CARROW et al v. FEDEX GROUND PACKAGE SYSTEMS, INC.
Filing
120
OPINION. Signed by Judge Robert B. Kugler on 12/26/2019. (rtm, )
NOT FOR PUBLICATION
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
:
:
:
:
:
:
:
:
:
:
:
:
:
Michael CARROW, Michael FENNELL, and
Nicholas STEFANOU, individually and on
behalf of all others similarly situated,
Plaintiffs,
v.
FEDEX GROUND PACKAGE SYSTEMS,
INC.,
Defendant.
Civil No. 16-3026 (RBK/JS)
OPINION
KUGLER, United States District Judge:
This matter is before the Court upon the Renewed Motion (Doc. No. 98) of Plaintiffs
Michael Carrow, Michael Fennell, and Nicholas Stefanou, individually and on behalf of all others
similarly situated (collectively, “Plaintiffs”) for Class Certification under Federal Rule of Civil
Procedure 23. Plaintiffs are delivery drivers who contend that they were employees of Defendant
FedEx Ground Package Systems, Inc. (“FedEx”); FedEx contends that they were only employees
of separate corporations that contracted with FedEx. If Plaintiffs are correct, Defendant may have
taken unlawful deductions from Plaintiffs’ wages under the New Jersey Wage Payment Law
(“NJWPL”), N.J.S.A. 34:11-4.1, et seq; if Defendant is correct, Plaintiffs have no viable claim.
Because the case boils down to this central issue, the Court finds that class treatment is appropriate
and therefore GRANTS Plaintiffs’ Motion.
I.
BACKGROUND
Defendant FedEx is a national company that picks up and delivers packages. (Doc. No. 41
(“Compl.”) at ¶ 20). Defendant relies on truck and van drivers in New Jersey like Plaintiffs to
1
provide these services for its customers. (Id. at ¶¶ 3, 20). This case concerns the precise relationship
between Defendant and these drivers.1
According to Nathan Mollenhauer, a region Senior Manager in Defendants’ Contractor
Relations Department, Defendant entered into contracts known as Operating Agreements (“OAs”)
(Doc. No. 99-3) with individuals and incorporated companies until 2010. (Mollenhauer Dec. (Doc.
No. 82) at ¶¶ 2–7). Mollenhauer states that before May 2010, Defendant considered individuals
who entered OAs with Defendant in their individual capacities to be independent contractors. (Id.
at ¶ 6). After 2010, however, Defendant only contracted with incorporated businesses, and not
individuals. (Id. at ¶ 7). By June 2011 every New Jersey business with which Defendant contracted
for pickup and delivery services was an incorporated business. (Id. at ¶ 8). These incorporated
businesses are known as Contracted Service Providers (“CSPs”), whose “Officers” ordinarily
signed the OA on the CSP’s behalf. (Id. at ¶¶ 7, 14). A CSP could hire individuals to drive for it,
its Officers could drive, or both. (Id. at ¶¶ 9, 11, 33). According to Mollenhauer, under the OA,
all of a CSP’s drivers are required to be employees of those CSPs and not Defendant, and
Defendant did not classify any of the drivers as independent contractors. (Id. at ¶¶ 12).
Plaintiffs drove for Defendant under OAs. Plaintiffs Carrow and Fennell each formed
corporate entities to create a CSP and signed OAs as the CSPs’ Officers. (See Carrow Dep. (Doc.
No. 74-2) at 79:20–81:1; see also Fennell Dep. (Doc. No. 74-5) at 55:24–56:2; accord Doc. No.
67-8). Plaintiff Stefanou, by contrast, initially purchased a CSP from another individual around
2008. (Stefanou Dep. (Doc. No. 74-15) at 54:17–56:3). In 2010, Plaintiff Stefanou, like Carrow
and Fennell, created a corporation and transferred the OA to it. (Id. at 70:7–13).
1
The Court has already set forth much of the factual background in its prior opinions in this case; it does so again to
highlight the facts underlying the present decision.
2
Plaintiffs contend that Defendant controls the drivers such that they are its employees rather
than independent contractors. (Compl. at ¶ 5). According to Plaintiffs, such control is manifest in
the terms of the OA, including its provisions requiring the drivers to operate vehicles displaying
the FedEx logo (OA at § 1.5), wear approved FedEx uniforms (OA at § 1.12), and meet
Defendant’s “Standard of Service” (OA at § 1.10), and to allow Defendant’s personnel to ride with
them in order to gather data on the drivers’ routes (id. at § 6.2). Further, Defendant determined the
size and composition of the routes, (id.) established the formulas by which drivers were paid,
negotiated all prices paid by customers (id. at § 4.1) and required the drivers to cover the FedEx
logo on their equipment if they wished to transport goods for other parties (id. at §§ 1.4–1.5).
Plaintiffs also assert that Defendant’s control extended beyond the terms of the OAs. All
drivers began their days at Defendant’s terminals where they would have to wait for their vehicle
to be loaded before they could go out and make deliveries. (Mollenhauer Dep. (Doc. No. 99-9) at
69:2–13). Drivers were required to carry scanners while making deliveries, recording all of their
pick-ups and deliveries, allowing Defendant to track the status of every package. (Norton Dep.
