SCOVIL et al v. FEDEX GROUND PACKAGE SYSTEM INC
Filing
137
DECISION AND ORDER ON PLAINTIFFS' MOTION TO CERTIFY CLASS AND DEFENDANT'S MOTION TO DECERTIFY COLLECTIVE ACTION granting 97 Motion to Certify Class; denying 109 Motion to Decertify Collective Action. By JUDGE D. BROCK HORNBY. (mnw)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
WAYNE SCOVIL,
ET AL.,
PLAINTIFFS
v.
FEDEX GROUND PACKAGE
SYSTEM, INC. d/b/a FedEx
Home Delivery,
DEFENDANT
)
)
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)
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NO. 1:10-CV-515-DBH
DECISION AND ORDER ON PLAINTIFFS’ MOTION TO CERTIFY CLASS
AND DEFENDANT’S MOTION TO DECERTIFY COLLECTIVE ACTION
FedEx Ground Package System, Inc. (FXG1) drivers in Maine have
brought this lawsuit against FXG. They challenge FXG’s classification of them
as independent contractors rather than as employees. I previously certified,
conditionally, a federal Fair Labor Standards Act (FLSA) collective action
against FXG. Discovery is complete.
The drivers have now requested certification of a class action for two
Maine statutory claims.
The drivers assert that as a result of the alleged
misclassification, FXG violated two Maine statutes that apply to employees, one
requiring overtime pay, 26 M.R.S.A. § 664, the other prohibiting certain
deductions from employee paychecks, 26 M.R.S.A. § 629.
In turn, FXG has
requested that I decertify the federal FLSA collective action.
I note that
nowhere in the briefing or the oral argument is there any suggestion that there
1
This is the abbreviation that the parties use.
is a dispute about the number of hours worked or the deductions that were
made (presumably all a matter of FXG financial records). After oral argument
on July 20, 2012, and applying the rigorous analysis that the First Circuit
requires, I GRANT the motion to certify a class for the two state law claims. I
also DENY FXG’s motion to decertify the FLSA collective action.
CLASS CERTIFICATION
The drivers request certification of the following class on their two Maine
statutory claims:
All persons who executed a standard Operating Agreement
. . . with FXG and worked full time as delivery drivers in
Maine under that agreement at any time between
December 12, 2004 and December 12, 2010.
Pls.’ Mot. and Mem. in Support of Class Certification at 3 (ECF No. 96).
ANALYSIS
I apply the criteria of Fed. R. Civ. P. 23(a) and, because the class seeks
damages, those of 23(b)(3). Of those criteria, FXG challenges four: numerosity,
adequacy of representation by the named plaintiffs, predominance and
superiority.
Numerosity
The class of Maine drivers exceeds 100.2 Pls.’ Mot and Mem. in Support
of Class Certification at 10. That satisfies numerosity. I reject FXG’s argument
that the proceedings to date indicate lack of class interest because the
participants in the FLSA opt-in collective action number only in the 20s.
Although FXG challenges superiority, it does not challenge the number of individuals
included in the class. FedEx’s Mem. of Law in Opp’n to Pls.’ Mot. for Class Certification at 4,
27, 28 (ECF No. 108).
2
2
FedEx’s Mem. of Law in Opp’n to Pls.’ Mot for Class Certification at 27 (ECF No.
108). The standards are different—a much longer statute of limitations for the
Maine claims, a restrictive weight requirement in the FLSA collective action for
the trucks the drivers used, limitation to drivers with a single route in the FLSA
collective action, and the attractions of temporary anonymity in a class action.
Commonality
FXG does not challenge this factor.
The parties agree that liability is
determined by whether the drivers are properly treated as employees or
independent contractors.
Wal-Mart decision.
(2011).
That satisfies commonality, even under the recent
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
As in General Telephone Co. of Southwest v. Falcon, 457 U.S. 147
(1982), here there is a standard document that drives the relationship, namely
FXG’s Operating Agreement that all drivers must sign and that defines them all
as independent contractors.
Under the predominance analysis below, I will
deal with the differences that FXG highlights.
Typicality
FXG does not challenge this factor. The named plaintiffs are FXG drivers
who signed the FXG Operating Agreement. Their claims are typical of those of
the class of drivers in Maine that they seek to represent.
Adequacy of Representation
Lawyers: FXG does not challenge the adequacy of class counsel, but I
assess it regardless because of Rule 23(g). I conclude that Harold Lichten of
the firm of Lichten & Liss-Riordan, P.C. has extensive experience in class
action litigation, employment litigation, and litigation against FXG.
He has
3
committed himself and his firm’s resources to pursuing this lawsuit now for
almost two years. Local counsel Donald F. Fontaine has over thirty-five years
of experience representing individuals and plaintiff classes in labor and
employment actions before the state and federal courts of Maine and the First
Circuit. See e.g., Parker v. Wakelin, 123 F.3d 1 (1st Cir. 1997); McCormick v.
