Henry v. Central Freight Lines, Inc.

Filing 87

ORDER signed by District Judge John A. Mendez on 6/13/19 GRANTING IN PART AND DENYING IN PART Defendants' Motion for Summary Judgment 72 and DENYING Plaintiff's Cross-Motion for Summary Judgment 73 CFL's motion is Granted as to Henry's claims alleging violations of California's meal and rest break rules under California Labor Code sections 226.7 and 512, which are hereby dismissed; Denied as to Henry's claims alleging violations of California wage orders , for which Henry's employment classification will be determined under the Dynamex ABC test, which applies retroactively and is not preempted by the FAAAA; Denied as to Henry's claims for reimbursement of lease payments; and Denied as t o Henry's remaining claims under the California Labor Code, for which Henry's employment classification will be determined under by the Borello standard, and which are not barred by the dormant Commerce Clause or preempted by federal TIL regulations. Henry's cross-motion is: Denied, without prejudice, except as to his PAGA claim, under the one-way intervention rule; and Denied as to his PAGA claim. (Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RICKEY HENRY, an individual,
on behalf of himself, and on
behalf of all persons
similarly situated,
Plaintiff,

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v.
CENTRAL FREIGHT LINES, INC.,
a Corporation, and DOES 1
through 50, Inclusive,

No.

2:16-cv-00280-JAM-EFB

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFF’S CROSSMOTION FOR SUMMARY JUDGMENT

Defendants.
Rickey Henry (“Henry” or “Plaintiff”) worked for Central

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Freight Lines, Inc. (“CFL” or “Defendant”) as a truck driver from

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April 2014 to February 2015.

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illegally misclassified him, and other putative class member-

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truck drivers, as independent contractors to deny them statutory

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benefits owed under the California Labor Code.

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Henry, and the putative class members, were properly classified

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as independent contractors and therefore not entitled to certain

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protections and benefits under the California Labor Code.

Henry alleges CFL intentionally and

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CFL contends that

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CFL moves for summary judgment on all of Henry’s claims.

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Mot., ECF No. 72-1.

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judgment.

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Henry’s cross-motion.

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Henry opposes and cross-moves for summary

Henry Opp’n/Cross-Mot., ECF No. 73.

CFL opposes

CFL Opp’n, ECF No. 76.

For the reasons set forth below, the Court GRANTS IN PART

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and DENIES IN PART Defendant’s motion and DENIES Plaintiff’s

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cross-motion.1

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I.

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FACTUAL AND PROCEDURAL BACKGROUND

Defendant Central Freight Lines, Inc. is a federally

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registered and permitted motor carrier headquartered in Texas and

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incorporated under the laws of Texas.

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Facts (“CFL UF”), ECF No. 73-3, ¶ 1 (all citations to CFL UF

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refer to Section I of the document).

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long-haul truck drivers and trucking service companies, generally

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to move freight from one CFL terminal to another.

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Henry Response to CFL

CFL contracts services from

Id. ¶¶ 2-3.

In May 2014, Plaintiff Rickey Henry and CFL entered into an

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independent contractor agreement (the “ICA”), under which Henry

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agreed to provide services to CFL as an owner-operator truck

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driver.

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hauled CFL’s customers’ freight between CFL terminals, under

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CFL’s DOT operating authority.

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(“Henry UF”), ECF No. 76-12, ¶¶ 4, 36.

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initial term of one year, would automatically renew year-to-year

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but could be terminated sooner by either party.

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Henry UF ¶ 105.

CFL UF ¶ 4; ICA, ECF No. 72-2 at Exhibit 2.

Henry

CFL Response to Henry Facts
The ICA, which was for an

CFL UF ¶ 15;

Henry provided services to CFL under the ICA

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for March 19, 2019.
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until February 2015, when CFL elected to terminate the agreement.

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CFL ¶ 8.

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CFL, though Henry did not drive exclusively in California.

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UF ¶¶ 126, 129.

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Henry was a California resident during his time with
Henry

Henry received weekly “settlement statements” from CFL that

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calculated his pay.

Henry UF ¶ 132.

Under the ICA, the parties

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set forth which costs and expenses CFL would initially cover and

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then deduct from Henry’s weekly settlements (“charge-backs”).

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CFL UF ¶ 11; Henry UF ¶¶ 130, 132.

Henry was also required to

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furnish his own truck and to carry insurance to drive for CFL.

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Henry UF ¶¶ 27-31, 37, 130.

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Leasing, and CFL deducted the lease payments directly from

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Henry’s settlement statements.

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compensation it paid Henry as payments to a contractor and CFL

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issued Henry a Form 1099.

Henry leased a truck through Wasatch

Henry UF ¶ 41.

