ECHAVARRIA et al v. WILLIAM SONOMA, INC. et al
Filing
53
OPINION. Signed by Judge Anne E. Thompson on 3/16/2016. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CAMILLO ECHAVARRIA, JONATHAN
MARK ADELS, JAMES LABRIE,
MAYCOL GOMEZ, PLINIO ANGULO,
JOSE CRUZ, HENRY RIVERA, JOSE
SANTOS, REINALDO RODRIGUEZ,
ANDRES CRUZ and CARLOS VARGAS,
on behalf of themselves and all other
similarly situated persons,
Civ. No. 15-6441
OPINION
Plaintiffs,
v.
WILLIAMS SONOMA, INC., J&J
TRUCKING, INC., MXD, INC. (f/k/a
EXEL DIRECT, INC.), ABC CORP. and
JANE & JOHN DOES,
Defendants.
THOMPSON, U.S.D.J.
INTRODUCTION
This matter is before the Court upon multiple motions. All plaintiffs (“Plaintiffs”)
have moved for summary judgment and class certification. (ECF Nos. 19-20).
Defendants Williams-Sonoma, Inc. (“WSI”) and MXD Group, Inc. (“MXD”) oppose
both motions. (ECF Nos. 27-29). WSI and MXD have moved separately for summary
judgment. (ECF Nos. 21-22). Plaintiffs oppose defendants’ motions for summary
judgment. (ECF Nos. 25-26). The Court has decided the motions based on the written
submissions of the parties and a hearing held on February 1, 2016. For the reasons stated
below, WSI’s motion will be granted, and all other motions will be denied.
1
BACKGROUND
WSI sells a variety of home goods, including furniture. WSI stores some of its
furniture in a warehouse in Monroe, New Jersey. WSI engaged MXD for final mile
furniture deliveries, and MXD had a small dispatch office in WSI’s Monroe warehouse
that coordinated furniture deliveries. MXD advertises itself on its website as a logistics
company that specializes in “final mile white glove delivery of large footprint items.”
The precise nature of MXD’s business is at issue in this case. MXD did not have its own
delivery trucks, but instead hired various transportation companies to actually deliver
WSI’s furniture to its customers. These transportation companies in turn hired drivers
and “helpers” to drive the transportation companies’ trucks and assist in delivering the
furniture.
Plaintiffs previously worked at WSI’s warehouse. Ten of the plaintiffs worked as
drivers or helpers. This opinion will refer to them as the “Driver/Helper Plaintiffs.”
They typically arrived at the warehouse early in the morning, loaded furniture onto their
assigned truck, and then left to make their deliveries. The Driver/Helper Plaintiffs were
paid by the various transportation companies. One of the plaintiffs, Jose Cruz, ran a
small transportation company. Unlike the Driver/Helper Plaintiffs, he owned his own
trucks, he hired a driver and helpers to work with him, and he was paid by MXD. (Jose
Cruz Dep. 38-6 at 89-90, 144, 180). None of the plaintiffs were paid by WSI.
The Driver/Helper Plaintiffs allege that they were paid a flat daily rate, plus
customer tips, without overtime pay. (Pls.’ Statement of Facts, ECF No. 20-2 at 11-12).
Jose Cruz alleges that he signed an Independent Truckman’s Agreement with MXD, and
was paid per delivery. (Id.). All plaintiffs allege that they were misclassified as
2
independent contractors, when they should have been classified as employees, and paid
overtime in accordance with The New Jersey State Wage and Hour Law (“NJWHL”).
(See Pls.’ Third Am. Compl., ECF No. 1 at 6-7).
Plaintiffs allege that even though the Driver/Helper Plaintiffs were paid by the
transportation companies, MXD and WSI are nevertheless employers liable under the
NJWHL because they controlled the manner and means of Plaintiffs’ employment. (Id.
at 5). Plaintiffs allege that such control included: telling Plaintiffs how to resolve issues
with customers (Pls.’ Statement of Facts, ECF No. 20-2 at ¶ 36), supervising Plaintiffs’
performance on a daily basis (Id. at ¶ 51), requiring Plaintiffs to wear a uniform that
included the Williams-Sonoma logo (id. at ¶ 55), controlling the timing and order of their
deliveries (Id. at ¶ 63), and requiring Plaintiffs to check in with the dispatch office
repeatedly throughout the day (id. at ¶ 79). Plaintiffs emphasize that they lacked
discretion in how to perform their jobs. (Id. at ¶ 87, 92).
WSI and MXD both deny that they were Plaintiffs’ employers under the
NJWHL.1 MXD additionally argues that all Plaintiffs were properly classified as
independent contractors. Contrary to Plaintiffs’ version of the facts, MXD asserts that:
the transportation companies were the ones that hired, instructed, and paid the
Driver/Helper Plaintiffs (MXD’s Mot. for Summ. J., ECF No. 22-1 at 19), MXD had
little communication with the Driver/Helper Plaintiffs throughout the day (id. at 20), and
Jose Cruz had sufficient independence to be correctly classified as an independent
contractor (id. at 25-26). MXD emphasizes that it is not a delivery company, but merely
MXD acknowledges it had an Independent Truckman’s Agreement with Jose Cruz.
(MXD’s Statement of Facts, ECF No. 22-2 at ¶ 8).
1
3
“facilitates the delivery [of WSI’s furniture] through independent-contractor
transportation companies that deliver products with the respective companies’ own trucks
and workers.” (Id. at 6-7).
Plaintiffs filed a complaint alleging violations of the NJWHL in the Superior
Court of New Jersey in September 2012. (ECF No. 1). The case was removed to this
Court in November 2014, remanded due to an insufficiently large amount in controversy,
then removed again in August 2015 once the amount in controversy was sufficiently
increased. (Id. at 5-7). The parties stipulated to submit all motions for summary
judgment and Plaintiffs’ motion for class certification on November 20, 2015, after
almost all discovery was completed. (ECF No. 7 at 9-10). Each party’s Motion for
Summary Judgment and Plaintiffs’ Motion for Class Certification are presently before the
Court.
