the manner and method in which the work is performed, whether
exercised or not, gives rise to the employment relationship.‖]; S.A. Gerrard Co. v.
Industrial Acc. Com. (1941) 17 Cal. 2d 411, 414 [―the right to control, rather than
the amount of control which was exercised, is the determinative factor‖]; Hillen v.
Industrial Acc. Com. (1926) 199 Cal. 577, 581–582 [―It is not a question of
interference, or non-interference, not a question of whether there have been
suggestions, or even orders, as to the conduct of the work; but a question of the
right to act, as distinguished from the act itself or the failure to act.‖].) 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.‖ ‘ ‖ (Toyota Motor Sales U.S.A., Inc. v.
Superior Court, supra, 220 Cal.App.3d at p. 875.)
A court evaluating predominance ―must determine whether the elements
necessary to establish liability [here, employee status] are susceptible to common
proof or, if not, whether there are ways to manage effectively proof of any
elements that may require individualized evidence.‖ (Brinker, supra, 53 Cal.4th at
p. 1024.) Consequently, at the certification stage, the relevant inquiry is not what
degree of control Antelope Valley retained over the manner and means of its
papers‘ delivery. It is, instead, a question one step further removed: Is Antelope
Valley‘s right of control over its carriers, whether great or small, sufficiently
9
uniform to permit classwide assessment? That is, is there a common way to show
Antelope Valley possessed essentially the same legal right of control with respect
to each of its carriers? Alternatively, did its rights vary substantially, such that it
might subject some carriers to extensive control as to how they delivered, subject
to firing at will, while as to others it had few rights and could not have directed
their manner of delivery even had it wanted, with no common proof able to
capture these differences?
The trial court lost sight of this question. Its order reveals the denial of
certification ultimately rested on two related determinations: (1) the record
reflected considerable variation in the degree to which Antelope Valley exercised
control over its carriers; and (2) the putative class as a whole was not subject to
pervasive control as to the manner and means of delivering papers. Neither of
these considerations resolves the relevant inquiry. Whether Antelope Valley
varied in how it exercised control does not answer whether there were variations
in its underlying right to exercise that control that could not be managed by the
trial court. Likewise, the scope of Antelope Valley‘s right to control the work
does not in itself determine whether that right is amenable to common proof.
We discuss first the relationship between the right of control and the
exercise of that control. The carriers‘ relationship with Antelope Valley was
governed by a form contract; Antelope Valley stipulated that during the relevant
period two such contracts were in use. Self-evidently, ―[s]uch agreements are a
significant factor for consideration‖ in assessing a hirer‘s right to control a hiree‘s
work. (Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at p. 952; see
Rest.2d Agency, § 220, subd. (2)(a) [what matters is ―the extent of control which,
by the agreement, the master may exercise over the details of the work,‖ italics
added]; Dalton v. Lee Publications (S.D.Cal. 2010) 270 F.R.D. 555, 563 [―The
primary factor, the right to control, is also susceptible to common proof. This is
10
because the rights and obligations of the class members and Defendant are set
forth in two sets of substantially identical contracts.‖]; Norris-Wilson v. Delta-T
Group, Inc. (S.D.Cal. 2010) 270 F.R.D. 596, 608 [same].)
At the certification stage, the importance of a form contract is not in what it
says, but that the degree of control it spells out is uniform across the class. Here,
for example, the two form contracts address, similarly for all carriers, the extent of
Antelope Valley‘s control over what is to be delivered, when, and how, as well as
Antelope Valley‘s right to terminate the contract without cause on 30 days‘ notice.
The trial court here afforded only cursory attention to the parties‘ written
contract, instead concentrating on the particulars of the parties‘ many declarations
and detailing a dozen or so ways in which delivery practices, or Antelope Valley‘s
exercise of control over those practices, varied from carrier to carrier—e.g.,
whether carriers were instructed on how to fold papers, whether they bagged or
―rubber banded‖ papers, and whether they followed the delivery order on their
route lists. In so doing, the court focused on the wrong legal question—whether
and to what extent Antelope Valley exercised control over delivery. But what
matters is whether a hirer has the ―legal right to control the activities of the
alleged agent‖ (Malloy v. Fong, supra, 37 Cal.2d at p. 370, italics added) and,
more specifically, whether the extent of such legal right is commonly provable. In
cases where there is a written contract, to answer that question without full
examination of the contract will be virtually impossible. (See Tieberg v.
Unemployment Ins. App. Bd., supra, 2 Cal.3d at p. 952 [written agreements are a
―significant factor‖ in assessing the right to control]; Grant v. Woods, supra, 71
Cal.App.3d at p. 653 [―Written agreements are of probative significance‖ in
evaluating the extent of a hirer‘s right to control].) Evidence of variations in how
work is done may indicate a hirer has not exercised control over those aspects of a
task, but they cannot alone differentiate between cases where the omission arises
11
because the hirer concludes control is unnecessary and those where the omission is
due to the hirer‘s lack of the retained right. That a hirer chooses not to wield
power does not prove it lacks power. (Malloy, at p. 370 [―It is not essential that
the right of control be exercised or that there be actual supervision of the work of
the agent. The existence of the right of control and supervision establishes the
existence of an agency relationship.‖]; Robinson v. George (1940) 16 Cal. 2d 238,
244 [absence of evidence a hirer ―exercised any particular control over the details‖
of the work does not show the hirer lacked the right to do so].) One must consider
the contract as well.
This is not to say the parties‘ course of conduct is irrelevant. While any
written contract is a necessary starting point, Tieberg recognizes the rights spelled
out in a contract may not be conclusive if other evidence demonstrates a practical
allocation of rights at odds with the written terms. (Tieberg v. Unemployment Ins.