CFL reported the

CFL UF ¶ 40.

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CFL did not prescribe or guarantee Henry any specific number

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of shipments or revenue, or prescribe Henry any minimum amount of

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hours or jobs.

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he kept his truck at a private lot and not at the CFL terminal.

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CFL UF ¶ 22.

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motor carriers, but he could not use the same truck he leased for

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his CFL jobs for that other work. CFL UF ¶ 23; Henry UF ¶ 125.

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CFL UF ¶ 17.

When he was not providing services,

Henry was not barred from performing work for other

On October 20, 2015, Henry filed the Complaint against CFL

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in Sacramento County Superior Court (Case No. 34-2015-00185756).

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Compl., ECF No. 1-5.

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Amended Complaint.

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this Court on February 11, 2016. ECF No. 1. Henry moved to remand

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the case back to Sacramento County Superior Court and that motion

On December 10, 2015, Henry filed a First

FAC, ECF No. 1-6. CFL removed the case to

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was granted on October 6, 2016. ECF No. 34.

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Court’s Order and the Ninth Circuit reversed and remanded the

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case back to this Court in July 2017. ECF Nos. 38, 40. This Court

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subsequently denied CFL’s motion to transfer venue to the Western

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District of Texas. ECF No. 45

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CFL appealed the

In the FAC, Henry alleges causes of action for (1) Unfair

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Competition in violation of Cal. Bus. & Prof. Code §§ 17200 et

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seq.; (2) Failure to Pay Minimum Wages in Violation of Cal. Lab.

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Code §§ 1194, 1197, and 1197.1; (3) Failure to Provide Accurate

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Itemized Statements in Violation of Cal. Lab. Code § 226; (4)

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Failure to Provide Wages When Due in Violation of Cal. Lab. Code

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§§ 201, 202, and 203; (5) Failure to Reimburse Employees for

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Required Expenses in Violation of Cal. Lab. Code § 2802; (6)

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Illegal Deductions from Wages in Violation of Cal. Lab. Code §

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221; and (7) Violation of the Private Attorneys General Act, Cal.

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Lab. Code §§ 2698, et seq.

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class action on behalf of a class consisting of all individuals

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who worked for CFL in California as truck drivers and were

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classified as independent contractors at any time beginning: (a)

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October 20, 2011, with respect to the first cause of action; (b)

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October 20, 2012, with respect to the second, third, fourth,

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fifth, and sixth causes of action; and (c) October 20, 2014, with

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respect to the seventh cause of action.

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See FAC.

II.

Henry brings this putative

Id. ¶¶ 23, 33, 97.

OPINION

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A.

Judicial Notice

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Henry ask this Court to take judicial notice of: (1) a March

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27, 2018, Order Denying Summary Judgment in Raul Villareal v.

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Central Freight Lines, Inc., Los Angeles County Superior Court
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Case No. NS032922; and (2) a July 18, 2018, Minute Order in

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Johnson v. VCG-IS, LLC, Orange County Superior Court Case No. 30-

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2015-00802813-CU-CR-CXC.

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notice of the existence of court records is “routinely accepted,”

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the requests for judicial notice are granted as to the existence

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of the records but not as to the truth of their contents.

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v. Optio Sols., LLC, 219 F. Supp. 3d 1012, 1014 (S.D. Cal. 2016).

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RJN, ECF No. 78-3.

Since judicial

Mendez

Additionally, CFL objects to certain evidence submitted by
Henry in opposition to CFL’s motion and in support of his cross-

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motion.

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evidentiary objections, but declines to rule on them as courts

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self-police evidentiary issues on motions for summary judgment

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and a formal ruling is unnecessary to the determination of these

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motions.

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433 F.Supp.2d 1110, 1118–1122 (E.D. Cal. 2006).

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B.

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ECF No. 76-11.

This Court has reviewed these

See Burch v. Regents of the University of California,

Collateral Estoppel Issues
1.

Collateral Estoppel Against CFL

As in this case, in Raul Villareal v. Central Freight Lines,

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Inc., Los Angeles County Superior Court Case No. NS032922, CFL

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moved for summary judgment arguing that plaintiff Raul Villareal

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was an independent contractor and not subject to the California

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Labor Code, that the Truth-in-Leasing regulations preempted

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certain of Villareal’s causes of action, and that the application

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of California’s wage and hour laws violated the dormant Commerce

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Clause.

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CFL’s motion.

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arguing these same issues against Henry.

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78, at 13-16.

ECF No. 73-2, Exhibit 16, at 379-393.
Id.

The court denied

Henry argues that CFL is now precluded from

This Court disagrees.
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Henry Reply, ECF No.

