JULIO PENDOLA VS. MILENIO EXPRESS, INC. (DIVISION OF WORKERS' COMPENSATION) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0225-17T2
JULIO PENDOLA,
Petitioner-Appellant,
v.
MILENIO EXPRESS, INC.,
d/b/a CLASSIC,
Respondent-Respondent.
_______________________________
Argued June 26, 2018 - Decided October 26, 2018
Before Judges Nugent and Accurso.
On appeal from the Department of Labor and
Workforce Development, Division of Workers'
Compensation, Claim Petition No. 2014-31102.
Pablo N. Blanco argued the cause for appellant (The
Blanco Law Firm, LLC, attorneys; Pablo N. Blanco, on
the brief).
Robert M. Gilbert argued the cause for respondent (Law
Offices of Styliades and Jackson, attorneys; Robert M.
Gilbert, on the brief).
PER CURIAM
The Division of Workers' Compensation dismissed Julio Pendola's claim
petition for compensation benefits against Milenio Express, Inc. d/b/a Classic,
on the basis that Pendola was not Classic's employee. Pendola appeals, claiming
he established an employment relationship because his work was an integral part
of Classic's business and controlled by the company. We agree and reverse.
Pendola, an auto cab driver in Newark, fractured his ankle in 2014 picking
up a customer. The facts of Pendola's accident and injury are not at issue in this
appeal.1 The parties agreed to bifurcate the trial, with the court first addressing
whether Pendola was an employee of Classic or an independent contractor. Only
two witnesses testified, Pendola and Veronica Solano, a Classic supervisor.
Pendola testified he had worked exclusively as a driver for Classic since
2003, at first driving someone else's car. When he purchased his own car, a
Crown Victoria, he consulted with Classic. Classic required that he paint the
car silver, the color assigned the company by the City, and affix the Classic logo
to the sides and front of the car, along with the company's telephone number.
The company also required that he purchase a two-way radio to be installed in
the car. Pendola testified he paid for all of those expenses as well as for his
1
We note, however, that the injury was a serious one, requiring surgery.
Pendola had no other insurance and medical bills of over $63,000, some of
which were paid by charity care.
A-0225-17T2
2
medallion, gas, maintenance on his car and liability insurance. The company
told him where to pick up customers and supplied him with business cards,
receipts and vouchers, "whatever we needed to work," all bearing the Classic
logo.
Pendola explained he was not permitted to pick up passengers off the
street as a taxi driver would. The only passengers he was permitted to pick up
were those dispatched through Classic. He testified he paid Classic $150 a week
and was permitted to keep all of his fares. He estimated he grossed between
$500 and $700 a week. He could work whatever hours he chose. Pendola
testified that Classic had rules for drivers, which they enforced. Asked what
kind of rules, he said, "Like you had to get well dressed. Keep the car clean.
Be polite with the people . . . [and] [b]e on time on the pick ups." If a driver
failed to follow the rules, he would be suspended. Pendola said he was
suspended a couple of times for picking up another driver's fare or being late for
pick-ups. He testified that on those occasions he was suspended for a few hours
or the rest of the day. He also claimed Classic stopped letting some drivers work
after "they got nasty."
Pendola testified Classic was owned by six people and the company had
A-0225-17T2
3
over 100 cars. Driving for Classic was Pendola's only job and it represented his
only source of income for his entire tenure.
Solano testified that Classic, although owned by one individual, her
cousin, was "more of like a family business." "The people that supervise are
family members" and "[m]ost of the family members also have vehicles working
with the company." Solano testified that although she did not drive, her husband
did, and they had "two more drivers" who rent the cars and pay the couple a
weekly fee.
Solano testified that Classic is a "dispatching service." The drivers are
"called independent owners/operators" who have their own cars, their own
medallions and Classic charges them "a weekly dispatching fee for the service."