App. Bd., supra, 2 Cal.3d at p. 952.) In deciding whether claims that hinge on
common law employee status are certifiable, then, a court appropriately may
consider what control is ―necessary‖ given the nature of the work (Borello, supra,
48 Cal.3d at p. 357, italics omitted), whether evidence of the parties‘ course of
conduct will be required to evaluate whether such control was retained, and
whether that course of conduct is susceptible to common proof—i.e., whether
evidence of the parties‘ conduct indicates similar retained rights vis-à-vis each
hiree, or suggests variable rights, such that individual proof would need to be
managed.
Relatedly, the existence of variations in the extent to which a hirer exercises
control does not necessarily show variation in the extent to which the hirer
possesses a right of control, or that the trial court would find any such variation
unmanageable. That a hirer may monitor one hiree closely and another less so, or
enforce unevenly a contractual right to dictate the containers in which its product
12
is delivered, does not necessarily demonstrate that the hirer could not, if it chose,
monitor or control the work of all its hirees equally. (See Estrada v. FedEx
Ground Package System, Inc. (2007) 154 Cal. App. 4th 1, 13–14 [recognizing that
how a hirer exercised control over a particular hiree might show, not the hirer‘s
differential control of that hiree, but the extent of its common right to control all
its hirees].) For class certification under the common law test, the key question is
whether there is evidence a hirer possessed different rights to control with regard
to its various hirees, such that individual mini-trials would be required. Did
Antelope Valley, notwithstanding the form contract it entered with all carriers,
actually have different rights with respect to each that would necessitate mini-
trials?
With one exception, the trial court considered only variations in the actual
exercise of control4 and, by finding such variations sufficient to defeat
certification, erroneously treated them as the legal equivalent of variations in the
right to control. Indeed, in places the trial court found Antelope Valley had a
uniform right of control, or uniform lack of right, but notwithstanding these
uniformities immediately thereafter considered as probative variations in carrier
practices, or in Ayala‘s exercise of its rights. For example, the trial court
concluded, citing the form contract, that Antelope Valley uniformly did not
require carriers to purchase rubber bands or bags exclusively from it, but then
noted some carriers did and some did not, a variation that shed no light on the
relevant inquiry. Similarly, the trial court concluded Antelope Valley had a
4 The exception: As the trial court‘s order notes, one of the two exemplars of
the form contract used during the class period requires carriers to pick up papers
from the designated location no later than 3:00 a.m. The other has no similar
deadline.
13
contractual right to impose complaint charges, but then focused on individual
variations in how Antelope Valley exercised that undisputed right against different
carriers.
We next discuss the relationship between the right of control and the issue
for certification purposes, variation in that right. After identifying various
differences in how carriers delivered papers, the trial court concluded ―the putative
class of [Antelope Valley] newspaper carriers was not subject to the ‗pervasive
and significant control‘ [of Antelope Valley] over the means and manner by which
they performed their work.‖ Consequently, the court held, ―[t]he evidence before
the Court demonstrates that there is no commonality regarding the right to
control.‖ The conclusion does not follow from the premise; indeed, as we discuss,
the conclusion is a contradiction of the premise.
Preliminarily, whether the court‘s premise (that carriers are not subject to
pervasive control) is intended to reflect a finding about the limits of Antelope
Valley‘s right to control its carriers‘ work or, like much of the court‘s preceding
discussion, only a finding about the limited exercise of such rights, is uncertain.
To the extent the finding relates to the exercise of rights, as it appears to, it is
problematic for all the reasons just discussed. But even assuming for present
purposes the finding concerns the scope of Antelope Valley‘s legal rights, it does
not support denial of class certification.
The extent of Antelope Valley‘s legal right of control is a point of
considerable dispute; indeed, it is likely the crux of the case‘s merits. To address
such an issue on a motion for class certification is not necessarily erroneous. We
recently reaffirmed that a court deciding a certification motion can resolve legal or
factual disputes: ―To the extent the propriety of certification depends upon
disputed threshold legal or factual questions, a court may, and indeed must,
resolve them.‖ (Brinker, supra, 53 Cal.4th at p. 1025; see Dailey v. Sears,
14
Roebuck & Co. (2013) 214 Cal. App. 4th 974, 990–991.) But we cautioned that
such an inquiry generally should occur only when ―necessary.‖ (Brinker, at
p. 1025.) The key to deciding whether a merits resolution is permitted, then, is
whether certification ―depends upon‖ the disputed issue. (Ibid.)
Certification of class claims based on the misclassification of common law
employees as independent contractors generally does not depend upon deciding
the actual scope of a hirer‘s right of control over its hirees. The relevant question
is whether the scope of the right of control, whatever it might be, is susceptible to
classwide proof. Bypassing that question, the trial court instead proceeded to the
merits.5 In so doing, the court made the same mistake others have when deciding
whether to certify claims predicated on common law employee status, ―focus[ing]
too much on the substantive issue of the defendant‘s right to control its newspaper
deliverers, instead of whether that question could be decided using common
proof.‖ (Dalton v. Lee Publications, supra, 270 F.R.D. at p. 564.) Moreover, by
purporting to resolve on a classwide basis the scope of Antelope Valley‘s right to
control its carriers, the trial court contradicted its own conclusion, that classwide
assessment of Antelope Valley‘s right to control is infeasible.
The difficulties with the court‘s ruling on class certification thus lie not in
the answers given, but the questions asked. A certification decision is reviewed
for abuse of discretion, but when the supporting reasoning reveals the court based
its decision on erroneous legal assumptions about the relevant questions, that
decision cannot stand. (Brinker, supra, 53 Cal.4th at p. 1022; Fireside Bank v.
Superior Court (2007) 40 Cal. 4th 1069, 1089; Linder v. Thrifty Oil Co., supra, 23
5 Assuming again one were to treat the trial court‘s absence of control
determination as speaking to the absence of a sufficient right to control, and not
merely to an absence of the exercise of control.