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Offensive non-mutual collateral estoppel, which Henry seeks

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to apply here, “is appropriate only if (1) there was a full and

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fair opportunity to litigate the identical issue in the prior

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action; (2) the issue was actually litigated in the prior action;

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(3) the issue was decided in a final judgment; and (4) the party

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against whom issue preclusion is asserted was a party or in

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privity with a party to the prior action.”

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Bus. Machines Corp., 472 F.3d 1072, 1078 (9th Cir. 2007)

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(internal citations omitted).

Syverson v. Int’l

A denial of a motion for summary

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judgment is generally not a final judgment.

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Caballero, No. 2:11-MJ-00035-EFB-1, 2017 WL 5564900, at *4 (E.D.

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Cal. Nov. 20, 2017) (citing Jones-Hamilton Co. v. Beazer

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Materials & Servs., Inc., 973 F.2d 688, 693-94 (9th Cir. 1992)).

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Thus, offensive non-mutual collateral estoppel does not

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apply here.

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2.

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United States v.

One-Way Intervention Rule and the Propriety of
Henry’s Cross-Motion

The Ninth Circuit has held that Federal Rule of Civil

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Procedure 23(c)(2) bars “the intervention of a plaintiff in a

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class action after an adjudication favoring the class ha[s] taken

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place.

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plaintiff would not otherwise be bound by an adjudication in

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favor of the defendant.”

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(9th Cir. 1995).

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from an imbalanced system in which members of a not-yet-certified

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class wait for a court’s substantive ruling and either opt in to

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a favorable ruling or avoid being bound by an unfavorable one.

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See Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 2:13-cv-

Such intervention is termed ‘one way’ because the

Schwarzschild v. Tse, 69 F.3d 293, 295

The rule exists in part to protect defendants

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05693-PSG-GJS, 2015 WL 4776932, at *4 (C.D. Cal. May 27, 2015).
CFL argues that, under the same rationale which bars one-way

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intervention, this Court should not rule on Henry’s cross-motion

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for summary judgment because Henry has not yet moved for class

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certification.

CFL Reply/Opp’n, ECF No. 76, at 1-2 (citing

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Schwarzchild).

This Court agrees.

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risk that prompted the Ninth Circuit to find one-way intervention

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impermissible: Henry’s summary judgment motion if successful

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could bind CFL as to the putative class and if unsuccessful would

CFL here faces the precise

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not prevent other putative class members from filing their own

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suits in the hopes of a more favorable ruling.

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Francisco Forty-Niners, Ltd., 104 F. Supp. 3d 1017, 1020-21

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(N.D. Cal. 2015).

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would also waste valuable judicial resources.

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See Villa v. San

Consequently, ruling on Henry’s cross-motion

Furthermore, this Court is not persuaded that CFL has waived

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its right to prevent this tactical manuever by signing a

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stipulation consenting to the timing of Henry’s “opposition, and

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any related cross-motion pursuant to L.R. 230(e).”

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The Local Rules do require the filing of cross-motions “related

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to the general subject matter of the original motion” but the

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rule against one-way intervention provides an exception in this

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case.

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judgment on his PAGA claim because that claim need not be

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certified under Rule 23.

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F. Supp. 3d 1180, 1186-87 (N.D. Cal. 2018) (collecting cases).

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ECF No. 70.

Nevertheless, Henry can properly cross-move for summary

Magadia v. Wal-Mart Assocs., Inc., 319

Additionally, the rule against one-way intervention does not

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prevent this Court from ruling on CFL’s motion for summary

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judgment.

Wright v. Schock, 742 F.2d 541, 544 (9th Cir. 1984)
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(“Where the defendant assumes the risk that summary judgment in

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his favor will have only stare decisis effect on [the named

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plaintiff], it is within the discretion of the district court to

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rule on the summary judgment motion first.”).

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Thus, under the one-way intervention rule, this Court denies

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Henry’s cross-motion except as to his PAGA claim.

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without prejudice, and, should a class be certified, the putative

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class will be permitted to move for summary judgment on any

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remaining claims after class certification.

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C.

This denial is

Preemption of California Meal and Rest Break Rules by
FMCSA Order

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On December 28, 2018, the Federal Motor Carrier Safety

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Administration (“FMCSA”) published an Order concluding that

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California’s meal and rest break rules, codified in California

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Labor Code sections 226.7 and 512 and sections 11 and 12 of IWC

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Order 9-2001, are preempted, under 49 U.S.C. 31141(c), as applied

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to property-carrying commercial motor vehicle (CMV) drivers

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covered by the FMCSA’s hours of service regulations.

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California’s Meal and Rest Break Rules for Commercial Motor

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Vehicle Drivers; Petition for Determination of Preemption

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(“FMCSA Preemption Order”), Docket No. FMCSA-2018-0304, 83 Fed.