Asked about the company's requirement that the drivers paint their cars silver
and carry the Classic name and phone number, Solano explained that the "[t]he
City of Newark Taxi Division requires that each company have a color" and that
Classic had been assigned "the silver color for many years." "So if they're going
to work with our transportation company they have to have our color; they have
to have our logos." Solano further explained that the drivers also "have to have
the Newark license in the back in case there's an accident . . . then the other
A-0225-17T2
4
person can actually see what company it is, what the auto cab license number
is."
Solano testified that Classic is not a taxi service but an auto cab company
and that its customers have to "call our office . . . for the ride." She explained
that at the time of Pendola's accident, Classic "had two different [radio] channels
at [its] office besides the phone operators." 2 When a driver
would want to start to work[,] he would turn on the
radio and he would listen to the dispatcher calling out
the jobs and if he was close to one of those jobs he
would what we say "punch for the ride" or "request the
ride."
He would press his microphone. The number
would come up at the office so we would know that he
was requesting that job. He would be put in a list along
with the other people that are requesting the ride, and
then the dispatcher will assign the ride according to
who was next on the list, who was waiting longer for
the next ride.
Solano explained that Classic does not "force [the drivers] to go and pick
up a certain fare. That's up to them. They're their own boss." She also testified
that "[t]he rules that [the drivers] have to follow . . . are pretty much the ones
that we enforce according to what [the] Taxi Division requests." Although
2
Since the accident, Classic has abandoned two-way radios and now dispatches
drivers via computer tablets the drivers purchase themselves.
A-0225-17T2
5
testifying that Classic enforced the rules in order to "try to help [the drivers]
out" by avoiding tickets issued by the Taxi Division, she conceded "[o]f course,
we want our customers to have nice vehicles, clean vehicles, proper attired
drivers, you know." Solano testified if a driver violated the rules, Classic "put
them out for [two] hours." She provided an example of a customer calling and
telling her "[t]he vehicle that I'm riding in right now is extremely dirty and has
a hole in the floor." Solano said "[s]o I called the driver and I said: A customer
is telling me that you have this and that. You need to come here so we can look
at the vehicle, and you are going to be out until you do so. You have [two]
hours."
When asked whether Classic routinely inspected the drivers' cars, Solano
responded: "We have — we don't really do it but we have certain people that
check the vehicles and if they see that there's something they will call us and
they'll tell us: That person needs to go to a car wash. The car is dirty." She
testified that Classic did not furnish any equipment for the drivers but provided
them with Classic "business cards, receipts, vouchers for credit cards that they
would need" and sometimes purchased key chains and pens for them "to give to
the customers." Solano also explained the company advertised its transportation
service via a website and has "an app for our customers . . . to request service."
A-0225-17T2
6
She testified that Classic has no written agreements with the drivers and "[t]hey
don't receive a 1099 or anything from us. They're not our employees." She did,
however, concede that Classic drivers were not free to pick up fares in a silver
Classic car dispatched through another company, explaining "[t]hey're auto cabs
and that's how it works."
Applying the twelve-factor Pukowsky3 test, the framework the Court
adopted "for assessing a worker's employment status in the context of social
legislation" in D'Annunzio v. Prudential Insurance Co. of America, 192 N.J.
110, 122-24 (2007), and "endorse[d] for purposes of determining whether the
Compensation Act applies" in Estate of Kotsovska ex rel. Kotsovska v.
3
Pukowsky v. Caruso, 312 N.J. Super. 171, 182-83 (App. Div. 1998). The
twelve factors are as follows:
(1) the employer's right to control the means and
manner of the worker's performance; (2) the kind of
occupation-supervised or unsupervised; (3) skill; (4)
who furnishes the equipment and workplace; (5) the
length of time in which the individual has worked; (6)
the method of payment; (7) the manner of termination
of the work relationship; (8) whether there is annual
leave; (9) whether the work is an integral part of the
business of the “employer[”;] (10) whether the worker
accrues retirement benefits; (11) whether the
“employer” pays social security taxes; and (12) the
intention of the parties.