Festiva Dev. Group LLC, Civ. No. 09-365-P-S, 2010 WL 582218 (D. Me.
Feb. 11, 2010); In re Wage Payment Litig., 759 A.2d 217 (Me. 2000).
Named Plaintiffs: FXG challenges the adequacy of some of the named
plaintiffs.
Recently I reviewed the applicable factors in LaRocque v. TRS
Recovery Services, Inc., No. 2:11-cv-91-DBH, 2012 WL 2921191 *5-*6 (D. Me.
July 17, 2012), and I will not repeat them here.
1.
I reject the challenges to credibility of the named plaintiffs. What
FXG asserts are inconsistencies between statements and depositions are a
matter of interpretation.
2.
I also reject the challenges that are based upon asserted
inconsistency between what a named plaintiff stated that FXG had the
authority to do in monitoring, and his testimony about what he himself
actually allowed FXG to do. The two are not necessarily inconsistent.
3.
The plaintiffs’ lawyer has assured me that the one named plaintiff’s
(Scovil’s) failure to afford discovery was an oversight, now being remedied (his
deposition was taken, but he did not provide answers to interrogatories.) Pls.’
Reply in Support of Their Mot. for Class Certification at 14 n.17 (ECF No. 119).
4.
I do find one named plaintiff inadequate, however. William Preble
testified not only that he knew nothing about the complaint and the lawsuit,
4
but he also said that he believed that he was an independent contractor, not an
employee, a statement contrary to the very premise of the lawsuit. Preble Dep.
at 14-18 (ECF No. 108-2). The plaintiffs’ lawyer also added at oral argument
that Preble was a class member for only part of the class period because he
was not a fulltime delivery driver while he was in Florida.
5.
The remaining named plaintiffs have participated in discovery, are
sufficiently familiar with the facts of the case, have suffered the same injuries,
seek the same relief for themselves as they do for all members of the putative
class and there are no alleged conflicts with the interests of the class members.
I conclude that they can adequately represent the proposed class.
Predominance
The “central issue” in this case is whether the drivers are properly
classified as independent contractors, as FXG’s Operating Agreement says,
rather than FXG employees. FedEx’s Mem. of Law in Opp’n to Pls.’ Mot. for
Class Certification at 1 (ECF No. 108). That issue alone will determine liability.
Whether common issues predominate will depend upon Maine law,
because the plaintiffs rely upon two Maine statutory provisions for liability.
The predominance question therefore is what the plaintiffs must prove to
establish liability under Maine law. Those two statutory provisions give their
protection only to “employees.” One of them defines that term; the other does
not.
Section 629, the prohibited deduction statute, has no definition for the
term “employee,” and the parties have found no Law Court case that addresses
who is an employee for purposes of this section.
The plaintiffs say that
5
employment status here should be determined by the “right to control,” which
they also call the common law right to control test, Plaintiffs’ Motion and
Memorandum in Support of Class Certification at 17, 18; FXG says that
Maine’s “common law test” is pertinent, FedEx’s Memorandum of Law in
Opposition to Plaintiffs’ Motion for Class Certification at 6 n.3.
For the overtime statute, section 664, there is a statutory definition in
section 663 of both “employ” and “employee,” but neither party discusses these
definitions.3
The plaintiffs argue that for section 664, the term “employee”
should be determined by the “economic realities” test, based upon a reference
to that test in Director of Bureau of Labor Standards v. Cormier, 527 A.2d
1297,
1299-1300
pronouncement.
(Me.
1987).
But
Cormier
is
hardly
a
definitive
The Law Court there was dealing with the meaning of
“employer,” not the defined term “employee.” It said, accurately, that there is
no statutory definition for the term “employer.” Moreover, what the Law Court
said—that in determining whether two entities were joint employers, “[t]he trial
court committed no error in examining the economic realities of the Cormierrelated corporate and partnership entities and determining based on that
examination that those entities acted as one employer for purposes of enforcing
section 664,” Cormier, 527 A.2d at 1300—is a slim reed upon which to
conclude that the economic realities test determines the definition of employee,
3 Section 663 (which expressly applies to the subchapter of which the overtime statute is part),
defines “employ” as “to suffer or permit to work,” and defines “employee” as “any individual
employed or permitted to work by an employer.” 26 M.R.S.A. § 663. There are certain
enumerated exclusions not pertinent to this case.
6
particularly in light of other cases that I discuss below.4 For its part, FXG says
that the test for who is a section 664 employee “is unsettled,” FedEx’s
Memorandum of Law in Opposition to Plaintiffs’ Motion for Class Certification
at 6 n.3, but that, for purposes of its opposition to certification, it will accept
the plaintiffs’ proposal.
In order to decide the certification motion, I need to determine what
factors will determine—at trial or on summary judgment—who is an employee
under each of these two statutory provisions, because they provide protection
to employees, not to independent contractors.
