Saucedo v. John Hancock Life & Health Ins. Co.

\.
j . . ·•
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
CERTIFICATION FROM THE UNITED
STATES COURT OF APPEALS FOR THE
NINTH CIRCUIT NO. 91945-3
IN
ABELARDO SAUCEDO; FELIPE ENBANC
ACEVEDO MENDOZA; JOSE VILLA
MEDONZA; JAVIER SAUCEDO; MAR 0 3 2016
SANDRA SAUCEDO, Individually, and on Filed ,.
---'----~-
behalf of all other similarly situated persons,
Appellees,
v.
JOHN HANCOCK LIFE & HEALTH
INSURANCE CO.; TEXAS MUNICIPAL
PLANS CONSORTIUM, LLC,
Defendants,
NW MANAGEMENT AND REALTY
SERVICES, INC.; JOHN HANCOCK LIFE
INSURANCE COMPANY,
Defendants,
FARMLAND MANAGEMENT
SERVICES,
A ellant.
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
ABELARDO SAUCEDO; FELIPE
ACEVEDO MENDOZA; JOSE VILLA
MEDONZA; JAVIER SAUCEDO;
SANDRA SAUCEDO, Individually, and on
behalf of all other similarly situated persons,
Appellees,
v.
JOHN HANCOCK LIFE INSURANCE
COMPANY; JOHN HANCOCK LIFE &
HEALTH INSURANCE CO.; TEXAS
MUNICIPAL PLANS CONSORTIUM,
LLC,
Appellants,
FARMLAND MANAGEMENT
SERVICES; NW MANAGEMENT AND
REALTY SERVICES, INC.,
Defendants.
ABELARDO SAUCEDO; FELIPE
ACEVEDO MENDOZA; JOSE VILLA
MEDONZA; JAVIER SAUCEDO;
SANDRA SAUCEDO, Individually, and on
behalf of all other similarly situated persons,
Appellees,
v.
2
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
JOHN HANCOCK LIFE INSURANCE
COMPANY; JOHN HANCOCK LIFE &
HEALTH INSURANCE CO.; TEXAS
MUNICIPAL PLANS CONSORTIUM,
LLC; FARMLAND MANAGEMENT
SERVICES,
Defendants,
NW MANAGEMENT AND REALTY
SERVICES, INC.,
Appellant.
GORDON McCLOUD, J.-This case is a class action lawsuit by farm workers
against four corporate defendants. It requires us to answer two questions, certified
to this court by the United States Court of Appeals for the Ninth Circuit, about
Washington's farm labor contractor act (FLCA), chapter 19.30 RCW. The first
question implicates RCW 19.30.010(2). That statute defines a "farm labor
contractor" as "any person, or his or her agent or subcontractor, who, for a fee,
performs any farm labor contracting activity." Another FLCA provision, RCW
19.3 0.01 0(3 ), then defines "farm labor contracting activity" as "recruiting, soliciting,
employing, supplying, transporting, or hiring agricultural employees." The second
question implicates RCW 19.30.200. That statute imposes joint and several liability
for FLCA violations on "[a]ny person who knowingly uses the services of an
3
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
unlicensed farm labor contractor" and then states, "In making determinations under
this section, any user may rely upon either the license issued by the director [of the
Department of Labor & Industries (Department)] to the farm labor contractor under
RCW 19.30.030 or the director's representation that such contractor is licensed as
required by this chapter."
The certified questions require us to decide whether defendant/appellant NW
Management and Realty Services Inc. is a "farm labor contractor" under RCW
19.30.01 0(2) and, if so, whether the other defendants "knowingly use[d]" its services
under RCW 19.30.200. (There is no dispute that NW was unlicensed at all times
relevant to this case.)
FACTS
Defendant/Appellant John Hancock Life Insurance Company owns
defendant/appellant John Hancock Life & Health Insurance Co. (collectively
Hancock companies). Together with defendant/appellant Texas Municipal Plans
Consortium LLC (TMP), the Hancock companies owned three apple orchards.