[Ibid. (citation omitted).]
A-0225-17T2
7
Liebman, 221 N.J. 568, 576, 595 (2015), the compensation judge concluded
Pendola was not an employee of Classic. The judge found Classic "exercised
very little control over the means and manner of [Pendola's] performance." He
noted that although Pendola was required by the "Taxi Division to paint his
vehicle silver and to place the name 'Classic'" and the company's phone number
on it, "he was otherwise left on his own to drive and pick up fares and
unaccountable to Milenio/Classic." The judge noted Pendola set his own
schedule and was free to accept or reject the fares dispatched to him by Classic.
The judge also found Classic did not supervise Pendola, that he was
required to have an auto cab license and comply with the rules of the Taxi
Division, that he furnished his own car and that, although he had been
"associated with" Classic for eleven years, it was "only to the extent of being a
driver of an auto cab which was dispatched by Milenio/Classic." The judge
further found Pendola received no salary from Classic but was required to pay a
dispatching fee of $150 per week. As to factor seven, the manner of termination
of the relationship, the judge found that Pendola "would only be prohibited from
operating an auto cab by the Taxi Division for failing to comply with the Taxi
Division rules and regulations, which would result in the revocation of his auto
cab license by the Taxi Division." The judge found there was no annual leave.
A-0225-17T2
8
As to factor nine, whether Pendola's work was an integral part of Classic's
business, the judge found Classic's business was "dispatching [Pendola] and
drivers of auto cabs." He found Classic was not dependent on Pendola,
reasoning that were he "not available to transport a fare, another cab driver was
waiting to do so. No one driver was essential to the effective functioning of the
business."
The judge further found that Pendola did not accrue retirement benefits
and Classic did not pay social security taxes. As to the final factor, the judge
found "based upon the arrangement" between the parties, "it is clear there was
no intention that petitioner was to be an employee of Milenio/Classic."
Pendola appeals, arguing the compensation court underestimated the
degree of control Classic exercised over its drivers relevant to factor one of the
Pukowsky test and misconstrued critical factor nine, representing the "relative
nature of the work test," which measures "the extent of the economic
dependence of the worker upon the business he serves and the relationship of
the nature of his work to the operation of that business." Marcus v. E. Agric.
Ass'n, Inc., 58 N.J. Super. 584, 603 (App. Div. 1959) (Conford, J.A.D.,
dissenting), rev'd on dissent, 32 N.J. 460 (1960). We agree.
A-0225-17T2
9
Because the question before us involves an interpretation of law and the
legal consequences of established facts, our review is de novo. Manalapan
Realty, L.P. v. Twp. Comm. of Twp. of Manalapan, 140 N.J. 366, 378 (1995).
The Supreme Court has reiterated on numerous occasions that our State's
comprehensive statutory scheme of workers' compensation coverage "for the
compensation of injured workers 'is remedial social legislation and should be
given liberal construction in order that its beneficent purposes may be
accomplished.'" Cruz v. Cent. Jersey Landscaping, Inc., 195 N.J. 33, 42 (2008)
(quoting Torres v. Trenton Times Newspaper, 64 N.J. 458, 461 (1974)).
As the Court held in D'Annunzio, and reiterated in Kotsovska, "when
'social legislation must be applied in the setting of a professional person or an
individual otherwise providing specialized services allegedly as an independent
contractor,' the trial court should consider three factors: '(1) employer control;
(2) the worker's economic dependence on the work relationship; and (3) the
degree to which there has been a functional integration of the employer's
business with that of the person doing the work at issue.'" Kotsovska, 221 N.J.
at 594 (quoting D'Annunzio, 192 N.J. at 122); see also Hargrove v. Sleepy's,
LLC, 220 N.J. 289, 310 (2015) (emphasizing those three of the twelve Pukowsky
factors as most pertinent when applying socially remedial legislation).