Only by knowing with some
assurance what the relevant factors are can I properly apply the Rule 23
predominance requirement.5 As I have said, the parties have found only one
Law Court decision, Cormier, that deals with section 664 overtime, and no Law
Court case that has interpreted section 629.
Cases that do address the
distinction between employee and independent contractor status arise out of
statutory law, namely the Workers Compensation Act and section 626
(requiring that employees be paid promptly at the end of their employment);
insurance contracts; and tort law concerning agent responsibility.
I start with section 626 because, like sections 629 and 664, it appears in
the Employment Practices chapter (Chapter 7) of Title 26, Maine’s Labor and
Industry code. (Sections 626 and 629 appear in the same subchapter, Wages
and Medium of Payment, whereas section 664 appears in the Minimum Wages
In Cormier, the Law Court did not even list what the economic realities factors were.
Thus, I cannot rely upon FXG’s stipulation that a particular test applies when the stipulation
is limited to the certification dispute. If at trial I concluded that a different test applied, I might
find that certification had been improvident.
4
5
7
subchapter.) Section 626 has its own definition of “employee.” It means “any
person who performs services for another in return for compensation, but does
not include an independent contractor.”
26 M.R.S.A. § 626.
That is not a
particularly helpful definition, and not very different from section 663’s
definition for a section 664 employee as “any individual employed or permitted
to work by an employer,” where “employ” in turn is defined as “to suffer or
permit to work.” In determining who is a section 626 employee rather than an
independent contractor, the Law Court uses the eight-factor common law rightto-control test. Marston v. Newavom, 629 A.2d 587, 590-91 (Me. 1993) (the
“‘right to control’ test” “is the proper test”6); accord Taylor v. Kennedy, 719 A.2d
525, 527-28 (Me. 1998) (listing the eight common law factors and stating that
“[t]he most important factor is the right to control” for determining section 626
employee status).7 As I describe below, Workers Compensation cases also use
this eight-factor test to determine who is an employee, as do insurance and
torts cases.
Marston said that there was no definition of “employee” at the time, because the definition,
added in 1991, did not apply retroactively to the activity in Marston, which occurred in 198990. Marston v. Newavom, 629 A.2d 587 at n.5.
7 Earlier, in determining whether a particular physician was an “employee” of a hospital for
purposes of section 626, Knoppers v. Rumford Community Hospital, 531 A.2d 1276 (Me. 1987),
the Law Court—in a divided decision—relied upon “the sound principle of statutory
construction that absent a legislative definition, the term ‘employee’ ‘must be given a meaning
consistent with the overall statutory context, and be construed in the light of the subject
matter, the purpose of the statute, the occasion and necessity for the law, and the
consequences of a particular interpretation.’” Id. at 1278. Because of some complex legislative
history concerning section 626 and its predecessor statute’s omission of hospitals from covered
employer liability, the Law Court concluded in Knoppers that there was never a legislative
intent to include the “hospital/physician employment relationship” within section 626. Id. at
1279. Instead, the Law Court concluded that section 626 “was intended to apply to working
people who are dependent upon full and regular wage payments to meet their weekly needs.”
Id. at 1280. The dissent faulted the Court’s legislative history, and said that the common law
right-to-control test should determine employment status. Id. at 1281-82. The cases in text
seem to have limited Knoppers to its facts, Marston, 629 A.2d at 591, (Taylor does not even
mention Knoppers) and to have adopted the Knoppers dissent’s position. In any event,
Knoppers would support the conclusion I reach here.
6
8
From my examination of all the Maine cases, I see nothing to lead me to
conclude that the Maine Court would define the term “employee” differently for
sections 626, 629 and 664. Indeed, it would create havoc for employers and
commerce if the standards for these provisions were different, causing
unnecessary complexity in bookkeeping, payroll, etc.
As the United States
Supreme Court said in confronting a similarly unhelpful definition in an ERISA
case (defining employee as “any individual employed by an employer”):
[w]here Congress uses terms that have accumulated settled
meaning under . . . the common law, a court must infer,
unless the statute otherwise dictates, that Congress means
to incorporate the established meaning of these terms. . . .
In the past, when Congress has used the term “employee”
without defining it, we have concluded that Congress
intended to describe the conventional master-servant
relationship as understood by common-law agency
doctrine.
Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992) (quoting
Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989)). Maine has
followed a similar approach in reading the common law right-to-control test
into section 626’s definition of employee. There is every reason to believe that
it would do the same for the section 663 definition for section 664 employees
and for the definition-less section 629.
State Farm Mut. Auto. Ins. Co. v.
Koshy, 995 A.2d 651, 663 (Me. 2010) (stating that an ambiguous statute will
only be read in derogation of the common law if the legislative history
demonstrates the Legislature's intent to do so); Town of Baldwin v. Carter, 794
A.2d 62, 68 (Me. 2002); Davis v. State, 306 A.2d 127, 131 (Me. 1973).8
The Law Court also follows the Restatements. The Restatement of Agency, both Second and
Third, list criteria very similar to those in Murray’s Case, for distinguishing an employee from
8
(continued next page)
9
For the common law definition of employee, the seminal case is the 1931
decision in Murray’s Case, 154 A. 352 (Me. 1931), although Murray’s Case
itself was not a common law decision.