15
Cal.4th at pp. 435–436.) The trial court denied certification both because of
individual variations in whether Antelope Valley exercised control and because
control was not pervasive, rather than asking whether Antelope Valley‘s
underlying right of control was subject to variations that would defy classwide
proof and prove unmanageable. That some other analytical path might, on this
record, support the same disposition matters not; because the reasons given are
unsound, the ruling must be reversed. (Linder, at p. 436.) In such a case, the
preferred course is to remand for the trial court to reconsider class certification
under the correct legal standards. (Id. at pp. 448–449.)
B. Secondary Factors
After concluding variations in control precluded class certification, the trial
court noted as well individual variations in a handful of the secondary factors that
supplement the central inquiry into the right of control (see Borello, supra, 48
Cal.3d at pp. 350–351; Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at
p. 950 & fn. 4), including whether carriers are engaged in a distinct occupation or
business; their instrumentalities, tools, and place of work; and the length of time
for which services are to be performed. Because the Court of Appeal addressed
these factors‘ role, the parties have briefed their application at length, and they
may affect class certification on remand, we briefly discuss the interplay between
the secondary factors and the predominance inquiry.
Preliminarily, we caution that courts assessing these secondary factors
should take care to correctly identify the relevant considerations. Here, for
example, the trial court noted variation in the ―place of work.‖ The inquiry that
sheds light on a hiree‘s common law employee status, however, is into who
provides the place of work, the hirer or hiree (Borello, supra, 48 Cal.3d at p. 351;
Rest.3d Agency, § 7.07, com. f, p. 211; Rest.2d Agency, § 220, subd. (2)(e)), and
thus the relevant inquiry is whether there is variation in who provides facilities.
16
That carriers could pick up papers at any of several Antelope Valley warehouses
or drop locations, as Antelope Valley argued, does not show variation in the
underlying secondary factor.
In evaluating how a given secondary factor may affect class certification, a
court must identify whether the factor will require individual inquiries or can be
assessed on a classwide basis. In a case where every class member performs the
same tasks, some factors will always be common, such as the kind of occupation
and the skill it requires. (Borello, supra, 48 Cal.3d at p. 351.) Other factors that
might on their face seem to turn solely on the peculiarities of the parties‘ particular
arrangement, the Restatement intended to depend as well on general custom with
respect to the nature of the work: ―It is not determinative that the parties believe
or disbelieve that the relation of master and servant exists, except insofar as such
belief indicates an assumption of control by the one and submission to control by
the other. However, community custom in thinking that a kind of service, such as
household service, is rendered by servants, is of importance.‖ (Rest.2d Agency,
§ 220, com. m, p. 492; see also id., com. i, p. 489 [―The custom of the community
as to the control ordinarily exercised in a particular occupation is of
importance.‖].) Depending on the record, still other factors may vary from hiree
to hiree. (See Sotelo v. Medianews Group, Inc., supra, 207 Cal.App.4th at
pp. 657–658.)
Once common and individual factors have been identified, the
predominance inquiry calls for weighing costs and benefits. ―The ‗ultimate
question‘ the element of predominance presents is whether ‗the issues which may
be jointly tried, when compared with those requiring separate adjudication, are so
numerous or substantial that the maintenance of a class action would be
advantageous to the judicial process and to the litigants.‘ ‖ (Brinker, supra, 53
Cal.4th at p. 1021.) ―Individual issues do not render class certification
17
inappropriate so long as such issues may effectively be managed.‖ (Sav-On Drug
Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 334; accord, Duran v. U.S.
Bank National Association (2014) 59 Cal. 4th 1, 29.)
When the issue of common law employment is involved, that weighing
must be conducted with an eye to the reality that the considerations in the multi-
factor test are not of uniform significance. Some, such as the hirer‘s right to fire at
will and the basic level of skill called for by the job, are often of inordinate
importance. (See Burlingham v. Gray, supra, 22 Cal.2d at p. 100 [― ‗Perhaps no
single circumstance is more conclusive to show the relationship of an employee
than the right of an employer to end the service whenever he sees fit to do so.‘ ‖];
Rest.2d Agency, § 220, com. i, p. 489 [the hirer‘s right of control, ―together with
the skill which is required in the occupation, is often of almost conclusive
weight‖].) Others, such as the ―ownership of the instrumentalities and tools‖ of
the job, may be of ―only . . . evidential value,‖ relevant to support an inference that
the hiree is, or is not, subject to the hirer‘s direction and control. (Rest.2d Agency,
§ 220, com. k, p. 491; see Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d
at p. 953 [many secondary factors ―are mer[e]ly evidentiary indicia of the right to
control‖ and may be of ―minute consequence‖ when independent evidence clearly
establishes that right].) Moreover, the significance of any one factor and its role in
the overall calculus may vary from case to case depending on the nature of the
work and the evidence. (Borello, supra, 48 Cal.3d at p. 354.)
Accordingly, the impact of individual variations on certification will
depend on the significance of the factor they affect. Some may be of no
consequence if they involve minor parts of the overall calculus and common proof
is available of key factors such as control, the skill involved, and the right to
terminate at will; conversely, other variations, if they undermine the ability to
prove on a common basis the most significant factor or factors in a case, may
18
render trial unmanageable even where other factors are common. The proper
course, if there are individual variations in parts of the common law test, is to
consider whether they are likely to prove material (see Bradley v. Networkers
Internat., LLC, supra, 211 Cal.App.4th at p. 1147 [variations do not defeat
certification where they are insufficiently significant to the overall inquiry];
Dalton v. Lee Publications, supra, 270 F.R.D. at pp. 562–563 [same]; Norris-
Wilson v. Delta-T Group, Inc., supra, 270 F.R.D. at p. 608 [same]), and, if
material, whether they can be managed (Brinker, supra, 53 Cal.4th at p. 1024).
