Thursday, July 29, 2010

Southern District Certifies Newspaper Carrier Misclassification Suit: Dalton v. Lee Publ'ns, Inc

On July 27, 2010, Southern District Court judge, Barry Ted Moskowitz, entered an order in Dalton v. Lee Publ'ns, Inc, 2010 U.S. Dist. LEXIS 75132 (S.D. Cal. July 27, 2010), granting certification of a class of newspaper carriers. As set forth within the Court’s order, plaintiffs alleged various wage violations based on the theory that defendant had uniformly misclassified news carriers as independent contractors. The Court’s decision to certify turned in large part on the element of “control” being subject to common proof through form contracts utilized by the defendant:
The primary factor, the right to control, is also susceptible to common proof. This is because the rights and obligations of the class members and Defendant are set forth in two sets of substantially identical contracts. The contracts set forth the following: (a) the carrier's primary duties, including assembling and delivering the newspapers timely and in good condition; (b) the carrier's obligation to supply a vehicle and equipment; (c) the carrier's pay schedule; (d) the purported understanding of the parties regarding the carrier's independent contractor status; (e) the penalties for excessive complaints, misdeliveries, and subscription cancellations; (f) the requirement to get auto insurance in specific liability amounts; (g) which party bears the risk of loss from non-payment, non-delivery, and other liabilities; (h) the contract is unassignable, but the carrier may hire substitutes or helpers; (i) the carrier will not attend employee meetings and is free to ignore all suggestions offered by the Defendant; (j) the manner and rate of compensation; (k) the carrier must use his or her best effort to increase circulation; (I) the parties must exchange updated information regarding subscriber cancellations and enrollments; (m) the duration of the contract; and (n) termination rights, among other things. There is no evidence before the Court that the parties' rights and obligations were substantially different from those set forth in the contracts.
Thus, the contracts sets forth the contours of Defendant's control over the class. The Court makes no findings yet about the extent of Defendant's control, but only observes that the contracts provide a basis to do so.
See Dalton, 2010 U.S. Dist. LEXIS 75132, 19-21.

The Court’s opinion is quite detailed, as it appears that the defendant pulled out all the stops in its attempt to defeat certification. One of the more interesting arguments raised was that class members would be unable to establish liability by overcoming the independent contractor defense alone, but rather, would have to overcome a second-level “outside sales” exemption defense.  The Court reasoned that this defense was implausible on its face, but in any event, would not create individualized issues sufficient to overcome certification:
Lastly, Defendant argues that its outside-salesperson defense will require individualized analysis. Under California regulations, an outside salesperson is defined as someone "who customarily and regularly works more than half the working time away from the employer's place of business selling tangible or intangible items or obtaining orders or contracts for products, services, or use of facilities." Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 938 (9th Cir. 2009) (citing California Industrial Wage Commission Wage Order 4-2001, § 2(M)). The claim that home-delivery newspaper carriers are salesman is dubious on its face. They deliver newspapers; they generally do not sell them. Moreover, because of Defendant's estimates and records--including Plaintiffs' time spent folding newspapers, whether they used Defendant's facilities to do so, and Plaintiff's time spent delivering newspapers--one could easily calculate whether a particular Plaintiff spent "more than half the working time away from the employer's place of business." Vinole, 571 F.3d at 938. So even if the carriers could be considered salespeople, determining where they spent their time would not entail so much individual analysis as to defeat certification.
See Dalton, 2010 U.S. Dist. LEXIS 75132, 26-27

The Court’s opinion covers many issues, too many to discuss in detail. Definitely a must read.

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