Espejo v. Copley Press, Inc.
221 Cal. Rptr. 3d 1
Cal. Ct. App. 5th2017Background
- Class action by former San Diego Union-Tribune home-delivery carriers alleging they were misclassified as independent contractors and seeking reimbursement of business expenses (Lab. Code §2802) and UCL restitution (Bus. & Prof. Code §17200) for the period ~Jan 2005–June 2007.
- Carriers signed form "Independent Contractor Distribution Agreement" with many unilateral provisions (hours/deadlines, approved bags, insert rules, CPT penalties, bonding/insurance, distribution-center assembly), and were paid per piece; UT controlled many delivery details and trained/supervised carriers.
- Trial court found carriers were employees under the Borello common-law control test and awarded class restitution of $3,188,445 plus prejudgment interest and attorneys’ fees; court denied enhanced-compensation defense under Gattuso.
- UT appealed multiple grounds (employee status, class certification/adequacy, scope of trial/amendment, bifurcation/jury, credits/reversals, prejudgment interest, fee award mechanics); plaintiffs cross-appealed limited fee issues.
- Appellate court affirmed employee-status finding and many procedure rulings but reversed portions of monetary award and fee award, remanding to: (1) recalculate restitution to account for documented credits/reversals and to disallow unsupported insert-charge recovery, (2) recalculate prejudgment interest, and (3) redetermine attorney fees in light of any reductions and limited-success considerations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Employee vs. independent contractor status | Carriers argued UT exercised sufficient control and secondary Borello factors support employee status | UT argued contracts and EDD guidelines showed independent-contractor status | Court affirmed: substantial evidence supports employee finding under Borello/Ayala; contract was adhesive and control retained by UT |
| Use of enhanced compensation as offset to §2802 / UCL restitution | Plaintiffs argued UT did not provide an apportionment method per Gattuso, so cannot offset restitution by pay structure | UT argued its pay incorporated expense reimbursement and invoices/credits showed it met Gattuso | Court held Gattuso requires employers to communicate apportionment method contemporaneously; UT failed to meet burden, so cannot rely on enhanced-compensation defense, but documented invoice credits/reversals must be credited against restitution |
| Scope of class trial / amendments to pleadings | Plaintiffs sought to try UCL restitution first (bifurcated) and to conform pleadings to proof for certain expense categories | UT argued certification limited issues and trial allowed improper, noncertified claims and deprived UT of jury trial | Court held bifurcation and bench trial were effectively waived/accepted by UT; trial court permissibly allowed amendment to conform to proof because UT had notice and opportunity to defend |
| Attorney fees under CCP §1021.5 (and related limits) | Plaintiffs sought lodestar plus enhancement and fees; argued public-interest factors supported full award and enhancement | UT argued §1021.5 requirements not met, fees should be reduced for limited success, and lodestar adoption/error | Court affirmed entitlement under §1021.5 but remanded to recalculate fee amount consistent with reduced monetary recovery and to consider Hensley/Ketchum limited-success adjustments and whether fee hours relate to unrelated unsuccessful claims |
Key Cases Cited
- S.G. Borello & Sons, Inc. v. Dep't of Indus. Relations, 48 Cal.3d 341 (Cal. 1989) (articulates right-to-control test and secondary factors for employee status)
- Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (Cal. 2014) (applies Borello test in class/employee-status context)
- Gattuso v. Harte‑Hanks Shoppers, Inc., 42 Cal.4th 554 (Cal. 2007) (employer may use enhanced compensation to satisfy §2802 only if apportionment method is communicated and suffices to reimburse expenses)
- Cortez v. Purolator Air Filtration Prods. Co., 23 Cal.4th 163 (Cal. 2000) (UCL restitution can include unlawfully withheld wages/benefits)
- Antelope Valley Press v. Poizner, 162 Cal.App.4th 839 (Cal. Ct. App. 2008) (similar facts; carriers held employees under common-law test)
- Gonzalez v. Workers' Comp. Appeals Bd., 46 Cal.App.4th 1584 (Cal. Ct. App. 1996) (newspaper carrier held employee for workers’ compensation purposes)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (degree of success guides fee reductions in limited-success cases)
- Ketchum v. Moses, 24 Cal.4th 1122 (Cal. 2001) (factors for lodestar adjustment and enhancement; avoid double-counting)
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (Cal. 2000) (lodestar as starting point for fee awards)