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Reg. 67470 (Dec. 28, 2018).

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See

A petition for judicial review of an FMCSA preemption

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determination may only be filed in a circuit court.

See 49

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U.S.C. § 31141(f).

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determine the validity of the FMCSA Preemption Order.

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unless and until the Ninth Circuit determines otherwise, this

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Court will follow the FMCSA Preemption Order and will not enforce

Therefore, this Court is without authority to

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Thus,

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the preempted provisions.

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not enforce a State law or regulation on commercial motor vehicle

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safety that the Secretary of Transportation decides under this

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section may not be enforced.”); see also, Ayala v. U.S Xpress

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Enterprises, Inc., No. 5:16-cv-00137-GW-KK, 2019 WL 1986760, at

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*3 (C.D. Cal. May 2, 2019); Supplemental Authority, ECF No. 85.

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///

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See 49 U.S.C. § 31141(a) (“A State may

Accordingly, this Court grants summary judgment to CFL on
Henry’s claims alleging violations of California’s meal and rest

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break rules under California Labor Code sections 226.7 and 512.

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Henry may, however, move for reconsideration of this order

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should the Ninth Circuit invalidate the FMCSA Preemption Order.

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Four petitions for review challenging the FMCSA Preemption Order

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are currently pending before the Ninth Circuit.

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18-73488, 19-70323, 19-70329, and 19-70413.

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D.

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Petition Nos.

Preemption of Application of California’s Wage and
Hour Laws by Dormant Commerce Clause

The Constitution grants Congress the power to “regulate

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Commerce ... among the several States.”

U.S. Const. art. I, § 8,

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cl. 3.

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affirmative grant of power to Congress to regulate interstate and

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foreign commerce, the Clause has long been recognized as a self-

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executing limitation on the power of the States to enact laws

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imposing substantial burdens on such commerce.”

S.-Cent. Timber

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Dev., Inc. v. Wunnicke, 467 U.S. 82, 87 (1984).

This negative

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implication of the Commerce Clause has come to be called the

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“dormant Commerce Clause.”

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U.S. 328, 337 (2008).

“Although the Commerce Clause is by its text an

Dep’t of Revenue of Ky. v. Davis, 553

CFL argues California’s wage and hour
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laws, as applied to CFL, violate the dormant Commerce Clause

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doctrine and thus Henry’s claims thereunder fail.

Mot. at 20-25.

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When conducting a dormant Commerce Clause analysis, the

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court first asks “whether a challenged law discriminates against

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interstate commerce.

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invalid, and will survive only if it advances a legitimate local

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purpose that cannot be adequately served by reasonable

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nondiscriminatory alternatives.”

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(internal quotes and citations omitted).

A discriminatory law is virtually per se

Davis, 553 U.S. at 338–39
Absent such prohibited

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discrimination, “[w]here a statute regulates even-handedly to

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effectuate a legitimate local public interest, and its effects on

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interstate commerce are only incidental, it will be upheld unless

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the burden imposed on such commerce is clearly excessive in

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relation to the putative local benefits.”

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Inc., 397 U.S. 137, 142 (1970).

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this Pike scrutiny...”

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Pike v. Bruce Church,

“State laws frequently survive

Davis, 553 U.S. at 339.

There is no allegation here that California’s wage and hour

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laws facially discriminate against interstate commerce.

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Sullivan v. Oracle Corp., 662 F.3d 1265, 1271 (9th Cir. 2011)

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(“California applies its Labor Code equally to work performed in

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California, whether that work is performed by California

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residents or by out-of-state residents.

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Dormant Commerce Clause argument when California has chosen to

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treat out-of-state residents equally with its own.”).

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See

There is no plausible

Rather, the only argument is that the laws, as applied to

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CFL’s interstate trucking operations, impose a burden on

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interstate commerce that is impermissible under Pike.

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20-25.

Mot. at

CFL contends the administrative and financial burdens are
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“unfathomable” because it would have to “carefully track the time

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each driver spent in each state,” “sort out” and “reconcile” each

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state’s wage and hour laws, and put forward this “monumental

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effort[]” without an in-house legal department.

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does not find these arguments persuasive.

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CFL’s motion for summary judgment, brought before class

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certification, is being considered only as to Henry’s claims.

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The Court is not prepared, on the record before it, to find the

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application of California’s wage and hour laws to CFL for the

Id.

This Court

As discussed supra,

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time worked by Henry in California imposes a “clearly excessive”

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burden on interstate commerce relative to the legitimate local

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public interest California has in regulating employment matters.

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See Yoder v. W. Express, Inc., 181 F. Supp. 3d 704, 722 (C.D.

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Cal. 2015); Henry UF ¶¶ 82, 95-96.