There the Law Court had to decide
whether a worker was an “employee” within the meaning of the Workmen’s
Compensation Act, or an independent contractor.
The statute defined
employee as a “person in the service of another under any contract of hire,
express or implied, oral or written.”
Id. at 353.
The Court quoted earlier
decisions that an independent contractor “is one who carries on an
independent business, and in the line of his business is employed to do a job of
work, and in doing it does not act under the direction and control of his
employer, but determines for himself in what manner the work shall be done.”
Id. The Court listed the following eight “tests of the relationship,” saying that
they were “not necessarily concurrent or each in itself controlling”:
(1) the existence of a contract for the performance by a
person of a certain piece or kind of work at a fixed price;
(2) independent nature of his business or his distinct
calling; (3) his employment of assistants with the right to
supervise their activities; (4) his obligation to furnish
necessary tools, supplies, and materials; (5) his right to
control the progress of the work except as to final results:
(6) the time for which the workman is employed; (7) the
method of payment, whether by time or by job; (8) whether
the work is part of the regular business of the employer.
Id. at 354. But the Court also said that “[t]he test of the relationship is the
right to control. It is not the fact of actual interference with the control, but the
right to interfere, that makes the difference between an independent contractor
and a servant or agent.” Id. at 354 (quoting Tuttle v. Embury-Martin Lumber
an independent contractor. Restatement (Third) of Agency § 7.07 (2006); Restatement (Second)
of Agency § 220 (1958).
10
Co., 158 N. W. 875, 879 (1916)); see also id. at 355 (citing Franklin Coal &
Coke Co. v. Ind. Comm., 129 N. E. 811 (1921)).
The Law Court said that
“[t]here is no conflict as to this general rule,” although the results of its
application are often contradictory. Id. at 354.
The Law Court has referred to the same eight factors recurrently over the
years since Murray’s Case, along with the statement that no one of them is in
itself controlling and that the right to control is the principal factor. E.g., Lunt
v. Fid. & Cas. Co., 28 A.2d 736, 740 (Me. 1942) (insurance contract excluding
coverage to employees) (“The essential elements are . . . control and direction of
the employment . . ., and . . . the right to employ . . . and . . .discharge.”);
Lewiston Daily Sun v. Hanover Ins. Co., 407 A.2d 288, 292 (Me. 1979)
(insurance contract excluding coverage for operation of an automobile by an
employee) (“The right to control the details of performance is the crucial factor
in determining the status of an individual who performs services for another,”
and “no single factor is controlling.”); Timberlake v. Frigon & Frigon, 438 A.2d
1294, 1296 (Me. 1982) (Workers Compensation Act definition of employee) (“the
vital issue in proving an employee-employer relationship is whether or not the
employer has the power of control or superintendence over the petitioner”);
Peerless Ins. Co. v. Hannon, 582 A.2d 253, 25 (Me. 1990) (insurance contract)
(citing Murray’s Case and stating that although no factor is conclusive, “the
right of employers to control the activities of those working for them and to
begin and terminate the relationship are crucial factors in establishing an
employment relationship. The right to control employment is not negated by
the fact that the circumstances of employment have never required exertion of
11
that right.”); North East Ins. Co. v. Soucy, 693 A.2d 1141, 1144 (Me. 1997)
(insurance policy) (control and direction and right to employ and discharge are
the essential elements; considering eight factors, “regarding no one factor as
decisive”); Legassie v. Bangor Pub. Co., 741 A.2d 442, 445 & n.4 (Me. 1999)
(tort principles) (listing the eight factors “with the recognition that ‘control’ is
the most significant of these factors”); Rainey v. Langen, 998 A.2d 342, 346-47,
349 (Me. 2010) (tort principles in context of franchise agreement and Lanham
Act, in determining whether franchisor was vicariously liable for conduct of
franchisee’s employee’s conduct) (adopting the “traditional approach” and
listing the eight factors from Murray’s Case, of which “right to control” is “the
most important”).
Legassie makes an important observation in a footnote.
It states that
when a workers’ protective statute such as the Workers Compensation Act is
being interpreted, more attention should be given in the eight-factor test to two
of those factors: the nature of the work and its importance to the employer’s
business. Id.9 I believe that observation applies as well to interpretation of
Maine’s overtime statute and Maine’s limitation on paycheck deductions,
because these two “Employment Practices” provisions certainly are labor
protective. Legassie, therefore, along with the Law Court’s regular invocation of
Murray’s Case in section 626 cases and elsewhere, leads me to conclude that,
9 The United States Supreme Court also has noted that in applying “social legislation,”
coverage may be broader, extending to “those who as a matter of economic reality are
dependent upon the business to which they render service.” Bartels v. Birmingham, 332 U.S.
