Case Name:   Carlos Lopez vs. Logistics Delivery Solutions, LLC, et al.

Case No.:       1-13-CV-249431

 

This is a putative class action by plaintiff Carlos Lopez (“Plaintiff”) individually and on behalf of all individuals employed by defendants Logistics Delivery Solutions, LLC d/b/a Delivery Solutions of America (“DSA”) and Antech Diagnostics, Inc. (“Antech”) (collectively “Defendants”) as delivery drivers.  Plaintiff alleges that Defendants misclassified their delivery drivers as independent contractors instead of employees and failed to provide overtime pay.[1]  The Complaint, filed July 12, 2013, defines two putative classes:

 

(1)  “All non-exempt hourly employees who are employed or have been employed by DEFENDANTS in California within four (4) years of the filing of this Complaint engaged in intrastate commerce for the DEFENDANTS as delivery drivers through the date of final disposition of this action and who suffered the following: [¶] A) Were not paid overtime wages; [¶] B) Were not paid for all hours worked; [¶] C) Were not provided meal periods or if they were provided late meal periods; [¶] D) Were willfully misclassified as independent contractors; [¶] E) Were not issued paystubs listing the hours worked and deductions taken from their pay.”; and

 

(2)  “All non-exempt hourly employees whose employment ended in California within…(3) years of the filing of this Complaint engaged in intrastate commerce for the DEFENDANTS as delivery drivers through the date of final disposition of this action and who suffered the following: [¶]  A[.] Were not fully paid their wages within seventy two hours of the end of their employment.”[2]

 

Plaintiff alleges that he previously worked directly for Antech as an employee, delivering blood and tissue samples to Antech, but after Antech and DSA “hatched their scheme,” Plaintiff was informed that he would no longer be an employee of Antech, but an independent contractor paid by DSA.[3]

 

Plaintiff alleges that he and the putative class members regularly worked in excess of eight hours a day and more than 40 hours per week, and their primary duties were not exempt, but Defendants did not pay them overtime and instead paid a flat fee for each route they drove.[4]  Plaintiff alleges that he and the putative class members were trained by Defendants, were expected to follow Defendants’ company policies outlined orally and in memorandum issued to them, were discouraged by Defendants from hiring their own staff to drive routes for them, were required to wear a shirt identifying them as Defendants’ employees, and were required to submit reports detailing each stop on their delivery route.[5]  Defendants allegedly paid Plaintiff and the putative class on a regularly bi-weekly basis and not after they completed their routes, set their work schedule, had a set schedule to deliver goods, and required Plaintiff and the putative class to drive a predetermined route.[6]  Defendants allegedly closely monitored Plaintiff and the putative class every step of their route by tracking them with GPS and/or cell phones, and called and chastised them if they deviated from the route that was set for them.[7]  Defendants also intentionally prevented Plaintiff and the putative class from taking a 30-minute meal break by harassing them by phone when the stopped their vehicle for a 30-minute meal period.[8]  Defendants allegedly failed to reimburse Plaintiffs for their expenses, particularly for gas and repairs to their vehicles.[9]

 

The Complaint asserts ten total causes of action.  The first five causes of action are for damages:  (1) failure to pay all wages including California overtime wages; (2) failure to pay timely wages under California law; (3) failure to provide accurate itemized employee wage statements; (4) failure to provide breaks; (5) violation of California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code, § 17200.  The remaining five causes of action are for civil penalties on behalf of Plaintiff and other employees under the Private Attorney General Act, Cal. Lab. code, § 2698, et seq.:  (6) failure to pay overtime civil penalty; (7) failure to keep payroll records; (8) failure to provide an adequate pay statement; (9) failure to provide 30 minute meal period; and (10) misclassification as an independent contractor.

 

Defendants move for summary judgment, or in the alternative, summary adjudication of the following issues:

 

• Issue No. 1:  The first through fourth causes of action fail because Plaintiff was an independent contractor as a matter of law.
• Issue No. 2:  The fifth through tenth causes of action fail because they are entirely derivative of the underlying Labor Code claims.
• Issue No. 3:  The second, third, seventh and tenth causes of action for misclassification fail because Defendants have a good faith defense and thus did not willfully, knowingly or intentionally violate the law.