The Hancock companies and TMP leased all three orchards to
defendant/appellant Farmland Management Services. Under the governing lease
agreements, the Hancock companies and TMP paid Farmland a "Management Fee"
in exchange for either operating and managing the orchards or subleasing the
4
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
orchards to a third party operator/manager. Appellants' Joint Excerpts of Sealed
Record (ESR) at 98 (boldface omitted). The Hancock companies and TMP also
reimbursed Farmland for operating costs and collected all profits.
Farmland subleased the orchards to NW. Under the governing sublease
agreement, Farmland paid NW a per-acre fee, reimbursed NW for all operating
costs, and collected all profits. Ultimately, pursuant to all the lease and sublease
agreements, the Hancock companies and TMP paid all of NW' s costs and collected
all of the orchards' profits, minus Farmland's "Management Fee." Id. (boldface
omitted).
The sublease agreement between Farmland and NW provided that NW "will
hire, employ, discharge and supervise the work of all employees and independent
contractors performing labor and/or services on the [orchards and that NW] shall be
the employer of record of all persons employed to perform work on the [orchards]."
ESR at 38. The agreement left the details of orchard management largely to NW' s
discretion, but it provided that NW would "operate and use the orchard Properties
for the sole purpose of conducting a first-class agricultural operation" and it required
NW to submit to Farmland a yearly "Farm Operating Plan" that included NW's
anticipated budget for the coming year. ESR at 37, 40. Farmland then sent this
budget to the Hancock companies for approval.
5
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
Farmland's lease agreements with the Hancock companies and TMP required
Farmland to either obtain necessary licenses or require any third party to do so. A
representative for Farmland told a representative for the Hancock companies that
Farmland had fulfilled this contractual obligation. It is undisputed, however, that
NW never obtained a farm labor contractor license.
The plaintiffs/appellees, a class of 722 former NW employees, sued the
defendants in the United States District Court for the Eastern District of Washington·
for violations of state and federal law, including the FLCA. The district court
certified the plaintiff class as to two FLCA claims: (1) that NW violated RCW
19.30.11 0(1) by failing to carry a current farm labor contractor's license, and (2) that
NW violated RCW 19.30.11 0(7) by making false and misleading representations
about worker compensation. The plaintiffs allege, in part, that Farmland and the
Hancock companies are jointly and severally liable for NW' s violations, under RCW
19.30.200, because they used the services of an unlicensed farm labor contractor
without either inspecting NW' s license or verifying licensure with the Department.
Farmland, the Hancock companies, and TMP each moved to dismiss, arguing
that RCW 19.30.200 penalizes only defendants with actual or constructive
knowledge that a contractor is unlicensed. The trial court denied the motions,
concluding that the FLCA imposes an affirmative duty on such defendants to verify
6
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
proper licensure. All the defendants then moved for summary judgment on the
ground that NW was not a "farm labor contractor" as defined in RCW 19.30.010(2)
because it was instead an "agricultural employer" (defined in RCW 19.30.010(4)).
The district court also denied that motion, concluding that those two definitions are
not mutually exclusive.
The plaintiffs then moved for summary judgment, arguing that NW was a
farm labor contractor under the FLCA; that NW violated the FLCA by failing to
obtain a farm labor contractor's license and by failing to provide the plaintiffs with
required disclosures; and that Farmland, the Hancock companies, and TMP are
jointly and severally liable for NW's violations. The district court granted the
motion and awarded the plaintiffs damages of $500 per class member per violation
per year worked, for a total of $1,004,000. The court also awarded the plaintiffs
attorney fees.
The defendants appealed to the Ninth Circuit, briefing these issues on the
merits and filing a joint excerpts of record (ER) containing the relevant documents.
Then, on August 5, 20 15, the Ninth Circuit certified the disputed questions to this
court. Saucedo v. John Hancock Life & Health Ins. Co., 796 F.3d 1016 (9th Cir.
