Lead Opinion
Opinion
Antеlope Valley Newspapers, Inc. (Antelope Valley), is the publisher of the Antelope Valley Press, a daily newspaper. To deliver the
The merits of the complaint are not before us. The sole question is whether this case can proceed as a class action. The trial court concluded the case could not, holding that on the critical question whether Ayala and others were employees, plaintiffs had not shown common questions predominate; to determine employee status, in the trial court’s view, would necessitate numerous unmanageable individual inquiries into the extent to which each carrier was afforded discretion in his or her work. The Court of Appeal disagreed in part, holding that the trial court had misunderstood the nature of the inquiries called for, and remanded for reconsideration of the class certification motion as to five of the complaint’s claims.
We affirm. Whether a common law employer-employee relationship exists turns foremost on the degree of a hirer’s right to control how the end result is achieved. (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989)
Factual and Procedural Background
Defendant Antelope Valley circulates the Antelope Valley Press daily to subscribers throughout Los Angeles and Kern Counties. To distribute the paper, Antelope Valley operates distribution facilities in both counties and contracts with individual carriers using a preprinted, standard form contract. Named plaintiffs Maria Ayala, Josefina Briseño, Rosa Duran, and Osman Núñez (collectively Ayala) are or were newspaper carriers for Antelope Valley.
In December 2008, Ayala sued on behalf of a putative class of Antelope Valley carriers. The complaint contends that Antelope Valley treats its carriers as independent contractors when, as a matter of law, they are employees. Consequently, Antelope Valley denies its carriers various wage and hour protections to which they are entitled. The complaint alleges unpaid overtime, unlawful deductions, failure to provide breaks, and failure to reimburse for
Ayala sought class certification. She contended the central question in establishing liability was whether carriers are employees, and that this question could be resolved through common proof, including but not limited to the contents of the standard contract entered into between Antelope Valley and its carriers. Antelope Valley opposed certification. Because of alleged individual variations in how carriers performed their work, it disagreed that the question of employee status could be resolved on a common basis. Antelope Valley further argued that even if the carriers were employees, some of the causes of аction presented additional unmanageable individual issues that should nevertheless preclude certification.
The trial court denied class certification. It concluded common issues did not predominate because resolving the carriers’ employee status would require “heavily individualized inquiries” into Antelope Valley’s control over the carriers’ work. Moreover, the claims for overtime and for meal and rest breaks would require additional claim-specific individualized inquiries. Because individual issues predominated, class resolution of the claims was not superior to individual lawsuits by each carrier.
A unanimous Court of Appeal affirmed in part and reversed in part. It agreed with the trial court that Ayala had not shown how her overtime, meal break, and rest break claims could be managed on a classwide basis. As for the remaining claims, however, it disagreed that proof of employee status would necessarily entail a host of individual inquiries. In the Court of Appeal’s view, although evidence of variation in how carriers performed their work might support Antelope Valley’s position that it did not control the carriers’ work, such evidence would not convert the critical question — how much right does Antelope Valley have to сontrol what its carriers do? — from a common one capable of answer on a classwide basis to an individual one requiring minitrials.
We granted Antelope Valley’s petition for review.
Discussion
I. Class Action Principles
“The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community
We review the trial court’s ruling for abuse of discretion and generally will not disturb it “ ‘unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions.’ ” (Brinker, supra,
II. The Test for Employee Status
We begin by identifying the principal legal issues and еxamining the substantive law that will govern. In doing so, we do not seek to resolve those issues. Rather, the question at this stage is whether the operative legal principles, as applied to the facts of the case, render the claims susceptible of resolution on a common basis. (Brinker, supra, 53 Cal.4th at pp. 1023-1025; Sav-On Drug Stores, Inc. v. Superior Court (2004)
The trial court and Court of Appeal correctly recognized as the central legal issue whether putative class members are employees for purposes of the provisions under which they sue. If they are employees, Antelope Valley owes them various duties that it may not have fulfilled; if they are not, no liability can attach. In turn, whether putative class members’ employee status can be commonly resolved hinges on the governing test for employment.
In deciding whether plaintiffs were employees or independent contractors, the trial court and Court of Appeal applied the common law test, discussed
Under the common law, “ ‘[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired ....’” (Borello, supra,
III. Predominance and Common Law Employee Status
A. Control
The trial court considered the various criteria relevant to certification, concluding the proposed class was sufficiently numerous and ascertainable and the class representatives had claims typical of the class and could adequately represent it. It further concluded, however, that common questions did not predominate; instead, “numerous individual inquiries” would be “required to determine whether carriers are member of the class,” and thus a class action was not a superior way of proceeding. This was so because the record demonstrated “heavily individualized inquiries [would be] required to conduct the ‘control test’ ” and decide the central question whether any given worker was an employee.