 

Defendants’ Arguments and Material Facts

 

Defendants submit the following arguments and material facts in support of its motion:

 

Antech operates laboratories that assist veterinary clinics (Defs’ Sep. St. of Material Facts [“DMF”] 1, 2).  Until June 2005, Antech employed delivery drivers to transport samples from the clinics to the laboratories (DMF 3), and Plaintiff worked for Antech in this capacity for three months, earning an hourly wage of $7.50 (DMF 4).  In June 2005, Antech outsourced the delivery function in Northern California by engaging a third-party to supply delivery services (DMF 5).  In 2009, Antech engaged DSA, a Utah-based transportation broker which contracts with companies in need of transportation services to provide delivery through third-party providers, with whom it separately contracts (DMF 6-7).

 

DSA contracts drivers to provide delivery services to Antech (DMF 8), which involves pick-ups from and deliveries to veterinary clinics, Antech’s customers (DMF 9).  The driver is responsible for collecting the samples from the clinics and delivering them to Antech’s Northern California laboratory (DMF 10).

 

Plaintiff is a professional delivery driver who previously provided delivery services to two different companies as an independent contractor (DMF 11-12).  He provided services to DSA until January 2013 (DMF 14), and since his engagement with DSA ended, he has provided delivery services to another company as an independent contractor (DMF 13).  Prior to mid-2012, Plaintiff operated a weekday route in the afternoon and a Saturday route (DMF 15).  In 2012, he added a route on weekday mornings and another on Sundays (DMF 16).

 

In written agreements with DSA, Plaintiff agreed that he was an “independent contractor” of DSA and that he is not an employee (DMF 17-18).  Plaintiff was free and “encouraged” to provide services of the same or different nature to any person and to seek out other opportunities by advertising or otherwise (DMF 19-20), and he did provide similar services to BeavEx, a direct competitor of DSA on weekday mornings before completing routes for DSA in the afternoon (DMF 21-22).  One of Plaintiff’s BeavEx routes was for delivering samples to IDEXX, a direct competitor of Antech (DMF 23).

 

Neither DSA nor Antech assigned Plaintiff’s routes (DMF 24), but rather, DSA received bids from various independent drivers for available routes (DMF 24; 16, 26).  DSA retained no control over the selection of routes (DMF 27) and Plaintiff acknowledges that Defendants “never imposed a route upon me.”  (DMF 28.)  Defendants did not require that any particular individual perform the services Plaintiff was contracted to provide, and he was free to hire other drivers as subcontractors or his own employees at his discretion (DMF 29-31).  During the period in issue, Plaintiff hired drivers or subcontractors to assist with a Friday, Sunday and other routes (DMF 32-34).  Plaintiff acknowledges that it was his responsibility to find substitutes and ensure that they provided the services if he could not do so, and that he alone was responsible for selecting, hiring, paying, and supervising any workers who performed his routes (DMF 35-36).  Plaintiff never sought or obtained approval from Defendants before hiring other drivers (DMF 37).

 

Plaintiff was responsible for providing and maintaining a vehicle, paying all operation costs and expenses (e.g., fuel, repairs, other equipment and supplies like a telephone and a cooler for preserving samples), and Defendants did not reimburse him for these expenses (DMF 38-41).  Plaintiff also maintained and paid for his own automobile, cargo, occupational accident and workers’ compensation insurance, certifying that he was an independent contractor (DMF 43-44).

 

Plaintiff negotiated with DSA for a flat fee for each route, as well as a fee for “call-ins” (unscheduled stops at clinics) (DMF 46-48).  Plaintiff sent an invoice to DSA describing the services performed by Plaintiff or his subcontractor, and DSA paid Plaintiff directly either way (DMF 49-50).  DSA did not deduct any taxes from Plaintiff’s payments and did not issue him a Form W-2, but rather, a Form a 1099-MISC (DMF 52-53).  Plaintiff was solely responsible for paying any taxes, including self-employment taxes, and he hired an accounted and reported taxes as an independent contractor by making deductions for business expenses (DMF 54-56).

 

Defendants did not issue any rules about Plaintiff’s personal appearance, inspect his appearance, or require him to wear any particular clothing or accessories (DMF 57-60).  Plaintiff carried a “badge” that bore his picture so personnel at clinics knew he was authorized to pick up samples (DMF 61) and a black shirt he bought himself (DMF 62).