(Doc. No. 99-2) at 100:15–101:19, 104:23–105:11; Mollenahuer Dep. at 39:18-40:3). Through
these scanners, drivers received instructions on how to release packages to customers. (Norton
Dep. (Doc. No. 99-2) at 74:7-18). Defendant would also send personnel on “van audits” to ensure
that drivers’ vehicles were properly locked and secured. (Sonsini Dep. (Doc. No. 99-1) at 45:22–
46:11; Mollenahuer Dep. At 77:5–78:9).
Plaintiffs claim that Defendant wrongfully withheld from Plaintiffs’ wages amounts for
“workers’ compensation, employment taxes, and business expenses” like “vehicle insurance,
vehicle maintenance, the ‘business support package’ and other expenses.” (Compl. at ¶¶ 86–87).
Under the OA, Defendant has not directly paid any individual for pickup and delivery services
3
since transitioning to the all-incorporated model, which was completed in June 2011; since that
time, Defendant has made all payments to the incorporated CSP entities. (Mollenhauer Dec. at ¶
13). In doing so, Defendant issued weekly settlement statements and settlement payments to the
corporate entity CSPs. (OA at § 4.2; see also Mollenhauer Dec. at ¶ 13). Defendant agreed that
the settlement statements would include an itemized listing of all deductions from the CSPs’
settlements. (OA at § 4.2). Defendant did take deductions from settlement payments to CSPs
during the class period, including for worker’s compensation insurance, worker’s accident
insurance, a variety of “business support” expenses, the “business support package,” physical
damage insurance, and liability insurance. (Dec. Rebecca Shuford (Doc. No. 99-31) at Attach. A).
Based on the OA’s alleged micro-managing and other alleged representations surrounding
the Plaintiffs’ contracting, Plaintiffs brought this suit, contending that Defendant misclassified
them as independent contractors when they were actually employees under the NJWPL. In a
previous Opinion, this Court dismissed several claims but declined to dismiss Plaintiffs’ NJWPL
claim. (Doc. Nos. 33, 34). Subsequently, Plaintiffs brought a motion for class certification, which
the Court denied without prejudice. (Doc. Nos. 91, 92). The Court concluded that Plaintiffs had
not met their burden on ascertainability, numerosity, or predominance because they did not provide
any “analysis, guidance, or methodology to determine whether putative class members
experienced the same allegedly improper wage deductions.” Carrow v. Fedex Ground Package
Sys., Inc., No. 16-3026, 2018 WL 6630512, at *4 (D.N.J. Dec. 19, 2018).
II.
STANDARD OF REVIEW
Defendant contends that Plaintiffs’ present Motion is actually an untimely Motion for
Reconsideration. (Doc. No. 103 (“Def. Brief”) at 9). As such the Court must first decide whether
to apply the demanding motion for reconsideration standard or only the usual requirements of
Federal Rule of Civil Procedure 23.
4
Courts may alter or amend class certification orders at any time “before final judgment.”
Fed. R. Civ. Pro. 23(c)(1)(C); Gutierrez v. Johnson & Johnson, 523 F.3d 187, 199 n. 12 (3d Cir.
2008). As such, district courts have discretion over whether to consider a successive motion for
class certification, and accordingly how to construe that motion. In re Tropicana Orange Juice
Marketing & Sales Practices Litig., 2018 WL 6819331, at *2 (D.N.J. Dec. 28, 2018) (citing In re
Initial Pub. Offering Sec. Litig., 483 F.3d 70, 73 (2d Cir. 2007). But courts typically will not
exercise their discretion to hear such motions unless the plaintiffs point to something new, such as
“developments in the factual background, a modified proposed class definition, new class
representatives, or any other changes which may cure defects earlier found by the court.” Gutierrez
v. Johnson & Johnson, 269 F.R.D. 430, 434 (D.N.J. July 30, 2010) (citing Zenith Labs., Inc. v.
Carter-Wallace, Inc., 530 F.2d 508, 512 (3d Cir. 1976)). Such a curative change may include
relying on “different evidence or legal theories.” In re Tropicana, 2018 WL 6819331, at *2.
Defendant contends that Plaintiffs’ Motion seeks to overturn the legal conclusions of the
Court’s prior Opinion, and therefore must be viewed as a motion for reconsideration. Defendant
seems to think that the prior Opinion was a disguised ruling on the merits, holding that Plaintiffs
must show that any deductions from the settlement payments from the CSPs were passed on by
the CSPs in the wages they paid to Plaintiffs. (Def. Brief at 9). Defendant is mistaken; the Court’s
prior Opinion holds no such thing. Instead, the Court dismissed Plaintiffs’ motion because their
legal theory was unclear and their showing was insufficient for class certification. Indeed, the
Court took pains to make clear that the issue it decided was “entirely separate” from the merits
question of whether Plaintiffs were employees of Defendant. Carrow, 2018 WL 6630512, at *5
n.3.
5
Consequently, the prior Opinion left the door open for Plaintiffs to pursue a different or
more clearly defined theory of NJWPL liability. On this motion, Plaintiffs walk through that door.