Significantly, what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise. (Perguica v. Ind. Acc. Com., supra, 29 Cal.2d at pp. 859-860 [“The existence of such right of control, and not the extent of its exercise, gives rise to the employer-employee relationship.”]; Empire Star Mines Co. v. Cal. Emp. Com., supra,
A court evaluating predominance “must determine whether the elements necessary to establish liability [(here, employee status)] are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence.” (Brinker, supra,
The trial court lost sight of this question. Its order reveals the dеnial of certification ultimately rested on two related determinations: (1) the record reflected considerable variation in the degree to which Antelope Valley exercised control over its carrier, and (2) the putative class as a whole was not subject to pervasive control as to the manner and means of delivering papers. Neither of these considerations resolves the relevant inquiry. Whether Antelope Valley varied in how it exercised control does not answer whether there were variations in its underlying right to exercise that control that could not be managed by the trial court. Likewise, the scope of Antelope Valley’s right to control the work does not in itself determine whether that right is amenable to common proof.
We discuss first the relationship between the right of control and the exercise of that control. The carriers’ relationship with Antelope Valley was governed by a form contract; Antelope Valley stipulated that during the relevant period two such contracts were in use. Self-evidently, “[s]uch agreements are a significant factor for consideration” in assessing a hirer’s right to control a hiree’s work. (Tieberg v. Unemployment Ins. App. Bd., supra,
At the certification stage, the importance of a form contract is not in what it says, but that the degree of control it spells out is uniform across the class. Here, for example, the two form contracts address, similarly for all carriers, the extent of Antelope Valley’s control over what is to be delivered, when, and how, as well as Antelope Valley’s right to terminate the contract without cause on 30 days’ notice.
The trial court here afforded only cursory attention to the parties’ written contract, instead concentrating on the particulars of the parties’ many declarations and detailing a dozen or so ways in which delivery practices, or Antelope Valley’s exercise of control over those practices, varied from carrier to carrier — e.g., whether carriers were instructed on how to fold papers, whether they bagged or “rubber banded” papers, and whether they followed
This is not to say the parties’ course of conduct is irrelevant. While any written contract is a necessary starting point, Tieberg recognizes the rights spelled out in a contract may not be conclusive if other evidence demonstrates a practical allocation of rights at odds with the written terms. (Tieberg v. Unemployment Ins. App. Bd., supra,
Relatedly, the existence of variations in the extent to which a hirer exercises control does not necessarily show variаtion in the extent to which the hirer possesses a right of control, or that the trial court would find any such variation unmanageable. That a hirer may monitor one hiree closely and another less so, or enforce unevenly a contractual right to dictate the containers in which its product is delivered, does not necessarily demonstrate
With one exception, the trial court considered only variations in the actual exercise of control
We next discuss the relationship between the right of control and the issue for certification purposes, variation in that right. After identifying various differences in how carriers delivered papers, the trial court concluded “the putative class of [Antelope Valley] newspaper carriers was not subject to the ‘pervasive and significant control’ [of Antelope Valley] over the means and manner by which they performed their work.” Consequently, the court held, “[t]he evidence before the Court demonstrates that there is no commonality regarding the right to control.” The conclusion does not follow from the premise; indeed, as we discuss, the conclusion is a contradiction of the premise.
Preliminarily, whether the court’s premise (that carriers are not subject to pervasive control) is intended to reflect a finding about the limits of Antelope Valley’s right to control its carriers’ work or, like much of the court’s
The extent of Antelope Valley’s legal right of control is a point of considerable dispute; indeed, it is likely the crux of the case’s merits. To address such an issue on a motion for class certification is not necessarily erroneous. We recently reaffirmed that a court deciding a certification motion can resolve legal or factual disputes: “To the extent the propriety of certification depends upon disputеd threshold legal or factual questions, a court may, and indeed must, resolve them.” (Brinker, supra,
Certification of class claims based on the misclassification of common law employees as independent contractors generally does not depend upon deciding the actual scope of a hirer’s right of control over its hirees. The relevant question is whether the scope of the right of control, whatever it might be, is susceptible of classwide proof. Bypassing that question, the trial court instead proceeded to the merits.