 

Plaintiff decided when to perform his routes and when to take time off, and he did not seek or receive approval form Defendants (DMF 63).  Plaintiff was free to use a vehicle of his own choosing (DMF 64-65), and Plaintiff does not recall Defendants ever inspecting the vehicle (DMF 66).  Plaintiff’s vehicle bore no signage, logos or information about Defendants (DMF 67) and Plaintiff kept the vehicle at his home and used it to perform deliveries for other companies (E.g., BeavEx) (DMF 68).

 

Plaintiff did not report to DSA’s office and on most days drove directly from his home to the clinics on his route (DMF 69, 71).  Plaintiff completed his work by delivering the samples to the laboratory and thus, he did not work a fixed number of hours (DMF 72-73).  He was responsible for the manner and means of securing the end result of the provision and services, and for determining the most effective and safe manner in conducting pickup and delivery services in accordance with the specific customer’s requirements (DMF 74).  DSA did not reserve any right to exercise discretion, control, or determination over the manner, means or methods of Plaintiff’s business activities (DMF 75).

 

Plaintiff did not receive training from DSA (DMF 76) and he does not recall receiving written instructions about performing the route (DMF 77).  No DSA or Antech personnel accompanied him or his helpers on the routes (DMF 78).

 

Plaintiff decided how best to travel from one clinic to the next and was free to determine the sequence and priority of pickups and deliveries (DMF 79-81).  He could decide the order of stops so long as he did not arrive at the clinics too early because the samples may not be read (DMF 82).  Plaintiff never told his helpers that they could not deviate from the order listed on the route sheets (DMF 83).  No one at Antech or DSA ever told Plaintiff he could not stop to take a break during a route (DMF 84).

 

Plaintiff does not recall communicating with any Antech employees or attending any meetings with Defendants’ personnel during the period at issue (DMF 85-86).  His communication with DSA was limited to brief telephone calls while on route and brief encounters when he arrived at the laboratory on weekday mornings (DMF 86-87, 89).  Defendants did not require Plaintiff to check in after a stop, and they had no email contact with him (DMF 88, 90).
Defendants did not evaluate Plaintiff’s performance.  (DMF 91).  Plaintiff is not aware of DSA ever contacting a clinic to discuss his performance (DMF 92).

 

Plaintiffs’ Arguments and Material Facts

 

Plaintiff argues the motion should be denied because there are triable issues on Defendants’ right to control the manner and means of delivery drivers’ work, which is the primary factor in determining an employment relationship.  Plaintiff also argues there are triable issues on various secondary factors, e.g.: drivers are not engaged in a distinct operation or business; a high degree of skill is not required for delivery drivers; the delivery services are an integral part of Defendants’ businesses; the indefinite length of time favors an employment relationship; and various instrumentalities like route sheets, tags, forms, badges, cooler, and tracking devices are provided by Defendants.  Plaintiff argues summary adjudication on Defendants’ good faith defense is improper for the second and seventh causes of action because it would not completely dispose of these causes of action.  Plaintiff argues there are triable issues on Defendants’ alleged willful violations of the Labor Code based on the sudden reclassification of drivers as independent contractors in June of 2005, with no real change in their duties and routes.

 

In response to Defendants’ arguments and material facts, Plaintiff disputes that his employment circumstances changed in June 2005, arguing that he maintained the same routes for Antech after June 2005.  According to Plaintiff, BeavEx initially worked directly with Antech to supply delivery services, followed by Aeropoint, and then DSA.

 

Plaintiff disputes that he is a professional delivery driver, saying his work requires no particular vehicle or skill other than driving, and he is only required to possess a car and an ordinary driver’s license.  Plaintiff contends that after Antech decided to change drivers from employees to independent contractors, Antech engaged other companies to engage the Antech route drivers including Plaintiff, but he still drove the same routes as he did as a direct Antech employee.  Plaintiff contends he only became involved with other companies like BeavEx through Antech, which paid Beavex to employ the drivers of the Antech routes.

 

Plaintiff argues it is immaterial that the Independent Contractor/Owner-Operator Agreement between him and DSA characterizes the relationship as an independent contractor arrangement because such labels do not control where the conduct is indicative of an employer-employee relationship.  Plaintiff further submits that he did not understand English when he certified he was an independent contractor.  (See Pltf’s Resp. DMF 44; Pltf’s Additional Material Fact [“AMF”] 1.)