Their theory is not that Defendant caused any improper deductions from Plaintiffs’ wages earned
as CSP employees. Rather, they contend that the CSPs are a sham, and the settlement payments
themselves were Plaintiffs’ rightful wages. (Doc. No. 99 (“Pl. Brief”) at 11). Under this theory,
Plaintiffs need only establish that they were Defendant’s employees and that Defendant took
deductions from settlement payments to their CSP; whether the CSP then passed along the
deduction in the wages it paid out is simply irrelevant. While Defendant clearly disagrees with this
theory, it has no say in choosing which theory Plaintiffs pursue. See Palmer v. Univ. of Medicine
& Dentistry of N.J., 605 F. Supp. 2d 624, 631 (D.N.J. 2009) (noting that “the plaintiff is the master
of the complaint” (internal quotation omitted)).
Because the concerns highlighted in the Court’s prior Opinion do not apply to Plaintiffs’
present theory of liability, the Court believes the best course of action is to treat the present Motion
like any other for class certification, and to apply the usual Rule 23 standard. To certify a class
under Rule 23, a plaintiff must satisfy Rule 23(a)’s four requirements and one of Rule 23(b)’s three
subsections. See In re Pet Food Prod. Liab. Litig., 629 F.3d 333, 341 (3d Cir. 2010). Under Rule
23(a), the plaintiff must show:
(1) numerosity (a “class so large that joinder of all members is impracticable”);
(2) commonality (“questions of law or fact common to the class”);
(3) typicality (named parties’ claims and defenses “are typical . . . of the class”);
and
(4) adequacy of representation (representatives “will fairly and adequately protect
the interests of the class”).
Id. at 341 n.14 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997)) (alterations
omitted). Under Rule 23(b)(3), which Plaintiffs invokes here, certification is proper if “the court
finds that the questions of law or fact common to class members predominate over any questions
6
affecting only individual members, and that a class action is superior to other available methods
for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). In addition to
these explicit requirements, the class must also be clearly defined and objectively ascertainable.
See Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 591 (3d Cir. 2012).
A plaintiff must show that these requirements are met by a preponderance of the evidence,
and a court “must make whatever factual and legal inquiries are necessary and must consider all
relevant evidence and arguments presented by the parties.” In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d 305, 306 (3d Cir. 2008). Thus, a court should certify a class only if the court finds,
after a “rigorous analysis,” that Rule 23’s requirements are met. See Gen. Tel. Co. of the Sw. v.
Falcon, 457 U.S. 147, 161 (1982). Further, courts must be careful to properly analyze each of Rule
23’s requirements separately, rather than conflating two or more requirements together. See Byrd
v. Aaron’s, 784 F.3d 154, 172 (3d Cir. 2015) (emphasizing that “[p]recise analysis of relevant Rule
23 requirements will always be necessary”).
III.
DISCUSSION
Plaintiffs seek to certify the following class on their NJWPL claim:
All persons who: 1) entered into a FedEx Ground or Home Delivery Operating
Agreement, either personally or through a corporate entity; 2) drove a vehicle on a
full-time basis to provide package pick-up and delivery services pursuant to the
Operating Agreement in any week from April 13, 2010 to June 1, 2017 (“the Class
Period”); 3) were dispatched out of a terminal in the state of New Jersey; and 4)
who first signed an Operating Agreement after October 15, 2007, or excluded
themselves from the certified class in Tofaute v. FedEx Ground Package System,
Inc., No. 05-595 (N.D. Ind).
(Pl. Brief at 13). Under the NJWPL, “[n]o employer may withhold or divert any portion of an
employee’s wages” unless another New Jersey or United States law applies or the deduction fits
into a statutory list of exceptions. N.J.S.A. 34:11-4.4. As both parties seem to recognize, the key
7
issue in this case is whether the potential class members were Defendant’s employees. 2 The
NJWPL defines employee broadly as “any person suffered or permitted to work by an employer,
except that independent contractors and subcontractors shall not be considered employees.”
N.J.S.A. 34:11-4.1.
When distinguishing between an employee and an independent contractor for NJWPL
claims, courts must use the “ABC” test. Hargrove v. Sleepy’s, LLC, 106 A.3d 449, 465 (N.J. 2015)
(“Sleepy’s I”). Under the ABC test, the employer bears the burden of proving that the plaintiff is
an independent contractor by showing that:
(A) Such individual has been and will continue to be free from control or direction over
the performance of such service, both under his contract of service and in fact; and
(B) Such service is either outside the usual course of the business for which such service
is performed, or that such service is performed outside of all the places of business
of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established trade,
occupation, profession or business.
N.J.S.A. 43:21-19(i)(6); Sleepy’s I, 106 A.3d at 305.
If the potential class members were Defendant’s employees, the next issue will be whether
the settlement payments from Defendant to the CSPs were class members’ wages. The NJWPL
defines wages as “the direct monetary compensation for labor or services rendered by an employee,
where the amount is determined on a time, task, piece, or commission basis excluding any form of
supplementary incentives and bonuses which are calculated independently of regular wages and
paid in addition thereto.” N.J.S.A. 34:11-4.1(c).
If the class members were Defendant’s employees, “a trier of fact will decide (1) whether Defendants withheld wages
from Plaintiff; (2) the purpose for withholding such wages; and (3) whether the purpose for withholding wages is one
of the itemized reasons set forth in the NJWPL.” Snyder v. Dietz & Watson, Inc., 837 F. Supp. 2d 428, 445 (D.N.J.
Dec. 22, 2011).
