Ayala v. Antelope Valley Newspapers: Trial Court Erred in Denying Certification in Independent Contractor Class Action Where Employer's Right to Control Work of Employees Could be Proven on Common Evidence

In Ayala v. Antelope Valley Newspapers, Inc. (9/19/12, pub. 10/17/12) 210 Cal.App.4th 77 (discussed here), the plaintiffs sought to certify a class of newspaper home delivery carriers, alleging that Antelope Valley Newspapers improperly classified them as independent contractors rather than employees. The trial court held that individual issues predominated because of numerous variations in how the carriers performed their jobs. The Court of Appeal reversed in part, holding that such variations did not preclude class certification under S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The California Supreme Court yesterday affirmed the Court of Appeal's decision.

First, the Court did not address an issue that many of us thought they would: In determining whether one is an employee or independent contractor, what is the relevance of the test set forth in IWC wage order No. 1-2001, subdivision 2(D)–(F)? See Martinez v. Combs (2010) 49 Cal.4th 35, 57-66. "[B]ecause plaintiffs proceeded below on the sole basis that they are employees under the common law, we now conclude we may resolve the case by applying the common law test for employment, without considering these other tests." Slip op. at 5-6.

Under the common law, "the 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." Slip op. at 6. Courts also may consider a number of secondary indicia. Slip op. at 7. What matters "is not how much control a hirer exercises, but how much control the hirer retains the right to exercise." Slip op. at 8.

Accordingly, the proper test on class certification is this: "is there a common way to show Antelope Valley possessed essentially the same legal right of control with respect to each of its carriers?" Slip op. at 10. The carriers' relationship with Antelope Valley was governed by a form contract, and "[s]uch agreements are a significant factor [though not the only factor] for consideration in assessing a hirer's right to control a hiree's work. Slip op. at 10. Rather than focusing on whether Antelope Valley's right to control could be proven on common evidence, the trial court erred in focusing on the ways in which the workers' delivery practices differed. Slip op. at 11. In doing so, the trial court "based its decision on erroneous legal assumptions about the relevant questions..." Slip op. at 15.

With regard to the secondary indicia of employment status, the Court held that a trial court "must identify whether the factor will require individual inquiries or can be assessed on a classwide basis." Slip op. at 17. The Court must then weigh whether 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." Slip op. at 17. Further, in weighing these factors, the court must keep in mind that some factors are of far greater significance than others. Slip op. at 18. The proper course is to consider whether individual variations are "likely to prove material," and if so, "whether they can be managed." Slip op. at 19.

The opinion is available here.