40 Cal.App.5th 1131
Cal. Ct. App.2019Background
- Plaintiff Francisco Gonzales sued San Gabriel Transit, Inc. (SGT) in a putative class action alleging drivers were misclassified as independent contractors and asserting multiple Labor Code and Wage Order No. 9-based claims; he sought certification of ~560 drivers.
- The trial court denied class certification for lack of commonality and typicality, relying on variations among multiple lease agreements and differences in drivers’ work (Access, school runs, LAX, traditional taxi).
- While the appeal was pending the California Supreme Court decided Dynamex, adopting the three‑part "ABC" test for determining employee status under wage orders.
- On appeal the court concluded Dynamex applies retroactively to pending wage‑order wage-and-hour litigation and held the ABC test governs Labor Code claims that enforce or are predicated on wage orders.
- The court ruled Borello remains the proper test for Labor Code claims that are not rooted in or predicated on wage orders.
- The matter was reversed and remanded: the trial court must (a) identify which Labor Code claims implicate wage orders, (b) apply ABC to those claims and Borello to the others, (c) reconsider commonality and typicality, and (d) assess superiority if certification is warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Retroactivity of Dynamex to pending cases | Dynamex clarifies existing law and should apply to pending wage‑order cases | SGT broadly reserved the point but did not substantively argue against retroactivity | Dynamex applies retroactively to pending wage‑order wage‑and‑hour litigation; SGT forfeited any substantive retroactivity challenge |
| Whether ABC applies to Labor Code claims that enforce or are predicated on wage orders | ABC should govern employee/independent‑contractor analysis for wage‑order‑rooted Labor Code claims | SGT argued some statutory claims must be analyzed under Borello (e.g., certain overtime/exclusion arguments) | ABC applies to Labor Code claims that enforce or are predicated on wage orders (harmonizing wage orders and Labor Code enforcement) |
| Whether Borello remains for non‑wage‑order Labor Code claims | Gonzales urged harmonized approach for overlapping claims | SGT argued non‑wage‑order statutory claims should be decided under Borello | Borello remains the appropriate test for Labor Code claims that are not rooted in or predicated on wage orders |
| Validity of trial court’s denial of class certification | Trial court applied the wrong legal framework and should reassess commonality/typicality under ABC (where applicable) | SGT relied on heterogeneous contracts, differing control across service types, and individualized defenses to defeat class treatment | Reversed and remanded: trial court must reapply ABC/Borello as appropriate, reassess commonality/typicality and superiority, and may redefine subclasses or permit additional representatives if needed |
Key Cases Cited
- Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. 2018) (adopted the three‑part ABC test for employee status under IWC wage orders)
- Martinez v. Combs, 49 Cal.4th 35 (Cal. 2010) (wage orders define "employ" and inform employer liability for wage‑and‑hour claims)
- S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, 48 Cal.3d 341 (Cal. 1989) (multifactor common‑law test for employee/independent‑contractor status)
- Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (Cal. 2014) (applied Borello in class certification context; guidance on community‑of‑interest factors)
- Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (Cal. 2012) (framework for class certification in wage‑and‑hour litigation and harmonizing wage orders with statutes)