2
8
Many of Defendant’s objections to class certification appear to be based on the premise
that it is legally impossible for the class members to have been Defendant’s employees because
they formally signed the OAs on behalf of their CSPs, rather than on behalf of themselves. Because
this premise is systemic to Defendant’s position, the Court must resolve it in order to properly
decide whether certification is appropriate. See Marcus, 687 F.3d at 591 (explaining that “the court
cannot be bashful. It must resolve all factual or legal disputes relevant to class certification, even
if they overlap with the merits—including disputes touching on elements of the cause of action”).
This premise is incorrect. In an earlier Opinion (Doc. No. 33), the Court noted that the
NJWPL “does not require an entity to render payment directly to a person to qualify as an
employer.” Carrow v. FedEx Ground Package Sys., Inc., No. 16-3026, 2017 WL 1217119, at *6
(D.N.J. Mar. 30, 2017). To be clear, under New Jersey’s ABC test employers cannot avoid the
legal responsibilities of the employee relationship by forcing their employees to incorporate. See
Hargrove v. Sleepy’s, LLC, No. 10-1138, 2016 U.S. Dist. LEXIS 156697 (D.N.J. Oct. 25, 2016)
(granting partial summary judgment and finding that plaintiff delivery drivers who entered into
contracts with defendant on behalf of businesses they owned or controlled were defendant’s
employees under New Jersey ABC test) (“Sleepy’s II”); see also DaSilva v. Border Transfer of
MA, Inc., 377 F. Supp. 3d 74, 86 (D. Mass. 2019) (holding that under Massachusetts’s ABC test
“the mere fact of incorporation does not defeat a [wage] claim”); Martins v. 3PD Inc., 2013 WL
1320454, at *17 (D. Mass. Mar. 28, 2013) (same) (“Martins I”); Padovano v. FedEx Ground
Package Sys., Inc., No. 16-17, 2016 WL 7056574, at *4 (W.D.N.Y. Dec. 5, 2016) (explaining that
“[i]f any business could avoid [wage and hour law] by simply classifying their workers as
independent contractors and compensating them through corporations rather than paying them
directly, [wage and hour law] would be rendered useless”).
9
Fundamentally, the NJWPL is not on the books to enforce private contractual
arrangements, but to void those arrangements that defy the public policy it embodies. N.J.S.A.
34:11-4.7 (“Every agreement made in violation of this section shall be deemed to be null and
void.”). If, as Plaintiffs claim, the CSPs are a sham, then the legal fiction of incorporation upon
which they rest must give way. See Hargrove I, 106 A.3d at 457 (noting that “[a]s a remedial
statute, the [NJ]WPL should be liberally construed”). Alternatively, Defendant may yet succeed
in proving that Plaintiffs were not its employees, whether due to aspects of the CSP arrangement
or otherwise. But the existence of the CSPs neither bars Plaintiffs’ claims on the merits, nor does
it prevent class certification. With the relevant legal background now established, the Court turns
to the substantive requirements of Rule 23.
A. Ascertainability
A class is ascertainable if it is (1) “defined with reference to objective criteria; and (2) there
is a reliable and administratively feasible mechanism for determining whether putative class
members fall within the class definition.” Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015).
Further, “a plaintiff [need not] be able to identify all class members at class certification—instead,
a plaintiff need only show that class members can be identified.” Id. (internal quotation omitted).
Importantly, ascertainability is a distinct inquiry from predominance, as “the ascertainability
requirement focuses on whether individuals fitting the class definition may be identified without
resort to mini-trials, whereas the predominance requirement focuses on whether essential elements
of the class's claims can be proven at trial with common, as opposed to individualized, evidence.”
Id. (internal quotation omitted).
There is no dispute that individuals who entered into an OA with Defendant, were
dispatched out of a New Jersey terminal, and were not included in the Tofaute class are readily
ascertainable. Rather, the parties’ dispute centers on the second prong of the proposed class
10
definition, limiting the class to individuals who drove “full-time.” Plaintiffs contend that “fulltime” means individuals who drove at least thirty hours per week, and that those individuals can
be readily discovered by analyzing Defendant’s records. (Pl. Brief at 33).
While making deliveries for FedEx, drivers use an electronic scanner to record their
progress throughout the day. The data includes the time that the driver first activates the scanner
each day, indicating that they are on duty, and the time that the driver ceases scanner activity for
the day, indicating that they are off duty. (Stuckwisch Dec. (Doc. No. 76) at 4). Assuming that the
time between the initial scan and the final scan represents the period of time in which the driver
was working, Plaintiffs’ expert, David M. Breshears, was able to identify 215 putative class
members who worked thirty or more hours per week in at least one week during the class period.
(Breshears Report (Doc. No. 99-24) at ⁋⁋ 10–12).3
Defendant’s principal objection to Breshears’s approach is that the drivers may not have
been working during the entire period between the initial scan and the final scan—rather, they may
have been taking breaks or running personal errands. (Def. Brief at 26). Although the scanner data
is extensive, it obviously cannot account for what each driver was doing during every minute of
every day throughout the class period. But the concern that the drivers could take a break or run
personal errands during their “on duty” time really strikes at the merits of Plaintiffs’ claims, as it
collapses onto the issue of whether Defendant exercised actual control over the drivers’ conduct.