LEGAL STANDARDS
Summary judgment is appropriate if the record shows “that there is no genuine
issue as to any material fact and that the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In
deciding a motion for summary judgment, a district court considers the facts drawn from
“the pleadings, the discovery and disclosure materials, and any affidavits” and must
“view the inferences to be drawn from the underlying facts in the light most favorable to
the party opposing the motion.” Fed. R. Civ. P. 56(c); Curley v. Klem, 298 F.3d 271,
276-77 (3d Cir. 2002) (internal quotations omitted). In resolving a motion for summary
judgment, the Court must determine “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
4
must prevail as a matter of law.” Anderson v. Liberty Lobby, 477 U.S. 242, 251-52
(1986). More precisely, summary judgment should be granted if the evidence available
would not support a jury verdict in favor of the nonmoving party. Id. at 248-49. The
Court must grant summary judgment against any party “who fails to make a showing
sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.
A class may be certified pursuant to Fed R. Civ. P. 23(a) when “(1) the class is so
numerous that joinder of all members is impracticable; (2) there are questions of law or
fact common to the class; (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the representative parties will fairly
and adequately protect the interests of the class.” “Class certification is proper only ‘if
the trial court is satisfied, after a rigorous analysis, that the prerequisites’ of Rule 23 are
met.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 309 (3d Cir. 2008)
(quoting Gen Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982)). “Upon finding each
of these prerequisites satisfied, a district court must then determine that the proposed
class fits within one of the categories of class actions enumerated in Rule 23(b).”
Sullivan v. DB Investments, Inc., 667 F.3d 273, 296 (3d Cir. 2011). If the proposed class
wishes to utilize Rule 23(b)(3), the plaintiffs must show that “questions of law or fact
common to class members predominate over any questions 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). The burden is on the
plaintiffs to prove that all the requirements of Rule 23 have been satisfied. In re
5
Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311-12. If there are any doubts as to
whether the requirements have been met, certification should be denied. Id. at 321.
DISCUSSION
A. WSI’s Motion for Summary Judgment
WSI moved for summary judgment on the sole ground that it did not employ any
of the Plaintiffs. WSI offers two tests that may be used to determine who a plaintiff’s
employer is: the “economic realities” test used under the federal Fair Labor Standards
Act, and the “joint employer” theory discussed in In re Enterprise Rent-A-Car Wage &
Hour Employment Practices Litig., 683 F.3d 462 (3d Cir. 2012). Plaintiffs argue that the
proper test is the “ABC” Test endorsed by Hargrove v. Sleepy’s, LLC, 106 A.3d 449
(N.J. 2015).
Hargrove answered the following certified question from the Third Circuit:
“which test should apply under New Jersey law to determine an employee’s status for
purposes of the Wage Payment Law (WPL), and the Wage and Hour Law (WHL)”?
Hargrove, 106 A.3d at 453 (citations omitted). The New Jersey Supreme Court
concluded that “the ‘ABC’ test . . . governs whether a plaintiff is an employee or
independent contractor for purposes of resolving a wage-payment or wage-and-hour
claim.” Id. Hargrove does not discuss which test a court should use to determine who
employed a given plaintiff. The issue simply did not come up in the case: the Hargrove
plaintiffs had each signed an Independent Driver Agreement directly with the defendant,
who classified them as independent contractors. Id.
Plaintiffs in this case do not have any such direct relationship with the defendants,
with the exception of Jose Cruz, who had an Independent Truckman’s Agreement with
6
MXD. Therefore, before applying the ABC test to determine if Plaintiffs were properly
classified as independent contractors, the Court must determine who employed Plaintiffs.
The New Jersey Supreme Court has not yet addressed how to determine who is a liable
employer under the NJWHL.
WSI discusses two tests that have been used in this district. The first test WSI
discusses is the economic realities test. Courts in New Jersey have previously utilized
variations of the economic realities test to determine who is an employer under the
NJWHL. Rong Chen v. Century Buffet & Rest., No. 09-1687, 2012 WL 113539, at *2
(D.N.J. Jan. 12, 2012); Chen v. Domino’s Pizza, Inc., No. 09-107, 2009 WL 3379946, at
*4 (D.N.J. Oct. 16, 2009); see also Thompson v. Real Estate Mortgage Network, 748 F.3d
142 (3d Cir. 2014). This test is borrowed from the federal Fair Labor Standards Act,
which contains virtually identical definitions of “employer” and “employee” as the
definitions in the NJWHL. Rong Chen, 2012 WL 113539, at *2. Under the economic
realities test, courts must examine the totality of the circumstances to determine whether
the economic realities of the situation indicate that an employment relationship existed.
Chen, 2009 WL 3379946, at *4. Relevant factors include: (1) who hired and fired the
workers, (2) who controlled and supervised the workers, (3) who determined the workers’
salaries, and (4) who maintained the workers’ employment records. Shakib v. Back Bay
Rest. Grp., Inc., No. 10-4564, 2011 WL 4594654, at *3 (D.N.J. Sept. 30, 2011); Kwee
Ling Tan v. Mr. Pi’s Sushi, Inc., No. 09-1579, 2010 WL 5392754 at *2 (D.N.J. Dec. 21,
2010). New Jersey courts have examined a range of other factors including who
furnished the workers’ equipment, whether the workers received benefits, and the
intention of the parties. Chen, 2009 WL 3379946, at *4. Examination of any of these
7
factors is fact-intensive, and therefore it is rare for a court to determine who employed a
given plaintiff on summary judgment. Kwee Ling Tan, 2010 WL 5392754, at *2.
