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Rosset v. Hunter Engineering co. CA1/3

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Rosset v. Hunter Engineering co. CA1/3
By
12:10:2018

Filed 9/27/18 Rosset v. Hunter Engineering co. CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

JAY ROSSET et al.,

Plaintiffs and Appellants,

v.

HUNTER ENGINEERING COMPANY,

Defendant and Respondent.

A148819

(Alameda County

Super. Ct. No. RG13707770)

Appellants are three Sales Representatives (SRs) and a Technical and Training Service Representative (TTR) (Plaintiffs) under contract with Hunter Engineering Company (Hunter). Plaintiffs sued Hunter on behalf of themselves and a putative class alleging various Labor Code violations and moved for class certification. The trial court considered the evidence and arguments, applied the appropriate legal standard and denied the motion. Plaintiffs dismissed without prejudice their claims under the Private Attorneys General Act (Lab. Code, § 2698 et. seq.) and appealed.[1] We affirm.

Factual and Procedural Background

Hunter manufactures and sells automotive repair equipment, such as lifts, wheel balancers and diagnostic equipment to automobile and tire dealers, garages and repair shops. Hunter sells its products through an independent network of contracted distributors and contracts with TTRs to install, service and repair the equipment and to train customers on its use. Hunter contracts with SRs to solicit sales orders in designated territories. Hunter entered into sales representative agreements with plaintiffs Jay Rosset, Thomas White and Joe Niccum and a technical and training representative agreement (collectively, “contracts”) with plaintiff Jim Whitesell to provide services in northern California. Plaintiffs contend that they and a putative class of TTRs and SRs were Hunter employees misclassified as independent contractors and therefore denied expense reimbursement, wages and other benefits required by the Labor Code.

Plaintiffs moved for class certification and argued that the nonnegotiable contracts drafted by Hunter were common to both SRs and TTRs and grant Hunter the right to control them. Plaintiffs emphasized the contracts’ provisions allowing either party to terminate “with or without cause, upon (30) days’ prior written notice.” The contracts also specified which Hunter products could be sold and which services provided and the applicable geographic region (territory)—any of which Hunter can alter “in its sole discretion and in the exercise of its business judgment” “at any time upon thirty (30) days’ prior written notice.” Hunter reserved the right to determine sales policies, prices and discounts. Hunter paid TTRs a predetermined fee to install and to train customers on products, but had no authority to set prices for other services TTRs provided to Hunter customers. SRs were required to purchase demonstration equipment and marketing materials, and TTRs had to purchase tools and parts specific to Hunter products. Subcontractors hired by SRs and TTRs were required to have sufficient training to meet Hunter’s standards.

Hunter underscored the contracts’ provisions which support the plaintiffs’ independence: “It is the essence of this Agreement that Representative is a self-employed independent business person and that the relationship between Hunter and Representative is that of independent contractors. [¶] . . . Representative shall not be considered or deemed in any way to be an employee of Hunter . . . .” TTRs and SRs were expressly permitted to “engag[e] in any other enterprise of any nature whatsoever.” Every TTR and SR reserved the right “in his sole and exclusive discretion, to hire additional personnel or make whatever provisions he may deem appropriate to provide” services under the contracts, subject to the subcontractors receiving adequate training. The TTR and SR had “the exclusive right to determine the method, manner and means by which he will perform his obligations” including the workdays and hours; areas within the territory; and selection of customers or potential customers to serve.

Plaintiffs countered by enumerating the means by which Hunter exercised control by requiring training, monitoring productivity and imposing reporting obligations. Hunter responded that—other than tools specifically calibrated for Hunter products and marketing materials—plaintiffs were entitled to provide whatever equipment, tools and supplies they deemed necessary to perform under the contracts, all of which were to be purchased at their expense. Hunter argued that contracts were not necessarily with individuals and submitted TTR and SR contracts in which the other party was an LLC, corporation or other company.

The trial court published a tentative ruling, heard oral argument and filed a 10-page single-spaced order denying class certification.

discussion

  1. Legal Principles

To decide this case, we begin by identifying the applicable standard of review and apply that to the factors a trial court must consider in deciding a class certification motion. Next, because the class certification decision “may be enmeshed with” issues “affecting the merits of a case,” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 443), we review the criteria for determining whether a relationship is that of an employee or independent contractor.