2015).
7
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
ANALYSIS
Certified questions are matters of law reviewed de novo and iri light of the
record certified by the federal court. Carlsen v. Global Client Solutions, LLC, 171
Wn.2d 486, 493, 256 P.3d 321 (2011). Because the questions in this case pertain to
a motion for summary judgment, we perform the same inquiry as the district court.
Smith v. Safeco Ins. Co., 150 Wn.2d 478, 483, 78 P.3d 1274 (2003).
I. The first certified question: Does the FLCA, in particular RCW
19.30.010(2), include in the definition of a "farm labor contractor" an
entity who is paid a per-acre fee to manage all aspects of farming-
including hiring and employing agricultural workers as well as making all
planting and harvesting decisions, subject to approval-for a particular
plot of land owned by a third party? Answer: Yes.
As noted above, RCW 19.30.010(2) defines a "farm labor contractor"' as "any
person, or his or her agent or subcontractor, who, for a fee, performs any farm labor
contracting activity." Another FLCA provision in turn defines "farm labor
contracting activity" to mean "recruiting, soliciting, employing, supplying,
transporting, or hiring agricultural employees." RCW 19.30.010(3).
NW is a farm labor contractor under the plain language of these provisions.
Pursuant to their sublease agreement, Farmland paid NW a per-acre fee "[a]s
compensation for the services rendered by [NW] under this Agreement." ESR at 43.
And pursuant to that agreement, those services included "hir[ing], employ[ing],
discharg[ing] and supervis[ing] the work of all employees and independent
8
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
contractors performing labor and/or services on the 'Properties'." ESR at 38. That
contractual arrangement places NW squarely within the plain definition of "farm
labor contractor" under the FLCA: at a minimum, NW "employ[s]" and "hir[es]
agricultural employees" in exchange "for a fee." RCW 19.30.010(3), (2).
The defendants make two main arguments to support their contrary
interpretation of the statute. 1
First, the defendants point to a provision in the FLCA making that chapter
inapplicable to "any person who performs any [farm labor contracting activities]
only within the scope of his or her regular employment for one agricultural employer
on whose behalf he or she is so acting, unless he or she is receiving a commission or
fee, which commission or fee is determined by the number of workers recruited."
RCW 19.30.010(6) (emphasis added). The parties refer to this provision as the
single-employer exemption. The defendants don't argue that the single-employer
exemption actually applies to NW; they argue, instead, that the logic underlying the
1 The defendants also attempt to avoid the statute's plain terms by citing a brief
passage of dictum from Perez-Farias v. Global Horizons, Inc., which addressed provisions
in the FLCA governing damages in a civil suit. 175 Wn.2d 518,521,286 P.3d 46 (2012).
The passage states that the FLCA protects farm workers by regulating the activities of
"farm labor contractors," who "act as intermediary between farm workers and farmer [and]
[g]enerally ... recruit, transport, house, and supervise farm workers, and handle their pay
arrangements." Id. The defendants would like us to interpret this passage as an exclusive
list of all farm labor contracting activities, but doing so conflicts with the plain terms of
the statutes at issue here.
9
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
exemption applies equally to entities like NW. They contend that the legislature
exempted single-employer contractors from FLCA coverage because "their ties to
one farmer ensured the requisite stability, permanence, and accountability" and that
NW possesses all of those qualities, having worked almost exclusively for Farmland
and in the same general area for roughly 20 years. Br. ofDefs.-Pet'rs at 22-23. Their
unstated conclusion is that these attributes make them as deserving of an exemption
as someone actually eligible for the enacted single-employer exemption. But the
legislature is the body that gets to make that policy decision by defining "farm labor
contractor." RCW 19.30.010(2). If NW fits the definition of a "farm labor
contractor," RCW 19.30.010(2), and is not eligible for any statutory exemption, then
it must abide by the FLCA's licensure requirements. We have no authority to read
a new exception into the statute on policy grounds. See Michigan v. Bay Mills Indian
Cmty., 572 U.S._, 134 S. Ct. 2024,2034, 188 L. Ed. 2d 1071 (2014) ("This Court
has no roving license, in even ordinary cases of statutory interpretation, to disregard
clear language simply on the view that ... Congress 'must have intended' something
'broader."').