Despite this high bar, WSI is able to show that it did not employ Plaintiffs under
the economic realities test. WSI did not hire or fire Plaintiffs.2 (WSI’s Statement of
Facts, ECF No. 21-3 at ¶¶ 49, 72-73; Pls.’ Response to WSI’s Statement of Facts, ECF
No. 26-1 at ¶¶ 49, 72-73). WSI did not control or supervise Plaintiffs, aside from
communicating through MXD how certain customer issues should be resolved. (Id. at ¶¶
41-42). WSI was not involved in determining salaries, and it did not maintain Plaintiffs’
records, aside from receiving copies of delivery manifests. (Id. at ¶¶ 24, 51-52).
WSI is separated from the Driver/Helper Plaintiffs by two levels: MXD and the
transportation companies. It is separated from Jose Cruz only by a single level, but the
record reflects that WSI never had more than occasional interactions with any Plaintiffs.
Plaintiffs do not address the economic realities test directly, but they argue that WSI had
an employment relationship with Plaintiffs because of certain connections including: WSI
allegedly communicated its concerns twice a week to MXD (who would then
communicate any relevant concerns to Plaintiffs), WSI required Plaintiffs to wear
uniforms that included with Williams-Sonoma logo, and WSI had standards that
Plaintiffs had to meet. (Pls.’ Mot. for Summ. J., ECF No. 20 at 17-18). These sorts of
attenuated connections at best partially meet only one of the four prongs of the economic
realities test, which is insufficient to preclude summary judgment on this point.
2
Jose Cruz alleged in his deposition that he was fired by MXD because a WSI employee
wanted him to be fired. (Jose Cruz Dep. ECF No. 38-6 at 33). Plaintiffs fail to cite any
other deposition testimony that suggests WSI was otherwise involved in hiring or firing
decisions in their response to WSI’s Statement of Facts. (Pls.’ Response to WSI’s
Statement of Facts, ECF No. 26-1 at ¶¶ 49, 72-73).
8
WSI also discusses the “joint employer” theory explained in In re Enterprise
Rent-A-Car Wage & Hour Employment Practices Litigation (“Enterprise”). In
Enterprise, the Third Circuit explained that two parties may be joint employers if they
exercise “significant control” over their workers. Enterprise, 683 F.3d at 468. The Third
Circuit established factors for the joint employer test that are very similar to those used in
the economic realities test:
(1) authority to hire and fire employees; (2) authority to promulgate work
rules and assignments, and set conditions of employment, including
compensation, benefits, and hours; (3) day-to-day supervision, including
employee discipline; and (4) control of employee records, including
payroll, insurance, taxes, and the like.
Id. at 469. The Court went on to explain that these factors should not be “blindly
applied,” rather courts should examine all relevant evidence. Id. Considering the record
as a whole, and the similar factors explored above under the economic realities test, WSI
compellingly argues that no reasonable jury could find that they were Plaintiffs’ joint
employer. Even if as Plaintiffs allege, WSI had some authority over terminations or
setting standards for Plaintiffs, the record simply does not show WSI exercising any
measure of “significant control” over Plaintiffs. Since no reasonable jury could find that
WSI was Plaintiffs’ employer under either the economic realities test or the joint
employer test, WSI’s summary judgment motion will be granted.
B. Plaintiffs’ Motion for Summary Judgment
Plaintiffs argue that they should prevail on summary judgment because the
defendants cannot rebut the ABC test’s presumption that they were employees, not
independent contractors. However, Plaintiffs fail to address the question of who actually
employed them. As explained above, courts may not apply the ABC test before
9
determining who employed a plaintiff. Since the defendants did not directly hire, fire, or
pay the Driver/Helper Plaintiffs, Plaintiffs would need to successfully argue that the
defendants were their employers before this Court could apply the ABC test and
potentially grant summary judgment to Plaintiffs. Plaintiffs’ motion for summary
judgment therefore will be denied as to the Driver/Helper Plaintiffs.
Unlike the Driver/Helper Plaintiffs, Jose Cruz had an Independent Truckman’s
Agreement with MXD. (Jose Cruz Dep., ECF No. 38-6 at 181). Therefore, like the
plaintiffs in Hargrove, who each had an “Independent Driver Agreement” with the
defendant, Jose Cruz’s claim may be analyzed under the ABC test. See Hargrove, 106
A.3d at 453. The ABC test presumes that an employer’s worker is an employee under the
NJWHL unless an employer can show:
(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.
Id. at 458 (quoting N.J. Stat. Ann. § 43:21–19(i)(6)). If an employer fails to satisfy any
of the above three prongs, the worker is classified as an employee under the NJWHL. Id.
Plaintiffs argue that they are all employees, and they do not make any separate
arguments about Jose Cruz. There is evidence in the record that MXD exerted control
over Jose Cruz, and that furniture delivery is part of MXD’s usual course of business.
(Jose Cruz Dep., ECF No. 38-6 at 95-96 (discussing the need to follow MXD’s “laws”);
Pls.’ Statement of Facts, ECF No. 20-2 at ¶¶ 2, 78 (describing MXD’s business)).
However, MXD strenuously rebuts each prong of the ABC test. On the A prong, MXD
10
notes that Jose Cruz arranged for his own training, owned his own trucks and equipment,
and hired his own drivers and helpers. (Jose Cruz Dep., ECF No. 38-6 at 89-90, 144-145,
152-154). On the B prong, MXD notes that Jose Cruz did not work in an MXD facility,
and argues that MXD’s business is solely about logistics, not deliveries. (MXD’s Opp’n
to Pls.’ Mot. for Summ. J., ECF No. 28 at 11-12). On the C prong, MXD argues that Jose
Cruz is an independent delivery contractor, since he performed furniture deliveries with
his trucks before and after his time with MXD. (Id. at 14; Jose Cruz Dep., ECF No. 38-6
at 22-24, 35).
