Juan Saravia v. Dynamex, Inc. et al

Filing 235

ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT by Judge Alsup denying 213 Motion for Summary Judgment; granting in part and denying in part 215 Motion for Summary Judgment. (whalc1, COURT STAFF) (Filed on 12/4/2016)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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JUAN SARAVIA, individually and on behalf
of all others similarly situated,
Plaintiff,

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v.
DYNAMEX, INC., DYNAMEX FLEET
SERVICES, LLC, DYNAMEX
OPERATIONS EAST, INC., and DYNAMEX
OPERATIONS WEST, INC.,

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ORDER RE CROSS-MOTIONS
FOR SUMMARY JUDGMENT

Defendants.
/

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No. C 14-05003 WHA

INTRODUCTION
In this collective action under the Fair Labor Standards Act, an order denied defendants’

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motion to decertify and invited both sides to bring a motion for summary judgment as to a

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single plaintiff. That plaintiff moves for summary adjudication that he was misclassified as an

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“independent contractor” and summary judgment on his claim for overtime wages. Defendants

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move for summary judgment on all claims on the basis that plaintiff was properly classified.

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Three defendants also move for summary judgment on the basis that they never contracted with

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plaintiff.

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For the reasons stated below, both sides’ motions on the misclassification issue are

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DENIED, and plaintiff’s motion on the overtime claims is also DENIED. To the extent stated

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below, the motion of the defendants that did not contract with plaintiff is GRANTED.

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STATEMENT
Plaintiff Juan Saravia contracted with defendant Dynamex Operations West, LLC, to

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provide delivery services to its customers. Saravia contends that Dynamex improperly

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classified him and all of its drivers as an “independent contractor” rather than as an “employee,”

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and brings a collective action under the Fair Labor Standards Act seeking unpaid minimum

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wages and overtime premiums.

conditionally certified (for the purpose of facilitating notice and opting in) a collective of all

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“Transportation Service Providers” (“TSPs”) who performed delivery work for Dynamex in

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California who signed one of the same agreements that Saravia did (Dkt. No. 86). More than

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For the Northern District of California

Saravia commenced this action in November 2014. In October 2015, an order

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United States District Court

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one hundred fifty plaintiffs opted-in to the collective action.

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In September 2016, an order denied Dynamex’s motion to decertify the collective action

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and directed counsel for plaintiffs to “identify the single individual who presents, in counsel’s

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view, the strongest case for misclassification” (Dkt. No. 205 at 8). Both sides were then invited

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to bring summary judgment motions regarding that individual, both as to misclassification and

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as to liability and damages. Plaintiffs’ counsel identified opt-in plaintiff Cesar Benitez, Jr. The

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other opt-in plaintiffs (and Saravia), were invited to consent to be bound by a ruling against

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Benitez, with the possibility that they could alternatively benefit from collateral estoppel on the

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misclassification issue based on a ruling in favor of Benitez. More than one hundred

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individuals so consented.

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Both sides moved for summary judgment as to Benitez’s individual claims. Defendants

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Dynamex, Inc., Dynamex Operations East, LLC, and Dynamex Fleet Services, LLC, also move

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for summary judgment, inasmuch as they never contracted with Benitez. This order follows

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full briefing and oral argument.

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ANALYSIS
MISCLASSIFICATION.

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1.

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There are too many fact issues pertaining to the misclassification issue to grant summary

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judgment for either side. As just one of many examples, Benitez contends that Dynamex had
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the right to control his attire, namely by requiring him to wear a uniform while performing

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deliveries for Pep Boys, the sole customer Benitez serviced.

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Section 8(p) of Benitez’s agreement with Dynamex provided as follows, in pertinent
part (Benitez Decl., Exh. 1):

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In accordance with the desire of the Shippers, CONTRACTOR’S
drivers shall be uniformed for identification and security purposes
and shall maintain a professional experience. The uniform shall
consist of clean, logoed, professional attire which adequately
identifies CONTRACTOR’S drivers as contracting through
Dynamex. For purposes of this Agreement each driver shall
maintain a professional appearance n accordance with the best
standards of the industry.