  1. Standard of Review

“The decision to grant or deny a certification motion ‘rests squarely within the discretion of the trial court’ because the trial court is ‘ “ideally situated to evaluate the efficiencies and practicalities of permitting group action.” ’ [Citation.] Accordingly, reviewing courts ‘afford’ trial court decisions ‘great deference on appeal, reversing only for a manifest abuse of discretion.’ (Ibid.) Under its ‘narrowly circumscribed’ inquiry, a reviewing court generally may not disturb an order denying certification unless ‘ “it is unsupported by substantial evidence” ’or ‘ “rests on improper criteria . . . or . . . erroneous legal assumptions.” ’ (Brinker [Restaurant Corp. v. Superior Court (2012)] 53 Cal.4th [1004, 1022 (Brinker)].) In applying this test, a reviewing court ‘must “[p]resum[e] in favor of the [trial court’s] order . . . the existence of every fact the trial court could reasonably deduce from the record . . . .” [Citation.]’ [Citation.]

“As we have recognized, the predominance inquiry ‘may be enmeshed with’ issues ‘affecting the merits of a case.’ [Citation.] ‘When evidence or legal issues germane to the certification question bear as well on aspects of the merits, a court may properly evaluate them.’ [Citation.] ‘[I]if the parties’ evidence is conflicting on the issue of whether common or individual questions predominate . . . , the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met—and doing so is not . . . an improper evaluation of the merits of the case. [Citations.]’ [Citations.] To the extent the trial court’s order turns on inferences to be drawn from the facts or on an evaluation of the credibility of conflicting evidence, a reviewing court may not ‘substitute’ its ‘judgment for the trial court’s.’ [Citation.] Even at the certification stage, ‘ “questions as to the weight and sufficiency of the evidence, the construction to be put upon it, the inferences to be drawn therefrom, the credibility of witnesses . . . and the determination of [any] conflicts and inconsistency in their testimony are matters for the trial court to resolve.” ’ ” (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 543 (conc. opn. of Chin, J.) (Ayala).)

  1. Class Action Principles

“ ‘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. [Citations.] “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.’ ” ’ (Brinker [, supra,] 53 Cal.4th [at p.] 1021[.)]” (Ayala, supra, 59 Cal.4th at pp. 529–530.)

“As relevant to this appeal, plaintiffs, as the proponents of certification, had the burden in the trial court to demonstrate that ‘ “questions of law or fact common to the class predominate over the questions affecting the individual members.” ’ [Citation.] ‘To assess predominance, a court “must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” [Citation.] It must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence. [Citation.]’ (Brinker [supra], 53 Cal.4th [at p.] 1024[.)] Thus, in assessing predominance, courts ‘must carefully evaluate the nature of the proof’ the parties will present. [Citation.] The ‘ultimate question’ is whether ‘the issues [that] may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.’ ” (Ayala, supra, 59 Cal.4th at pp. 542–543 (conc. opn. of Chin, J.).)

  1. The Test for Employee Status
        1. Control

“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.” ’ ([S.G.] Borello [& Sons, Inc.] v. Department of Indus. Relations [(1989) 48 Cal.3d 341,] 350 [Borello], quoting Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 946; [citation.]) What matters is whether the hirer ‘retains all necessary control’ over its operations. (Borello, supra, 48 Cal.3d at p. 357.) ‘ “[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.” ’ [Citation.] 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.’ ” (Ayala, supra, 59 Cal.4th at p. 531.)

        1. 2. Secondary Factors

“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.’ (Borello, supra, 48 Cal.3d at p. 351.” (Ayala, supra, 59 Cal.4th at p. 532.)[2]

  1. Analysis

Mindful that we must “ ‘afford [the trial court] decision great deference on appeal, reversing only for a manifest abuse of discretion,’ ” we conduct a “narrowly circumscribed” inquiry and must affirm the trial court’s order denying class certification unless “ ‘ “it is unsupported by substantial evidence” ’or ‘ “rests on improper criteria . . . or . . . erroneous legal assumptions.” ’ ” (Brinker, supra, 53 Cal.4th at p. 1022, quoting Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)

  1. The Legal Test Applied by the Trial Court

We follow our high court’s approach in Ayala: “We begin by identifying the principal legal issues and examining the substantive law that will govern. In doing so, we do not seek to resolve those issues. Rather, the question at this stage is whether the operative legal principles, as applied to the facts of the case, render the claims susceptible of resolution on a common basis. (Brinker, supra, 53 Cal.4th at pp. 1023–1025; Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 327 [the focus ‘is on what type of questions—common or individual—are likely to arise in the action, rather than on the merits of the case’].) [¶] The trial court . . . correctly recognized as the central legal issue whether putative class members are employees for purposes of the provisions under which they sue.” (Ayala, supra, 59 Cal.4th at p. 530.)