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Thus, this Court denies CFL’s motion for summary judgment on

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the grounds that the application of California’s wage and hour

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laws to CFL violate the dormant Commerce Clause doctrine.

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E.

Preemption by TIL Regulations

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CFL argues federal Truth-in-Leasing (“TIL”) Regulations bar

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Henry’s unlawful deduction, waiting time, and reimbursement

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claims under the doctrine of conflict preemption.

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CFL contends that the TIL regulations, specifically 49 C.F.R. §

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376.12, explicitly permit the particular charge-back arrangement

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entered into by the parties, and that Henry now seeks to

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essentially rewrite the terms of the ICA.

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Mot. at 16-19.

Id.

While CFL did not raise this exact defense in its Answer,

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its Affirmative Defense Thirty-Eight was sufficient to put Henry

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on notice of this defense.

Answer, ECF No. 46, ¶ 38
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(“Plaintiffs’ claims are preempted by federal and state law,

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including, but not limited to, the Federal Aviation

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Administration Authorization Act and the Federal Motor Carrier

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Safety Act.”).

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prejudice ... an affirmative defense may be raised for the first

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time at summary judgment.”

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639 (9th Cir. 1993).

Moreover, “[i]n the absence of a showing of

Camarillo v. McCarthy, 998 F.2d 638,

Henry has not demonstrated prejudice.

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“Conflict preemption exists when either: (i) a state law

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indirectly conflicts with a federal law because it interferes

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with the objectives of the federal law or is an obstacle to the

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accomplishment of the federal purpose (‘indirect preemption’ or

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‘obstacle preemption’); or (ii) a state law directly conflicts

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with a federal law because it is impossible to comply with both

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(‘direct preemption’ or ‘impossibility preemption’).”

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CSX Intermodal Terminals, Inc., No. 3:15-cv-05433-EDL, 2017 WL

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1416883, at *7 (N.D. Cal. Apr. 10, 2017) (citing Sprietsma v.

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Mercury Marine, a Div. of Brunswick Corp., 537 U.S. 51, 64-65

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(2002)).

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Conflict pre-emption does not apply here.

Valadez v.

It is not

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impossible to comply with both California labor law and the TIL

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regulations.

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deductions and allocation of expenses be specified and disclosed

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in the parties’ agreement, not that they be allocated in a

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certain manner.

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comply with the California Labor Code and be specified in the

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agreement as the TIL regulations require.

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Intermodal Terminals, Inc., No. 3:17-cv-06081-EMC, 2018 WL

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4649829, at *3 (N.D. Cal. Sept. 25, 2018).

The TIL regulations only require that the

Deductions and allocations of expenses can both

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See Goyal v. CSX

Nor is the California

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Labor Code an obstacle to the accomplishment of the purpose of

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the TIL regulations at issue.

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regulations is to protect drivers by ensuring full disclosure in

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leases,” and compliance with the California Labor Code does not

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interfere with that objective.

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“[T]he primary purpose of the TIL

Valadez, 2017 WL 1416883, at *8.

This Court therefore denies CFL’s motion for summary

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judgment on the grounds that the TIL regulations bar Henry’s

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unlawful deduction, waiting time, and reimbursement claims

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through conflict preemption.

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F.

Costs and Expenses Claim for Leasing the Truck

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CFL argues, as a matter of law, Henry cannot recover money

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he paid to own or lease the vehicle used in service of his

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contract with CFL.

Mot. at 19-20.

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The California Division of Labor Standards Enforcement

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(“DLSE”) has stated that although the costs of operating a motor

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vehicle in the course of employment may be covered by California

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Labor Code section 2802, the costs of furnishing the vehicle

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itself are not.

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1985) (“Bulletin 84–7”).

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FedEx Ground Package System, Inc., the California Court of Appeal

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affirmed that, under California law, an employer is not required

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to reimburse employee-drivers for the costs of purchasing or

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leasing their vehicles.

24

App. 2007).

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See DLSE Interpretive Bulletin No. 84–7 (Jan. 8,
Relying on Bulletin 84-7, in Estrada v.

154 Cal. App. 4th 1, 21-25 (Cal. Ct.

Nevertheless, while Estrada provides strong support for

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CFL’s argument, prior to a determination that Henry is an

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employee and therefore entitled to bring claims under the

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California Labor Code, this Court is not in a position to rule on
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1

whether the lease payments in this case are or are not subject to

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reimbursement.

3

No. 3:07-cv-02104-SC, 2009 WL 2588879, at *5 (N.D. Cal. Aug. 19,

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2009).

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determination of Henry’s employment classification at this stage.