That is, Defendant wants to engage in an abstract debate about what it means to “work,” which is
Rebecca Shuford, a paralegal for Plaintiffs’ counsel, was subsequently able to identify 157 potential class members
who had deductions taken from the settlement payments to their CSP during the class period. (Shuford Dec. at Attach.
A). At this time, the Court does not believe that restricting the class to these 157 individuals would be appropriate
because Plaintiffs are also pursuing a theory that Defendant exacted indirect deductions from the class members’ pay
by shifting certain expenses to the CSPs via the OA. (Pl. Brief at 10 n.3).
3
11
not the purpose of the ascertainability requirement. Given that Plaintiffs can objectively show the
duration of the drivers’ “on duty” time, this issue does not raise ascertainability concerns.
Defendant attempts to rely on Hargrove v. Sleepy’s LLC, No. 10-1138, 2018 WL 1092457
(D.N.J. Feb. 28, 2018) (“Sleepy’s III”), and its sequel, Hargrove v. Sleepy’s LLC, No. 10-1138,
slip op., (D.N.J. May 10, 2019) (Doc. No. 239) (“Sleepy’s IV”) for the proposition that the
existence of gaps in the records of delivery driver’s daily activities is fatal to ascertaining a class.
In Sleepy’s III, the plaintiffs attempted to certify a class of “full-time” delivery drivers, relying in
part on time logs of when trucks entered and exited the defendant’s facility in order to calculate
the length of the driver’s workday. Sleepy’s III, 2018 WL 1092457 at *7. However, the logs were
incomplete, such that the entrance or exit time for some trucks was not recorded on certain days.
Id. Further, plaintiffs were only able to produce gate logs for two years out of their nine-year class
period and were unable to indicate whether such gaps existed in the records for the other years. Id.
Given this systemic uncertainty about when the drivers’ workdays started and ended, the court
concluded that the plaintiffs had not satisfied the ascertainability requirement. Id. at *7–8.
In Sleepy’s IV, the plaintiffs attempted to certify a modified version of their proposed class
but retained the “full-time” requirement. However, the Court found that plaintiffs had not
addressed the concerns it set forth in Sleepy’s III. Sleepy’s IV, slip op., at *9–10. Further, the Court
indicated that the records gathered by the plaintiffs did not provide sufficient information about
the driver’s activities during the day; the plaintiffs could point to records showing when drivers
arrived and departed the defendant’s facility, and separate records of the stops made by each truck
during the day, but could not conclusively establish which driver was operating the truck during
the day. Id. at *10.
12
The concerns articulated by the court in Sleepy’s III and Sleepy’s IV are not present here.
The scanner data covers the entirety of the class period, and although there are certain instances
where a scanner registered an on duty scan but no off duty scan, these incidents occurred in less
than 0.05% of the daily records, and as Defendant’s expert’s report indicates, alternative methods
may be used to estimate driving time for these records. (Stuckwisch Dec. at ⁋ 11). Consequently,
the “gaps” Defendant points to here are not gaps in the records of when the drivers began and
ended their workdays, as in Sleepy’s III, but “gaps” in the record of what the drivers did during
their workdays.
Sleepy’s IV did raise concerns about what the drivers were doing during their workdays,
but only because the plaintiffs could not show who was driving each truck throughout the day. By
contrast, because the scanner data here is linked to specific drivers, it does indicate what individual
drivers were doing throughout the day. (Norton Dep. at 98:17–100:9; Mollenhauer Dep. at 39:18–
40:3). As such, the issues raised by the court in Sleepy’s III and Sleepy’s IV are not present in this
case.
Defendant is also concerned that because the class definition only requires drivers to have
been working “full-time” in a given week, class members will float in and out of the class over
time. (Id. at 26). Again Defendant is collapsing the merits onto the ascertainability inquiry; it may
be that the class members’ employment status depends on the number of hours they worked each
week, but whether the class members are later found to be employees or independent contractors
does not present any bar to identifying who they are at this time. As such, the methodology
proposed by Breshears demonstrates that the class can be defined by objective criteria and there is
an administratively feasible mechanism for determining which class members meet the class
13
definition. In order to remove any ambiguity, the shall amend the class definition to specify that
“full-time basis” means thirty or more hours.4
B. Numerosity
Numerosity is presumed if “the potential number of plaintiffs exceeds 40.” Stewart v.
Abraham, 275 F.3d 220, 226–27 (3d Cir. 2001). The proposed class consists of 215 individuals.
(Breshears Rep. at ⁋ 12). As such, numerosity is satisfied.
C. Commonality
When, as here, an action is brought under Rule 23(b)(3), Rule 23(a)(2)’s commonality
requirement “is subsumed by the predominance requirement” of Rule 23(b)(3). Danvers Motor
Co. v. Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (quoting Amchem Prods., 521 U.S. at
627). Thus, the predominance discussion below also accounts for the commonality requirement.
D. Typicality
Rule 23(a)(3) requires the plaintiff to show that the claims or defenses of the representative
parties are “typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). When
comparing the claims of the representative plaintiffs and the class as a whole, courts must address
three distinct, though related, concerns: (1) the claims of the class representative
must be generally the same as those of the class in terms of both (a) the legal theory
advanced and (b) the factual circumstances underlying that theory; (2) the class
representative must not be subject to a defense that is both inapplicable to many
members of the class and likely to become a major focus of the litigation; and (3)
the interests and incentives of the representative must be sufficiently aligned with
those of the class.