The trial court articulated and applied the legal standard precedent requires:

“LEGAL STANDARD. ‘To obtain certification, a party must establish the existence of both an ascertainable class and a well-defined community of interest among the class-members.’ (Linder v. Thrifty Oil Co. (2000) 23 Ca1.4th 429, 435 (Linder), citing Richmond v. Dart Industries, Inc. (1981) 29 Ca1.3d 462.) This requires an inquiry into numerosity, ascertainability, whether common questions of law or fact predominate, whether the class representatives have claims or defenses typical of the class, and whether the class representatives can represent the class adequately. (See id.; see also Brinker, supra, 53 Cal.4th at p. 1022.) Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing. (Linder, supra, 23 Cal.4th at p. 435.)

“ ‘[T]he focus in a certification dispute is on what type of questions—common or individual—are likely to arise in the action, rather than on the merits of the case[.]’ (See Sav-On Drug Stores Inc. v. Superior Court (2004) 34 Cal.4th 319, 327 (Sav-On); see also Brinker, supra, 53 Cal.4th at p. 1022.) Analysis of class certification criteria may come close to examining the merits, because facts relevant to the merits may be and are often enmeshed with class certification criteria, such as commonality; but it is not a merits decision. (See Linder, supra, 23 Cal.4th at p. 432.)

“It is Plaintiffs’ burden to support each of the above factors with a factual showing. (See Hamwi v. Citinational-Buckeye Inv. Co. (1977) 72 Cal.App.3d 462.) The court is vested with discretion in weighing the concerns that affect class certification. (See Sav-On, supra, 34 Cal.4th at p. 336; Brinker, supra, 53 Cal.4th at p. 1022.) This includes ‘questions as to the weight and sufficiency of the evidence, the construction to be put upon it, the inferences to be drawn therefrom, the credibility of witnesses . . . and the determination of [any] conflicts and inconsistency in their testimony.’ (Sav-On, supra, at p. 334, quoting Thompson v. City of Long Beach (1953) 41 Ca1.2d 235, 246.)”

Both the prerequisites of numerosity and ascertainability were undisputed and therefore satisfied, and the trial court proceeded to consider whether common issues of fact and law predominated. Again, we agree that the trial court relied on “the operative legal principles.” (Ayala, supra, 59 Cal.4th at p. 530.) “Plaintiffs’ ‘burden on moving for class certification . . . is not merely to show that some common issues exist, but, rather, to place substantial evidence in the record that common issues predominate.’ (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1108; Brinker, supra, 53 Cal.4th at p. 1021.) The determination of how much commonality is enough to warrant use of the class mechanism requires a fact-specific evaluation of the claims, the common evidence, and the anticipated conduct of the trial. California courts consider ‘pattern and practice evidence, statistical evidence, sampling evidence, expert testimony, and other indicators of a defendant’s centralized practices in order to evaluate whether common behavior towards similarly situated plaintiffs makes class certification appropriate.’ (Sav-On, supra, 34 Cal.4th at p. 333, fn. omitted.)

“Commonality is determined with respect to the claims and defenses as pleaded. (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908 at p. 916 & fn. 22.) All of plaintiffs’ causes of action depend upon a predicate finding that, during the proposed class period, Defendant acted as their employer and misclassified SRs and/or TTRs as Independent Contractors (ICs). If the ‘misclassification’ issue is appropriate for certification, the court will also consider whether common issues predominate as to plaintiffs’ underlying causes of action.”

The court, correctly, proceeded to consider whether Hunter misclassified SRs and TTRs as independent contractors, rather than as employees. To decide this issue the court cited and relied on controlling California Supreme Court precedent:

“The test for whether a worker is an employee or an [independent contractor] principally turns on the ‘control of work details’ exercised by the putative employer. (See e.g., Borello, supra, 48 Cal.3d at p. 350; JKH Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046, 1062 (JKH Enterprises); Antelope Valley Press v. Poizner (2008) 162 Cal.App.4th 839, 852 (Antelope Valley).) This test considers whether the parties have contracted for the ‘result’ of the work rather than the ‘means by which it is accomplished.’ (Borello, supra, at p. 351; Antelope Valley Press, supra, at p. 852 [describing it as the ‘right of the person to whom services are rendered to control the manner and means of accomplishing the desired result of those services’].) As the Supreme Court has clarified, with certain limited exceptions, the question is not the degree to which the principal actually controls workers, but whether the right of control is sufficiently uniform to permit class-wide adjudication. (Ayala, supra, 59 Cal.4th at p. 533, citing Brinker, supra, 53 Cal.4th at p. 1024.)