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Thus, this Court denies CFL’s motion for summary judgment as

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Smith v. Cardinal Logistics Mgmt. Corp.,

As discussed infra, this Court cannot make a

to Henry’s claims for a reimbursement of lease payments.

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G.

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In 2018 the California Supreme Court clarified that the ABC

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test is the applicable standard to determine whether a worker is

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an employee or an independent contractor for purposes of applying

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California wage orders.

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4 Cal. 5th 903 (Cal. 2018), reh’g denied (June 20, 2018).

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Dynamex ABC Test

Dynamex Operations W. v. Superior Court,

Primarily, CFL argues this Court should determine Henry’s

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employment classification under the long-used standard described

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in S. G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48

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Cal. 3d 341 (Cal. 1989) (“Borello”), as opposed to the newly-

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announced Dynamex ABC test.

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the ABC test should not be applied retroactively to Henry’s

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claims.

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employee under the ABC test, such a determination only applies to

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claims brought under California wage orders.

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24

Mot. at 6-16.

In turn, CFL contends

CFL further argues that even if Henry were considered an

1.

Retroactivity of the ABC Test

The Ninth Circuit recently held that Dynamex applies

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retroactively.

Vazquez v. Jan-Pro Franchising Int’l, Inc., 923

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F.3d 575, 586-90 (9th Cir. 2019).

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addressed the retroactive application of the ABC test under

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California law and with respect to due process concerns of
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In Vazquez, the Ninth Circuit

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fairness and reliance interests, the same arguments CFL raises

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here.

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holding of Vazquez and thus applies the ABC test discussed in

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Dynamex to Henry’s claims brought under California wage orders.

Id.; Mot. at 6-9.

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2.

This Court follows the reasoning and

Preemption of the ABC Test by FAAAA

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The Federal Aviation Administration Authorization Act

7

(“FAAAA”) provides that states “may not enact or enforce a law,

8

regulation, or other provision having the force and effect of law

9

related to a price, route, or service of any motor carrier.”

10

49 U.S.C. § 14501(c)(1).

11

to” preemption to be broad, “the FAAAA does not preempt state

12

laws that affect a carrier’s prices, routes, or services in only

13

a tenuous, remote, or peripheral manner with no significant

14

impact on Congress’s deregulatory objectives.”

15

Trucking Ass’n v. Su, 903 F.3d 953, 960 (9th Cir. 2018), cert.

16

denied, 139 S. Ct. 1331 (2019) (internal citations and quotes

17

omitted).

18

background regulation in an area of traditional state power that

19

has no significant impact on a carrier’s prices, routes, or

20

services.”

21

While Congress intended this “related

California

The FAAAA will not preempt a “generally applicable

Su, 903 F.3d at 957, 961.

CFL contends that the FAAAA fully preempts the Dynamex ABC

22

test, or, at a minimum, preempts Part B of the test.

CFL

23

Reply/Opp’n at 4-5, 10-13.

24

rule on the issue, it has stated, in dicta, “the ABC test may

25

effectively compel a motor carrier to use employees for certain

26

services because, under the ABC test, a worker providing a

27

service within an employer’s usual course of business will never

28

be considered an independent contractor.”

While the Ninth Circuit has yet to

15

Su, 903 F.3d at 964

1

(holding, on the other hand, that the Borello standard is not

2

preempted by the FAAAA because the multi-factored standard does

3

not compel the use of employees or independent contractors).

4

Moreover, lower courts in this circuit are divided on the issue.

5

Alvarez v. XPO Logistics Cartage LLC, No. 2:18-cv-03736-SJO-E,

6

2018 WL 6271965, at *5 (C.D. Cal. Nov. 15, 2018) (finding the

7

FAAAA fully preempts the Dynamex ABC test); Valadez, 2019 WL

8

1975460, at *8 (finding the FAAAA preempts only Part B of the

9

Dynamex ABC test); W. States Trucking Ass’n v. Schoorl, No. 2:18-

10

cv-01989-MCE-KJN, 2019 WL 1426304, at *10 (E.D. Cal. Mar. 29,

11

2019) (finding the FAAAA does not preempt the Dynamex ABC test).

12

This Court finds that the FAAAA does not preempt the

13

application of the Dynamex ABC test to claims arising under

14

California wage orders.

15

classification test that does not apply to motor carriers

16

specifically and does not, by its terms, compel a carrier to use

17

an employee or an independent contractor.

18

prices, mandate or prohibit certain routes, or tell motor

19

carriers what services they may or may not provide, either

20

directly or indirectly.”

21

F.3d 637, 647 (9th Cir. 2014).

22

carriers to specific prices, routes, or services.”

23

Dynamex ABC test merely requires employers to classify employees

24

appropriately and comply with generally applicable wage orders.

