Antelope Valley Newspapers, Inc. (Antelope Valley) operates distribution facilities in the counties of Los Angeles and Kern in order to distribute a newspaper called the Antelope Valley Press.  Antelope Valley contracts with individual carriers using a preprinted standard form contract.  Maria Ayala, Josefina Briseño, Rosa Duran, and Osman Nuñez are or were newspaper carriers for Antelope Valley. 

In 2008, Ayala, Briseño, Duran, and Nuñez (collectively Ayala) sued Antelope Valley on behalf of a putative class of newspaper carriers, alleging that Antelope Valley treated them as independent contractors even though they were, as a matter of law, employees.  The complaint alleged a number of wage and hour violations, including failure to pay overtime.  Ayala sought class certification, which the trial court denied.  It concluded that individual issues, not common issues, predominated.  The Court of Appeal affirmed in part and reversed in part.  Antelope Valley appealed, and the California Supreme Court affirmed.

The party seeking certification of a class must demonstrate, among other factors, that the proposed class has a "well-defined community of interest."  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 sole issue on appeal was whether common questions of law or fact predominated. 

The question at the heart of Ayala's litigation was whether the carriers were independent contractors or employees.  If they were correctly classified as independent contractors, Antelope Valley could not be liable for the alleged wage and hour violations because employers have no obligation to pay independent contractors overtime, provide breaks, etc.  The principal test for determining whether an employer/employee relationship exists is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the desired result.  It is not how much control an employer actually exercises, but how much control an employer retains the right to exercise. 

At the certification stage, the question is not what degree of control an employer retains, but whether the employer's right of control can be evaluated on a classwide basis.  The trial court failed to resolve the ultimate inquiry.  Instead, it determined that the record demonstrated a considerable variation in the degree to which Antelope Valley exercised control over its carriers.  It noted, for instance, the variations as to whether the carriers were told how to fold papers, whether they used rubber bands or bags, and whether they followed the delivery order on their route lists.  Instead, the trial court should have placed greater emphasis on the form contracts that governed the carrier's relationship with Antelope Valley.  Even where the trial court evaluated the right to control, as opposed to the exercise of control, it focused too much on the substance of the question instead of deciding whether the question could be decided using common proof. 

In addition to an employer's right to control the manner and means of an individual's work, courts should also look at secondary factors, such as who provides the place of work and for how long the services will be performed.  As with the right to control, the court must determine whether the factor can be evaluated on a classwide basis.  The trial court in this case listed the variations it found regarding the secondary factors, but did not properly determine whether the variations were material.  Some variations may be insignificant to the overall inquiry.   

Thus, the California Supreme Court affirmed the Court of Appeal's decision, holding that the trial court erred by finding that employee status could not be determined on a classwide basis, and remanded for further proceedings.    

Note:

In our July 2014 Client Update, we reported on the case of Ruiz v. Affinity Logistics Corp. (9th Cir. 2014) 754 F.3d 1093, in which the Court of Appeals for the Ninth Circuit held that drivers working for a furniture delivery company were employees, not independent contractors, because the company had the right to control the details of the drivers' work.   The Court noted, for instance, that the company set the drivers' routes, required them to report to work at a specific time and attend meetings, set and enforced rules regarding the drivers' appearance, and maintained control of the drivers' delivery trucks and keys.   However, in that case, the Court was analyzing the evidence that both parties had presented at a bench trial, not making the initial determination of whether the case should be litigated as a class action.  

Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522.