Here, the trial court simply recited secondary factor variations it found
without doing the necessary weighing or considering materiality. This was
understandable, as the court had already determined substantial variations in
control existed, a determination that, had it been sound, would have been
sufficient to justify denying class certification and thus obviated any need for
further inquiry. On remand, any consideration of common and individual
questions arising from the secondary factors should take into account the likely
materiality of matters subject to common or individual proof.
19
DISPOSITION
We affirm the Court of Appeal‘s judgment and remand for further
proceedings not inconsistent with this opinion.
WERDEGAR, J.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
LIU, J.
KENNARD, J.*
* Retired Associate Justice of the Supreme Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
20
CONCURRING OPINION BY BAXTER, J.
I agree with the majority on the following points: First, whether one
retained to provide compensated service to another is an employee or an
independent contractor for purposes of the common law depends primarily on the
degree to which the hirer has the legal right to control the manner and means of
performance, as opposed to the extent to which the hirer exercises (or attempts to
exercise) such control. Second, where a written contract specifies the terms of the
relationship between hirer and hiree, setting out their respective degrees of control
over the work, such a contract is generally the most significant determinant of
whether an employer-employee relationship has arisen. Third, whether the issue
of employee status can be resolved on a classwide basis thus depends on the
degree to which it appears the hirer‘s legal right of control, however great or
small, was similar for all members of the putative class — as evidenced, for
example, by a standard contract that was common to all.
Applying these principles, I concur in the majority‘s conclusion that the
trial court‘s denial of class certification proceeded on incorrect principles. As the
majority indicates, the trial court erred by focusing its attention exclusively on
evidence that defendant actually imposed more detailed supervisory control over
some of its contract newspaper carriers than others, and that the degree of such
actual supervision varied widely from carrier to carrier. I therefore join the
majority‘s holding that the Court of Appeal‘s judgment, overturning the trial
court‘s order and remanding for further proceedings, should be affirmed. In my
view, nothing more need be said to reach this conclusion, and I therefore express
no opinion on any other matter discussed by the majority.
BAXTER, J.
I CONCUR:
CORRIGAN, J.
2
CONCURRING OPINION BY CHIN, J.
I agree that the trial court committed error in the course of ruling on the
class certification motion of named plaintiffs Maria Ayala, Josefina Briseño, Rosa
Duran, and Osman Nuñez, that remand for further consideration of the motion is
necessary, and that affirmance of the Court of Appeal‘s judgment is appropriate.
The record indicates that the trial court did not adequately consider the extent to
which there will be common proof regarding a central factor in determining
whether carriers who deliver newspapers for defendant Antelope Valley
Newspapers, Inc. (Antelope Valley) are employees or independent contractors:
the extent to which Antelope Valley has the right to control the manner and means
by which the carriers accomplish their work. The record also suggests that the
trial court did not adequately perform the weighing of common and individualized
proof necessary to determine whether common issues predominate.
However, in several respects, I question the majority‘s legal analysis. I also
do not endorse its dicta regarding some of the secondary factors that are relevant
to determining whether someone who provides service to another is an employee
or an independent contractor. (Maj. opn., ante, at pp. 16-19.) I therefore concur
only in the judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND.
In December 2008, plaintiffs sued on behalf of a putative class of
newspaper carriers, alleging that Antelope Valley improperly treated them as
independent contractors instead of employees and improperly denied them various
statutory wage and hour protections. The complaint alleged numerous violations
of our labor laws — including unpaid overtime, unlawful deductions, failure to
provide breaks, and failure to reimburse for business expenses — and unfair
competition based on those violations. Plaintiffs moved for class certification,
contending that the central question in establishing liability — whether carriers are
employees or independent contractors — would be resolved through common
proof, principally the contracts between Antelope Valley and its carriers.
Antelope Valley opposed certification, arguing in relevant part that there
was insufficient commonality regarding proof of its right to control the means and
manner by which its carriers accomplish their work, its actual exercise of control,
and various secondary factors that, under S. G. Borello & Sons, Inc. v. Department
of Industrial Relations (1989) 48 Cal. 3d 341, 350 (Borello), are relevant to
determining whether a service provider is an employee or an independent
contractor. Antelope Valley further argued that even were the carriers employees,
some of the causes of action presented additional unmanageable individual issues
that should nevertheless preclude certification.
The trial court denied the certification motion, finding that plaintiffs had
failed to show that (1) ―common questions of law or fact predominate,‖ (2) ―a
class action would be ‗superior‘ to individual lawsuits,‖ or (3) despite the ―highly
individualized‖ nature of ―the issues affecting the class,‖ ―manageability is
achievable through the use of‖ various procedural tools, including questionnaires,
surveys, and representative sampling. As to the claims still at issue in this appeal,
the Court of Appeal reversed, believing that the trial court had based its ruling on
2
―variations in how the carriers performed their jobs,‖ and finding that ―those
variations do not present individual issues that preclude class certification.‖ We
then granted Antelope Valley‘s petition for review.
II. THE LEGAL INQUIRY.
As relevant to this appeal, plaintiffs, as the proponents of certification, had
the burden in the trial court to demonstrate that ― ‗questions of law or fact
common to the class predominate over the questions affecting the individual
members.‘ ‖ (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal. 4th 1096,
1104.) ―To assess predominance, a court ‗must examine the issues framed by the
pleadings and the law applicable to the causes of action alleged.‘ [Citation.] It
must determine whether the elements necessary to establish liability are
susceptible of common proof or, if not, whether there are ways to manage
effectively proof of any elements that may require individualized evidence.