In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 599 (3d Cir. 2009). In this case the second
and third concerns pose little issue for Plaintiffs. Defendant has not identified any defenses that
4
The Court notes that courts have on several occasions certified classes of FedEx drivers that were defined, in part,
on whether the drivers were working “full-time.” See, e.g., Scovil v. FedEx Ground Package Sys., Inc., 886 F. Supp.
2d 45, 47 (D. Me. 2012); In re FedEx Ground Package Sys., Inc., 283 F.R.D. 427, 460 (N.D. Ind. 2008).
14
apply to Plaintiffs that do not apply to the class as a whole, nor any reason why the interests and
incentives of the representative plaintiffs would differ markedly from the rest of the class, and the
Court on its own can see no issue on either front.
Rather, Defendant’s objection lies with the first concern. Although the representative
Plaintiffs undisputedly articulate the same legal theory as the rest of the class—that Defendant
misclassified its drivers as independent contractors and illegally took deductions from their
wages—Defendant highlights several factual differences between the representative Plaintiffs and
the class as a whole. (Doc. No. 72 at 55–56). These include: (1) that the representative Plaintiffs
never expanded beyond a single route; (2) that they rarely or never employed others to drive their
route; and (3) that they drove more hours than other class members. (Id).
While these factual differences do exist, “factual differences between the proposed
representative and other members of the class do not render the representative atypical if the claim
arises from the same event or practice or course of conduct that gives rise to the claims of the class
members.” In re Schering Plough Corp., 589 F.3d at 598 (internal quotation omitted). The claims
of the representative plaintiffs concern the same OAs and the same types of deductions as the
remaining class members, and Defendant has not highlighted any ways in which its conduct
towards the representative Plaintiffs differed from its conduct towards the rest of the class. The
typicality requirement in satisfied.
E. Adequacy
The fourth requirement of Rule 23(a) requires a plaintiff to show that as class
representative, she “will fairly and adequately protect the interests of the class.” Fed. R. Civ. P.
23(a)(4). This “adequacy” requirement has two components: (1) whether counsel is qualified,
experienced, and able to conduct the litigation; and (2) whether any conflicts of interest exist
between the named parties and the class they seek to represent. See In re Prudential Ins. Co. Am.
15
Sales Practice Litig. Agent Actions, 148 F.3d 283, 312 (3d Cir. 1998). Although Defendant does
not raise an adequacy argument, the Court must still satisfy itself that the requirement is met.
The Court finds that the representative Plaintiffs and their counsel will fairly and
adequately represent the class. As discussed above, Plaintiffs Carrow, Stephanou, and Fennell are
pursuing claims on the same legal theory as the other members of the class, and all seek damages
directly from Defendant. Similarly, Plaintiffs’ counsel has substantial experience litigating wage
and hour class actions, particularly on behalf of delivery drivers. See, e.g., Badia v.
HomeDeliveryLink, Inc., 2015 WL 566077, at *8 (D.N.J. Sept. 25, 2015) (approving class
settlement and noting that “Class Counsel, notably Messrs. Lichten and Marchetti, are
accomplished attorneys with considerable experience in wage and hour cases”). With that, all the
Rule 23(a) requirements are satisfied, and the Court turns to the more demanding requirements of
Rule 23(b).
F. Predominance
In order for a Rule 23(b)(3) class to be certified, “[i]ssues common to the class must
predominate over individual issues” such that the class is “sufficiently cohesive to warrant
adjudication by representation.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311 (internal
quotation omitted). Although courts may not decide cases on the merits at the class certification
stage, the merits are very much at issue, as courts “must formulate some prediction as to how
specific issues will play out in order to determine whether common or individual issues
predominate.” Id. (internal quotation omitted). Ultimately, “[i]f proof of the essential elements of
the cause of action requires individual treatment, then class certification is unsuitable.” Id. (internal
quotation omitted).
16
On Plaintiffs’ theory, there are two common issues tying the class members together: (1)
if the class members were Defendant’s employees under the ABC test; and (2) if the settlement
payments from Defendant to the CSPs were Plaintiffs’ wages under N.J.S.A. 34:11-4.1(c). The
second is a highly abstract question, and there does not appear to be any dispute that it may be
resolved on common evidence. Rather, Defendant’s primary objection is that proof of the essential
elements of the ABC test requires individual treatment. (Def. Brief at 27–30). Defendant further
contends that the complexity of assigning particular deductions to particular individuals
overwhelms the misclassification issue.5
a. The ABC Test
In cases concerning the alleged misclassification of delivery drivers in other jurisdictions
using ABC tests, federal courts have repeatedly found common evidence sufficient to satisfy all
three prongs of the test. See, e.g., Costello v. BeavEx, Inc., 810 F.3d 1045, 1060–61 (7th Cir. 2016)
(finding prongs A and B of Illinois ABC test could be satisfied through common evidence);
DaSilva v. Border Transfer of MA, Inc., 296 F. Supp. 3d 389, 400–404 (D. Mass. 2017) (finding
prongs A and C of Massachusetts test could be satisfied through common evidence); Martins I,
2013 WL 1320454, at *5–9 (same).6 There is no real dispute that Prong B turns on common
5
Defendant also asserts that Plaintiffs must establish that Defendant was their employer, and that this inquiry will
require individualized treatment because the majority of Plaintiffs signed their OAs on behalf of their CSPs, not
themselves. (Def. Brief at 23–24). Notably, the court in Sleepy’s II did not engage in any such analysis before
concluding that drivers who signed contracts on behalf of their own corporations were employees of the defendant in
that case. 2016 U.S. Dist. LEXIS 156697, at *3; see also Veras v. Interglobo N. Am., Inc., No. A-3313-16T1, 2018
WL 5316459, at * 5 (N.J. Super. Ct. App. Div. Oct. 29, 2018) (casting doubt on the necessity of such an inquiry where
plaintiff signed agreement with defendant on behalf of his own company). But see Echavarria v. Williams Sonoma,
Inc., No. 15-6441, 2016 WL 1047225, at *3–4 (D.N.J. Mar. 16, 2016) (finding that delivery drivers who never signed
a contract of any sort with defendant would need to meet this threshold requirement in order to bring misclassification
claim under New Jersey law). In this case, every potential class member did sign an OA with Defendant and did
subsequently make deliveries on Defendant’s behalf. As such, even if New Jersey law does require a threshold inquiry
into the identity of the employer before applying the ABC test, that inquiry here can be decided on common evidence.
