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California Supreme Court Nixes Certification Denial Ruling Against Newspaper Carriers Classified as Independent Contractors

By George Patterson

The California Supreme Court recently held that a trial court needed to revisit its class certification decision regarding newspaper carriers who alleged that they should have been classified as employees rather than independent contractors.  The trial court erred, the Court said, by focusing not on differences in the newspaper’s right to control the individual plaintiffs’ work, but on variations in how it exercised that right.

In Ayala v. Antelope Valley Newspapers, Inc., the California Supreme Court stated that by focusing on whether the newspaper monitored some carriers more closely than others, or unevenly enforced its contractual right to dictate the manner in which they delivered its product, the trial court “lost sight” of whether the scope of the newspaper’s right of control was susceptible to class-wide proof.

The plaintiffs worked as carriers for the Antelope Valley Press. The newspaper contracted with individual carriers to distribute the paper from facilities in two counties using a preprinted standard form agreement that identified the carriers as independent contractors. One of the carriers, Maria Ayala, sued on behalf of a putative class, claiming the carriers were newspaper employees and the newspaper’s misclassification of them as independent contractors deprived them of a host of wage and hour protections to which they were legally entitled resulting in the denial of overtime pay, unlawful deductions, failure to provide breaks and failure to provide reimbursement of business expenses.

The trial court ruled that individual lawsuits by each carrier were more practical than class resolution of the claims because individual issues in how the carriers performed their work predominated. The appellate court agreed that Ayala could not show how her overtime, meal break and rest break claims could be managed on a class-wide basis, but reversed the trial court’s ruling that “heavily individualized inquiries” were necessary to establish employee status in general.

The State Supreme Court defined the “sole issue” on appeal as “the presence or absence of predominant common questions.” In resolving this issue the court first noted that “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 ...” Concluding that the contract supported a common right to control, the court then asked whether “Antelope Valley, notwithstanding the form contract it entered with all carriers, actually [had] different rights with respect to each that would necessitate mini-trials.” The court determined that the trial court would have to reconsider this issue on remand because it improperly 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 manageable.”

Although the Ayala decision raises the bar for California employers seeking to defeat class certification by clarifying that the right of control outweighs individual differences in the extent of control exercised, it does not foreclose the possibility that “secondary factors” may still warrant denial of class certification. These factors include whether workers are engaged in a distinct occupation or business, their instrumentalities, tools and places of work and the length of time for which their services are to be performed. Employers should keep in mind that, even if they fail to meet their burden on the all-important right of control, they may nevertheless be able to mount a successful argument that secondary factors render trial of the plaintiffs as class unmanageable.

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