 

Plaintiff disputes Defendants’ assertion that they did not assign Plaintiff’s routes, and that instead, DSA received bids from various independent drivers for available routes.  According to Plaintiff, DSA dictated the amounts paid to the route drivers for their routes and the on-calls, and routes were verbally offered to specific drivers at rates specified by DSA.  It was only in the last several months (long after this lawsuit was initiated) that drivers began submitting an offer in writing if they were interested in a specific route, or if they wanted to receive more money for a route they were already driving, but DSA has discretion whether or not to increase the pay for that route, just as any other employer has that option.  Plaintiff contends that drivers cannot, even post-lawsuit, increase their rates, and it remains up to DSA whether or not to approve a rate increase.

 

Regarding Defendants’ control over drivers’ working conditions and the manner in which their jobs were performed, Plaintiff submits the following evidence:

 

• DSA required Plaintiff and the other route drivers to report in each day before they start driving their routes.
• Antech makes the route sheets that it requires all drivers to use.  The route sheets are on a form made up by Antech, and Antech provides on each route sheet, the clinics on that route, as designated by Antech, the earliest pick up times for each clinic, which clinics to be stopped at each day (indicated by a check mark next to the clinic names) and any special instructions to be followed by the drivers for each clinic.
• Drivers are required to follow the route sheets, including the pick-up times and locations.
• Antech provides the route sheets to DSA and DSA provides the route sheets to the drivers.
• DSA and Antech require that each and every driver complete each route sheet according to DSA’s instructions and standards.
• DSA trains the drivers on how to properly complete the route sheets, manifests and blue tags according to DSA standards.
• DSA and Antech also require that all drivers be trained on a route before taking over a route.
• DSA required and require Lopez and the other drivers to turn in the route sheets at the end of each route to a location designated by DSA.
• DSA supervisors check each route sheet to ensure it is completed by the drivers to DSA’s specifications.
• Antech and DSA require the drivers to follow Antech’s basic procedures which are specified in writing.  The drivers are required to sign a form and acknowledge that they understand these procedures to be required of them.  Some of the many things required of the drivers include, without limitation: (1) to “[b]e Courteous and Professional at all times; (2) [a]lways follow the same routine at each clinic; (3) “ASK questions;” (4) “NEVER Arrive early;” (5) “Check the Lock Box FIRST even on the AM routes;” (6) “Check ALL sample locations […] VERIFY with staff the sample count and that there are no more samples;” (8) “Document EVERYTHING;” (9) “Evening Routes Must leave a blue slip .[…];” (10) “in the event that there are NO SAMPLES from a Saturday account, call DSA before moving on to the next clinic”
• DSA and Antech required and require that all route drivers wear an identification badge bearing both Antech’s and DSA’s names.
• DSA and Antech required and require that all route drivers wear a red shirt and closed toed shoes.
• DSA required and requires that all drivers turn in the samples they pick up on each route by a certain time and place.
• The drivers are required to use scanners provided by DSA.  DSA deducts a fee from the paychecks issued to the drivers on a weekly basis.  The drivers have no option to decline use of the scanners or deduction from their paychecks.
• The drivers have been required, in the past, to carry a tracking device provided by DSA.  As with the scanners, a fee for the tracking devices was deducted from the driver’s checks on a weekly basis and the driver had no option to refuse to carry the tracking devices.
• Drivers are not permitted to drive a route unless they agree to use the scanning device.
• The scanners and trackers impart information to DSA regarding the pick-up times and locations for each driver on each route, and the tracking device showed where the drivers were on their route.  If the drivers were running behind, DSA would call them.
• DSA often contracts drivers, including Carlos Lopez, when they miss a pick up or are running late in making pick ups.  DSA has even given the drivers driving directions to get around traffic if traffic is causing the drivers to run late.
• If the drivers want to change something about their route, they must submit a change request to DSA who in turn submits the request to Antech for approval.
• Drivers can bring on extra help, but all such help must be approved by DSA and meet DSA’s requirements.
• The drivers are not permitted to handle any customer issues or complaints.  Antech must handle those issues or complaints.
• DSA requires that the drivers must obtain all three types of insurance specified by DSA – automobile insurance, cargo insurance, and trucker’s occupational and accident insurance –and for the minimum coverage amounts specified by DSA.
• The drivers must obtain the KBS Cargo insurance which application forms are provided to the drivers by DSA, along with the independent contractor agreements.
• The drivers must obtain trucker’s occupational and accident insurance through One Beacon which insurance forms are provided by DSA along with the independent contractor agreement.
• Antech may request a route driver’s termination.