6
Illinois’s misclassification test is identical to New Jersey’s, 820 ILCS 115/2; prong B of the Massachusetts test is
more restrictive, because the employer must show that “the service is performed outside the usual course of the
business of the employer,” M.G.L.A. 149 § 148B(a)(2), while Illinois and New Jersey permit employers to
alternatively prove that the work was performed outside of its places of business.
17
evidence, because the questions it raises—about the nature of the service provided, the usual course
of business of the employer, and whether the service was performed at the employer’s place of
business—are fairly abstract, and do not vary by individual. The same is true in this case. However,
some courts have concluded that prongs A and C always require individual inquiry, defeating class
certification. See, e.g., Schwann v. FedEx Ground Package Sys., Inc., No. 11-11094, 2013 WL
1292432, at *2–3 (D. Mass. April 1, 2013) (denying class certification on Massachusetts
misclassification claim).
To satisfy Prong A of the New Jersey test, the employer must show both that it did not
have a contractual right of control and that it did not exercise actual control. Hargrove I, 106 A.3d
at 459. The first part of this inquiry will center on interpreting the OA, the substantive provisions
of which were the same for all class members. (Mollenhauer Dep. at 31:2–21). As such, assessing
Defendant’s right of control is clearly provable through common evidence. See Williams v. JaniKing of Phila. Inc., 837 F.3d 314, 321–22 (3d Cir. 2016) (finding right of control inquiry under
Pennsylvania law resolvable through evidence of common franchise agreement, policies manual,
and training manual).
The second part of the inquiry, looking at control in fact, may in certain cases require an
individualized inquiry. However, Plaintiffs have demonstrated here that “evidence of common
practices can establish common answers as to control as a matter of fact.” DaSilva, 296 F. Supp.
3d at 401 (finding sufficient evidence of common policies requiring class members to attend
morning meetings, be subject to a customer rating system, wear uniforms, and make deliveries in
specified order and timeframes). Here, the drivers were required to wear uniforms approved by
Defendant, display the FedEx logo on their vehicles, use the scanners to record their pick-ups and
deliveries, and allow FedEx personnel to ride along with them to review their performance.
18
Defendant fails to offer any indication that the implementation of these policies and practices
varies substantially from class member to class member. As such, Prong A is resolvable through
common evidence.
Finally, Defendant contends that prong C requires individual analysis of whether each class
member was operating an independent business. (Def. Brief at 29). The thrust of prong C is
determining whether the “individual has a profession that will plainly persist despite the
termination of the challenged relationship.” Hargrove I, 106 A.3d at 459. When defining the scope
of this inquiry, the New Jersey Supreme Court relied upon Trauma Nurses Inc. v. Board of Review,
576 A.2d 285 (N.J. Super. Ct. App. Div. 1990). Id. When concluding that the defendant’s nurses
were engaged in an independent profession, the Trauma Nurses court did not look to any
individualized evidence, but rather relied upon evidence common to all “nurses,” namely that all
nurses must meet certain educational and licensure requirements, and that most nurses worked at
institutions not operated by the defendant. 576 A.2d at 292. As such, New Jersey law clearly does
not require an individualized inquiry under prong C in every case. Rather, the inquiry can be
satisfied by evidence common to either the members of the class or all such similarly situated
persons.
Plaintiffs’ argument on Prong C is that certain FedEx policies prevented the class members
from operating the CSPs as truly independent businesses, specifically the policies that allowed
FedEx to negotiate all prices paid by customers, to determine the size and composition of the
driver’s route, and to restrict the ability of the drivers to use their vehicles to make deliveries for
parties other than FedEx. (Pl. Brief at 16–17). Defendant protests that it wishes to introduce
evidence about how each CSP was run in order to show that it was an independent business, but
the personal choices of the service-providing individual are not the main concern of the test. See
19
Feinsot v. Bd. of Review, 2007 WL 561326, at *3 (N.J. Super. Ct. App. Div. Feb. 26, 2007) (finding
that employer’s requirements rather than claimant’s personal choices were determinative of
whether individual had an independently established business). However, Defendant may be able
to make use of such evidence on the theory that it shows that its policies provided sufficient
flexibility to class members as to make the CSPs truly independent. 7 Either way, the analysis of
prong C will rise and fall on common evidence. Consequently, no aspect of the ABC test requires
individualized assessments that would preclude satisfaction of the predominance requirement.