The difficulties with the court’s ruling on class certification thus lie not in the answers given, but the questions asked. A certification decision is reviewed for abuse of discretion, but when the supporting reasoning reveals the court based its decision on erroneous legal assumptions about the relevant questions, that decision cannot stand. (Brinker, supra,
B. Secondary Factors
After concluding variations in control precluded class certification, the trial court noted as well individual variations in a handful of the secondary factors that supplement the central inquiry into the right of control (see Borello, supra, 48 Cal.3d at pp. 350-351; Tieberg v. Unemployment Ins. App. Bd., supra,
Preliminarily, we caution that courts assessing these secondary factors should take care to correctly identify the relevant considerations. Here, for example, the trial court noted variation in the “place of work.” The inquiry that sheds light on a hiree’s common law employee status, however, is into who provides the place of work, the hirer or hiree (Borello, supra,
In evaluating how a given secondary factor may affect class certification, a court must identify whether the factor will require individual inquiries or can be assessed on a classwide basis. In a case where every class member performs the same tasks, some factors will always be common, such as the kind of occupation and the skill it requires. (Borello, supra,
Once common and individual factors have been identified, the predominance inquiry calls for weighing costs and benefits. “The ‘ultimate question’ the element of predominance presents is whether ‘the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.’ ” (Brinker, supra,
When the issue of common law employment is involved, that weighing must be conducted with an eye to the reality that the considerations in the multifactor test are not of uniform significance. Some, such as the hirer’s right to fire at will and the basic level of skill called for by the job, are often of inordinate importance. (See Burlingham v. Gray, supra,
Accordingly, the impact of individual variations on certification will depend on the significance of the factor they affect. Some may be of no
Here, the trial court simply recited secondary factor variations it found without doing the necessary weighing or considering materiality. This was understandable, as the court had already determined substantial variations in control existed, a determination that, had it been sound, would have been sufficient to justify denying class certification and thus obviated any need for further inquiry. On remand, any consideration of common and individual questions arising from the secondary factors should take into account the likely materiality of matters subject to common or individual proof.
Disposition
We affirm the Court of Appeal’s judgment and remand for further proceedings not inconsistent with this opinion.
Cantil-Sakauye, C. J., Corrigan, J., Liu, J., and Kennard, J.,
Notes
While the trial court also concluded class treatment was not superior to other means of resolving the complaint’s claims, that determination was wholly derivative of its conclusion that individual questions of fact and law would predominate over common ones. Our opinion therefore focuses on the trial court’s predominance analysis.
The worker’s corresponding right to leave is similarly relevant: “ ‘An employee may quit, but an independent contractor is legally obligated to complete his contract.’ ” (Perguica v. Ind. Acc. Com. (1947)
As Justice Chin’s concurrence notes, Borello recognized “the concept of ‘employment’ embodied in the [Workers’ Compensation] Act is not inherently limited by common law principles” (Borello, supra,
The exception: As the trial court’s order notes, one of the two exemplars of the form contract used during the class period requires carriers to pick up papers from the designated location no later than 3:00 a.m. The other has no similar deadline.
Assuming again one were to treat the trial court’s absence-of-control determination as speaking to the absence of a sufficient right to control, and not merely to an absence of the exercise of control.
Retired Associate Justice of the Supreme Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Concurrence Opinion
Concurring. — I agree with the majority on the following points: First, whether one retained to provide compensated service to another is an employee or an independent contractor for purposes of the common law depends primarily on the degree to which the hirer has the legal right to control the manner and means of performance, as opposed to the extent to which the hirer exercises (or attempts to exercise) such control. Second, where a written contract specifies the terms of the relationship between hirer and hiree, setting out their respective degrees of control over the work, such a contract is generally the most significant determinant of whether an employer-employee relationship has arisen. Third, whether the issue of employee status can be resolved on a classwide basis thus depends on the
Applying these principles, I concur in the majority’s conclusion that the trial court’s denial of class certification proceeded on incorrect principles. As the majority indicates, the trial court erred by focusing its attention exclusively on evidence that defendant actually imposed more detailed supervisory control over some of its contract newspaper carriers than others, and that the degree of such actual supervision varied widely from carrier to carrier. I therefore join the majority’s holding that the Court of Appeal’s judgment, overturning the trial court’s order and remanding for further proceedings, should be affirmed. In my view, nothing more need be said to reach this conclusion, and I therefore express no opinion on any other matter discussed by the majority.
Corrigan, J., concurred.