[Citation.]‖ (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal. 4th 1004,
1024 (Brinker).) Thus, in assessing predominance, courts ―must carefully evaluate
the nature of the proof‖ the parties will present. (Keating v. Superior Court (1982)
31 Cal. 3d 584, 622.) The ―ultimate question‖ is whether ―the issues [that] may be
jointly tried, when compared with those requiring separate adjudication, are so
numerous or substantial that the maintenance of a class action would be
advantageous to the judicial process and to the litigants.‖ (Collins v. Rocha (1972)
7 Cal. 3d 232, 238.)
The decision to grant or deny a certification motion ―rests squarely within
the discretion of the trial court‖ because the trial court is ― ‗ideally situated to
evaluate the efficiencies and practicalities of permitting group action.‘ ‖ (Fireside
Bank v. Superior Court (2007) 40 Cal. 4th 1069, 1089.) Accordingly, reviewing
courts ―afford‖ trial court decisions ―great deference on appeal, reversing only for
a manifest abuse of discretion.‖ (Ibid.) Under its ―narrowly circumscribed‖
3
inquiry, a reviewing court generally may not disturb an order denying certification
unless ― ‗it is unsupported by substantial evidence‘ ‖ or ― ‗rests on improper
criteria . . . or . . . erroneous legal assumptions.‘ ‖ (Brinker, supra, at p. 1022.) In
applying this test, a reviewing court ―must ‗[p]resum[e] in favor of the [trial
court‘s] order . . . the existence of every fact the trial court could reasonably
deduce from the record . . . .‘ [Citation.]‖ (Ibid.)
As we have recognized, the predominance inquiry ―may be enmeshed with‖
issues ―affecting the merits of a case.‖ (Linder v. Thrifty Oil Co. (2000) 23
Cal. 4th at 429, 443.) ―When evidence or legal issues germane to the certification
question bear as well on aspects of the merits, a court may properly evaluate
them.‖ (Brinker, supra, 53 Cal.4th at pp. 1023-1024.) ―[I]if the parties‘ evidence
is conflicting on the issue of whether common or individual questions
predominate . . . , the trial court is permitted to credit one party‘s evidence over the
other‘s in determining whether the requirements for class certification have been
met — and doing so is not . . . an improper evaluation of the merits of the case.
[Citations.]‖ (Dailey v. Sears, Roebuck and Co. (2013) 214 Cal. App. 4th 974, 991,
citing Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal. 4th 319, 331
(Sav-On).) To the extent the trial court‘s order turns on inferences to be drawn
from the facts or on an evaluation of the credibility of conflicting evidence, a
reviewing court may not ―substitute‖ its ―judgment for the trial court‘s.‖ (Sav-On,
supra, at p. 331.) Even at the certification stage, ― ‗questions as to the weight and
sufficiency of the evidence, the construction to be put upon it, the inferences to be
drawn therefrom, the credibility of witnesses . . . and the determination of [any]
conflicts and inconsistency in their testimony are matters for the trial court to
resolve.‘ [Citation.]‖ (Id. at p. 334.)
Under the complaint, as a prerequisite to recovery, plaintiffs must establish
that they are employees of Antelope Valley rather than independent contractors.
4
In litigating the certification motion below, both plaintiffs and Antelope Valley
maintained that this issue is governed by the principles and considerations Borello
set forth. Consistent with the parties‘ arguments, both the trial court and the Court
of Appeal applied Borello‘s principles in determining whether certification was
appropriate. In accordance with Antelope Valley‘s petition for review, the issue
on which we granted was whether the trial court abused its discretion in finding
that, under Borello‘s test for determining whether someone is an employee or an
independent contractor, common questions of law or fact will not predominate
over individual questions.
The issue in Borello was whether, for purpose of workers‘ compensation
coverage, certain agricultural laborers were employees or independent contractors.
(Borello, supra, 48 Cal.3d at p. 345.) In answering this question, we began by
explaining that the Workers‘ Compensation Act distinguishes between covered
employees and noncovered independent contractors based on ―the common law
‗control-of-work‘ test,‖ under which an employment relationship exists if ― ‗the
person to whom service is rendered has the right to control the manner and means
of accomplishing the result desired. . . .‘ [Citations.]‖ (Id. at p. 350.) We next
held that, because ―the ‗control‘ test, applied rigidly and in isolation, is often of
little use in evaluating the infinite variety of service arrangements,‖ it is
appropriate to consider various ― ‗secondary‘ indicia of the nature of a service
relationship.‖ (Ibid.) We found the relevant secondary indicia in multiple
sources. From our own decisions, we identified ― ‗the right to discharge at will,
without cause,‘ ‖ as a factor. (Ibid.) We then listed ―[a]dditional factors [that had]
been derived principally from‖ the Restatement Second of Agency (sometimes,
Restatement). (Borello, supra, at p. 351.) We then identified factors the
Legislature had identified in Labor Code section 2750.5. (Borello, supra, at p.
351, fn. 5.) Finally, we identified factors the federal courts had adopted in
5
applying the federal Fair Labor Standards Act (FLSA factors). (Borello, supra, at
pp. 354-355.) All of these factors, we held, are relevant to determining whether
someone is an employee under the worker‘s compensation law. (Ibid.)
Consistent with Borello, in determining whether common questions of law
or fact predominate, the trial court principally focused on Antelope Valley‘s ―right
to control.‖ It found that the evidence the parties had submitted ―demonstrates
that there is no commonality regarding the right to control‖ and that ―heavily
individualized inquiries [will be] required to conduct the ‗control test.‘ ‖
Regarding the secondary factors, the trial court found that ―[s]ome carriers use
helpers or substitutes‖; ―some carriers have multiple clients and customers; some
have distinct occupation or delivery businesses; there is no commonality in the
instrumentalities, tools, and place of work; carriers may or may not take advantage
of chances to generate profits; and the length of time to perform services varies.‖
Contrary to what the majority opinion suggests (maj. opn., ante, at p. 11), in
reaching these conclusions, the trial court considered several aspects of Antelope
Valley‘s contracts with its carriers, specifically the following: (1) some contracts
included a ―dock closing policy‖ while others did not; (2) the contracts did not
require carriers to purchase rubber bands or bags from Antelope Valley; (3) the
contracts stated that carriers may not put newspapers in containers that Antelope
Valley has not approved; (4) the contracts provided for complaint charges; (5) the
contracts provided some carriers with an option to redeliver newspapers to correct
complaints, but that option was not available for certain routes or areas; and (6)
the contracts provided that carriers could increase their profits by increasing the
number of subscribers in their areas of delivery. The trial court also considered
evidence — declarations and deposition testimony — showing how individual
carriers actually performed their delivery duties, how Antelope Valley actually
6
exercised control over the delivery process and its carriers as a group, and how
Antelope Valley actually exercised such control with respect to particular carriers.