126, 130 (1947).
12
for both these provisions, the eight-factor test is applicable,10 but with more
attention to the nature of the work and its importance to the employer’s
business.11
The plaintiffs contend that the primary evidence on status/liability will
be FXG’s Operating Agreement and FXG’s policy manuals. FXG, on the other
hand, asserts that there will be an excess of individualized evidence as it
defends its claim that drivers are independent contractors—evidence of those
drivers who profited and those who lost money, those who allowed supervisors
to accompany them in their trucks and those who did not, those who were
closely regulated and those who were not (for example, facial hair and length of
hair), those who invested a lot in their trucks and those who did not—and that
the need to present evidence of actual control will prevent a finding of
predominance.
As I have said, FXG takes the position that all the drivers are
independent contractors.
That is how the FXG Operating Agreement
characterizes them and how FXG maintains that they were treated. Until the
lawsuit, FXG did not maintain that some drivers were independent contractors
while others were not. Thus, the status question initially should be subject to
determination on common evidence: FXG’s general treatment of a class of its
10 In other words, in my prediction of what the Law Court would do, I find that even for section
629, Legassie’s more recent pronouncement prevails over Cormier’s previous endorsement of
the economic realities test in a joint employer dispute.
11 I also note two decisions from this federal court: Beckwith v. United Parcel Service, 711 F.
Supp. 655 (D. Me. 1989) (§ 629, the deduction statute and referring to Law Court usage for
§ 626 that employees include “working people who are dependent upon full and regular wage
payments to meet their weekly needs”); Larson v. Johnson, 184 F. Supp. 2d 26 (D. Me. 2002)
(§ 626) (“right to control” determines the employment relationship and listing eight factors,
without “any one particular factor controlling”).
13
drivers.
True, proof of independent contractor status may show that FXG
permitted variations in behavior (supervisory managers at four terminals were
involved), or that the drivers varied in the profits or losses that they generated
from their activities, or that they varied in negotiating their agreements, or that
some but not others executed supplemental documents, or that they paid
differing amounts for their trucks, or that they had different levels of skill and
initiative.12 But to the degree that those are relevant issues under the eightfactor
test,
they
are
part
of
the common proof—that
FXG
accorded
independence to its drivers and accorded them economic freedom.
That
evidence of variation among drivers is a hallmark of independent contractor
status and would be admissible at FXG’s request even in an individual lawsuit
by one driver, to show that whatever the experience of that individual driver, he
had the opportunity and freedom accorded to an independent contractor, as
demonstrated by the experience of his fellows; the variety component is not a
dimension added by class action certification. And while there may be a lot of
evidence to present to show variety, that is not the same as showing that
common evidence does not predominate.
Moreover, the right to control, the nature of the work, and its importance
to FXG’s business—the three most important factors according to the Maine
cases—are all subject to common evidence. There is no dispute as to the last
two factors (the nature of the work and its importance to FXG’s business). The
Some of this evidence is problematic. Differing skill and initiative, and different standards of
behavior by managers are of course characteristic of an employment relationship as well.
12
14
right to control will be determined primarily by the Operating Agreement and
other documents that FXG issues.13
At oral argument, FXG’s lawyer argued that I should focus on what the
class action trial will be about (a sensible proposition), and that FXG will be
entitled to show that actual control varied and to present the individualized
evidence of each driver’s work experience.
But Murray’s Case makes the
individualized actual control evidence of doubtful relevance: “[t]he test of the
relationship is the right to control. It is not the fact of actual interference with
the control, but the right to interfere, that makes the difference between an
independent contractor and a servant or agent.” Murray’s Case at 354.14
Instead, assessing the eight factors from Murray’s Case makes it clear
that at trial the common evidence should predominate, specifically:
FXG states in its opposition that
[t]he Operating Agreement (“OA”) signed by FXG contractors
provides that it was the mutual intention of both FXG and
Plaintiffs to establish an independent contractor relationship. Ex.
5 (OA) at 1, Background Statement. The Agreement sets forth the
parties’ mutual business objectives, but provides that the
“manner and means of reaching these results are within the
discretion of the Contractor.” Id. The Contractor’s compensation,
called “settlement,” is determined by a formula based largely on
the number of packages they pick-up and/or deliver and the
number of stops they make. (OA Addendum 3). Under the OA,
the Contractor, which may be an entity such as a corporation, is
responsible for paying the costs and expenses of operating the
Contractor’s business (§ 1.3, at 2-3), including the provision of a
vehicle (§ 1.1, at 1-2); is allowed to hire other persons to perform
the Contractor’s contractual obligations (§ 2.2, at 9); has a
proprietary interest in the Contactor’s route(s) (OA Addendum 5);
and is even allowed to sell the route to another qualified person
(§ 18, at 27-28). Several of the OA addenda were voluntary, and
contractors had the option to refuse to sign them.
FedEx’s Mem. of Law in Opp’n to Pls.’ Mot. for Class Certification at 4-5.
