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Dynamex Operations W., Inc. v. Superior Court - 230 Cal. App. 4th 718, 179 Cal. Rptr. 3d 69 (2014)

Rule:

To prevail on a motion to certify a class, the party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives. In turn, the community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. Nonetheless, a court may consider how various claims and defenses relate and may affect the course of the litigation even though such considerations may overlap the case's merits.

Facts:

Lee and his coplaintiff, Pedro Chevez, are former same-day delivery drivers who were engaged by Dynamex as independent contractors. The operative second amended complaint alleges Dynamex's classification of drivers as independent contractors rather than employees violated provisions of Wage Order No. 9, as well as various sections of the Labor Code, and it had engaged in unfair and unlawful business practices under Business and Professions Code section 17200.

Lee's first motion for class certification, filed in November 2006, was denied on two grounds—the inascertainability of the class and a lack of common issues. We reversed that ruling. Based on the Supreme Court's intervening decision in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 [53 Cal. Rptr. 3d 513, 150 P.3d 198], we concluded the trial court had improperly denied Lee's “motion to compel Dynamex to identify and provide contact information for potential putative class members,” a ruling that “improperly interfered with Lee's ability to establish the necessary elements for class certification … .” 

In June 2009 Lee filed a second motion for class certification, which was granted. The certified class contained four subclasses and several limited exclusions involving drivers who had hired other drivers to perform services for Dynamex, worked for other companies while also driving for Dynamex or transported certain hazardous items or transported freight in interstate commerce. Because of the lack of records sufficient to identify members of the class, the parties agreed to send questionnaires to each putative class member seeking information as to class membership. The trial court entered a stipulated order that the class was only “conditionally” certified pending the questionnaire process.

According to Dynamex, the questionnaire responses proved the unworkable nature of the proposed class. In December 2010 it moved to decertify the class on the grounds no records existed to identify class members; individualized inquiries were necessary to determine employment status;and contradictions in sworn testimony demonstrated the need for cross-examination to avoid a violation of its due process rights. The trial court granted the motion but allowed plaintiffs to change the class definition one more time. The court subsequently vacated the order decertifying the class and continued the motion to allow plaintiffs to file a third motion for class certification. Relying on the Supreme Court's then recent decision in Martinez, supra, 49 Cal.4th 35, Lee and Chevez contended drivers met the test for employment so long as Dynamex knew the drivers were providing services or negotiated the rates paid to the drivers: In other words, adherence to the common law rule described in Borello was not necessary to certification of the proposed class. The superior court agreed and certified the class.

In December 2012 Dynamex renewed its motion to decertify the class on the ground intervening law had demonstrated the error of the court's reliance on Martinez. The superior court denied the motion to decertify.

Issue:

Did the trial court properly use the IWC definition of employee to evaluate whether common issues predominated as to claims falling within the scope of IWC wage order No. 9-2001?

Answer:

Yes.

Conclusion:

The IWC wage orders share common definitions and schemes, including the definition of employment: Like all other wage orders, Wage Order No. 9, applicable to the transportation industry, defines the word “employ” as “to engage, suffer, or permit to work.” (Cal. Code Regs., tit. 8, § 11090, subd. 2(D).) An employer is defined as any person “who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.” This is the same language examined by the Supreme Court in Martinez. Parsing this language in light of the IWC's statutory purposes, Martinez concluded that “[t]o employ, then, under the IWC's definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.”

Dynamex contends the superior court's ruling is an outlier and insists no other court has resorted to the first two prongs of the IWC definition of employee in certifying a class in a wage and hour case. Under this “extreme view,” Dynamex asserts, “independent contractors will no longer exist in California.”

Contrary to Dynamex's overblown rhetoric, the decisions it cites as rejecting application of Martinez in fact confirm its broad sweep. In Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419 [119 Cal. Rptr. 3d 513], for instance, the court applied the IWC definition of employment because “Martinez governs our determination of the issues in the current case. Martinez teaches that,  in actions under section 1194 to recover unpaid wages, an IWC wage order governing a subject industry defines the employment relationship, and thus who may be held liable—as an employer—for unpaid wages.”  Although utilizing the IWC definition, the court affirmed summary judgment in favor of the payroll company because it did not exercise control over the plaintiff's wages, hours or working conditions; did not have the power to cause or prevent him from working; and did not control any aspect of his job performance.

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