III. THE TRIAL COURT ERRED IN MAKING ITS RULING.
I agree with the majority that the trial court abused its discretion in making
its ruling and that remand is appropriate for further consideration of the
certification motion. As noted above, in denying certification, the trial court found
that the evidence ―demonstrates that no commonality exists regarding the right to
control.‖ However, the evidence plaintiffs submitted and principally relied on in
support of their certification motion — including the form contracts between
Antelope Valley and its carriers and the delivery instructions (known as ―Bundle
Tops‖) that Antelope Valley typically prepared and provided to all carriers each
day — shows that there is, in fact, some commonality in the proof regarding
Antelope Valley‘s right of control. Moreover, there surely is some commonality
of proof regarding at least some of the secondary factors that are relevant under
Borello to determine whether someone is an employee or independent contractor.
Thus, in terms of proof, the trial court‘s ―no commonality‖ finding lacks support
in the record and reflects insufficient consideration of the common proof plaintiffs
submitted.
In addition, as we have explained, ― ‗that each [putative] class member
might be required ultimately to justify an individual claim does not necessarily
preclude maintenance of a class action.‘ [Citation.] Predominance is a
comparative concept, and ‗the necessity for class members to individually
establish eligibility and damages does not mean individual fact questions
predominate.‘ [Citations.] Individual issues do not render class certification
inappropriate so long as such issues may effectively be managed. [Citations.]‖
(Sav–On, supra, 34 Cal.4th at p. 334.) The ―ultimate question‖ is whether ―the
issues [that] may be jointly tried, when compared with those requiring separate
7
adjudication, are so numerous or substantial that the maintenance of a class action
would be advantageous to the judicial process and to the litigants.‖ (Collins v.
Rocha, supra, 7 Cal.3d at p. 238.) ―The relevant comparison lies between the costs
and benefits of adjudicating plaintiffs‘ claims in a class action and the costs and
benefits of proceeding by numerous separate actions — not between the
complexity of a class suit that must accommodate some individualized inquiries
and the absence of any remedial proceeding whatsoever.‖ (Sav-On, supra, at p.
339, fn. 10, italics omitted.) The record indicates that the trial court did not make
the necessary comparison; it focused on the individualized proof it believed would
be necessary regarding Antelope Valley‘s right and actual exercise of control, and
gave little or no consideration to the common proof plaintiffs submitted on these
issues. By failing to make the legally required comparison, the trial court abused
its discretion. I therefore agree we should affirm the Court of Appeal‘s judgment
and remand for additional consideration of the certification motion.
IV. THE MAJORITY’S OPINION.
Although I agree with the majority‘s result, I question several aspects of its
analysis. I begin with the fundamental rule that ―[o]n appeal, we presume that a
judgment or order of the trial court is correct, ‗ ―[a]ll intendments and
presumptions are indulged to support it on matters as to which the record is silent,
and error must be affirmatively shown.‖ ‘ [Citation.]‖ (People v. Giordano (2007)
42 Cal. 4th 644, 666.) Consistent with these principles, to the extent the trial
court‘s order is ambiguous, we must ―resolve the ambiguity in favor of
affirmance.‖ (Piscitelli v. Salesian Soc. (2008) 166 Cal. App. 4th 1, 7, fn. 9.) I find
the majority‘s approach, which generally seems to read the trial court‘s ruling in
the most unfavorable light, to be out of step with these well-established principles
of appellate review.
8
More specifically, I find many of the numerous criticisms the majority
levels at the trial court‘s ruling to be off the mark. For example, I disagree that the
trial court ―ultimately rested‖ its order on variations ―in the degree to which
Antelope Valley exercised control over its carriers‖ and the circumstance that ―the
putative class as a whole was not subject to pervasive control as to the manner and
means of delivering papers,‖ thus ―los[ing] sight‖ of the relevant question ―at the
certification stage‖ (maj. opn., ante, at pp. 9-10): ―is there a common way to show
Antelope Valley possessed essentially the same legal right of control with respect
to each of its carriers‖ (id. at pp. 9-10). As noted above, in finding insufficient
commonality, the trial court expressly considered the extent to which the contracts
showed either variations or uniformity in Antelope Valley‘s ―right to
control‖ regarding several issues, including complaint charges, when carriers
perform their work, use of unapproved containers, redelivery, and the carriers‘
ability to increase profits. Indeed, the majority acknowledges elsewhere in its
opinion that the trial court did, in fact, consider ways in which the contracts show
―a uniform right of control, or uniform lack of right,‖ but it then criticizes the trial
court for considering evidence that the parties‘ actual course of conduct was
different. (Maj. opn., ante, at p. 13.)