14 Some of the Maine cases permit evidence of what actually happened as evidence of the power
to control, but for the reasons I explain in text, to the extent it is relevant it still is common
evidence as to what independence FXG allows its Maine drivers.
13
15
(1)
”The existence of a contract for the performance by a
person of a certain piece or kind of work at a fixed price”: proof of
the contract(s) will largely be common evidence.
(2)
“independent nature of his business or his distinct
calling”:
to the degree this factor goes beyond what the FXG
documents provide, there could be individualized evidence about
the “calling” or “business” of various drivers.
(3)
“his employment of assistants with the right to
supervise their activities”:
the first part (driver employment of
assistants) could vary, but not significantly; the second (right to
supervise their activities) should be common evidence.
(4)
“his obligation to furnish necessary tools, supplies,
and material”: evidence of the obligation should be common; and
even the evidence of actual investment is unlikely to vary much,
involving a truck, scanner and equipment for lifting packages.
(5)
“his right to control the progress of the work except as
to final results”: this should be common evidence.
(6)
“the time for which the workman is employed”: actual
length of employment may vary, but the class is limited to fulltime
drivers and that will be common evidence.
(7)
“the method of payment, whether by time or by job”:
that will be a matter of common evidence.
(8)
“whether the work is part of the regular business of
the employer”: that will be a matter of common evidence.
16
In the end, I find that the predominance standard is satisfied. Of course, in
light of the Law Court precedents, I cannot know with certainty what
combination of the eight factors will drive the final decision on the merits. But
it is highly unlikely that the few factors involving individualized evidence will be
the driving determination, especially given FXG’s business model. Finally, FXG
may be asserting that, even if its business model is incorrect in treating drivers
as independent contractors, it should be able to prove that certain drivers were
in fact independent contractors anyway and thereby avoid damages as to those
particular drivers.
None of the Maine cases seems to recognize such a
defense—i.e., that for a category of workers that should have been treated as
employees, an employer can defend against statutory recovery by showing that
some individual workers behaved as independent contractors regardless. I find
the defense highly improbable,15 without Maine case support, and therefore not
a factor in the certification decision.16
See Nerland v. Caribou Coffee Co., 564 F. Supp. 2d 1010, 1024 (D. Minn. 2007) (it is
“disingenuous” for a defendant to collectively assign classification to all managers “without any
individualized inquiry” and then argue individualized inquiries are needed when plaintiffs
challenge defendant’s class-wide designation). Tellingly, in its motion to decertify the collective
FLSA action, FXG says that “FXG’s main individualized defense—that Plaintiffs were properly
classified as independent contractors under the FLSA’s economic realities test—applies to each
Plaintiff.” FedEx’s Mot. and Mem. to Decertify Collective Action at 2 (ECF No. 110).
The United States Supreme Court has noted the importance of categorical judgments
for such issues. See Nationwide Mutual Ins. Co. v. Darden, 503 U.S. at 327 (referring to the
need of companies “to figure out who their ‘employees’ are and what, by extension, their
pension-fund obligations will be. To be sure, the traditional agency law criteria offer no
paradigm of determinacy. But their application generally turns on factual variables within an
employer’s knowledge, thus permitting categorical judgments about the ‘employee’ status of
claimants with similar job descriptions.”) (emphasis added).
16 I do not cite the abundance of decisions from other jurisdictions involving FXG drivers,
because I conclude that ultimately Maine law controls in the determination of whether common
issues predominate.
15
17
Superiority
Under the superiority factors enumerated in the Rule, I find that the
class members do not have any interests in individually controlling the
prosecution of separate actions; there is no other litigation already begun by
these class members; it is desirable to concentrate the litigation in this Maine
forum for these Maine claims; and difficulties in managing the class action are
unlikely to nonexistent. Here there will be a central question to resolve: were
the drivers independent contractors or employees?
Once that question is
resolved, either the lawsuit is over, or there are damages to be calculated. The
parties have previously agreed to bifurcate damages. In any event, the First
Circuit has said that individual damages calculations are not ordinarily a block
to class certification. Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d
32, 41 (1st Cir. 2003). Here they should be largely a matter of straightforward
accounting.
FXG argues that a class trial is not superior to individual trials or joinder
of claims in part because few drivers ultimately opted into the collective action
that I conditionally certified earlier under the Fair Labor Standards Act.
FedEx’s Mem. in Opp’n to Pls.’ Motion for Class Certification at 2, 26-29. FXG
also says that the plaintiffs’ lawyer has access to drivers’ names and addresses
and has successfully continued to prosecute individual cases in other states
where a class was not certified. As I said under numerosity, the number of
opt-ins is not determinative. The class definition is different from the FLSA
collective action definition and is larger here for the state law claims.
Moreover, a class action has the advantage of allowing some drivers to proceed
18
anonymously for a time as unidentified members of the class.