Concurrence Opinion
Concurring. — I agree that the trial court committed error in the course of ruling on the class certification motion of named plaintiffs Maria Ayala, Josefina Briseño, Rosa Duran, and Osman Núñez, that remand for further consideration of the motion is necessary, and that affirmance of the Court of Appeal’s judgment is appropriate. The record indicates that the trial court did not adequately consider the extent to which there will be common proof regarding a central factor in determining whether carriers who deliver newspapers for defendant Antelope Valley Newspapers, Inc. (Antelope Valley), are employees or independent contractors: the extent to which Antelope Valley has the right to control the manner and means by which the carriers accomplish their work. The record also suggests that the trial court did not adequately perform the weighing of common and individualized proof necessary to determine whether common issues predominate.
However, in several respects, I question the majority’s legal analysis. I also do not endorse its dicta regarding some of the secondary factors that are relevant to determining whether someone who provides service to another is an employee or an independent contractor. (Maj. opn., ante, at pp. 538-540.) I therefore concur only in the judgment.
I. Factual and Procedural Background.
In December 2008, plaintiffs sued on behalf of a putative class of newspaper carriers, alleging that Antelope Valley improperly treated them as independent contractors instead of employees and improperly denied them various statutory wage and hour protections. The complaint alleged numerous
Antelope Valley opposed certification, arguing in relevant part that there was insufficient commonality regarding proof of its right to control the means and manner by which its carriers accomplish their work, its actual exercise of control, and various secondary factors that, under S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989)
The trial court denied the certification motion, finding that plaintiffs had failed to show that (1) “common questions of law or fact predominate,” (2) “a class action would be ‘suрerior’ to individual lawsuits,” or (3) despite the “highly individualized” nature of “the issues affecting the class,” “manageability is achievable through the use of’ various procedural tools, including questionnaires, surveys, and representative sampling. As to the claims still at issue in this appeal, the Court of Appeal reversed, believing that the trial court had based its ruling on “variations in how the carriers performed their jobs,” and finding that “those variations do not present individual issues that preclude class certification.” We then granted Antelope Valley’s petition for review.
II. The Legal Inquiry.
As relevant to this appeal, plaintiffs, as the proponents of certification, had the burden in the trial court to demonstrate that “ ‘questions of law or fact common to the class predominate over the questions affecting the individual members.’ ” (Lockheed Martin Corp. v. Superior Court (2003)
The decision to grant or deny a certification motion “rests squarely within the discretion of the trial court” because the trial court is “ ‘ideally situated to evaluate the efficiencies and practicalities of permitting group action.’ ” (Fireside Bank v. Superior Court (2007)
As we have recognized, the predominance inquiry “may be enmeshed with” issues “affecting the merits of a case.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th at pp. 429, 443 [
The issue in Borello was whether, for purpose of workers’ compensation coverage, certain agricultural laborers were employees or independent contractors. (Borello, supra,
Consistent with Borello, in determining whether common questions of law or fact predominate, the trial court principally focused on Antelope Valley’s “right to control.” It found that the evidence the parties had submitted “demonstrates that there is no commonality regarding the right to control” and that “heavily individualized inquiries [will be] required to conduct the ‘control test.’ ” Regarding the secondary factors, the trial court found that “[s]ome carriers use helpers or substitutes”; “some carriers have multiple clients and customers; some have distinct occupation or delivery businesses; there is no commonality in the instrumentalities, tools, and place of work;
III. The Trial Court Erred in Making Its Ruling.
I agree with the majority that the trial court abused its discretion in making its mling and that remand is appropriate for further consideration of the certification motion. As noted above, in denying certification, the trial court found that the evidence “demonstrates that no commonality exists regarding the right to control.” However, the evidence plaintiffs submitted and principally relied on in support of their certification motion — including the form contracts between Antelope Valley and its carriers and the delivery instructions (known as “bundle tops”) that Antelope Valley typically prepared and provided to all carriers each day — shows that there is, in fact, some commonality in the proof regarding Antelope Valley’s right of control. Moreover, there surely is some commonality of proof regarding at least some of the secondary factors that are relevant under Borello to determine whether someone is an employee or independent contractor. Thus, in terms of proof, the trial court’s “no commonality” finding lacks support in the record and reflects insufficient consideration of the common proof plaintiffs submitted.
In addition, as we have explained, “ ‘that each [putative] class member might be required ultimately to justify an individual claim does not necessarily preclude maintenance of a class action.’ [Citation.] Predominance is a comparative concept, and ‘the necessity for class members to individually establish eligibility and damages does not mean individual fact questions predominate.’ [Citations.] Individual issues do not render class certification inappropriate so long as such issues may effectively be managed. [Citations.]”