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In his declaration submitted in support of his motion for summary judgment, Benitez
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For the Northern District of California

United States District Court

averred (Benitez Decl., ¶ 22):
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Dynamex requires me to wear a uniform and identification badge
while on the job. The required uniform included a blue shirt with
Dynamex’s corporate name and logo. Attached hereto as Exhibit 2
is a picture I took of myself wearing the uniform I have to wear
every day.

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Furthermore, in his brief in support of his motion, Benitez stated, “[i]t is undisputed that
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Dynamex requires Mr. Benitez to wear a uniform bearing the company logo when working for
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Dynamex” (Pl.’s Mtn. at 6). He contended that requirement came from the terms of his
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agreement with Dynamex.
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In preparation for its opposition to Benitez’s motion, Dynamex hired two private
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investigators who surveilled Benitez for several days. The investigators reported that Benitez
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did not wear a uniform while performing deliveries (Lopez Decl., Exh. 2; Guillermo Decl.,
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Exhs. 2–3).
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Benitez filed a reply declaration in which he explained (Benitez Reply Decl. ¶¶ 4–5):
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Even though I know I am supposed to wear the uniform, I have not
been wearing it lately. I apologize to the Court for not disclosing
this before. The reason I have not been wearing the uniform is that
I have had so much trouble controlling my weight that I can no
longer fit comfortably into my uniform. I have struggled with my
weight for some time, but in the past year, it has gotten worse. I
now weigh well over 400 pounds. I am embarrassed about my
weight. It has been difficult for me to admit this to people who
don’t already see me on the job.

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I have attempted to obtain a uniform from Dynamex that fits, but
the largest size Dynamex has been able to provide me is a 5XL.
This is the size Dynamex provided me in June, 2013. I paid for
and received 6 total uniforms from Dynamex when I started, each
of which is a size 5X (which I understand is the largest size
Dynamex has available). I made sure to get one for every day of
the week. However, I now wear a 7XL. My co-workers at the Pep
Boys account are much smaller people and I have seen them wear
their uniforms regularly.

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In his reply brief, Benitez set forth the language of his agreement with Dynamex

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addressing uniforms, but omitted the prefatory phrase “[i]n accordance with the desire of the

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Shippers,” leaving the misimpression that the uniform requirement was absolute (Pl.’s Reply

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at 2).
Whether or not Benitez is required to wear a uniform and whether he, in fact, wears it bear

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For the Northern District of California

United States District Court

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on the extent of Dynamex’s right to control the means and manner of Benitez’s work. Indeed,

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the uniform requirement has been the single example of Dynamex’s control of its drivers cited

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most frequently and adamantly by plaintiffs’ counsel throughout the extensive motion practice

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in this case. Yet, the facts bearing on this issue, among many other critical issues, are hotly

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contested. Indeed, Benitez’s late disclosure that he recently stopped wearing his uniform casts

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doubt on whether he ever wore his uniform.

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Moreover, the agreement is ambiguous on its face. For example, it is unclear whether the

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phrase “[i]n accordance with the desire of the Shippers” means that any uniform requirement

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applies only at a customer’s request or if it simply declares the desire of Dynamex’s customers

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as the motivation for any uniform requirement. Beyond that ambiguity, however, our record

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lacks any explanation of how, if at all, Benitez came to understand that he was required to wear

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a uniform or how Pep Boys communicated its “desire” to have Benitez wear a uniform to

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Dynamex.

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Among numerous others, there are also factual disputes and omissions in the record

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relating to whether Benitez had to attend a mandatory training session, what was said at any

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preliminary meeting that Benitez attended, and how Benitez receives the details of his assigned

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deliveries for Pep Boys. All of these bear on the economic reality of Benitez’s working

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relationship with Dynamex, which is the central question here. The issue of misclassification

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cannot be resolved as a matter of law on this record.

