AMENDED ORDER RE: PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE FIRST, SECOND, THIRD, FOURTH AND FIFTH CLAIMS FOR RELIEF
I.
INTRODUCTION 1
Apex Clothing Corporation sews garments for clothing manufacturers, including Bebe Stores, Inc., with whom it does a majority of its business. Plaintiff Zhao, and other immigrant workers who were employed by Apex to sew garments, claim that Apex violated various federal and state labor laws, including the Fair Labor Standards Act (FLSA), regarding wages and working conditions. In the present motion for summary judgment, Plaintiffs seek a declaration that, pursuant to the FLSA, Bebe Stores is a “joint employer” with Apex and should be held responsible for Apex’s labor law violations.
The joint employer determination requires a fact intensive inquiry into the relationship between Bebe Stores and Apex for the purpose of applying the “economic reality test.”
Torres-Lopez v. May,
FACTUAL BACKGROUND
A. The Parties
Plaintiffs are garment workers who worked at Apex as single needle operators six days a week for various time periods from November 6, 2000 to August 13, 2001. (Statement of Undisputed Facts (“SUF”) ¶¶ 16-17). Plaintiffs sewed exclusively for Bebe Stores at the Apex factory. (Id. ¶ 18).
Bebe Stores designs, manufactures, and retails garments with the following labels: “bebe,” “bebe moda,” “bbsp,” and “bebe san francisco.” (Id. ¶¶ 1, 2).
Apex Clothing Corporation (“Apex”) is a garment contractor that made pants, tops, dresses and dressing room curtains for Bebе Stores. (Id. ¶¶ 3-5). The sole owners, officers, directors, and shareholders of Apex have been Katie Chen, Edmund Chen, and Victor Chan. (Id. ¶ 6).
B. Bebe Store’s Relationship with Apex and its Employees
Apex’s work for Bebe Stores never constituted more than a small portion of the garments produced for Bebe; Apex was one of approximately 50 garment factories that Bebe Stores contracted with to manufacture its garments during the applicable time period. (Genuinе Issues of Material Fact (“GIMF”) ¶¶ 131, 134). Between 1998 and the present, Apex produced garments exclusively for Bebe Stores for some periods of time and at all other times did the majority of its production for Bebe. (SUF ¶ 10). Bebe Stores issued a steady stream of work to Apex, regularly monitored the orders it placed at Apex, and was the primary source of Apex’s income. (Id. ¶¶ 12, 105). Bebe Stores’ quality control personnel inspected garments at Apex at the beginning, middle, and end of the garment assembly process as it did at other facilities that manufactured Bebe garments. (Id. ¶ 56).
Bebe Stores did not exercise control over either Apex or its workers. Bebe did not assist Apex in any way with the lease or purchase of Apex’s factories in El Monte, California. (GIMF ¶ 149). Nor did Bebe invest in Apex’s sewing machines or other instruments and tools needed to assemble garments for Bebe Stores and Apex’s other manufacturers. (Id. ¶ 151). Bebe Stores did not have the authority to recruit, hire, fire, layoff or recall Apex’s employees, did not maintain Apex’s employment records, and did not dictate the payment or employment conditions of Apex workers. (Id. ¶¶ 137, 138). Finally, Bebe Stores did not control the assignments of Apex employees or determine which shift an employee worked. (Id. ¶ 139)
In 1998, after Bebe Stores retained Apparel Resources, Inc. (ARI) to monitor and audit Bebe Stores’ contractors, in accordance with U.S. Department of Labor suggestions, ARI began conducting quarterly audits of Apex. (Id. ¶¶ 143, 145). Bebe relied on ARI to ensure that Apex and other garment factories that produce Bebe garments comply with applicable state and federal labor laws. (SUF ¶ 113). ARI’s surveillance procеdures include entering a garment factory at will, observing activities of the workers, inspecting the time clock, and reviewing time cards. (Id.). Payroll records of individual workers, including their identities, are generally made freely accessible to ARI, which is free to interview those workers. (Id.). During inspections, the ARI auditor also tells garment factories what posters and signs must be posted, takes photographs, physically tours factory fаcilities, and visits workers at their sewing machines. (SUF ¶ 121).
ANALYSIS
A. Legal Standard for Summary Judgment
Summary judgment is proper where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Thus, when addressing a motion for summary judgment, this Court must decide whether there exist “any genuine factual issues that properly сan be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.”
Anderson v. Liberty Lobby, Inc.,
In this case, the Court finds that the material facts are not in dispute. The Court therefore considers whether those facts demonstrate that Bebe Stores, along with Apex, jointly employed Plaintiffs.
