Ivan Iontchev v. Aaa Cab Service, Inc.
685 F. App'x 548
| 9th Cir. | 2017Background
- Consolidated class action by taxi drivers ("Drivers") against AAA Cab alleging violations of the FLSA and Arizona minimum-wage laws for misclassification as independent contractors.
- District court denied Drivers' motion for partial summary judgment and granted summary judgment to AAA Cab; Drivers appealed. Court of Appeals has jurisdiction under 28 U.S.C. § 1291.
- Central legal question: whether Drivers were employees or independent contractors under the "economic reality" test; AAA Cab bore the burden to prove independent-contractor status by clear and convincing evidence under Arizona law and Ninth Circuit standards.
- Factual points supporting independent-contractor classification: AAA Cab exercised little control over Drivers' schedules and hours, kept few work/hour records, and mainly enforced airport rules rather than directing day-to-day operations.
- Drivers leased cabs (paying flat fees), kept fares (except limited credit-card and airport fees), could work off-site, develop their own clientele, hire relief drivers, and supplied many incidentals (gas, cleaning, business cards).
- Applying the totality of circumstances and the six-factor test, the court concluded Drivers were not economically dependent on AAA Cab and thus were independent contractors under the FLSA and Arizona law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Drivers are employees under the FLSA and Arizona law | Drivers argued they were economically dependent on AAA Cab and thus employees entitled to wages | AAA Cab argued Drivers were in business for themselves when leasing cabs and retained operational control over earnings and hours | Drivers are independent contractors; AAA Cab met burden by clear and convincing evidence |
| Whether AAA Cab exercised sufficient control to create employment | Drivers claimed airport rules and AAA policies established control amounting to employment | AAA Cab showed it did not set schedules, attendance logs, or minimum hours and had limited disciplinary reach | Control was minimal; factor favors independent-contractor status |
| Whether Drivers had opportunity for profit/loss and managerial skill | Drivers argued limited avenues for profit due to lease and airport fees | AAA Cab showed Drivers could increase profit via hours, routes, clientele, relief drivers, and off-airport work | Opportunity for profit/loss rested with Drivers; factor favors independent-contractor status |
| Whether service was integral and required special skill such that employment is likely | Drivers argued taxi service is integral to AAA Cab's business, implying dependence | AAA Cab conceded integrality but emphasized Drivers’ business independence and lack of required special skill | Integrality acknowledged but outweighed by other factors; overall economic reality shows independent contractors |
Key Cases Cited
- Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28 (U.S. 1961) (establishes the "economic reality" test for employee status)
- Bartels v. Birmingham, 332 U.S. 126 (U.S. 1947) (employees are those economically dependent on the business they serve)
- Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748 (9th Cir.) (totality-of-circumstances test for economic dependence)
- United States v. Jordan, 256 F.3d 922 (9th Cir. 2001) (defines clear and convincing standard as "highly probable" or "reasonably certain")
- Donovan v. Sureway Cleaners, 656 F.2d 1368 (9th Cir. 1981) (discusses when absence of special skill supports independent-contractor finding)