 

(See Pltfs’ Resp. DMF 18; AMF 2-22.)

 

Plaintiff further submits that drivers were required by DSA and Antech to take extra stops during their route called “on-calls” or “call-ins.”  (AMF 16.)

 

Plaintiff disputes Defendants’ assertion that they did not control drivers’ use of helpers or substitutes by arguing that DSA had a policy and protocol requiring any substitute drivers to be pre-approved by DSA.  (See Pltfs’ Resp. DMF 29; AMF 18.)

 

Plaintiff disputes Defendants’ assertion that Plaintiff was responsible for his vehicle and all operation costs and expenses, Plaintiff argues that DSA assumed control over vehicle related requirements like insurance, and Plaintiff says Antech provided a cooler and a telephone.  (See Pltf’s Resp. DMF 38-40, 42-43.)

 

Plaintiff argues that rates were not really negotiable because if he rejected the offered rate, it would go to another driver, and he was not free to raise the rates paid to DSA.  Plaintiff argues the invoices he submitted to DSA were on an invoice form provided by DSA to all drivers.

 

Discussion

 

“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact.”  (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 850.)  “A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action.”  (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72.)  The court must liberally construe evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party.  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

 

As a threshold matter, Plaintiff has submitted a Redacted Compendium of Evidence which did not include Exhibits F, G, H, I , J, K, N, O, P.  Instead, these exhibits were lodged under seal in a Nonredacted version of Plaintiff’s Compendium of Evidence, but neither party has filed a motion to seal these exhibits.  According to Plaintiff’s counsel, the exhibits at issue are documents produced by DSA or Antech and designated by them to be Confidential.[10]  Under rule 2.551(b)(3)(A), if a party files, for purposes of adjudication, documents produced in discovery subject to a confidentiality, but that party does not intend to move to seal those documents, the party must still lodge them under seal, with redacted copies, and give notice to the other party that the documents will be placed in the public file unless a timely motion to seal is made.  (See Cal. Rules of Court, rule 2.551(b)(3)(A).)  If the party that produced the documents is given notice and fails to file a motion to seal the records within 10 days (or obtain an extension of time to file such motion), “the clerk must promptly remove all the documents…from the envelope…and place them in the public file.”  (See rule 2.551(b)(3)(B).)  Because Plaintiff did not file a notice of lodgment pursuant to California Rules of Court, rule 2.551, Defendants shall have 10 days from the date of the final order on the instant motion for summary judgment/adjudication to file a motion to seal Booke Exhibits F, G, H, I , J, K, N, O, P that complies with the requirements of California Rules of Court, rules 2.550-2.551.

 

The parties agree that the governing common law test for employment is set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

 

Under the common law, “ ‘[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired … .’ ” [Citations.]  What matters is whether the hirer “retains all necessary control” over its operations. [Citation.]  “ ‘[T]he fact that a certain amount of freedom of action is inherent in the nature of the work does not change the character of the employment where the employer has general supervision and control over it.’ ” [Citations.]  Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because “[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent’s activities.” [Citations.]

 

(Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 531, original italics, citing Borello.)

 

While the extent of the hirer’s right to control the work is the foremost consideration in assessing whether a common law employer-employee relationship exists, our precedents also recognize a range of secondary indicia drawn from the Second and Third Restatements of Agency that may in a given case evince an employment relationship. Courts may consider “(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.” [Citations.]

 

(Id. at p. 532.)

 

Significantly, what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise.  [Citations.]  Whether a right of control exists may be measured by asking “ ‘ “whether or not, if instructions were given, they would have to be obeyed” ’ ” on pain of at-will “ ‘ “discharge[] for disobedience.” ’ ” [Citation.]

 

(Id. at p. 533.)

 

“ ‘An “independent contractor” is generally defined as a person who is employed by another to perform work; who pursues an “independent employment or occupation” in performing it; and who follows the employer’s “desires only as to the results of the work, and not as to the means whereby it is to be accomplished.” [Citations.]  The most significant factor in determining the existence of an employer-independent contractor relationship is the right to control the manner and means by which the work is to be performed.  [Citations.]  “If control may be exercised only as to the result of the work and not the means by which it is accomplished, an independent contractor relationship is established.” [Citations.]’ [Citation.]”  (Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 431.)

