39 F.4th 652
9th Cir.2022Background
- Field Asset Services, Inc. (FAS) contracts with independent vendors (sole proprietors and business entities) to perform pre-foreclosure property‑preservation services in California; FAS sets work orders, VQPs, scorecards, deadlines, and discipline policies.
- Fred Bowerman (sole proprietor) sued on behalf of himself and a putative class of 156 vendors (2009–2016), alleging willful misclassification as independent contractors and resulting failure to pay overtime and reimburse business expenses.
- The district court certified the Rule 23(b)(3) class and granted partial summary judgment to the class on misclassification and derivative overtime and §2802 expense claims; a bellwether jury later decided damages for 11 claimants.
- After summary judgment, the California Supreme Court’s Dynamex decision (ABC test) and subsequent Ninth Circuit and state developments (Vazquez, and Cal. Lab. Code §2776 business‑to‑business exception) intervened; the district court also awarded an interim $5.17M in attorneys’ fees.
- FAS appealed certification, summary judgment, and the interim fee award; the Ninth Circuit reversed certification and summary judgment, vacated the interim fee award, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Rule 23(b)(3) predominance and class certification | Classwide proof suffices because FAS had a uniform policy of misclassification; individualized damages do not defeat certification. | Individualized issues (whether each vendor worked overtime or incurred reimbursable expenses and quantifying damages) predominate; no common proof of injury. | Reversed certification: plaintiffs cannot prove liability or classwide damages by common evidence; individualized inquiries defeat predominance and Comcast requirements. |
| 2) Proper test for employee status (Dynamex ABC vs. Borello) | Dynamex (ABC) applies broadly to wage‑hour claims; plaintiffs relied on wage orders for overtime claims. | Borello governs non–wage‑order claims (e.g., §2802 expense claims); Dynamex does not apply to joint‑employment contexts; §2776 business‑to‑business exception may apply. | Expense claims governed by Borello; overtime (wage‑order rooted) claims governed by Dynamex for sole proprietors, but §2776 creates a genuine factual issue for business‑to‑business entities and joint‑employment may require separate consideration. |
| 3) Summary judgment on misclassification, overtime, and §2802 expenses | District court correctly found control and misclassification as a matter of law under Borello, making damages the only individualized phase. | Control and other Borello factors are disputed; ABC part B (usual course of business) favors employees; but parts A and C present triable issues; §2776 raises triable issues for business entities. | Reversed: genuine disputes exist under Borello (expenses) and under Dynamex/§2776 (overtime). Summary judgment improper because material factual disputes remain and liability/damages cannot be resolved classwide. |
| 4) Interim attorneys’‑fee award and appellate jurisdiction | Plaintiffs sought immediate interim fee award; district court granted ~$5.17M without disclosing in‑camera time records to defendant or notifying class. | FAS argued award was erroneous and not ripe for appeal; sought access to records and vacatur. | Ninth Circuit exercised pendent appellate jurisdiction over the interim fee award (extraordinary circumstances) and vacated it because certification and summary judgment were reversed. |
Key Cases Cited
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (class certification requires damages capable of measurement on a classwide basis)
- S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal.3d 341 (1989) (multifactor control test for employee status)
- Dynamex Operations W., Inc. v. Superior Court, 4 Cal.5th 903 (2018) (California ABC test for wage‑order worker classification)
- Leyva v. Medline Indus., Inc., 716 F.3d 510 (9th Cir. 2013) (individualized damages alone do not always defeat class certification)
- Just Film, Inc. v. Buono, 847 F.3d 1108 (9th Cir. 2017) (Comcast framework applied to predominance/injury)
- Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981 (9th Cir. 2014) (defining ‘results’ versus means in control analysis)
- Vazquez v. Jan‑Pro Franchising Int’l, Inc., 986 F.3d 1106 (9th Cir. 2021) (Dynamex retroactivity and Ninth Circuit handling)
- Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir. 2008) (district court may apply a modest percentage reduction to requested fees for inefficiency)