“The secondary factors (also known as the ‘economic reality’ test) include: (1) whether there is a right to fire at will without cause; (2) whether the one performing services is engaged in a distinct occupation or business; (3) 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; (4) the skill required in the particular occupation; (5) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (6) the length of time for which the services are to be performed; (7) the method of payment, whether by the time or by the job; (8) whether or not the work is an integral part of the core business of the principal; (9) whether or not the parties believe they are creating an employer-employee relationship; (10) whether the classification of independent contractor is bona fide and not a subterfuge to avoid employee status; (11) the hiree’s degree of investment other than personal service in his or her own business and whether the hiree holds himself or herself out to be in business with an independent business license; (12) whether the hiree has employees; (13) and the hiree’s opportunity for profit or loss depending on his or her managerial skill. (JKH Enterprises, supra, 142 Cal.App.4th at p. 1064 & fn. 14, citing Borello, supra, 48 Cal.3d 341.) The courts also consider the relative bargaining power of the parties, and whether it indicates a true, arm’s length agreement in which the worker voluntarily takes on the independent contractor role, or an adhesive ‘take it or leave it’ agreement presented to a candidate who must sign it in order to get the work. (See Antelope Valley Press, supra, 162 Cal.App.4th at p. 847 & fn.8, citing Borello, supra, 48 Cal.3d 341.)

“These factors are not to ‘be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.’ (JKH Enterprises, supra, 142 Cal.App.4th at p. 1063, quoting Borello, supra, 48 Cal.3d at pp. 350–351, fn. omitted; see also Antelope Valley, supra, 162 Cal.App.4th at p. 853 [the ‘court is not concerned with whether each and every one of the factors indicate an employee status for the carriers’].)

“Here, the court must determine whether, together, the foregoing factors are susceptible to common proof and/or whether plaintiffs have identified ways to effectively manage proof of any criteria that would otherwise require review of individualized evidence. (Ayala, supra, 59 Cal.4th at p. 1024.)”

The court assessed whether common issues predominate, how individualized factors, including the “control of details test,” can be managed effectively and whether trying common issues would save the litigants and the court time.[3]

  1. The Trial Court’s Criteria

The trial court correctly stated the applicable criteria for deciding both whether plaintiffs met their burden for class certification and whether common questions of law and fact predominate as to the alleged misclassification of employee status. Next the court carefully analyzed each of the required factors, weighed and balanced the proffered evidence and found some common issues, but they were substantially outweighed—both in number and significance—by elements which required individualized evidence.

First the court assessed “how much control the hirer retains the right to exercise” and whether that right of control “was sufficiently uniform to permit classwide assessment.” (Ayala, supra, 59 Cal.4th at p. 533.) Its starting point was the form contracts signed by both the SRs and TTRs and for purposes of deciding certification whether “the degree of control [the contract] spells out is uniform across the class.” (Id. at p. 534.) The court reviewed each of the contract provisions in which Hunter “plainly disclaim[s] [its] right to control the details of representatives’ work” and concluded: “if the ‘control of details’ question could be resolved based solely . . . upon contract language, the issue would easily resolve against Plaintiffs.” Instead—at plaintiffs’ urging—the court assessed Hunter’s “actual operational practices” to determine whether there was evidence extrinsic to the contracts which was common to “a substantial portion of the proposed class or subclasses without the need for individualized inquiries.” The court evaluated the evidence as to each of the Borello or secondary factors: “secondary indicia . . . that may in a given case evince an employment relationship.” (Id. at p. 532.) The trial court systematically addressed, in order, every Borello factor to determine whether the relevant evidence was common or would require an individualized analysis. And then—as required—the court considered all the factors and their relative weight before reaching its decision. “Generally, . . . the individual factors cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.” (Germann [v. Workers’ Comp. Appeals Unemployment Ins. App. Bd. (1981) 123 Cal.App.3d 776,] 783.)” (Borello, supra, 48 Cal.3d at p. 351.) We review first, those factors the court found susceptible to common resolution, and then those which it determined would require individual adjudication.