B. Joint Employer Status
1. The Law
Two or more employers may jointly employ an individual for the purposes of the FLSA.
Bonnette v. Cal. Health and Welfare Agency,
The Ninth Circuit has, at various times, identified different factors as relevant to the test of whether an employment relationship exists for purposes of the FLSA. For example, in
Real v. Driscoll Strawberry Assoc., Inc.,
1) the degree of the alleged employer’s right to control the manner in which the work is to be performed;
2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill;
3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers;
4) whether the service rendered requires a special skill;
5) the degree of permanence of the working relationship; and
6) whether the service rendered is an integral part of the alleged employer’s business.
Id. at 754. This was far from the finаl word on the subject, however.
Four years later, in
Bonnette v. Cal. Health and Welfare Agency,
Most recently, in
Torres-Lopez,
the Ninth Circuit confronted the joint employer issue in a suit brought under the FLSA and the Agricultural Workers Protection Act (AWPA). In that case, a grower, Bear Creek Farms, entered into. an agreement with a farm labor company, Ag-Labor, to provide workers to harvest Bear Creek’s cucumber crop. Some of the workers brought suit against the grower for labor law violations on the theory that the grower was a joint employer with Ag-Labor. The District Court found that the grower was not a joint employer, and the plaintiffs appealed. In reviewing the trial court’s decision, the Ninth Circuit identified five “regulatory factors,” established by the Department of Labor, to be evaluated in assessing whether or not a joint employment relationship existed, but emphasized that these factors were not exhaustive.
Torres-Lopez,
The “nonregulatory factors” considered [in earlier cases] in deciding whether a joint employment relationship existed include:
(1) whether the work was a “specialty job on the production line;”
(2) whether responsibility under the contracts between a labor contractor and an employer pass from one labor contractor to another without “material changes;”
(3) whether the “premises and equipment” of the employer are used for the work;
(4) whether the employees had a “business organization that could or did shift as a unit from one [worksite] to another;”
(5) whether the work was “piecework” and not work that required “initiative, judgment or foresight;”
(6) whether the employee had an “opportunity for profit or loss depending upon [the alleged employee’s] managerial skill;”
(7) whether there was “permanence [in] the working relationship;”
(8) whether “the service rendered is an integral part of the allеged employer’s business.”
Id., at 640. (citations omitted). Because the District Court had not given due consideration to these non-regulatory factors, the Torres-Lopez court reversed the District Court’s determination that the grower and the agricultural labor company that provided the workers’ services to the grower were not joint employers.
2. Analysis
Relying heavily on
Rutherford Food Corp. v. McComb,
Taking that as their starting point, the Plaintiffs focus their argument on the nature of Plaintiffs’ work, which they describe as a discrete step in Bebe Stores’
In contrast, Defendants assert that Plaintiffs urge an “over-simplified interpretation of the Fair Labor Standards Act’s” definition of “employer,” and “omit[] significant facts which the Ninth Circuit considers powerful indicia of the lack of joint employment.” (Opp. at 2) (emphasis in original). In particular, applying the four Bonnette factors, Bebe asserts that it did not: 1) have the power to hire or fire Apex’s employees; 2) supervisе or control Apex’s employees’ work schedules or conditions of employment; 3) determine the rate and method of payment of Plaintiffs’ wages; or 4) maintain Apex’s employment records. (Id.). In addition, Bebe argues that other factors considered by the Ninth Circuit preclude a finding of joint employment, distinguishing the case from Torres-Lopez and other cases where courts found a joint employment relationship. Bebe Stores еmphasizes Apex’s independence from Bebe because Apex could reject Bebe’s garment orders and negotiate price increases and different turnaround dates, Apex owned its premises and equipment, and Apex marketed its work to other manufacturers. (Id.). Bebe also points out that its agent, ARI, did not exercise any control over Plaintiffs: ARI did not communicate directly with Apex or require that Apex cure any problems it discovered, but simply reported its findings and recommendations to Bebe. (Opp. at 5).
While both sides can find support for their respective position with reference to the factors set forth in the controlling case law, the Court concludes, on balance, that Bebe Stores is not a joint employer with Apex. Critical factors present in this case distinguish it from the situation presented in Torres-Lopez, the case on which Plaintiffs so heavily rely.
