Sotelo v. MediaNews: Court Affirms Denial of Class Certification

In Sotelo v. MediaNews Group, Inc. (7/2/12) --- Cal.App.4th ---, the plaintiffs were newspaper carriers and the "distributors" who supervised or employed them. They alleged that the defendant newspaper publishers misclassified them as independent contractors when they were in fact employees. The trial court (Alameda County Superior, Judge Steven A. Brick) denied certification, and the Court of Appeal affirmed.

I. Ascertainability of the Proposed Class

First, the Court held that the proposed class was not ascertainable because many putative class members had no agreements with the defendants and could not otherwise be identified through the defendants' records. As stated by the trial court: "The determination of whether a person who signed no carrier contract with a defendant nonetheless bagged and delivered papers for a defendant during the class period will devolve into a disputed mini-hearing, requiring sworn statements and/or deposition testimony from that class member, the evaluation of circumstantial evidence, and credibility determinations."

The Court rejected the plaintiffs' argument that "any difficulties with identifying putative class members are due to respondents' failure to keep accurate records and that respondents cannot defeat certification by their own wrongdoing in not maintaining proper records." Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121, 136.  

In Aguiar the dispute concerned certain employees of Cintas who had worked on the company's contracts with the Los Angeles Department of Water and Power (DPW) [sic].  Cintas was under a contractual obligation to track the employees who worked on DPW [sic] contracts, but failed to do so. Thus, when the court concluded that Cintas could not defeat class certification, on ascertainability grounds, because of its own failure to keep records that it was obligated to keep, that obligation was uncontested and independent of the outcome of the employees' suit. Here, any obligation on respondents' part to track all members of the proposed class depends on the merits of the suit being brought. Appellants cannot bootstrap their action merely by assuming as true what they are obligated to prove. 

Slip op. at 8. The Court also held that the plaintiffs had not proposed a feasible plan for giving the putative class members notice of the action. Ibid.

The Court next held that the trial court did not err in failing to limit the class to those individuals for whom records existed showing their work for defendants. Although it would have been appropriate to so limit the class if the other certification requirements had been met, they were not, as discussed below. Slip op. at 8-9.

II. Predominance 

The Court then held that the plaintiffs had not met their burden of showing that common legal and factual issues predominate. 

A. Overtime, Meal Break, and Rest Break Causes of Action

The trial court held:

Plaintiffs must prove that putative class members in fact worked sufficient days and/or hours to be entitled to overtime and sufficient hours in a day to be entitled to meal and/or rest breaks. These inquiries involve the examination of different facts from the classification question; the motion, however, fails to discuss whether there is common evidence on this issue." [The evidence indicated] "a wide variation among carriers in the number of hours they worked each day . . . and that their ability to take breaks turned on factors that varied substantially across the proposed class . . . . [¶] Similarly, on the overtime question, it appears that routes and helper arrangements varied such that not all routes would take more than 8 hours per day to fold and throw. Several class members hired helpers so they could end their workday early . . . . Plaintiffs have not provided evidence . . . showing that substantial numbers of class members were not free to subcontract in this fashion . . . . Defendants, on the other hand, have shown that many carriers felt free to employ help in their routes—and did so. . . . [¶] The record likewise shows that carriers were generally permitted to, and did, obtain substitutes so that they did not have to work 7 days in a week.  

Slip op. at 11.  The Court of Appeal rejected the plaintiffs' argument, relying primarily on Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286 (discussed here), that these issues go primarily to damages.  The Court distinguished Jaimez:

The difference between Jaimez and this case is that in Jaimez, the plaintiff actually presented the court with a theory of recovery that specified the uniform policies and practices of the defendant that acted to establish liability for overtime. The complaint in Jaimez "asserted that [defendant] consistently administered a uniform corporate policy that violated California law with respect to overtime and meal and rest break requirements." As to the overtime claims, the Jaimez court found that the "predominant common factual issues include: (1) whether [defendant] had a uniform practice of misclassifying RSR's as exempt; and (2) whether [defendant] had a uniform policy of requiring RSR's to work overtime, but failing to pay them for their overtime hours." Appellants' allegation that respondents have misclassified putative class members as ICs rather than employees is only part of the equation. In contrast to Jaimez, appellants have not alleged that respondents have a uniform policy that requires putative class members to work overtime.

Slip op. at 13. The Court similarly distinguished Jaimez as to the plaintiffs' meal and rest period claims. "Jaimez is not helpful to appellants because appellants have not alleged that respondents have uniform practices or policies, beyond the issue of employee misclassification, that would establish liability for overtime or rest/meal break violations." Slip op. at 14.

B. Fraud and Concealment Causes of Action

The trial court found that the plaintiffs' motion "wholly fails to address plaintiffs' first two causes of action, for fraud and concealment." The plaintiffs' effort to remedy this defect on appeal was not sufficient. Slip op. at 15.

C. Employee Status

The Court next considered the "pivotal" issue in several causes of action: whether the putative class members were independent contractors or employees. The Court examined this issue under the multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

The trial court first concluded that the evidence demonstrated little variance as to the issue of respondents' control over the details of putative class members' work. However, the court stated that "there are so few 'details' in a carrier's work that a newspaper needs (or wants) to control that this factor is not likely to weigh heavily in the merits analysis." Slip op. at 16-17. 

The Court rejected the plaintiffs' argument that the trial court failed to give sufficient weight to the control factor. "The court," it held "was not dismissing the importance of the factor, but commenting on the degree to which the factor was likely to be an issue of actual controversy at trial." Slip op. at 17.

Appellants argue that "common questions predominate in the overarching inquiry of whether carriers were misclassified as independent contractors; class treatment is therefore the most efficient way to proceed. The lower court abused its discretion by focusing on the divergent experiences of a select minority of class members and ignoring the overwhelming similarities among the majority." If the court had actually focused on the divergent experiences of a select minority, we might conclude that substantial evidence did not support the determination of the trial court that a number of factors would require individual testimony. However, appellants point to no evidence in the record that proves the characteristics of the majority. Survey evidence from a well-selected sample of the 5,000 identified class members might have supported appellants' contention, but none is present in the record. Thus, we cannot say that the court's determinations as to the various factors were not supported by substantial evidence.

Slip op. at 20.

The Court next considered whether application of Martinez v. Combs (2010) 49 Cal.4th 35 (discussed here), which was issued during the pendency of the appeal, would change the result. The Court first held that Martinez is not limited to joint employment situations. Slip op. at 22. The Court next held that the trial court erred in failing to apply the wage order's multi-pronged, alternative employer definition, at least as to the overtime cause of action. Ibid. However, the error was harmless because the trial court had already correctly held that common issues did not predominate as to that cause of action. Ibid.

III. Failure to Use Subclasses or Other Creative Devices

In its order denying certification, the trial court expressed surprise that the plaintiffs had not proposed subclasses "given the existence of about 30 potential employers in this case and the differences in their policies and procedures among themselves and over time...  Indeed, on reply, plaintiffs made a few general suggestions regarding subclassing, but did not explain if or how the types of subclasses they mention could cure or reduce commonality problems."  

The trial court did not err in declining to certify subclasses or use other, unspecified creative devices to allow for certification.  "Here, the court considered appellants' proposals, fulfilling its obligation, and found them deficient because they failed to discuss how they would cure the issues the court had identified. There was no abuse of discretion."  Slip op. at 23.   

The opinion is available here.