25

W. States Trucking Ass’n, 2019 WL 1426304, at *10.

26

failed to demonstrate how the Dynamex ABC test significantly

27

affects its prices, routes, or services to warrant preemption.

28

The Dynamex ABC test is a general

The test does “not set

Dilts v. Penske Logistics, LLC, 769
Nor does it “ ‘bind’ motor
Id.

The

CFL has

Thus, this Court finds the Dynamex ABC test is not preempted
16

1
2
3

by the FAAAA.
3.

Scope of Determination Under the ABC Test

The California Supreme Court explicitly limited its adoption

4

of the ABC test to “one specific context” – determining “whether

5

workers should be classified as employees or as independent

6

contractors for purposes of California wage orders.”

7

4 Cal. 5th at 913-14 (emphasis in original).

8

alleged violations of both Industrial Welfare Commission Wage

9

Order No. 9 and the California Labor Code.

Dynamex,

Dynamex involved

The term “employ” in

10

IWC wage orders means not only “to exercise control over the

11

wages, hours or working conditions,” but also “to suffer or

12

permit to work.”

13

to the reasoning of the Dynamex Court, which found the “suffer or

14

permit to work” definition embodied the broad remedial purpose of

15

the wage orders and thus determined the ABC test was the

16

appropriate standard for claims arising under the wage orders,

17

rather than the common-law “control” test described in Borello.

18

Id. at 952-54, 958-64.

19

application of the Dynamex ABC test beyond the “one specific

20

context” endorsed by the California Supreme Court.

21

Id. at 942-944.

This distinction was central

This Court declines to expand the

This Court agrees with CFL that Henry’s claims for

22

reimbursement, unlawful deductions, waiting time penalties, wage

23

statement penalties, and violations of PAGA are not grounded in

24

the wage orders, but rather in the California Labor Code, and

25

must therefore be decided based on Henry’s classification under

26

the Borello standard.

27

203 Cal. App. 4th 1112, 1132 (Cal. Ct. App. 2012) (holding that

28

“PAGA does not create any private right of action to directly

Thurman v. Bayshore Transit Mgmt., Inc.,

17

1

enforce a wage order” because “a wage order is not a statute”).

2
3

4.

Application of ABC Test

The ABC test “presumptively considers all workers to be

4

employees, and permits workers to be classified as independent

5

contractors only if the hiring business demonstrates that the

6

worker in question satisfies each of three conditions: (a) that

7

the worker is free from the control and direction of the hiring

8

entity in connection with the performance of the work, both under

9

the contract for the performance of such work and in fact; and

10

(b) that the worker performs work that is outside the usual

11

course of the hiring entity’s business; and (c) that the worker

12

is customarily engaged in an independently established trade,

13

occupation, or business of the same nature as the work

14

performed.” Dynamex, 4 Cal. 5th at 955-56.

15

Prongs A and C is most likely to trigger the need for further

16

factual development, because the considerations relevant to those

17

prongs are the most factually oriented.

18

conjunctive, so a finding of any prong against the hiring entity

19

directs a finding of an employer-employee relationship.

20

may be the most susceptible to summary judgment on the record

21

already developed.”

“Application of

But the ABC test is

Prong B

Vazquez, 923 F.3d at 596.

22

Despite the substantial factual disagreements presented on

23

this motion, Henry has compelling arguments that his employment

24

by CFL fails Prong B of the ABC test, making Henry an employee.

25

Indeed, Henry moved this Court to determine the ABC test applies

26

and that he was CFL’s employee under the test.

27

at 16-23.

28

as to his PAGA claim which rests on the Borello standard, Henry’s

Opp’n/Cross-Mot.

However, this Court, as discussed supra, finds, except

18

1

cross-motion to be improper as violating the one-way intervention

2

rule.

3

properly classified as an independent contractor under the ABC

4

test; rather CFL only presented arguments limiting the

5

applicability of the ABC test to Henry’s claims, which are

6

addressed above.

7

reach the merits of whether CFL properly classified Henry as an

8

independent contractor under the ABC test.

9
10

CFL did not move for a determination that Henry was

H.

Mot. at 6-16.

This Court therefore does not

Borello Standard

“The California Labor Code ... confers certain benefits on

11

employees that it does not afford independent contractors.”

12

Narayan v. EGL, Inc., 616 F.3d 895, 897 (9th Cir. 2010).

13

argues Henry’s claims for violations of the California Labor Code

14

fail because, under the Borello standard, Henry is properly

15

classified as an independent contractor, not an employee.

16

Mot. at 9-12.

17

CFL

Borello is the “seminal California decision” providing the

18

standard for determining whether to classify a worker as an

19

employee or independent contractor.

20

Under the Borello standard, the most significant factor in this

21

determination is the right of the principal to control the manner

22

and means of accomplishing the result desired.