Contrary to the majority‘s criticism, the trial court‘s analysis was
completely consistent with — indeed, was actually required by — Borello. There,
we stressed that the right to control test ―is not necessarily the decisive test‖
(Borello, supra, 48 Cal.3d at p. 351, fn. 5), that ―common law principles are not
dispositive of the employment relationship‖ (id. at p. 352, fn. 6), that ―[t]he nature
of the work, and the overall arrangement between the parties, must be examined‖
in addition to the right to control (id.at p. 353), and that ―[e]ach service
arrangement must be evaluated on its facts, and the dispositive circumstances may
vary from case to case‖ (id. at p. 354). Consistent with these statements, in
9
finding as a matter of law that the agricultural laborers in Borello were employees,
we explained that the evidence showed that the grower, ―though purporting to
relinquish supervision of the harvest work itself‖ (id. at p. 355), actually
― ‗exercise[d] ‗pervasive control over the operation as a whole‘ ‖ (id. at p. 356).
Significantly, we expressly noted that, given this evidence of the grower‘s actual
exercise of control, a contractual provision purporting to give the laborers joint
control over acceptable buyers was entitled to ―little credence.‖ (Id. at p. 356, fn.
7.) Thus, in considering the parties‘ actual course of conduct in addition to the
contracts, the trial court here simply did what Borello required it to do. It also did
what the record shows both plaintiffs and Antelope Valley urged it to do.
Applying Borello at the certification stage, the trial court had to determine the
extent to which there would be common proof regarding the ―overall arrangement
between‖ Antelope Valley and each of the putative class members. (Id. at p. 353.)
The trial court‘s ruling indicates that the trial court did precisely that.
Nor do I agree with the majority that the trial court, ―by finding‖ that
―variations in the actual exercise of control‖ were ―sufficient to defeat
certification, erroneously treat[ed] them as the legal equivalent of variations in the
right to control.‖ (Maj. opn., ante, at p. 13.) The majority‘s view appears to stem
from its belief that the determination of whether the carriers were employees or
independent contractors turns only on Antelope Valley‘s right to control. As
explained above, Borello establishes otherwise. So does another decision on
which Borello extensively relied and which the majority cites: Tieberg v.
Unemployment Ins. App. Bd. (1970) 2 Cal. 3d 943, 946. (Borello, supra, 48 Cal.3d
at pp. 349-351; maj. opn., ante, at p. 12.) There, we held that, in determining that
certain television writers were employees and not independent contractors, the
trial court had ―improperly‖ declined to consider relevant secondary indicia,
including the Restatement factors. (Tieberg, supra, at p. 946.) We also noted that
10
―the terminology in an agreement is not conclusive,‖ even if it states that one party
has ― ‗complete control of the services which the employee will render.‘ ‖ (Id. at
p. 952.) Nevertheless, we upheld the trial court‘s determination because the trial
court had relied not ―solely upon‖ the alleged right to control under ―the
provisions of the contract,‖ but also on evidence that it had ―in fact exercised
control and direction over the writers.‖ (Ibid.) Thus, under Borello and its
predecessors, evidence of an alleged employer‘s ―actual exercise of control‖ has
independent significance, and ―variations in the . . . exercise of control‖ are
independently relevant to the certification question. (Maj. opn., ante, at p.13.)
Accordingly, there is no basis for the majority‘s assumption that by resting its
decision in part on ―variations in the actual exercise of control,‖ the trial court was
―treat[ing] them as the legal equivalent of variations in the right to control.‖
(Ibid.) Moreover, given Borello and Tieberg, the majority errs in stating that ―how
much control a hirer exercises‖ does not ―matter[],‖ and that the only thing that
―matters‖ is ―how much control the hirer retains the right to exercise‖ (maj. opn.,
ante, at p. 8) and whether ―there were variations in‖ Antelope Valley‘s
―underlying right to exercise‖ control over its carriers (maj. opn., ante, at p. 10,
italics omitted).
I also do not entirely agree with the majority‘s assertion that, ―[a]t the
certification stage, the importance of a form contract is not in what it says, but that
the degree of control it spells out is uniform across the class.‖ (Maj. opn., ante, at
p. 11.) As noted above, to assess predominance, a court ―must determine whether
the elements necessary to establish liability are susceptible of common proof or, if
not, whether there are ways to manage effectively proof of any elements that may
require individualized evidence. [Citation.]‖ (Brinker, supra, 53 Cal.4th at p.
1024.) Insofar as the terms of a form contract make clear that the alleged
employer‘s right of control is extensive, it is more likely that the elements
11
necessary to establish liability will be susceptible of common proof and that there
will be ways effectively to manage proof of elements that may require
individualized evidence. Insofar as the terms of a form contract provide that the
alleged employees retain extensive control over the details of their work, it is less
likely that the elements necessary to establish liability will be susceptible of
common proof and that there will be ways effectively to manage proof of elements
that may require individualized evidence. Accordingly, what a form contract says
may be of considerable importance in determining whether common issue
predominate.
I also disagree we should limit our analysis to whether the trial court
abused its discretion in applying the ―common law test‖ for employment, and
should ignore the FLSA factors Borello adopted. (Maj. opn., ante, at pp. 6, 8, fn.