In evaluating Plaintiffs’ motion for summary judgment, this Court must view the
inferences raised by the underlying facts in the light most favorable to the opposing party.
Curley, 298 F.3d at 277. Viewed in this light, the evidence is not “so one-sided that one
party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. Rather, there is
sufficient evidence in the record to suggest that Jose Cruz may have been an independent
contractor under the ABC test. Therefore, Plaintiffs’ motion for summary judgment will
be denied as to all plaintiffs.
C. MXD’s Motion for Summary Judgment
MXD makes a number of arguments in its motion for summary judgment. The
Court will address each argument in turn.
1. The Joint Employer Test
MXD argues that under the joint employer test articulated in Enterprise, MXD
did not employ the Driver/Helper Plaintiffs, and therefore is not liable under the NJWHL.
To reiterate, the four Enterprise factors are:
(1) authority to hire and fire employees; (2) authority to promulgate work
rules and assignments, and set conditions of employment, including
11
compensation, benefits, and hours; (3) day-to-day supervision, including
employee discipline; and (4) control of employee records, including
payroll, insurance, taxes, and the like.
683 F.3d at 469. On the first factor, MXD states that it did not hire or fire the
Driver/Helper Plaintiffs. However, MXD exercised some authority over the hiring of the
Driver/Helper Plaintiffs by requiring that the Driver Helper/Plaintiffs fill out MXD
paperwork for their corporate office in Ohio, performing multiple background checks,
and disallowing the hiring of any drivers with insufficiently clean driving records. (Jamie
Rackett Dep., ECF No. 20-6 at 82-83; Jose Cruz Dep., ECF No. 38-6 at 97). On the
second Enterprise factor, MXD argues that it did not set the conditions of the
Driver/Helper Plaintiffs’ employment. MXD notes that the transportation companies
controlled which truck the Driver/Helper Plaintiffs had to work on each day, who they
would be working with, and where they should park the truck at the end of the day.
(MXD’s Mot. for Summ. J., ECF No. 22 at 18). However, MXD also set certain
conditions of employment. MXD generated delivery routes for the Driver/Helper
Plaintiffs each day, addressed how the Driver/Helper Plaintiffs dressed for work, and
required them to check in from the road on a regular basis. (Pls.’ Statement of Facts,
ECF No. 28-2, at ¶¶ 57, 61, 79-80).
On the third Enterprise factor, MXD argues that they did not manage or discipline
the Driver/Helper Plaintiffs. There is evidence in the record that some of the
Driver/Helper Plaintiffs saw only the transportation companies as their supervisors. (See,
e.g., Camillo Echavarria Dep., ECF No. 38-11 at 172 (stating that he believed his only
supervisor was his transportation company boss)). However, there is also evidence in the
record that MXD held regular meetings on how the drivers should do their jobs,
12
supervised Plaintiffs during the morning load-out process, and required Plaintiffs to call
to ask permission before changing the order of their delivery stops. (Plinio Angulo Dep.,
ECF No. 38-9 at 52-53; Jose Santos Dep., ECF No. 38-7 at 37-38; Maycol Gomez Dep.,
ECF No. 38-8 at 36; Mark Adels Dep., ECF No. 38-5 at 74-75). On the final Enterprise
factor, MXD provides convincing evidence that they did not control the Driver/Helper
Plaintiffs’ Records. (MXD’s Mot. for Summ. J., ECF No. 22 at 21).
While the fourth factor cuts clearly in favor of MXD, the other factors and
relevant evidence in the record do not clearly favor MXD. A reasonable jury could find
that under the Enterprise test, MXD was the Driver/Helper Plaintiffs’ joint employer, and
that therefore MXD is liable under the NJWHL. MXD will therefore not be granted
summary judgment on this point.
2. The ABC Test
i.
When the ABC Test Applies
MXD argues that an employment relationship only exists when an employer
provides remuneration for personal services. Without remuneration, MXD argues, there
is no employment relationship, and the ABC test is not applied. MXD argues that the
ABC test cannot be applied to them because they did not provide remuneration to any
Plaintiffs.
MXD’s argument is based on one New Jersey case from 1957 about the state’s
Unemployment Compensation Act, and several out-of-circuit cases. (MXD’s Mot. for
Summ. J., ECF No. 22 at 22-24). These cases do not control here. As explored above, an
employer is liable under the NJWHL if it acted as a plaintiff’s direct or joint employer.
MXD admits as much earlier in its brief. (See id. at 16). The Enterprise test does not
13
require direct remuneration. Neither does the NJWHL. See N.J. Stat. Ann. § 34:1156a1(g) (defining “employer”). Therefore, a jury could find that MXD had an
employment relationship with Plaintiffs, even absent direct remuneration. If a jury found
that MXD was Plaintiffs’ employer, then the ABC test would be used to determine if
Plaintiffs should have been classified as employees under the NJWHL. Hargrove, 106
A.3d at 453.
ii.
Application of the ABC Test
MXD next argues that under the ABC test, Plaintiffs were properly classified as
independent contractors. To reiterate, the ABC test assumes that an employer’s worker is
an employee, not an independent contractor, unless an employer can show:
(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.
Id. at 458 (quoting N.J. Stat. Ann. § 43:21–19(i)(6)). If an employer fails to satisfy any
of the above three prongs, the worker is found to be an employee under the NJWHL. Id.