Second, the defendants argue NW performs too many farming activities to be
a farm labor contractor. They contend that the FLCA embraces a "Tripartite
Scheme" that distinguishes between three mutually exclusive categories:
10
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
"Agricultural employer" (farmer), "Agricultural employee" (workers), and "Farm
labor contractor" (broker). Br. ofDefs.-Pet'rs at 24 (boldface omitted). NW argues
that because it is an agricultural employer, it cannot also be a farm labor contractor.
But the legislature did not make the three categories of "person" defined in RCW
19.30.010(2), (4), and (5) mutually exclusive. As the district court concluded in this
case, "The fact that NW ... also meets the statutory definition of 'agricultural
employer' is irrelevant; [if it was] paid by a third party to 'recruit,' 'employ' and
'supply' farm laborers, see RCW 19.30.010(3), it was required to register." ER at
2
This does not mean that a person becomes a "farm labor contractor" under the
FLCA just because he or she employs agricultural workers in a farming operation that
eventually turns a profit. In support of their argument that NW did not perform any farm
labor contracting activities "for a fee," RCW 19.30.010(2), the defendants cite only one
directly relevant case: Escobar v. Baker, 814 F. Supp. 1491, 1495, 1500 n.9 (W.D. Wash.
1993). See Br. ofDefs.-Pet'rs at 20. In Escobar, a farmworker (Soto) worked as a foreman
for one defendant (Baker) and as a row boss for another defendant (Dobbins). 814 F. Supp.
at 1495-96. Baker gave Soto free gasoline in exchange for his picking up workers in
Oregon and driving them to Baker's Washington farm. ld. at 1496. Eventually, through
what appears to have been a long-standing informal arrangement between Baker and
Dobbins, Soto also transported some of these workers to Dobbins' farm. Jd. The district
court held that Soto performed farm labor contracting activities "for a fee" as to Baker, but
not as to Dobbins. ld. at 1499-1500. It concluded that the gasoline (from Baker)
constituted a "fee" under the FLCA, but that Soto's salary as a row boss (for Dobbins) did
not. Id. The court reasoned that a salary can sometimes constitute a "fee" under the FLCA
but that to trigger coverage there must be some "tie" between a salary and the farm labor
contracting activities. ld. at 1500 n.9.
The defendants cite this portion of Escobar to argue that NW received a fee for its
activities as an "'agricultural employer"' rather than a "'farm labor contractor."' Br. of
11
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
II. The second certified question: Does the FLCA, in particular RCW
19.30.200, make jointly and severally liable any person who uses the
services of an unlicensed farm labor contractor without either inspecting
the license issued by the director of the Department to the farm labor
contractor or obtaining a representation from the director of the
Department that the contractor is properly licensed, even if that person
lacked knowledge that the farm labor contractor was unlicensed? Answer:
Yes.
RCW 19.30.200 provides, in full:
Any person who knowingly uses the services of an unlicensed farm
labor contractor shall be personally, jointly, and severally liable with
the person acting as a farm labor contractor to the same extent and in
the same manner as provided in this chapter. In making determinations
under this section, any user may rely upon either the license issued by
the director [of the Department] to the farm labor contractor under
RCW 19.30.030 or the director's representation that such contractor is
licensed as required by this chapter.
The parties offer competing interpretations of this provision.
