Calif. SC rules newspaper carriers are entitled to class treatment as employees

SANTA ANA, Calif. (Legal Newsline) - The Supreme Court of California has ruled that newspaper carriers are entitled to class treatment as employees rather than being required to pursue individual claims in a class action lawsuit against Antelope Valley Newspapers by four newspaper carriers.

The California Supreme Court held that in California, the key determining factor on whether or not a worker is an employee or an independent contractor is whether or not the hirer has the right to control the conduct of the service provider, according to the June 30 opinion.

If the hirer has that right, regardless of whether or not that right is exercised or exercised consistently, the hirer will be deemed the employer of the worker and will be subject to all California laws governing employment relationships.

Supreme Court justices Kathryn Werdegar, Tani Cantil-Sakauye, Carol Corrigan, Goodwin Liu and former Justice Joyce L. Kennard voted in the majority, with Werdegar authoring the opinion. Justices Marvin R. Baxter and Ming Chin had concurring opinions and authored their own opinions.

To deliver the paper to its subscribers, Antelope Valley contracts with individual carriers. Four carriers - Maria Ayala, Josefina Briseno, Rosa Duran and Osman Nunez - 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 opinion states. "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," the opinion states. "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."

In December 2008, the 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 plaintiffs claimed the defendant violated numerous 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.

The 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 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 the plaintiffs had failed to show:

-Common questions of law or fact;

-That a class action would be superior to individual lawsuits; or

-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 'variations in how the carriers performed their jobs,' and finding that 'those variations do not present individual issues that preclude class certification,'" the opinion states.

The Supreme Court of California then granted Antelope Valley's petition for review.

"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," the opinion states.

In Chin's concurring opinion, he stated that he agreed that the trial court committed error in the course of ruling on the class certification motion of the plaintiffs, that remand for further consideration is necessary and that the "affirmance of the court of appeal's judgment is appropriate."

"However, in several respects, I question the majority's legal analysis," Chin states. "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. I therefore concur only in the judgment."

In his concurring opinion, Baxter stated that he concurred with 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," he stated.

"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."

This opinion has statewide significance because there are numerous cases throughout California where this issue has arisen, according to a press release by Callahan & Blaine.

A lawsuit against the Sacramento Bee for the same issues went to trial earlier this year, and the court awaited the June 30 ruling from the Supreme Court of California before entering its judgment.

"The carriers in the Sacramento Bee case should be entitled to in excess of $20 million for reimbursement of expenses incurred in performing their service for the newspaper," said Daniel J. Callahan, founding partner of Callahan & Blaine in a press release. "The Fresno Bee case is headed for trial in November 2014. It was also certified properly as a class and after the presentation of evidence should also be entitled to an award in excess of $20 million."

The Antelope Valley Press is the only case where the trial court found that the newspaper carriers were not entitled to class certification.

"The practice in the newspaper industry of attempting to treat their carriers as independent contractors and thus avoid obligations in an employer/employee relationship is nearly universal throughout the United States," Callahan said.

"This opinion clearly holds that that practice is illegal, therefore, this opinion, relying upon established common law principles, could modify the entire industry's method of conducting business and contractual relationships with the newspaper carriers nationwide."

California Supreme Court case number: S206874

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.