b. The Deductions Issue
Defendants effectively argue that the damages calculation in this case will be so complex
as to make class certification inappropriate. They have a point. Recall Plaintiffs’ theory that the
CSPs are a sham, meaning that the settlement payments were truly the class members’ wages. If
this theory holds, and the class members were the CSPs’ sole employees and sole owners, then the
damages calculation would be easy—damages would be the full amount of any improper
deductions Defendant took from the settlement payments. But Defendant argues that damages
would be more complicated because the CSPs had multiple employees and multiple owners. As
such, the class members may not be the only parties entitled to any improper deduction, and the
settlement payments may reflect more than the class members’ personal work. Further, because
many class members only drove “full-time” in certain weeks during the class period, they may
only be entitled to deductions taken in those weeks, rather than for the entirety of the class period.8
(Def. Brief at 16–23).
7
The Court is not ruling on the admissibility of any such evidence, much less on the merits of this theory.
This would be true if the Court were to conclude that the class members must be driving “full-time” in order to be
employees under New Jersey law, such that they may have been employees during certain weeks in the class period
and independent contractors in others.
8
20
At this stage it would be inappropriate for the Court to decide the scope of any damages
that Plaintiffs may be entitled to. But at the same time, the Court cannot ignore the likelihood that
at least some of these issues will be relevant. See Martins v. 3PD Inc., No. 11-11313, 2014
1271761, at *13 (Mar. 27, 2014) (finding that class of delivery drivers was “only permitted to
recover deductions attributable to services they personally performed” on Massachusetts
misclassification claim) (“Martins II”). If they bear out, a laborious deduction-by-deduction
inquiry may be necessary for each class member in order to determine damages.
Although the act of calculating damages may be supremely complex, in this circuit
“obstacles to calculating damages may not preclude class certification” if the class can show “the
fact of damages [] on a common basis.” Harnish v. Widener Univ. Sch. of Law, 833 F.3d 298,
306 (3d Cir. 2016) (internal quotation omitted); see also Tyson Foods, Inc. v. Bouaphakeo, 136
S. Ct. 1036, 1045 (2016) (noting that predominance can still be found “even though other
important matters will have to be tried separately, such as damages”). Plaintiffs have presented
evidence that Defendant directly took allegedly improper deductions from the settlement
payments for 157 class members (Shuford Dec. at Attach. A). Further, they contend that
Defendant indirectly took deductions from all class members by improperly placing the burden
for certain expenses on them. If this legal theory holds up, then all class members have indeed
suffered damages on a common basis.
As such, Plaintiffs have met their burden on damages for purposes of the predominance
inquiry. If Defendant is found liable and complex damages issues present themselves, the Court
has a number of tools it may avail itself of, including: “appointing a magistrate judge or special
master to preside over individual damages proceedings; decertifying the class after the liability
trial and providing notice to class members concerning how they may proceed to prove damages;
21
creating subclasses; or, altering and amending the class.” Martins II, 2014 WL 1271761, at *12
(citing In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 139 (2d Cir. 2001).
G. Superiority
As to superiority, Rule 23(b)(3) provides a four-factor list that a court may use to assess
whether class adjudication is superior to other forms of adjudication:
(A) the class members’ interests in individually controlling the prosecution or
defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already
begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims
in the particular forum; and
(D) the likely difficulties in managing a class action.
All four factors support class adjudication here. The Court is not aware of any claims filed
by potential class members under the NJWPL other than those filed by the named Plaintiffs in this
case. As there is no parallel litigation to be concerned about, “no class member’s interests in
independently prosecuting his or her claim would be frustrated by certifying the class at issue
here.” Stair ex rel. Smith v. Thomas & Cook, 254 F.R.D. 191, 201 (D.N.J. 2008). Further, as
discussed through this Opinion, the main issues in this case turns on analysis of policies common
to the class. Consequently, class treatment is both practicable and desirable. See Scovil, 886 F.
Supp. 2d at 56 (finding superiority satisfied for class of drivers bringing misclassification claims
against FedEx because “there will be one central question to resolve: were the drivers independent
contractors or employees?”).
IV.
CONCLUSION
For the forgoing reasons, Plaintiffs’ Renewed Motion for Class Certification is
GRANTED and the following class is certified under Rule 23(b)(3):
1. All persons who: 1) entered into a FedEx Ground or Home Delivery
Operating Agreement, either personally or through a corporate entity; 2)
drove a vehicle on a full-time basis to provide package pick-up and delivery
22
services pursuant to the Operating Agreement in any week from April 13,
2010 to June 1, 2017 (“the Class Period”); 3) were dispatched out of a
terminal in the state of New Jersey; and 4) who first signed an Operating
Agreement after October 15, 2007, or excluded themselves from the
certified class in Tofaute v. FedEx Ground Package System, Inc., No. 05595 (N.D. Ind).
2. “Full-time basis” means thirty or more hours.
An Order follows.
Dated: December 26, 2019
/s/ Robert B. Kugler
ROBERT B. KUGLER
United States District Judge
23
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?