A-0225-17T2
10
Here, of course, there was no dispute regarding Pendola's economic
dependence on Classic. Pendola had been driving for Classic for eleven years,
and it was his sole source of income. Although one could debate whether the
requirement that Pendola paint his car silver and display prominently the Classic
name and phone number was indicia of control by Classic or merely enforcement
of Newark auto cab regulations, other aspects of the relationship point
unequivocally to a significant level of control by Classic over its drivers.
Besides requiring its drivers install a two-way radio in the cars, at their
expense, the drivers were subject to Classic's rules as to which drivers would
receive a dispatched fare. Drivers were not free to pick up any nearby passenger
calling Classic for a ride. They were required, pursuant to rules established by
Classic, to request the ride from the dispatcher, who would decide which driver
would pick up the passenger based on how long the driver had waited since his
last fare. Further, as explained by Classic supervisor Solano, when customers
complained about the condition of a car, a supervisor would immediately contact
the driver and tell him, "[y]ou need to come here so we can look at the vehicle,
and you are going to be out until you do so. You have [two] hours." The
testimony demonstrated not only that Classic maintained rules for its drivers,
but that it enforced them.
A-0225-17T2
11
Even more important, however, we conclude the judge of compensation
misapplied factor nine, "whether the work is an integral part of the business of
the 'employer.'" Pukowsky, 312 N.J. Super. at 183. As Justice LaVecchia
explained in D'Annunzio, that factor "allows for examination of the extent to
which there has been a functional integration of the employer's business with
that of the person doing the work." 192 N.J. at 123.
Several questions elicit the type of facts that would
demonstrate a functional integration: Has the worker
become one of the "cogs" in the employer's enterprise?
Is the work continuous and directly required for the
employer's business to be carried out, as opposed to
intermittent and peripheral? Is the professional
routinely or regularly at the disposal of the employer to
perform a portion of the employer's work, as opposed
to being available to the public for professional services
on his or her own terms? Do the "professional" services
include a duty to perform routine or administrative
activities? If so, an employer-employee relationship
more likely has been established.
[Id. at 123-24.]
Asking those questions here, in our view, makes plain the functional
integration of Pendola's work into Classic's business. It cannot be seriously
disputed that Pendola was one of the "cogs" in Classic's operation. His work as
a driver willing to provide the rides Classic arranged was essential to the success
of its business. The work of the drivers was certainly continuous, Classic
A-0225-17T2
12
operated twenty-four hours a day, and thus needed many drivers day and night
to carry out its operations. Drivers such as Pendola could not use their own
silver Classic car to pick up fares dispatched from competitors of Classic or
those attempting to call them directly. The drivers were thus prohibited from
using their own cars to further any business but Classic's. And although a
driver's passengers or hours might vary, the daily routine of picking up Classic's
customers and delivering them to their destinations throughout Newark did not
change.
We agree with Pendola that the judge of compensation's finding that
Classic's business was limited "solely [to] dispatching [Pendola] and drivers of
auto cabs" is not supported by the evidence. Although Solano began her
testimony by asserting that Classic was only "a dispatching service," she also
referred to it as a "transportation company" and the riders as Classic's customers,
who Classic wooed with web ads, apps, keychains and pens with the company's
name and "nice vehicles, clean vehicles" and punctual, "proper attired drivers."
We also agree with Pendola that the judge of compensation erred in finding that
Classic was not dependent on Pendola because if he "was not available to
transport a fare, another auto cab driver was waiting to do so." The
compensation judge's finding that "[n]o one driver was essential to the effective
A-0225-17T2
13
functioning of the business" misapprehends the test. The point, of course, is that
Classic was dependent on Pendola and other drivers like him. That the business
required multiple drivers to operate does not reduce Pendola's importance to
Classic's business or make him any less a "cog" in Classic's enterprise.
D'Annunzio, 192 N.J. at 123. Accordingly, we conclude that application of the
Pukowsky test establishes Pendola as an employee of Classic under our workers'
compensation laws.