Considering the uniformity of the contracts executed by all TTRs and SRs, the court found two common issues: Hunter’s right to terminate without cause upon 30-days’ notice and the absence of a time limit on the contracts’ terms. In the Ayala court’s view, the former is, “the strongest evidence of the right to control [the agent],” but the secondary, Borello, factors are also to be considered. (Ayala, supra, 59 Cal.4th at p. 531.) While these contract terms were common to the class members, the trial court found that “litigating these issues will consume few, if any, resources at trial.” It also observed that a merits review limited to the “control of work details” in the contract would resolve against plaintiffs due to the predominance of contract provisions in which Hunter disclaimed control. Therefore the court undertook an exacting examination of all the evidence of Hunter’s operational practices in light of the Borello factors—not to decide the merits, but to decide whether common issues predominate.

After meticulously studying approximately 2000 pages of evidence, the court found some additional common issues which could be tried as to the class: the contracts were nonnegotiable and required all SRs and TTRs to participate in a standardized orientation/training program. As to the latter, the court noted that because the program was principally intended “to screen out poor candidates, not to impart skills . . . this initial program will carry far less weight than the actual experiences of representatives, once they were hired and working in the field.” Both contracts allow the right to subcontract subject to Hunter’s veto, but the court identified differences between what would constitute “sufficient training” or “adequate services” for SRs versus TTRs, allowing at best for “common issues, at most, only within a subclass of each group.”

Other Borello factors, such as equipment requirements, were addressed in the contracts, and therefore common, but required “extrinsic evidence of what tools and equipment were needed for SRs and TTRs to perform under the agreements.” The court cited the discrepancies among the declarants as to the particular items which were required and whether equipment was purchased from Hunter or in the open market and the percentage of each and concluded: “The evidence on this issue will likely be highly individualized. Even if the general contract provision is common, its impact on the class as a whole does not appear to be common.”

A fifth Borello factor—method of payment—was different for TTRs and SRs, though common for each group. TTRs “set their own prices for certain types of service (not included with the initial sale) and were paid directly by their customers, not through [Hunter.] . . . At least as to TTRs, this issue cannot be tried based primarily on common evidence.”

The court rejected plaintiffs’ claim “that the issue of ‘whether the services rendered by SRs/TTRs are an integral part of [Hunter’s] business’ is common.” The evidence demonstrated “substantial variation among SRs regarding the degree of integration into [Hunter’s] business.” Some SRs were dedicated full-time Hunter products salespersons, and some worked part-time for other employers. SRs sell other manufacturer’s products or operate other businesses. Still other SRs purchase equipment from distributors—not Hunter—“suggesting that—at least in some instances—distribution and sales are not an integral part of [Hunter’s] business.”

TTRs exhibit similar variation: some confine their installation, service and training to Hunter products; others refurbish or sell non-Hunter products. “With such variation among representatives, it does not appear that this element can be determined without resort to individualized evidence.”

Given the disparity among declarations—plaintiffs believed they were employees; Hunter’s declarants confirmed the contracts’ independent contractor relationship—the court found: “the evidence does not show the level of consistency needed to try this issue on a class basis.”

The court scrutinized numerous declarations and deposition testimony on the degree of supervision of the representatives. As to the requirement of attending meetings and trainings, the court concluded: “the evidence on the degree of managerial control exercised through ‘meeting attendance’, and the message that representatives received from management on this issue, is mixed, not common.” Representatives reported similarly disparate experiences on the extent to which they were monitored, evaluated and adversely affected by their performance. Some felt they were adversely affected by issues related to productivity or other issues; other representatives, especially some who were from southern California, disclaimed any pressure or retaliation. The evidence on the requirement to log in on the program to provide client-specific details to respond to client demands was just as varied, leading the court to conclude “that the evidence on supervision of TTRs through centralized programs . . . is highly individualized in nature, not common.” The court also found disparity on the approach to the role of business plans and sales projections: while one manager required that they be provided, that was not universal. The range of views on Hunter’s control of representatives’ personal appearance, dress and vehicle type/appearance was equally far ranging and—in the court’s view—not common.

After an exhaustive recitation of every Borello factor and the related evidence, the court summarized its findings: “The record plainly reflects that different members of the putative class experienced different treatment as to many of the factors going into the employment status relationship. Some differences are driven by differences in the roles and responsibilities held by TTRs and SRs, respectively. Even within California TTRs, however, the record discloses too much variability to try their claims as a subclass, as further dividing this group, e.g., by region, would undermine numerosity.”