In Torres-Lopez, the grower owned and operated the means of production — the fields and the crops grown on those fields. The grower retained Ag-Labor to obtain the services of field workers to pick the crops. Ag-Labor, which was the nominal employer of those workers, did little other than set up a location at the fields and sign the workers up for the job. As the Court noted:
At oral argument we learned that Ag-Labor did not actually recruit farmwork-ers to work at Bear Creek Farms. We also learned that the farmworkers did not form teams of harvesters that moved from farm to farm picking crops. Rather, individual farmworkers would learn by word of mouth that harvesting work was available at Bear Creek Farms. Hoping to be hired, the farmworkers would appear at the field on harvest days. Ag-Labor would then choose farmworkers from this group.
Torres-Lopez,
The Torres-Lopez Court also emphasized the importance of focusing on the ownership of the means of production. On thаt subject, the Court wrote:
[A] grower’s ownership of farmland is relevant “for the obvious reason that without the land, the worker might not have work, and because a business that owns or controls the worksite will likely be able to prevent labor law violations, even if it delegates hiring and supervisory responsibilities to labor contractors.” Anterior,88 F.3d at 937 (citing Gulf King Shrimp Co. v. Wirtz,407 F.2d 508 , 513-14 (5th Cir.1969)). Similarly, the grower’s investment in “equipment and facilities” is probative of the “workers’ economic dependence on the person who supplies the equipment or facilities.” Id. Finally, considering whether the farmworkers perform “a line-job integral to [the grower’s] business” is relevant “because a worker who performs a routine task that is a normal and integral phase of the grower’s production is likely to be dependent on the grower’s overall production process.”
With respect to control, the Court notes that Bebe Stores did supply personnel whose job was to insure that Bebe Stores received quality goods from Apex, and that at least one of its quality control managers maintained an officе at Apex to deal with quality control problems as they arose. But the record falls short of demonstrating that this involvement could be properly characterized as control or supervision over Apex’s employees. Apex had its own supervisors who were primarily responsible for the day to day management of its employees, unlike the nominal employer in Torres-Lopez. At Apex, these supervisors scheduled work, сontrolled worker shifts and hours of work, and were responsible for employee assignments. Apex’s control over its workers contrasts markedly with the situation described in Torres-Lopez. In that case, all decisions regarding when the crop would be harvested, how much would be harvested, how many workers would be employed in the harvest, and the like were controlled by the grower through its representative, Robert May, who was given primary responsibility for the cucumber crop. Id. at 642. The Torres-Lopez court also noted that the Ag-Labor employee who was involved in supervising the harvesters took direction from the grower’s representative. Id. These factors definitively distinguish Torres-Lopez from the present action, in which, despite the presence of Bebe Stores’ quality control personnel at the Apex facility, Apex’s supervisors were in control of their own employees.
Finally, the Court concludes that ARI’s access to Apex’s payroll records, in its capacity as Bebe Stores’ monitor of Apex’s compliance with labor laws, cannot and should not be equated with Bebe Stores’ control, either direct or indirect, over Plaintiffs’ payroll records, wages, or working conditions. Department of Labor policy encourages clothing manufacturers to monitor the operations of garment contractors to insure compliance with applicable
Clearly, the 1998 survey “confirms that effective monitoring works to significantly improve garment workers’ chances of being paid what they are entitled and reduces manufacturers’ potential liability for ‘hot goods’ actions,” said Secretary Herman. “We recоgnize those Los Angeles firms which have been willing to incorporate monitoring, and especially effective monitoring, into the way they do business.”
Id. This policy — part of the Department’s “No Sweat Initiative” arises from legitimate concerns, born from decades of experience, that garment factories often operate what are commonly described as “sweat shops.” The Court is aware of no аuthority for the proposition that Bebe Stores’ adoption of monitoring, in response to the Department of Labor initiative, can or should be used to find the existence of a joint employment arrangement. In the Court’s view, holding Bebe Stores to have exercised “control” over Apex on the basis of its monitoring activities, and therefore to be a joint employer with Apex, would be counterproductivе and would create a disincentive for clothing designers and manufacturers to monitor contractor shops to ensure compliance with the FLSA. Since the Court finds that the test for joint employment has otherwise not been met, it declines to find that Bebe Stores’ monitoring of Apex gives rise to joint employer liability.
rv.
CONCLUSION
For the reasons set forth above, the Court DENIES Plaintiffs’ motion for summary adjudication as to the issue of Bebe’s status as a joint employer of Plaintiffs under the FLSA. Moreover, the Court finds as a matter of law that Bebe is not a joint employer of Plaintiffs under the FLSA.
IT IS SO ORDERED.
Notes
. This amended order reflects no substantive change in the Court's prior order on the issues addressed herein. The only changes from the prior order are minor word changes, and corrections to typographical and spelling errors that appeared in the original order.