On the A prong, MXD refers to its previous arguments regarding control under
the Enterprise test. These arguments largely rest on evidence that the transportation
companies controlled the Driver/Helper Plaintiffs. MXD also argues that it did not exert
control over Jose Cruz because MXD did not train Cruz, provide him with trucks or
equipment, and Cruz hired others to work for him. These arguments fail to demonstrate
that MXD did not exert control over the Plaintiffs. While the transportation companies
exerted control over the Driver/Helper Plaintiffs, this fact does not preclude MXD from
14
also exerting control over them. There is significant evidence in the record that MXD did
exert control over the Driver/Helper Plaintiffs. MXD told the Driver/Helper Plaintiffs
when they needed to make their deliveries, required them to check in from the road, and
told them what to do when they encountered a problem. (See MXD’s Responses to Pls.’
Statement of Facts, ECF No. 28-2 at ¶¶ 78-85). MXD sometimes exerted control over
Jose Cruz in the same ways, since he frequently performed the same functions as the
Driver/Helper Plaintiffs. (See Jose Cruz Dep., ECF No. 38-6 at 150-151; id.).
Since there is a genuine issue of material fact regarding MXD’s control over
Plaintiffs, MXD is unable to satisfy the A prong of the ABC test on summary judgment.
Under the ABC test, if an employer fails to satisfy any one prong, the workers must be
classified as employees. Therefore, the Court will not grant MXD summary judgment
under the ABC test.
3. The FAAAA
MXD argues that the Federal Aviation Administration Authorization Act of 1994
(“FAAAA”) preempts Jose Cruz’s claim. The FAAAA provides that a state “may not
enact or enforce a law, regulation, or other provision having the force and effect of law
related to a price, route, or service of any motor carrier . . . with respect to the
transportation of property.” 49 U.S.C. § 14501(c)(1). This provision mirrors language
from the Airline Deregulation Act of 1978 (“ADA”), and FAAAA cases therefore often
apply the preemption analyses from ADA cases. See, e.g., Rowe v. New Hampshire
Motor Transp. Ass’n, 552 U.S. 364, 370 (2008).
The Supreme Court has stated that the preemption provision expresses a “broad
pre-emptive purpose” because it preempts any laws that “relate” to a carrier’s prices,
15
routes, or services. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992).
However, this preemption is limited in that it does not preempt laws that only have a
“tenuous, remote, or peripheral” effect on carrier’s prices, routes, or services. Rowe, 552
U.S. at 371 (quoting Morales, 504 U.S. at 390).
MXD argues that it is a motor carrier, and the FAAAA preempts Jose Cruz’s
claim because “it seeks to substitute New Jersey law in place of his Agreements to
provide services.” (MXD’s Letter of Feb. 29, 2016, ECF No. 52). MXD stresses that it
does not ask the Court to hold that the FAAAA categorically preempts the NJWHL, but
only to hold that Jose Cruz’s claim is preempted because it seeks to replace his
independent contractor agreement with employment terms dictated by the NJWHL. Id.
It is a matter of first impression in the Third Circuit whether the FAAAA may preempt a
claim made under the NJWHL and the ABC test.
MXD drew the Court’s attention to a recent First Circuit opinion, Schwann v.
FedEx Ground Package System, Inc., No. 15-1214, 2016 WL 697121 (1st Cir. Feb. 22,
2016), which addressed a claim under the Massachusetts Independent Contractor Statute.
Id. The First Circuit held that the FAAAA preempted the application of the second prong
of Massachusetts’ ABC test to the defendant FedEx. Schwann, 2016 WL 697121 at *1.
Massachusetts’ version of the ABC test states:
(a) . . . an individual performing any service . . . shall be considered to be
an employee . . . unless:-(1) the individual is free from control and direction in connection with the
performance of the service, both under his contract for the performance of
service and in fact; and
(2) the service is performed outside the usual course of the business of the
employer; and,
(3) the individual is customarily engaged in an independently established
trade, occupation, profession or business of the same nature as that involved
in the service performed.
16
Mass. Gen. Laws Ann. ch. 149, § 148B (West). The First Circuit’s preemption analysis
focused “upon the manner in which Prong 2 of the Massachusetts Statute would apply to
FedEx’s operations.” Schwann, 2016 WL 697121 at *6. The Court was particularly
concerned that Prong 2 would “significantly affect how FedEx provides good and
efficient service.” Id. at *8. Under the plaintiffs’ proposed application of Prong 2,
FedEx could not hire individuals as independent contractors to handle part of its routes,
even if those individuals acted quite independently. Id. at *7-8. The First Circuit
concluded that such an intrusion into how FedEx could conduct its business was not
compatible with the FAAAA’s purpose to avoid an unwieldy patchwork of state
regulations. Id. at *7.
The First Circuit’s conclusion stands in tension with the case law from other
circuits. In Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. 2014), cert. denied,
135 S. Ct. 2049 (2015), the Ninth Circuit held that California’s meal and rest break laws
were not preempted by the FAAAA. The Ninth Circuit’s reasoning was premised on the
laws at issue not being sufficiently “related to” the defendant’s prices, routes, or services.
Dilts, 769 F.3d at 640. The Court noted that virtually any kind of state regulation may
carry some cost, but “generally applicable background regulations that are several steps
removed from prices, routes, or services, such as prevailing wage laws or safety
regulations, are not preempted, even if employers must factor those provisions into their
decisions about the prices that they set, the routes that they use, or the services that they
provide.” Id. at 646.
The Seventh Circuit has highlighted that labor laws in particular “which regulate[]
the motor carrier as an employer, [as] often too ‘remote’ to warrant FAAAA
17
preemption.” Costello v. BeavEx, Inc., 810 F.3d 1045, 1054 (7th Cir. 2016).
Additionally, the Seventh Circuit articulated a line between laws affecting a carrier’s
contracts with its consumers, and laws affecting a carrier’s contracts with its employees.