3.) Contrary to what the majority indicates, neither the trial court nor the Court of
Appeal applied only ―the common law test.‖ (Maj. opn., ante, at p. 5.) The trial
court never used the phrase ―common law‖ in either its ruling or during hearings
on the certification motion. It did, however, consistently refer during the hearings
to ―the Borello factors‖ and ―the criteria from the Borello case‖ and cite in its
subsequent written ruling at least two of the FLSA factors Borello adopted:
whether the carriers ―use helpers or substitutes from time to time‖ and whether
they can and do take action to ―increase their profits‖ and ―compensation.‖1 (See
Borello, 48 Cal.3d at p. 355 [relevant FLSA factors include ―the alleged
employee‘s opportunity for profit or loss depending on his managerial skill‖ and
1 Like its final written ruling, the trial court‘s written tentative ruling did not
mention the ―common law.‖ It did, however, state the court‘s intention to deny
the certification motion because ―many‖ of the putative class members ―will be
found to be true independent contractors‖ because they do not ―satisfy the Borello
factors for determination of employee vs. independent contractor status.‖
12
his or her ―employment of helpers‖].) Consistent with this ruling, the Court of
Appeal explained that Borello (1) adopted both the Restatement factors and the
―six-factor test developed by other jurisdictions,‖ and (2) ―cautioned that the
individual factors — from the Restatement as well as the six-factor test —
‗ ―cannot be applied mechanically as separate tests; they are intertwined and their
weight depends often on particular combinations.‖ ‘ [Citation.]‖ Nor did the Court
of Appeal use the phrase ―common law,‖ with a single exception: in quoting the
passage of Borello that explains why ― ‗the ―control‖ test,‘ ‖ which derives from
― ‗common law tradition,‘ ‖ ― ‗is often of little use in evaluating the infinite variety
of service arrangements.‘ ‖
The lower courts‘ application of all the Borello factors is consistent with
the arguments the parties made below. In the briefs they filed in support of their
certification motion and during argument on the motion, plaintiffs argued that
―[n]ewspaper delivery is an integral part of [Antelope Valley‘s] business‖ and that
―the carriers perform an integral part of [Antelope Valley‘s] newspaper business.‖
―[W]hether the service rendered is an integral part of the alleged employer‘s
business‖ is one of the FLSA factors Borello adopted. (Borello, supra, 48 Cal.3d
at p. 355.) Moreover, in their briefing, plaintiffs relied on the ―factor‖ analysis the
Court of Appeal used in Antelope Valley Press v. Poizner (2008) 162 Cal. App. 4th
839 (Poizner) to find that Antelope Valley‘s carriers were employees rather than
independent contractors. Poizner, which involved Antelope Valley‘s workers‘
compensation insurance premium, looked to all of the factors Borello cited,
including the FLSA factors. (Id. at p. 853.) Thus, plaintiffs did not, as the
majority asserts, ―proceed[] below on the sole basis that they are employees under
the common law.‖ (Maj. opn., ante, at pp. 5-6.) Likewise, in its opposition to the
certification motion, Antelope Valley relied on the same two FLSA factors the
trial court cited in its written ruling: some carriers use ―helpers or substitutes‖ to
13
fulfill their contractual obligation and carriers have the ―ability to generate profits
or incur losses.‖ Thus, the record does not support limiting our analysis to the
common law test for employment and ignoring the FLSA factors.2
Finally, I do not endorse the majority‘s dicta regarding the ―interplay‖
between ―the predominance inquiry‖ and the Restatement factors in determining
whether someone is an employee or an independent contractor. (Maj. opn., ante,
at p. 16.) In light of the majority‘s conclusion, that discussion is unnecessary.
Substantively, it is also questionable in at least one respect. The majority asserts
that certain Restatement ―factors that might on their face seem to turn solely on the
peculiarities of the parties‘ particular arrangement, the Restatement intended to
depend as well on general custom with respect to the nature of the work.‖ (Maj.
opn., ante, at p. 17.) However, the Restatement comment the majority quotes in
support of this assertion describes, not multiple ―factors,‖ but only one factor:
whether ― ‗the parties believe or disbelieve that the relation of master and servant
exists.‘ ‖ (Maj. opn., ante, at p. 17.) Moreover, the comment indicates, not that
this factor depends in part ―on general custom with respect to the nature of the
work‖ (maj. opn., ante, at p. 17), but that a separate factor is ―community custom
in thinking that a kind of service . . . is rendered by servants‖ (Rest.2d Agency,
§ 220, com. m, p. 492; see also id., com. h, p. 489 [listing as separate factors ―the
fact that the community regards those doing such work as servants‖ and ―the belief
by the parties that there is a master and servant relation‖]).
2 My conclusion reflects only fidelity to the record, not, as the majority
asserts, any ―assumption‖ on my part. (Maj. opn., ante, at p. 8, fn. 3.) In
determining whether an order denying certification was error, an appellate court
should apply ―the theory on which plaintiffs pursued class certification.‖
(Fairbanks v. Farmers New World Life Ins. Co. (2011) 197 Cal. App. 4th 544, 560.)
14
For the preceding reasons, I concur in the judgment.
CHIN, J.
15
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Ayala v. Antelope Valley Newspapers, Inc.
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 210 Cal. App. 4th 77
Rehearing Granted
__________________________________________________________________________________
Opinion No. S206874
Date Filed: June 30, 2014
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Carl J. West
__________________________________________________________________________________
Counsel:
Callahan & Blaine, Daniel J. Callahan, Jill A. Thomas, Michael J. Sachs, Kathleen L. Dunham and Scott D.
Nelson for Plaintiffs and Appellants.
Aaron Kaufmann for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiffs
and Appellants.
Jocelyn Larkin, Della Barnett, Michael Caeser; and Fernando Flores for Asian Law Caucus, Centro de La
Raza, Equal Rights Advocates, Impact Fund, La Raza Centro Legal, Lawyers‘ Committee for Civil Rights,
Legal Aid Society-Employment Law Center, National Employment Law Project, Public Justice, P.C.,
Wage Justice Center, Watsonville Law Center, Western Center on Law and Poverty, Women‘s
Employment Rights Clinic at Golden Gate University of Law and Worksafe as Amici Curiae on behalf of
Plaintiffs and Appellants.
Perkins Coie, Sue J. Stott, William C. Rava, Jenica D. Mariani and Eric D. Miller for Defendant and
Respondent.
Seyfarth Shaw, Camille A. Olson and David D. Kadue for The California Employment Law Council and
The California Chamber of Commerce as Amici Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Scott D. Nelson
Callahan & Blaine
3 Hutton Centre Drive, Ninth Floor
Santa Ana, CA 92707
(714) 241-4444
Aaron Kaufmann
1330 Broadway, Suite 1450
Oakland, CA 94612
(510) 272-0169
Eric D. Miller
Perkins Coie
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
(206) 359-8000
2