We are not the first panel of this court to conclude that Classic's drivers
are its employees and not independent contractors. In 1999, another panel
considering the same question concluded that "according to the criteria of the
'relative nature of the work' test, each of Classic's taxicab [sic] drivers was an
integral part of its total operation and that they were therefore 'employees' for
purposes of workers' compensation." Santos v. Classic Sedan Limo, Inc., A-
5356-97 (App. Div. July 2, 1999) (slip op. at 8), certif. denied, 163 N.J. 12
(2000).
The petitioner in Santos was shot by a passenger dispatched by Classic.
Santos, slip op. at 1. Santos owned his own cab, which was painted the
company's silver color and had "Classic Sedan Limo" and the company's
telephone number displayed on its doors, like all the cabs dispatched by Classic,
A-0225-17T2
14
in order "to convey the impression that they were a fleet of taxis operated by a
single company." Id. at 2. We explained how the service worked as follows:
Classic placed a listing for taxi services in the
telephone yellow pages, and perhaps elsewhere,
advertising the availability of its taxis. Classic
maintained a dispatcher who received customers' calls
for taxis and undertook to broadcast each call to
whomever of its nearby drivers had been waiting the
longest since his last fare. To receive these calls, each
driver was required to purchase a prescribed radio from
Classic. Classic's drivers were permitted to accept only
passengers assigned to them by the dispatcher.
[Ibid.]
We noted the company maintained an extensive set of rules, which it
enforced by "suspending" drivers who violated them. Id. at 3. We explained
that "[t]he dispatcher would not assign waiting passengers to a suspended driver,
thus effectively docking his pay during the period of his suspension." Ibid. We
noted Santos owned and paid for his own cab, keeping the fares he collected and
paying for "gasoline, repairs, insurance, and a fee of $150 a week to Classic,"
making him "financially dependent on his affiliation" with the company. Id. at
3-4.
We found Santos' relationship with Classic satisfied both the "right to
control" test as well as the "relative nature of the work" test, finding "Classic
possessed and exercised the power to control Santos in his performance of his
A-0225-17T2
15
work," and that he was "economically dependent on Classic." Id. at 5-6. We
specifically rejected the judge of compensation's finding "that Classic is 'in the
business of soliciting fares for the owners of the cabs,'" noting the judge also
observed "that Classic was 'holding [itself] out to the public as . . . a safe[,]
reliable source of transportation' and that it was important for the drivers to
maintain uniform standards and discipline to assure that the 'overall operation
functioned.'" Id. at 8. We found those "observations show that Classic was in
the business of providing transportation, not merely dispatching. There would
be no customers to dispatch in return for the owner-drivers' weekly payments if
steps were not taken to assure that the total enterprise provided satisfactory
service to the public." Ibid. We thus concluded "that according to the criteria
of the 'relative nature of the work' test, each of Classic's taxicab drivers w as an
integral part of its total operation and that they were therefore 'employees' for
purposes of workers' compensation," thereby reversing the contrary finding of
the compensation judge. Id. at 8-9.
In its brief and at oral argument, Classic made no attempt to explain why
our prior opinion is no longer binding on the company. See Raymond v. N.J.
State Parole Bd., 221 N.J. Super. 381, 384 n.1 (App. Div. 1987) (noting that
"[w]hile an unpublished opinion does not have stare decisis effect, it is
A-0225-17T2
16
nevertheless binding as against a party . . . whose conduct is thereby prescribed."
(citing R. 1:36-3)). Its only response is the one relied on in its brief that "it
should be noted that [Santos] was a 1999 decision and things have changed
considerably in the taxicab business since the rendering of that decision."
Perhaps so, but it is nevertheless apparent that at the time of Pendola's accident
at least, the relationship between Classic and its drivers remained remarkably
constant.
Reversed and remanded for further proceedings not inconsistent with this
opinion.
A-0225-17T2
17