The Supreme Court has only found FAAAA preemption where state laws affected a
carrier’s contracts with its consumers. See, e.g., Morales, 504 U.S. at 388; Rowe, 552
U.S. at 372. “Laws that merely govern a carrier’s relationship with its workforce,
however, are often too tenuously connected to the carrier’s relationship with its
consumers to warrant preemption.” Costello, 810 F.3d at 1054 (emphasis in original).
MXD does not discuss how the proposed application of the NJWHL will affect its
relationship with its consumers. MXD argues that Jose Cruz’s claim clearly refers to
MXD’s services, and therefore the connection between his claim and MXD’s services is
not too “tenuous, remote, or peripheral” to be preempted. See Rowe, 552 U.S. at 371.
However, Jose Cruz’s claim concerns the services he provided MXD; neither side
discusses how MXD’s services to its consumers would be affected by the application of
the NJWHL. This stands in stark contrast to the recent First Circuit opinion, which based
its preemption holding on the effect that the application of the Massachusetts statute
would have on how FedEx is able to conduct its business and service its consumers. It is
not apparent how the proposed application of the NJWHL would affect MXD’s prices,
routes, or services any more than dozens of other “generally applicable background
regulations” that the Ninth and Seventh Circuits have held are too remote to be
preempted by the FAAAA. See Dilts, 769 F.3d at 646; Costello, 810 F.3d at 1051.
Lastly, while the Third Circuit has not addressed this issue directly, it has
provided some helpful language about ADA/FAAAA preemption generally. In an ADA
18
case, the Third Circuit highlighted “the well-established principle that ‘courts should not
lightly infer preemption.’” Gary v. Air Grp., Inc., 397 F.3d 183, 190 (3d Cir. 2005)
(quoting Int’l Paper Co. v. Ouellette, 479 U.S. 481, 491 (1987)). Moreover, this
principle “is particularly apt in the employment law context which falls ‘squarely within
the traditional police powers of the states, and as such should not be disturbed lightly.’”
Id. (citation omitted). The Third Circuit suggested that “garden variety employment
claim[s]” in particular are not preempted by the ADA. Id. at 189.
This Court will not infer preemption in this traditional area of state power when
MXD has failed to argue that the NJWHL will have the kind of “significant impact” on
its prices, routes, or services that Congress sought to prevent under the FAAAA. Rowe,
552 U.S. at 371.
4. Plaintiffs Labrie, Rodriguez, and Rivera’s Overtime Claims
MXD argues that three of the Driver/Helper Plaintiffs do not have valid overtime
claims because if their flat daily rates were divided by the hours they worked, the
resulting hourly wages would meet the statutory minimum wage and minimum overtime
wage for truck drivers and helpers. MXD offers no case law to support this approach,
and the statute they cite explicitly contemplates that drivers and helpers shall receive “an
overtime rate,” not simply a sufficiently high daily flat rate. N.J. Stat. Ann. § 34:1156a4. Laws mandating a higher overtime rate “discourage the employer from requiring
the employees to work excessive hours.” New Jersey Dep’t of Labor v. Pepsi-Cola, No.
A-918-00T5, 2002 WL 187400, at *96 (N.J. Super. Ct. App. Div. Jan. 31, 2002). Under
a flat rate approach, employers are incentivized to have employees work longer hours,
which results in a decreasing hourly wage. See id. According to Plaintiffs’ deposition
19
testimony, their flat rates were in fact often accompanied by long hours. (Henry Rivera
Dep., ECF No. 38-3 at 52 (stating that he worked at least 10 hours a day, and sometimes
worked 14 or 15 hours a day); Reinaldo Rodriguez Dep., ECF No. 38-10 at 71 (stating
that he sometimes worked more than 14 or 15 hours a day)). Therefore, this Court
declines to accept MXD’s lump sum approach, and summary judgment will not be
granted as to these three plaintiffs’ claims.
5. Applicability of the NJHWL
MXD argues that Plaintiffs Echavarria, Vargas, and Jose Cruz worked in New
York, and therefore the NJWHL does not apply to them. The NJWHL protects workers
that are employed in New Jersey. Mulford v. Computer Leasing, Inc., 759 A.2d 887, 891
(N.J. Super. Ct. Law Div. 1999). While MXD is correct that New Jersey law does not
apply beyond its borders, there is significant evidence in the record that these three
plaintiffs were employed in New Jersey, and are therefore covered by the NJWHL.
(Camillo Echavarria Dep., ECF No. 38-11 at 115 (describing his work day as always
starting at one of two warehouses in New Jersey); (Carlos Vargas Dep., ECF No. 38-2 at
59-60 (describing multi-day delivery trips that he always began by loading up his truck in
New Jersey)). See also Littman v. Firestone Tire & Rubber Co., 709 F. Supp. 461, 469
(S.D.N.Y. 1989) (holding that New Jersey law applied to an employee who was based out
of a New Jersey office, and who was terminated in New Jersey, despite employee living
and performing some of his work in New York). Since there is significant evidence in
the record that suggests these plaintiffs were employed in New Jersey, MXD may not
prevail on this point on summary judgment.
20
Because none of MXD’s arguments in favor of summary judgment have been
successful, MXD’s motion for summary judgment will be denied.
D. Plaintiffs’ Motion for Class Certification
Plaintiffs have moved to certify a class of “all individuals who reported to the
Williams-Sonoma facility in Monroe, New Jersey and performed truck driving and/or
helper functions pursuant to delivery manifests and/or routes that were created by MXD
and/or Williams-Sonoma, from August 2010 to the present.” (Pls.’ Mot. for Class
Certification, ECF No. 19-1 at 2-3). This class may only be certified if the Court finds
that each prerequisite of Rule 23(a) has been met. In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d at 310. The prerequisites of Rule 23(a) are:
(1) the class is so numerous that joinder of all members is
impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the
interests of the class.
