Espejo v. The Copley Press, D065397

Background

Class action by former San Diego Union‑Tribune home delivery carriers who signed "Independent Contractor Distribution Agreement" contracts with The Copley Press, Inc. (UT) alleging unpaid business expense reimbursement and UCL violations (class period effectively Jan 2005–June 2007).
Trial court found the carriers were employees (not independent contractors) under Borello common‑law test and certified class members who contracted directly with UT; liability was adjudicated in a bifurcated bench trial on the UCL (§ 17200) claim first.
Plaintiffs pursued restitution under § 17200 (based on Labor Code § 2802 duties) for several expense categories; trial court awarded $3,188,445 in principal restitution plus prejudgment interest and substantial attorney fees under Code Civ. Proc. § 1021.5.
UT appealed, challenging employment status, class certification adequacy and scope, management of individualized issues, bifurcation/jury waiver, enhanced‑compensation offsets, admissibility/quantification of credits and reversals, insert‑charge award, prejudgment interest, and the § 1021.5 fee award. Plaintiffs cross‑appealed limited fee points.
Court of Appeal affirmed the employee finding and many procedural rulings but reversed in part: remanded to re‑calculate restitution, prejudgment interest, and attorney fees to account for (1) documented invoice credits/reversals and (2) lack of substantial evidence for the insert‑charge award; directed reconsideration of fees in light of any reduction in monetary recovery and limited success.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Employee v. independent contractor status	Carriers were employees because UT controlled manner/means and secondary Borello factors favored employment	UT argued insufficient control and EDD guidelines support independent contractor status	Court of Appeal: substantial evidence supports employee finding under Borello; EDD regs not controlling beyond Borello factors
Class representative adequacy / decertification	Named reps were adequate and typical; class counsel competent	UT argued reps inadequate (few testified; some uninformed) and class should be decertified	Court: no changed circumstances; class rep adequacy upheld; decertification denied
Trial scope / amendment to conform to proof	Plaintiffs could try § 17200 restitution for multiple expense categories and amend complaint to conform where UT had notice	UT argued trial exceeded certified issues and amendment prejudiced UT	Court: trial management discretion upheld; amendment to include carrier collect, insert charges, warehouse rent allowed (UT had notice)
Enhanced compensation (Gattuso) defense	Plaintiffs: UT failed Gattuso apportionment requirement and cannot offset via enhanced pay; § 17200 restitution for § 2802 violations available	UT: paid enhanced compensation that reimbursed expenses and satisfied Gattuso; any awarded restitution should be offset by credits/reversals and gas incentives	Court: Gattuso requires employer communication of apportionment at/near payment; UT did not meet burden to prove classwide apportionment. But court must reduce restitution by documented, readily identifiable invoice credits/reversals and documented gas/service credits on remand
Use of classwide estimates for mileage	Plaintiffs used route mileage and IRS rates to estimate class mileage; individual proof impractical	UT argued mileage proof was too individualized and IRS rate unreliable without offsets	Court: classwide reasonable estimation permitted (actual miles not provable exactly); IRS rate acceptable; remand to deduct documented gas credits/payments
Award for insert charges	Plaintiffs sought recovery for insert charges	UT argued inserts were not necessary § 2802 expenses and plaintiff's 14% multiplier derived from a single invoice was unsupported	Court: insert‑charge award reversed—not supported by substantial evidence
Prejudgment interest on UCL restitution	Plaintiffs sought full prejudgment interest to make them whole	UT argued § 17200 does not authorize prejudgment interest; amounts were unliquidated	Court: equitable discretion permits prejudgment interest as part of restitution; award not barred but remand to recalculate interest after award redetermination
Attorney fees under § 1021.5	Plaintiffs sought lodestar + enhancement; argued private‑attorney‑general factors met	UT contested entitlement, relation of successful/unsuccessful claims, limited success reduction, and lodestar adoption	Court: § 1021.5 award permissible; trial court applied financial‑burden analysis reasonably and adopted lodestar; remanded to reconsider fee amount in light of any reduced recovery and to assess reduction for limited or unrelated unsuccessful claims

Key Cases Cited

S.G. Borello & Sons, Inc. v. Dept. of Indus. Relations, 48 Cal.3d 341 (Cal. 1989) (common‑law right‑to‑control test and secondary factors for employee status)
Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (Cal. 2014) (applying Borello in class certification and common issues analysis)
Gattuso v. Harte‑Hanks Shoppers, Inc., 42 Cal.4th 554 (Cal. 2007) (employer may satisfy § 2802 by enhanced compensation only if apportionment method is communicated and sufficient)
Cortez v. Purolator Air Filtration Prods. Co., 23 Cal.4th 163 (Cal. 2000) (UCL restitution can reach unlawfully withheld wages; UCL does not award damages)
Antelope Valley Press v. Poizner, 162 Cal.App.4th 839 (Cal. Ct. App. 2008) (persuasive authority finding carriers were employees under similar facts)
Gonzales v. Workers' Comp. Appeals Bd., 46 Cal.App.4th 1584 (Cal. Ct. App. 1996) (newspaper carrier employment analysis under Borello factors)
Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663 (Cal. Ct. App. 2006) (UCL restitution must be supported by measurable evidence)
PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (Cal. 2000) (lodestar method and factors for attorney fee awards)
Ketchum v. Moses, 24 Cal.4th 1122 (Cal. 2001) (factors for adjusting lodestar and standards for fee enhancements)