(For those
drivers still working for FXG, there may be some reluctance to join by name a
collective action or to file an individual lawsuit.) The plaintiffs’ lawyer said in
court at oral argument that, in addition to the 22 drivers who now are part of
the FLSA collective action, already he has as clients 46 drivers (he predicts
there will be ten or fifteen more) who have not joined the lawsuit because of
tolling, that they will file individual lawsuits if a class is not certified, and that
the number is likely to grow if no class certification occurs, because some
drivers now are relying on the likelihood of class status.
Finally, this is not a “bet the company” case for FXG, a situation that has
motivated some appellate courts to show more resistance to class certification.
This case involves drivers in only one state, the small state of Maine. All does
not rise or fall on the Maine outcome. (FXG told me at oral argument that it
had successfully obtained summary judgment on similar claims where classes
were certified in other states.17)
I conclude that the superiority factor is satisfied.
Thus, I conclude that all the criteria of Rule 23(a) and (b)(3) are satisfied
and that the proposed class should be certified, omitting William Preble as a
named plaintiff representing the class.
THE FLSA COLLECTIVE ACTION
FXG has moved to decertify the collective action that I certified
conditionally under the Fair Labor Standards Act. The FLSA claim is that FXG
See also FedEx’s Mem. of Law in Opp’n to Pls.’ Motion for Class Certification at 10 n. 8
(citing In re FedEx Ground Package Sys., Inc., Emp’ t Practices Litig., 758 F. Supp. 2d 638, 734
(N.D. Ind. 2010)).
17
19
misclassified its drivers as independent contractors and, as a result of the
misclassification, failed to pay them the required overtime for all hours worked
in excess of 40 hours per week. The total size of the collective action after optins is 22 drivers.
Although there is no First Circuit caselaw on the standard for
certifying/decertifying an FLSA collective action, the Sixth Circuit says that the
standard is less demanding than Rule 23, O’Brien v. Ed Donnelly Enters., Inc.,
575 F.3d 567, 580 (6th Cir. 2009), and FXG agreed at oral argument. FXG
says that at this decertification stage,
Courts usually consider three factors: (1) the factual and
employment settings of the individual plaintiffs; (2) the
different defenses to which plaintiffs may be subjected on
an individual basis; and (3) the degree of fairness and
procedural impact of certifying the action as a collective
action.
FXG Mot. & Mem. to Decertify Collection Action at 1 (ECF No. 110) (citing
O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d at 584). The plaintiffs bear the
burden, id. at 602, but as the cases repeat, the requirement is that the
plaintiffs be “similarly situated,” not identical. See e.g., O’Brien, 575 F.3d at
580.
I also observe that in this case the collective action contains only 22
drivers.
Thus, the quantity of evidence is unlikely to be excessive.
In
determining superiority, I weigh the advantages and disadvantages of a
collective action against joinder of these drivers or 22 individual trials.18
18 On the substantive law of liability, status again controls: are the drivers employees or
independent contractors? But for the FLSA, employment status is controlled by the “economic
realities” test, which the cases attribute to Rutherford Food Corp. v. McComb, 331 U.S. 722
(1947). Rutherford Food dealt with the FLSA definitions of employee (“any individual employed
by an employer”) and employ (“suffer or permit to work”). (The Supreme Court has said that
this definition is one of “striking breadth” that “stretches the meaning of ‘employee’ to cover
(continued next page)
20
FXG says that the lack of similarity (factor 1) in this case is that in Maine
there were four different terminals (Bangor, Lewiston, Saco and Houlton),
Declaration of Matt Runko ¶¶ 1-2 (ECF No. 108-2), several different terminal
managers, and two different service offerings (residential home delivery (HD)
and business package distribution (Ground)), FedEx’s Memorandum of Law in
Opposition to Plaintiffs’ Motion for Class Certification at 2-4; that the
individualized defenses (factor 2) for each plaintiff arise out of their different
work experiences; and that there is a lack of fairness and of procedural
some parties who might not qualify as such under a strict application of traditional agency law
principles.” Nationwide Mutual Ins. Co. v. Darden, 503 U.S. at 326.) Rutherford Food
concluded that “determination of the relationship [depends] upon the circumstances of the
whole activity,” and agreed with the Tenth Circuit Court of Appeals, which had looked at the
“underlying economic realities” to determine employee status. Id. at 727. In Rutherfood Food,
the Supreme Court concluded that the workers in question were not independent contractors
but employees, by looking at the group of workers as a whole. 331 U.S. at 730.
Judge Carter of this District has said that under the “economic realities” test, “[t]he
focal point is whether the individual is economically dependent on the business to which he
renders service or is, as a matter of economic fact, in business for himself.” Bolduc v. Nat’l
Semiconductor Corp., 35 F. Supp. 2d 106, 112 (D. Me. 1998). According to Bolduc:
Courts examine the following factors to determine whether an
individual is an employee and, thus, is covered by the FLSA:
1) the degree of control exercised by the employer over the
worker; 2) the worker’s opportunity for profit or loss; 3) the
worker’s investment in the business; 4) the degree of skill and
independent initiative required to perform the work; 5) the
permanence or duration of the working relationship; and 6) the
extent to which the work is an integral part of the employer’s
business.