IV. The Majority’s Opinion.
Although I agree with the majority’s result, I question several aspects of its analysis. I begin with the fundamental rule that “[o]n appeal, we presume that a judgment or order of the trial court is correct, ‘ “[a]ll intendments and presumptions are indulged to support it on matters as to which the record is silent, and еrror must be affirmatively shown.” ’ [Citation.]” (People v. Giordano (2007)
More specifically, I find many of the numerous criticisms the majority levels at the trial court’s ruling to be off the mark. For example, I disagree that the trial court “ultimately rested” its order on variations “in the degree to which Antelope Valley exercised control over its carriers” and the circumstance that “the putative class as a whole was not subject to pervasive control as to the manner and means of delivering papers,” thus “los[ing] sight” of the relevant question “at the certification stage” (maj. opn., ante, at p. 534): “is there a common way to show Antelope Valley possessed essentially the same legal right of control with respect to each of its carriers” (id. at p. 533). As noted above, in finding insufficient commonality, the trial court expressly considered the extent to which the contracts showed either variations or
Contrary to the majority’s criticism, the trial court’s analysis was completely consistent with — indeed, was actually required by — Borello. There, we stressed that the right-to-control test “is not necessarily the decisive test” (Borello, supra,
Nor do I agree with the majority that the trial court, “by finding” that “variations in the actual exercise of control” were “sufficient to defeat certification, erroneously treated them as the legal equivalent of variations in the right to control.” (Maj. opn., ante, at p. 536.) The majority’s view appears to stem from its belief that the determination of whether the carriers were employees or independent contractors turns only on Antelope Valley’s right to control. As explained above, Borello establishes otherwise. So does another decision on which Borello extensively relied and which the majority cites: Tieberg v. Unemployment Ins. App. Bd. (1970)
I also do not entirely agree with the majority’s assertion that, “[a]t the certification stage, the importance of a form contract is not in what it says, but that the degree of control it spells out is uniform across the class.” (Maj. opn., ante, at p. 534.) As noted above, to assess predominance, a court “must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence. [Citation.]” (Brinker, supra,
I also disagree we should limit our analysis to whether the trial court abused its discretion in applying the “common law test” for employment, and
The lower courts’ application of all the Borello factors is consistent with the arguments the parties made below. In the briefs they filed in support of their certification motion and during argument on the motion, plaintiffs argued that “[n]ewspaper delivery is an integral part of [Antelope Valley’s] business” and that “the carriers perform an integral part of [Antelope Valley’s] newspaper business.”'“[W]hether the service rendered is an integral part of the alleged employer’s business” is one of the FLSA factors Borello adopted. (Borello, supra,
Finally, I do not endorse the majority’s dicta regarding the “interplay” between “the predominance inquiry” and the Restatement factors in determining whether someone is an employee or an independent contractor. (Maj. opn., ante, at p. 538.) In light of the majority’s conclusion, that discussion is unnecessary. Substantively, it is also questionable in at least one respect. The majority asserts that certain Restatement “factors that might on their face seem to turn solely on the peculiarities of the parties’ particular arrangement, the Restatement intended to depend as well on general custom with respect to the nature of the work.” (Maj. opn., ante, at p. 538.) However, the Restatement comment the majority quotes in support of this assertion describes, not multiple “factors,” but only one factor: whether “ ‘the parties believe or disbelieve that the relation of master and servant exists ....’” (Maj. opn., ante, at pp. 538-539.) Moreover, the comment indicates, not that this factor depends in part “on general custom with respect to the nature of the work” (maj. opn., ante, at p. 538), but that a separate factor is “community custom in thinking that a kind of service ... is rendered by servants” (Rest.2d Agency, § 220, com. m, p. 492; see also id., com. h, p. 489 [listing as separate factors “the fact that the community regards those doing such work as servants” and “the belief by the parties that there is a master and servant relation”]).
For the preceding reasons, I concur in the judgment.
Like its final written ruling, the trial court’s written tentative ruling did not mention the “common law.” It did, however, state the court’s intention to deny the certification motion because “many” of the putative class members “will be found to be true independent contractors” because they do not “satisfy the Borello factors for determination of employee vs. independent contractor status.”
My conclusion reflects only fidelity to the record, not, as the majority asserts, any “assumption” on my part. (Maj. opn., ante, at p. 532, fn. 3.) In determining whether an order denying certification was error, an appellate court should apply “the theory on which plaintiffs pursued class certification.” (Fairbanks v. Farmers New World Life Ins. Co. (2011)