 

The relevant period for this lawsuit is four years prior to the filing of the Complaint,[11] which would be July of 2009.  It is not really disputed that in June of 2005, Plaintiff ceased to be a formal “employee” of Antech and that Plaintiff subsequently provided services to DSA until 2013.  (See DMF 3, 14.)[12]  Plaintiff’s relationship with DSA is governed by an Independent Contractor Agreement, which Defendants submit as Exhibit A to the Declaration of Kendra Pershall, Vendor Relations Manager for Express Messenger Systems, Inc. dba OnTrac.  While “an agreement between the purported employer and employee setting forth the details of their relationship…[is] a significant factor for consideration” in assessing the right to control[,]” (Ayala, supra, 59 Cal.4th at p. 534, citing Tieberg v. Unemployment Ins. Appeals Board (1970) 2 Cal.3d 943, 952), “the rights spelled out in a contract may not be conclusive if other evidence demonstrates a practical allocation of rights at odds with the written terms.  [Citation.]”  (Ayala, supra, 59 Cal.4th at p. 535.)  “[T]he parties’ label is not dispositive and will be ignored if their actual conduct establishes a different relationship.  [Citations.]”  (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 11.)

 

Based on the parties’ submissions, the facts of this case fall somewhere in between cases like Alexander, et al. v. FedEx Ground Package System, Inc. (9th Cir. 2014) U.S. App. LEXIS 16585 (“policies and procedures unambiguously allow FedEx to exercise a great deal of control over the manner in which its drivers do their jobs”) and Estrada, supra, 154 Cal.App.4th at pp. 11-12 (“control over every exquisite detail of the drivers’ performance…”) on the one hand, and Arnold, supra, 202 Cal.App.4th 580 (nonexclusive insurance agent used her own judgment soliciting applications for insurer’s products) and Millsap, supra, 227 Cal.App.3d 425 (instructions to delivery drivers to “be careful” and submit delivery confirmation forms did not raise triable issue on independent contractor status).

 

The evidence could be found by a trier of fact to show that DSA retained control over the manner and means in which drivers like Plaintiff performed their jobs.  While the mere provision of route sheets alone might not be enough by itself to show sufficient control (see Millsap, supra, 227 Cal.App.3d at p. 431 [carrier gave deliveryman “directions to a particular location”]), the required use and completion and submission of such route sheets, along with DSA supervisor checks on the route sheets, and the requirement that drivers report in each day before they start driving their routes demonstrates a degree of control over the manner and means in which drivers perform their job that goes beyond cases like Millsap or Arnold.  To further support this inference of control, there is evidence that DSA tracked delivery and pickup times with the use of scanners and called drivers who were running late.[13]  Plaintiff cites an instance in which he was told by DSA that he “had to back track to Santa Cruz to pick up a late on-call” even though it would take an additional hour, and he “was not offered any additional compensation” for his time.[14]  Plaintiff cites another instance in which Mike Spears told him to go back to a location where he had previously found nothing to pick up or he “was going to have problems.”[15]

 

Other evidence supports an inference of control over the means and manner of drivers’ job performance, such as DSA’s regulations regarding drivers’ appearance (e.g., red shirts, closed toed shoes) and the required use of an identification badge, as well as DSA’s protocol for approval of substitute drivers.  Defendants contend that Plaintiff never sought approval and nobody at DSA ever told him approval was required.  (DMF 36-37, 63.)  However, Plaintiff’s Exhibit I (lodged under seal) supports that inference that DSA’s approval and certain specific conditions were required for substitutions.  The fact that DSA did not exercise its right to control Plaintiff’s substitute drivers does not mean it did not retain the right to exercise this control by specifically providing for the “protocol” set forth in Exhibit I.  (See Ayala, supra, 59 Cal.4th at p. 533; see also Estrada, supra, 154 Cal.App.4th at p. 12 [noting carrier’s “discretion to reject a driver’s helper, temporary replacement, or proposed assignee”].)