Fed. R. Civ. P. 23(a). Additionally, Rule 23 requires plaintiffs to meet the requirements
of either Rule 23(b)(1), (2) or (3). Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 590
(3d Cir. 2012). Plaintiffs assert that their class meets the requirements of Rule 23(b)(3).
Rule 23(b)(3) requires that “questions of law or fact common to class members
predominate over any questions 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).
Plaintiffs carry the burden of showing that all the requirements of Rule 23 have
been met. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 316 n.14. The Court will
21
apply a “preponderance of the evidence” standard to determine if Plaintiffs have met their
burden. Id. at 320. The Third Circuit encourages district courts to thoroughly examine
plaintiffs’ factual and legal allegations, and to perform a “preliminary inquiry into the
merits” as needed to determine whether the plaintiffs’ claims may be properly resolved as
a class action. See id. at 317-18 (citations omitted).
On the first Rule 23(a) prerequisite, numerosity, Plaintiffs attest that they have
identified 166 individuals who fit into their class description. (Pls.’ Mot. for Class
Certification, ECF No. 19-1 at 21-22). While there is no precise number of prospective
plaintiffs that is necessary to meet the numerosity prerequisite, the Third Circuit has
previously indicated that this perquisite is met if there are more than 40 potential
plaintiffs. Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001). Since Plaintiffs have
provided a list of well over 40 potential plaintiffs, and Defendants do not make any
arguments as to why this list is insufficient to fulfill the numerosity perquisite, the Court
finds that the first Rule 23(a) prerequisite is fulfilled.
Plaintiffs fail to meet the next Rule 23(a) prerequisite, commonality.
Commonality requires that class members share at least one common question of law or
fact. Marcus, 687 F.3d at 597 (citation omitted). Commonality also requires that “there
are classwide answers.” Reyes v. Netdeposit, LLC, 802 F.3d 469, 482 (3d Cir. 2015). If
the class members are too different from one another to generate common answers that
will drive the litigation to a resolution, then the commonality prerequisite is not satisfied.
See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). The focus is not on
whether each class member has a colorable claim, but on whether the defendant’s
22
conduct was common as to all class members. Sullivan v. DB Investments, Inc., 667 F.3d
273, 299 (3d Cir. 2011).
MXD’s conduct was not common as to all proposed class members. Plaintiffs
attempt to combine two fundamentally different sets of plaintiffs: the Driver/Helper
Plaintiffs, and the owners of small transportation companies like Jose Cruz. MXD
classified the transportation company owners as independent contractors by having the
owners sign Independent Truckman’s Agreements. (See Jose Cruz Dep., ECF No. 38-6
at 181). MXD took no such direct action with the Driver/Helper Plaintiffs, whom they
neither hired nor paid.
Because the transportation company owners had contracts with MXD, at trial the
owners would only have to argue that they were misclassified under the ABC test. The
Driver/Helper Plaintiffs would have to first argue that MXD employed them, and only if
they succeeded in showing that MXD employed them, could they then argue that they
were misclassified under the ABC test. This puts the Driver/Helper Plaintiffs in a much
more difficult position than the owners of the transportation companies. Their additional
legal burden makes a “classwide answer” on the ultimate misclassification issue unlikely.
The two groups also have different positions under the ABC test itself. The ABC
test presumes that an employer’s worker is an employee under the NJWHL unless an
employer can show:
(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.
23
N.J. Stat. Ann. § 43:21–19(i)(6)). On the A prong, MXD exerted more control over the
transportation company owners than they did over the Driver/Helper Plaintiffs. MXD
had control over the transportation company owners through their contracts, and MXD
directly informed the owners what their responsibilities were. (Jose Cruz Dep., ECF No.
38-6 at 137-142). The Driver/Helper Plaintiffs had no contracts with MXD; they were
hired by the transportation companies, whose owners told them what to do. (Camillo
Echavarria Dep., ECF No. 38-11 at 166, 172). These differences again create a more
difficult path for the Driver/Helper Plaintiffs. Conversely, on the C prong, the
Driver/Helper Plaintiffs have a stronger position than the transportation companies. The
transportation companies had their own trucks and equipment, while the Driver/Helper
Plaintiffs did not. (Jose Cruz Dep., ECF No. 38-6 at 144-45). The transportation
companies hired and paid additional employees, while the Driver/Helper Plaintiffs did
not. (Jose Cruz Dep. 38-6 at 89-90). These differences make the transportation
companies look more like they were “customarily engaged in an independently
established” business than the Driver/Helper Plaintiffs. See Carpet Remnant Warehouse,
Inc. v. New Jersey Dep’t of Labor, 593 A.2d 1177, 1190 (N.J. 1991) (describing a
worker’s additional employees, vehicles, and equipment as relevant to evaluating the C
prong of the ABC test). Therefore, it is unlikely that the ABC test would provide the
same answers to the two groups of plaintiffs. Given all of the above discrepancies
between the two groups, Plaintiffs are unable to establish commonality.
Plaintiffs point to Villalpando v. Exel Direct Inc., 303 F.R.D. 588 (N.D. Cal.
2014) to argue that their class is permissible. Villalpando was another suit against MXD
(under its former name “Exel Direct”) where plaintiffs alleged that MXD had
24
misclassified them as independent contractors. The Villalpando court certified a class
with the following description:
All individuals who have personally provided delivery services for
Defendant Exel Direct in California while being classified by Exel Direct
as independent contractors, at any time beginning June 14, 2008 until
resolution of this action. Any individual who has signed the Independent
Truckman’s Agreement with Exel Direct but has provided delivery services
exclusively through the use of hired second drivers and who has never
personally made deliveries for Exel is excluded from the Class.