The trial court carefully and exhaustively analyzed all of the evidence and applied the correct legal standards: “The court must compare those issues that may be jointly tried with those requiring separate adjudication to determine whether the common issues are sufficiently numerous and substantial to make the class action advantageous to the judicial process and to the litigants. Here, the misclassification inquiry is the most important and will dominate this litigation, as it is a predicate to all causes of action.” The court recognized that “there are some common issues in the employment status inquiry,” but—after analyzing all of the evidence and the applicable precedent—decided that plaintiffs had not met their burden.

The court concluded: “Perhaps most importantly, the multi-factor test for the employment relationship requires that all of the factors be examined together. Even if certain issues were tried jointly as to a class or subclasses, the remaining individualized issue would have to be determined and then weighed along with the already-determined common issues in order to resolve whether each class member was an employee or independent contractor. It does not appear that trying common issues first would result in any appreciable savings of the court’s or the litigant’s time. As such, a class action is not a superior method for resolving putative class members’ claims.”

  1. The Sufficiency of the Evidence

Recognizing that, when reviewing a trial court’s denial of a class certification motion, our inquiry is “narrowly circumscribed,” we have considered whether the court’s decision “rests on improper criteria . . . or . . . erroneous legal assumptions.” (Brinker, supra, 53 Cal.4th at p. 1022.) We find neither. The third basis for reversal would be that an order “is unsupported by substantial evidence.” (Ibid.) To the contrary, after carefully considering and weighing all of the evidence, the trial court applied controlling precedent and issued an order replete with references to the voluminous record, all of which amply support its ruling.

DISPOSITION

The judgment is affirmed. Respondent shall be entitled to recover its costs on appeal.

_________________________

Ross, J.*

We concur:

_________________________

Siggins, P.J.

_________________________

Pollak, J.


[1] Hunter urges us to dismiss the appeal, arguing that the “death-knell” doctrine is inapplicable where plaintiffs’ individual claims were dismissed without prejudice. We decline that invitation and reach the merits.

[2] The California Supreme Court recently revisited Borello and Ayala to decide an issue it “did not reach in Ayala, namely whether in a wage and hour class action alleging that the plaintiffs have been misclassified as independent contractors when they should have been classified as employees, a class may be certified based on the wage order definitions of ‘employ’ and ‘employer’ as construed in Martinez [v. Combs (2010)] 49 Cal.4th 35, or instead, whether the test for distinguishing between employees and independent contractors discussed in Borello, supra, 48 Cal.3d 341, is the only standard that applies in this setting. (Dynamex Operations West, Inc. v. Superior Court (Charles Lee) (2018) 4 Cal.5th 903, 941–942 (Dynamex).) We invited counsel to brief and argue the application of the Dynamex test to the issues they present.

Dynamex decides the standard to be applied “in one specific context”: “whether workers should be classified as employees or independent contractors for purposes of California wage orders, which impose obligations relating to the minimum wages, maximum hours, and a limited number of very basic working conditions . . . of California employees.” (Id. at pp. 913–914.) In reaching its decision, the court discusses and reaffirms Borello and Ayala , but adopts a different standard for the “specific context” of interpreting California wage orders. Plaintiffs’ claims are not based on alleged violations of any California wage orders. We agree with the parties that Dynamex does not establish the standard for deciding the issues they present.

[3] The court identified all of the relevant issues which must be considered in deciding the appropriateness of class certification, including whether the class representatives’ claims or defenses are typical of the class, and whether they can adequately represent the class. However, the court concluded: “In light of the foregoing findings that the misclassification issue, which will be a necessary predicate and major focus for every cause of action, will be the focus of the liability inquiry, and that this inquiry will require individualized inquiries, the court does not address plaintiffs’ individual causes of action.”

* Judge of the San Francisco Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.





Description Appellants are three Sales Representatives (SRs) and a Technical and Training Service Representative (TTR) (Plaintiffs) under contract with Hunter Engineering Company (Hunter). Plaintiffs sued Hunter on behalf of themselves and a putative class alleging various Labor Code violations and moved for class certification. The trial court considered the evidence and arguments, applied the appropriate legal standard and denied the motion. Plaintiffs dismissed without prejudice their claims under the Private Attorneys General Act (Lab. Code, § 2698 et. seq.) and appealed. We affirm.
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