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Factual disputes also preclude summary judgment on Benitez’s overtime claim, which
claim also depends on the misclassification issue.

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Prior to trial, both sides shall produce to the other all documents that summarize, describe,

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or reference any request by Pep Boys that Dynamex require the drivers servicing that account to

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wear uniforms. Additionally, both sides shall produce any documents indicating any request or

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inquiry by Benitez to Dynamex requesting a larger uniform.

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This additional discovery shall be completed by DECEMBER 16 and shall be accompanied

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Finally, Dynamex shall produce its full agreement with Pep Boys.

by a declaration by counsel explaining the due diligence actually undertaken to conduct a

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thorough search.

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2.

OTHER DYNAMEX ENTITIES.

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Defendants Dynamex, Inc., Dynamex Fleet Services, LLC, and Dynamex Operations

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East, LLC, move for summary judgment on all claims against them, inasmuch as they never

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contracted with Benitez (or any member of our collective). Benitez does not oppose the

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motions by Dynamex Fleet Services or Dynamex East, but contends that there is a factual

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dispute as to whether Dynamex, Inc., is a proper defendant, inasmuch as it is a “joint

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employer,” because Dynamex, Inc.’s “Compliance Group” monitored the regulatory

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requirements of its subsidiaries’ drivers.

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This joint employment theory appeared for the first time in Benitez’s opposition to

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Dynamex’s motion for summary judgment. The complaint simply named Dynamex, Inc.,

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among the defendants, and referred to all defendants collectively as “Dynamex” thereafter.

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Benitez (and the rest of our plaintiffs) cannot pursue claims at summary judgment based on a

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theory that was never properly pled. See Pickern v. Pier 1 Imports (U.S.), Inc., 457 F.3d 963,

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968-69 (9th Cir. 2006).

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In any case, there is simply no evidence that Dymanex, Inc., ever had any relationship
with Benitez, much less one that could allow it to be considered a joint employer. Our court of
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appeals applies two tests to determine whether a second entity is a “joint employer” under the

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FLSA. See Guifu Li v. A Perfect Day Fran., Inc., 281 F.R.D. 373, 400 (N.D. Cal. 2012) (Judge

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Lucy Koh) (discussing the two tests). The first is the same “economic reality” test applied to

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determining whether a worker is an “employee” or an independent contractor. This test applies

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when “a company has contracted for workers who are directly employed by an intermediary

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company.” Chao v. A–One Medical Servs., Inc., 346 F.3d 908, 917 (9th Cir. 2003). The

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alternate test applies where two entities share operations and finds a joint employment

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relationship where two conditions are met (1) “the employers are not ‘completely disassociated’

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with respect to the employment of the individuals,” and (2) “one employer is controlled by

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another or the employers are under common control.” Id. at 912–13.
There is no evidence Dynamex, Inc., had any right to control Benitez. Indeed, our record

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does not even describe Dynamex, Inc.’s right to control Dynamex West. All we know is that

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Dynamex, Inc.’s compliance group monitored regulatory compliance of drivers generally.

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Given the complete absence of such control — and indeed the absence of any relationship —

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the economic reality is that Dynamex, Inc., cannot be Benitez’s employer. Furthermore,

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Dynamex, Inc., is plainly “completely disassociated” from Dynamex West with regard to

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Benitez, since there is no relationship to associate. Thus, under either test, Benitez cannot

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maintain a claim against Dynamex, Inc. Accordingly, this order GRANTS the motion for

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summary judgment of Dynamex, Inc., Dynamex Fleet Services, and Dynamex East as to

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Benitez.

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CONCLUSION

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To the extent stated above, Benitez’s motion is DENIED, and Dynamex’s motion is

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DENIED as to the central issue, but GRANTED as to the entities with which Benitez never

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contracted.

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IT IS SO ORDERED.

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Dated: December 4, 2016.

WILLIAM ALSUP
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UNITED STATES DISTRICT JUDGE

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For the Northern District of California

United States District Court

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