Villalpando, 303 F.R.D. at 610. Plaintiffs argue that this class includes the Driver/Helper
Plaintiffs and the transportation companies. Plaintiffs are mistaken. In its opinion, the
Villalpando court refers only to the transportation company owners as “Exel drivers.”
This is apparent when the Villalpando court describes the Exel drivers as interviewing
directly with Exel, signing Independent Truckman’s Agreements, and hiring what the
court refers to as “second drivers.” Id. at 593, 597. The “second drivers” are equivalent
to the Driver/Helper Plaintiffs. The second drivers do not have contracts with Exel,
though Exel must approve them. Id. at 597. These “second drivers” are not part of the
Villalpando class. The class description obscures this slightly, but other passages make
their absence clear. For example, when the Villalpando court discusses typicality, it
states: “the alleged injury results from a uniform course of conduct that affects all drivers,
namely, the requirement that all drivers must sign the same ITA [Independent
Truckman’s Agreement] classifying them as independent contractors.” Id. at 607. When
the court refers to “all drivers,” it clearly excludes any drivers who do not have a contract
with Exel. The Villalpando court was only concerned with drivers who had signed
contracts with Exel, and therefore the class certification refers to all individuals who
25
performed deliveries for Exel “while being classified by Exel Direct as independent
contractors” through their Independent Truckman’s Agreements. Id. at 610.
A comparable class cannot be created here. Jose Cruz is the only plaintiff who is
a transportation company owner, and has not been offered as a name plaintiff. Plaintiffs
suggested at oral argument that a class of only Driver/Helper Plaintiffs would be possible,
but that potential class was not briefed. Moreover, this potential class would fail to meet
Rule 23(b)(3)’s predominance requirement. Predominance is a far more demanding
requirement than commonality. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at
311. District courts must “formulate some prediction as to how specific issues will play
out in order to determine whether common or individual issues predominate in a given
case.” Id. (citation omitted). Common issues must predominate in order for Rule
23(b)(3) to be satisfied. Id. These issues must be capable of being resolved through
common evidence, not individualized evidence. Id.; Sullivan, 667 F.3d at 305.
The Driver/Helper Plaintiffs cannot prove their case without individualized
evidence. At trial, the Driver/Helper Plaintiffs will first have to show that MXD
employed them, most likely under the Enterprise joint employer theory, and then show
that they were employees under the ABC test. Both tests turn on the specific relationship
between the worker and the purported employer, and control is a key element. The
amount of control MXD exercised over the different Driver/Helper Plaintiffs varied
significantly. The variety appears to have been partly driven by the fact that the
Driver/Helper Plaintiffs were employed by different transportation companies, with
larger companies relying more heavily on MXD to control their workers. Plaintiff
Angulo worked for transportation company owner Jose Pena, who told him each morning
26
which loading dock door to park at at the warehouse. (Plinio Angulo Dep., ECF No. 38-9
at 59-60). Plaintiff Andres Cruz worked for FGO, a larger transportation company, and
in his case MXD told him where to park in the morning. (Andres Cruz Dep., ECF No.
38-1 at 48-49). Plaintiff Vargas also worked FGO, and even though he was a Helper, he
had to attend MXD’s morning meetings. (Carlos Vargas Dep., ECF No. 38-2 at 53).
Plaintiff Gomez worked for a smaller transportation company run by a man named Tariq,
and Plaintiff Gomez believed that only drivers needed to attend MXD’s meetings.
(Maycol Gomez Dep., ECF No. 38-8 at 90). Some plaintiffs checked in with MXD from
the road frequently, while others only checked in when there was a problem. (Cf. Andres
Cruz Dep., ECF No. 38-1 at 72 (called MXD every three stops); Plinio Angulo Dep.,
ECF No. 38-9 at 56 (only called in when he encountered a problem)). Moreover, since
the Driver/Helper Plaintiffs did not sign agreements with MXD, there is no common
codified set of MXD policies that the Driver/Helper Plaintiffs could rely upon at trial. Cf.
Villalpando, 303 F.R.D. at 597 (summarizing the plaintiffs’ argument that class
certification was appropriate because the court could evaluate the MXD’s standardized
contracts and company-wide policies that applied to all the plaintiffs).
There is additionally some variety in the Driver/Helper Plaintiffs’ testimony as to
the C prong of the ABC test, namely whether the plaintiff was engaged in an independent
business. See Carpet Remnant Warehouse, 593 A.2d at 1187 (noting that the C prong is
satisfied if defendant shows that plaintiff has an independent occupation that will clearly
continue after plaintiff’s relationship with defendant is over). Some plaintiffs, like
Plaintiff Gomez, worked as truck drivers before and after their time with MXD,
suggesting that they had their own independent occupations as truck drivers. (Maycol
27
Gomez Dep., ECF No. 38-8 at 12-13, 30). Other plaintiffs, like Plaintiff Angulo, worked
in different types of jobs before and after their work for MXD, suggesting no such
independent occupation existed. (Plinio Angulo Dep., ECF No. 38-9 at 9-10 (describing
his prior work as a fast food manager, then as a truck driver for MXD, then as a
construction worker)). These differences would make it extremely difficult to try the
Driver/Helper Plaintiffs’ case without the use of individualized evidence.
Since Plaintiffs’ proposed class does not satisfy the commonality prerequisite of
Rule 23(a), and a smaller class of Driver/Helper Plaintiffs would not satisfy Rule
23(b)(3)’s predominance requirement, Plaintiffs’ Motion for Class Certification will be
denied.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Summary Judgment will be
denied, WSI’s Motion for Summary Judgment will be granted, MXD’s Motion for
Summary Judgment will be denied, and Plaintiffs’ Motion for Class Certification will be
denied. An appropriate order will follow.
/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
Dated: March 16, 2016
28
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?