Id. But this reference to the “individual” was not in the context of a company like FXG that
puts an entire category of workers under a particular classification. FXG is right or it is wrong
in its classification, but it cannot argue that, even if it is wrong in its classification, certain
individual drivers in fact behave like independent contractors and therefore lack employee
protections. If that were so, any employer could make the same argument about selected
employees as a defense in an FLSA lawsuit. Applying the Bolduc “economic realities” factors to
the category of FXG drivers, in place of the eight-factor common law test, would produce the
same conclusion on the certification decision (if the economic realities factors were pertinent
there), in particular on the predominance analysis, and it produces no different outcome here
for the FLSA collective action. FXG cites a Second Circuit case, Frasier v. General Electric Co.,
930 F.2d 1004 (2d Cir. 1991), for the proposition that a particularized inquiry into the
relationship between employer and employee is required. In fact, Frasier (like Rutherford Food)
was speaking about a category, not an individual, noting that the plaintiff “might be able to
adduce facts and evidence to suggest that the pertinent consultants should be deemed
employees.” Id. at 1008.
21
efficiency (factor 3) because the individualized evidence requires individual
trials. For the most part, these are the same arguments that I have rejected in
granting class certification, and there is no reason to repeat the analysis. But
to summarize: the number of terminals and terminal managers is small;19 I am
highly skeptical of the individualized defense argument, because FXG treated
its drivers as a category in its status classification decision; there is nothing
unfair about the collective action, and procedural efficiency will be furthered by
a collective action involving only 22 drivers.
FXG says that it has an individualized statute of limitations defense to
some of the collective action members.
If it does, it should challenge their
inclusion in the collective action, but the statute of limitations does not make a
collective action inappropriate.20 FXG also says that it has a judicial estoppel
defense to two of the collective action members who declared bankruptcy but
did not list their claims against FXG.
That may be a reason to permit the
bankruptcy trustee to intervene as a party, see, e.g., GE HFS Holdings, Inc. v.
National Union Fire Insurance Company of Pittsburgh, PA, 2008 WL 2246673,
*4 (D. Mass. May 29, 2008); Graupner v. Town of Brookfield, 450 F. Supp. 2d
119, 129 (D. Mass. 2006); Vidal v. Doral Bank Corporation, 363 F. Supp. 2d
19, 22 (D. P.R. 2005), but not to foreclose a collective action.
19 If there is a significant distinction between home delivery (HD) and commercial (Ground)
drivers (and I don’t believe that there is, given the legal analysis), FedEx Motion and
Memorandum to Decertify Collective Action at 6 (ECF No. 110), FXG can suggest two
subclasses.
20 The same is true for FXG’s arguments about qualifying vehicle weight and some drivers
using corporate status.
22
I conclude that the drivers are similarly situated and appropriate for the
collective action. Under the factors listed by FXG and for reasons similar to
those I gave for certifying the class21, therefore, I DENY the motion to decertify
the collective action.22
ORDER
1.
Without prejudice to their objections to this decision, the parties
shall meet and confer on the form and content of an order certifying and
defining the class to satisfy Rule 23(c)(1)(B)’s requirement that the order “must
define the class and the class claims, issues, or defenses.” William Preble shall
not be listed as a named plaintiff representing the class. If the parties cannot
agree on the order, they shall present jointly the portions on which they do
agree and separately—with support for their competing positions—the portions
on which they cannot agree. They shall do so by September 4, 2012.
2.
The parties shall meet and confer on the form and content of a
class notice that satisfies Rule 23(c)(2)(B). The same procedures and deadlines
shall be followed as in the preceding paragraph.
3.
The order certifying the class must also appoint class counsel. In
that connection, I exercise my authority to order that class counsel propose
terms for attorney fees and nontaxable costs, as well as record-keeping and
documentation requirements, and provide me with any fee agreement(s) that
21 FXG suggests in passing that, by the Rules Enabling Act, Rule 23 supplants any collective
action. They cite no authority for the argument. Since the Supreme Court has recognized
FLSA collective actions, Hoffman-La Roche, Inc. v. Sperling, 493 U.S. 165, 186 (1989), I reject
the argument.
22 FXG asserts that some members of the collective action do not qualify because of the size of
their trucks or because they did not sign an Operating Agreement. FedEx Mot. and Mem. to
Decertify Collective Action at 22-23. If that is so, FXG can challenge their membership in the
collective action.
23
they have entered.
See Rule 23(g)(1)(C).
They shall do so by the same
deadline.
SO ORDERED.
DATED THIS 13TH DAY OF AUGUST, 2012
/s/D. Brock Hornby
D. BROCK HORNBY
UNITED STATES DISTRICT JUDGE
24
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