 

Finally, the evidence could support DSA’s ability to essentially “discharge” drivers without cause by terminating the agreement after the initial term or removing a driver (defined as a “Vendor Service Provider”) from any Antech worksite upon Antech’s request.  (See DMF 93; Booke Exhs. N, O, ¶ 1.2(c)(iii) [Vendor Responsibilities].)  Under the 2011 and 2012 Independent Contractor Owner/Operator Agreements, DSA can exercise its right of termination without cause, upon 30 days’ written notice.[16]  (See Estrada, supra, 154 Cal.App.4th at p. 11 [noting carrier’s ability to not renew without cause].)  Combined with the evidence of DSA’s control over the means and manner in which drivers performed their jobs, including instances where Plaintiff was essentially ordered to do late on-calls under threat of “problems,” DSA’s ability to terminate the agreement without cause or remove any driver from Antech’s worksite further supports DSA’s right to control.

 

The issue is less clear as to Antech, which is no longer Plaintiff’s direct employer and is DSA’s client for delivery services (DMF 8).  However, the California Supreme Court has left open the question of whether additional Industrial Welfare Commission (“IWC”) wage order tests for employee status apply to wage and hour claims such as the instant case.  (See Martinez v. Combs (2010) 49 Cal.4th 35 [applying IWC wage order tests to claims for unpaid minimum wages; Ayala, supra, 59 Cal.4th at p. 531 [recognizing “the possible relevance of the additional tests for employee status in IWC wage order No. 1-2001, subdivision 2(D)–(F)” but “leav[ing] for another day the question of what application, if any, the wage order tests for employee status might have to wage and hour claims”].)  In Martinez, the Supreme Court applied the IWC wage order’s definition of “employ” as historically understood to mean “suffer, or permit” to define employment.  “A proprietor who knows that persons are working in his or her business without having been formally hired, or while being paid less than the minimum wage, clearly suffers or permits that work by failing to prevent it, while having the power to do so.”  (Martinez, supra, 49 Cal.4th at p. 69.)  However, under the particular facts of Martinez, the court held that two produce merchants did not “suffer, or permit” the agricultural worker-plaintiffs to work because neither had the power to prevent plaintiffs from working.  The undisputed facts showed that the direct employer alone controlled plaintiffs’ wages, hours, and working conditions, and no evidence suggested the direct employer’s employees viewed the produce merchants’ field representatives as their supervisors or believed they owed their obedience to anyone but the direct employer and his foremen.

 

Here, the evidence could support the inference that Antech “suffered or permitted” DSA drivers to work and had the power to control their working conditions, since there is evidence that Antech makes the route sheets that DSA drivers are required to use, requires drivers to wear certain types of clothing and an identification badge, requires drivers to follow specific procedures at clinics, provides email instructions to DSA dispatchers to direct changes in driver routes,[17] and can request the removal of a driver at any Antech worksite.[18]  Resolving all doubts in favor of the party opposing summary judgment, the Court finds that a trier of fact could conclude Antech had the power to prevent drivers from working in order to satisfy the “suffer, or permit” test discussed in Martinez and Ayala as a possible alternative to Borello.

 

Finally, as to the issue of scienter/willfulness and Defendants’ good faith defense, the Court finds the evidence could support a finding of bad faith/willful misclassification based on the evidence that drivers were previously classified as employees and their duties and routes (as well as Defendants’ control over the means and manner of their job performance and working conditions) did not change when they were formally changed to independent contractors.

 

For all of these reasons, the motion for summary judgment and summary adjudication is DENIED.

 

[1] See Compl. ¶ 33.

[2] Id.¶ 9.

[3] Id.at p. 2.

[4] Id.¶¶ 26-31.

[5] Id. ¶¶ 35-36, 38, 45-46.

[6] Id. ¶¶ 37-41.

[7] Id. ¶¶ 42-43.

[8] Id. ¶ 44.

[9] Id. ¶ 45.

[10] See Decl. Victoria L.H. Booke In Opp. to MSJ ¶¶ 6-11, 14-16.

[11] See Compl. ¶ 9.

[12] Plaintiff merely points out that he maintained the same routes and duties as he did prior to June of 2005, but the formal change in his relationship to Antech is not disputed.

[13] See Decl. Candis Martin ¶¶ 4, 10.

[14] See Decl. Carlos Lopez ¶ 14.

[15] Ibid.

[16] See Knopp. Decl. ¶ 2, Exh. A (Lopez Depo. Exh. 4 at p. 9, ¶ 11 [2011 agreement] and Exh. 6 at p. 5, ¶¶ 10-11 [2012 agreement].)

[17] See Decl. Candis Martin ¶ 6.

[18] See Booke Exhs. N, O (lodged conditionally under seal) at p. 1, ¶ 1.2(c)(iii).