The defendants emphasize RCW 19.30.200's first sentence, which limits joint
and several liability to those who "knowingly" use an unlicensed farm labor
contractor. They argue that the second sentence (which lists two ways of
Defs.-Pet'rs at 20. But Escobar is clearly distinguishable from the present case. According
to the Escobar court, Soto's driving workers to Dobbins' farm was incidental to and
attenuated from the salary he received as Dobbins' row boss. 814 F. Supp. at 1499-1500
& n.9. By contrast, the contract at issue in this case explicitly conditions NW's receipt of
the per-acre fee on NW's "hir[ing]" and "employ[ing]" agricultural workers. ESR at 38.
The fact that the fee also compensates NW for other activities, such as managing orchards
and repairing farm equipment, id., does not mean that NW's farm labor contracting
activities are incidental to or attenuated from the per-acre fee.
12
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
determining whether a farm labor contractor has a license) creates a "safe harbor"
for persons who rely on a license or the Department's representation of licensure,
but does not create any affirmative duty to verify licensure. Br. of Defs.-Pet'rs at
39-43. Accordingly, they conclude that the plaintiffs must prove that the Hancock
companies and/or TPM had actual or constructive knowledge that NW was
unlicensed in order to establish joint and several liability under RCW 19.30.200.
The plaintiffs argue that RCW 19.30.200 gives the term "knowingly" a
specific meaning: that a person "knowingly" uses an unlicensed farm labor
contractor if he or she does so without using one of the two methods listed in that
statute's second sentence-inspecting the contractor's license or inquiring about the
contractor's status with the Department. Answering Br. ofPls.-Resp'ts at 24 ("[a]
user is required to make a determination based on one of two [specified] options
[and] [a]fter that determination is made, the user will know whether the labor
contractor possesses a valid Washington license"). Thus, the plaintiffs conclude that
a person who fails to verify in one of these easy, straightforward ways must be
charged with lmowledge and is therefore jointly and severally liable under the statute
for use of an unlicensed farm labor contractor.
"Our fundamental goal in statutory interpretation is to 'discern and implement
the legislature's intent."' O.S.T v. Regence BlueShield, 181 Wn.2d 691, 696, 335
13
Saucedo etal. v. JohnHancockLifelns. Co. etal., No. 91945-3
P.3d 416 (2014) (quoting State v. Armendariz, 160 Wn.2d 106, 110, 156 P.3d 201(2007)). For the reasons given below, we conclude that the plaintiffs' interpretation
of the statute must certainly be what the legislature intended when it enacted RCW
19.30.200.
First, the statute's plain language-specifically, the "either-or" disjunctive
phrasing that appears in the statute's second sentence-normally implies that one or
the other of two things will occur; it does not imply the option to pursue other,
unspecified alternatives. See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY
728 (2002) (defining "either-or" as "an unavoidable choice or exclusive division
between only two alternatives"). On this point, we note that the FLCA's federal
analog, the agricultural worker protection act (AWPA), contains a "[c]onfirmation
of [r]egistration" provision, 29 U.S.C. § 1842, very similar to RCW 19.30.200. That
provision states, in its entirety:
No person shall utilize the services of any farm labor contractor
to supply any migrant or seasonal agricultural worker unless the person
first takes reasonable steps to determine that the farm labor contractor
possesses a certificate of registration which is valid and which
authorizes the activity for which the contractor is utilized. In making
that determination, the person may rely upon either possession of a
certificate of registration, or confirmation of such registration by the
Department of Labor. The Secretary shall maintain a central public
registry of all persons issued a certificate of registration.
14
Saucedo eta!. v. John Hancock Life Ins. Co. eta!., No. 91945-3
29 U.S.C. § 1842 (emphasis added). We are not aware of any case law interpreting
this provision to allow "reasonable steps" other than the two listed in the statute. I d.