23

3d at 349-50 (noting that “[t]he label placed by the parties on

24

their relationship is not dispositive, and subterfuges are not

25

countenanced.”).

26

will, without cause, is considered “[s]trong evidence in support

27

of an employment relationship.”

28

v. Unemployment Ins. App. Bd., 2 Cal. 3d 943, 949 (Cal. 1970)).

Dynamex, 4 Cal. 5th at 929.

Borello, 48 Cal.

Moreover, the right to terminate a worker at

Id. at 350-51 (quoting Tieberg

19

1

Nevertheless, in Borello, the California Supreme Court also

2

explained that additional, “secondary” factors may be relevant in

3

making the classification determination, including: “(a) whether

4

the one performing services is engaged in a distinct occupation

5

or business; (b) the kind of occupation, with reference to

6

whether, in the locality, the work is usually done under the

7

direction of the principal or by a specialist without

8

supervision; (c) the skill required in the particular occupation;

9

(d) whether the principal or the worker supplies the

10

instrumentalities, tools, and the place of work for the person

11

doing the work; (e) the length of time for which the services are

12

to be performed; (f) the method of payment, whether by the time

13

or by the job; (g) whether or not the work is part of the regular

14

business of the principal; and (h) whether or not the parties

15

believe they are creating the relationship of employer-employee.”

16

Id. at 350-51.

17

mechanically as separate tests; they are intertwined and their

18

weight depends often on particular combinations.”

19

(quoting Germann v. Workers’ Comp. Appeals Bd., 123 Cal. App. 3d

20

776, 783 (Cal. Ct. App. 1981)).

21

These factors “[g]enerally ... cannot be applied

Id. at 351

On this record, there are factual disputes regarding control

22

over Henry’s working condition, including required adherence to

23

certain CFL policies and procedures (CFL UF ¶¶ 14, 16; Henry UF

24

¶¶ 56-60, 65-72, 82-86); possession of and leasing of his truck

25

(CFL UF ¶ 10; Henry UF ¶¶ 38-40); his ability to accept or

26

decline loads and do so without reprisal (CFL UF ¶ 18; Henry UF

27

¶¶ 43-44, 52-54); his ability to choose his route (CFL UF ¶ 21;

28

Henry UF ¶¶ 48-51); his ability to hire other drivers to assist
20

1

him (CFL UF ¶¶ 24-25; Henry UF ¶¶ 97-101); the circumstances of

2

his hiring and training (CFL UF ¶¶ 34-35; Henry UF ¶¶ 10-17, 19-

3

26, 61); his pay (CFL UF ¶¶ 36-37; Henry UF ¶¶ 77-80); and his

4

post-CFL work (CFL UF ¶¶ 41-44; Henry UF ¶¶ 102-104).

5

numerous factual disputes having a bearing on the multi-factored

6

Borello standard, this Court cannot, as a matter of law, grant

7

summary judgment to either party.

8

There exist sufficient indicia of both an employer-employee and

9

principal-independent contractor relationship between Henry and

Given the

Narayan, 616 F.3d at 904.

10

CFL such that a reasonable jury could find the existence of

11

either such relationship.

12

Accordingly, this Court denies CFL’s motion for summary

13

judgment as to Henry’s remaining claims arising under the

14

California Labor Code, and denies Henry’s motion for summary

15

judgment on his PAGA claim.

16

III.

ORDER

17

For the reasons set forth above, this Court GRANTS IN PART

18

and DENIES IN PART Defendants’ Motion for Summary Judgment (ECF

19

No. 72-1) and DENIES Plaintiff’s Cross-Motion for Summary

20

Judgment (ECF No. 73).

21

CFL’s motion is:

22

1.

Granted as to Henry’s claims alleging violations of

23

California’s meal and rest break rules under California Labor

24

Code sections 226.7 and 512, which are hereby dismissed;

25

2.

Denied as to Henry’s claims alleging violations of

26

California wage orders, for which Henry’s employment

27

classification will be determined under the Dynamex ABC test,

28

which applies retroactively and is not preempted by the FAAAA;
21

1
2
3

3.

Denied as to Henry’s claims for reimbursement of lease

payments; and
4.

Denied as to Henry’s remaining claims under the

4

California Labor Code, for which Henry’s employment

5

classification will be determined under by the Borello standard,

6

and which are not barred by the dormant Commerce Clause or

7

preempted by federal TIL regulations.

8

Henry’s cross-motion is:

9

1.

10
11

Denied, without prejudice, except as to his PAGA claim,

under the one-way intervention rule; and
2.

Denied as to his PAGA claim.

12
13
14

IT IS SO ORDERED.
Dated: June 13, 2019

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