141 F. Supp. 3d 974
N.D. Cal.2015Background
- Plaintiffs Curtis Johnson and Anthony Aranda are mortuary-transportation drivers who allege they were misclassified as independent contractors by Serenity Transportation, Inc.; they bring a putative class action including 40+ drivers.
- Defendants include Serenity Transportation and its owner David Friedel, plus customer entities (SCI, SCI California, Neptune, Lifemark) and Santa Clara County (the "Customer Defendants").
- Plaintiffs allege Serenity/Friedel recruit, schedule, supervise, and control drivers (dress code, dispatch, equipment leases) and that Friedel is Serenity’s alter ego and sole shareholder who advised reclassification.
- Plaintiffs allege drivers were paid a flat per-dispatch rate set by Defendants and not paid for waiting/on-call time, minimum wage, or overtime, and that Customer Defendants promulgated detailed policies governing drivers while on their premises.
- Procedurally: Defendants moved to dismiss the Third Amended Complaint (TAC). The court GRANTED IN PART and DENIED IN PART: it upheld claims against Friedel (alter ego and §2753 advice liability) but DISMISSED claims against the Customer Defendants for joint-employer liability (with leave to amend). The on-call portion of the on-call/standby claim was dismissed with leave to amend; the overtime and wage-statement claims survived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Friedel can be held liable as alter ego of Serenity | Friedel dominated and controlled Serenity (sole shareholder, failed corporate formalities, inadequate capitalization) so veil should be pierced | Presumption against piercing; plaintiffs only pled conclusory allegations | Pleading sufficient at this stage; alter ego adequately alleged and claim against Friedel can proceed |
| Whether Friedel is liable under Cal. Labor Code § 2753 for advising misclassification | Friedel (as board member/owner) advised reclassification and personally benefited (sole shareholder) so §2753 applies | §2753(b) exempts a person who "provides advice to his or her employer" (i.e., an employee), so Friedel as CEO/employee cannot be liable; also no allegation he received consideration | Court permits claim to proceed: §2753 may reach an officer/director who advised in that capacity and allegations of unjust enrichment suffice at pleading stage |
| Whether Customer Defendants are joint employers under the FLSA (and related state claims) | Customer Defendants exercised control over drivers’ work (policies, response times, training, dress code), set pay structure (flat per dispatch), and shared control so are joint employers | Customer Defendants lacked hiring/firing power, did not set rates or maintain employment records; Serenity/Friedel hired, supervised, paid, and fired drivers — customers only limited control | TAC fails to plausibly plead joint-employer status for SCI, SCI California, Neptune, Lifemark; County has some allegations supporting control but overall claims against Customer Defendants dismissed with leave to amend |
| Whether on-call/standby time is compensable under California law | Drivers were assigned 24-hour shifts, required to be available and respond quickly on employer radios, and therefore waited to be engaged (compensable) | Allegations are vague about response time, frequency of calls, and restrictions on personal activities — plaintiffs did not show they were "engaged to wait" | On-call/standby claim (pay for waiting) dismissed as pleaded (insufficient facts on restrictive response limits), but plaintiff may amend; overtime claim survives based on alleged number/length of runs |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard for federal claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (complaints must plead factual matter permitting reasonable inference of liability)
- Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465 (Ninth Circuit four-factor economic-reality test for FLSA employment/joint-employer analysis)
- Moreau v. Air France, 356 F.3d 942 (Ninth Circuit emphasizing Bonnette factors and focusing analysis on control)
- Torres-Lopez v. May, 111 F.3d 633 (additional factors for joint-employer analysis)
- Martinez v. Combs, 49 Cal.4th 35 (California IWC wage order definitions govern who is an "employer" for wage claims)
- S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (California common-law right-to-control multi-factor test)
- Mendiola v. CPS Sec. Solutions, Inc., 60 Cal.4th 833 (California standards for compensable on-call/standby time; focus on employer control)
- Morillion v. Royal Packing Co., 22 Cal.4th 575 (employer control determinative for on-call compensability)
- Gonzalez v. Downtown LA Motors, LP, 215 Cal.App.4th 36 (piece-rate systems and calculation of regular rate/overtime under California law)