Second, our legislature enacted the FLCA to remedy a pattern of farm worker
exploitation, in part by including tough civil penalty provisions "to compensate
injuries, promote enforcement ... , and deter violations." Perez-Farias v. Global
Horizons, Inc., 175 Wn.2d 518,521, 530,286 P.3d 46 (2012). As a remedial statute
designed to prevent worker exploitation, the FLCA is generally construed liberally
to further this purpose. Id. at 521, 530; see also Drinkwitz v. Alliant Techsystems,
Inc., 140 Wn.2d 291, 301, 996 P.2d 582 (2000) (chapter 49.46 RCW (Washington
Minimum Wage Act)); Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961
P.2d 371 (1998) (chapter 49.52 RCW). The defendants' interpretation of RCW
19.30.200 frustrates this intent by giving "users of farm labor contractors a perverse
incentive to remain deliberately ignorant of a contractor's licensure status." ER at
47. 3 The plaintiffs' interpretation, by contrast, furthers the statute's remedial
3 Thedefendants contend that our legislature considered and rejected arguments that
a knowledge prerequisite to liability under RCW 19.30.200 would facilitate intentional
ignorance. They are incorrect. That history demonstrates only that our legislature rejected
one lobbyist's suggestion that it strike the word "knowingly" from a bill that eventually
became RCW 19.30.200. But if the "making determinations" clause is an affirmative
inquiry requirement, there was no need to omit the word "knowingly" (and thereby impose
the harsh standard of strict liability), RCW 19.30.200, in order to punish intentional
Ignorance.
15
Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3
purpose by codifying straightforward and easily complied with license verification
requirements. 4
In fact, as the district court concluded in this case, the defendants'
interpretation of RCW 19.30.200 "renders the 'determination' requirement
optional." ER at 121-22. Under the defendants' interpretation, if a person elects to
verify licensure, he or she may do so by inspecting the contractor's license or
inquiring with the Department-or not. As a practical matter, this reading renders
RCW 19.30.200's second sentence all but superfluous. The plaintiffs' interpretation
is much more persuasive: that the either/or "making determinations" provision in
RCW 19.30.200 clarifies the meaning ofthe term "knowingly" in the statute's first
sentence.
4 The defendants contend that the rule of lenity applies here because the FLCA
imposes some criminal sanctions, specifically on "[a]ny person who violates any
provisions of ... chapter [ 19.3 0 RCW], or who causes or induces another to violate any
provisions of this chapter." RCW 19.30.150. They argue that the imposition of criminal
sanctions triggers the rule of lenity. See United States v. Thompson/Center Arms Co., 504
U.S. 505, 518 n.10, 112 S. Ct. 2102, 119 L. Ed. 2d 308 (1992) (holding that the rule of
lenity applies to a tax statute with both criminal and civil applications). But RCW
19.30.200-the specific statute at issue here-imposes no criminal sanctions at all. As
noted above, the FLCA imposes criminal penalties on a person who "violates" its
provisions. RCW 10.30.150. The only provision violated here was RCW 19.30.110(1),
the separate statute that requires a "farm labor contractor" to "[ c]arry a current farm labor
contractor's license." RCW 19.30.200 does not establish that duty, which only NW
violated; it just clarifies the extent of the other defendants' civil liability for NW's
violation. We therefore reject the argument that the rule oflenity applies to that statute.
16
Saucedo eta!. v. John Jlancock Life Ins. Co. eta!., No. 91945-3
CONCLUSION
The plain language of the FLCA compels us to answer yes to both certified
questions. Under RCW 19.30.010(2) and (3), the definition of a "farm labor
contractor" includes an entity who is paid a per-acre fee to manage all aspects of
farming-including hiring and employing agricultural workers as well as making all
planting and harvesting decisions, subject to approval-for a particular plot of land
owned by a third party. Under RCW 19.30.200, any person who uses the services
of an unlicensed farm labor contractor without either inspecting the contractor's
license or obtaining a representation from the Department that the contractor is
properly licensed is jointly and severally liable with that contractor, even if that
person lacked knowledge that the farm labor contractor was unlicensed.
17
Saucedo et al. v. Farmland Mgmt. Servs. et al., No. 91945-3
WE CONCUR:
18'