Browning v. Ceva Freight, LLC

885 F.Supp.2d 590

Franklin BROWNING, individually and on behalf of all other persons similarly situated who were employed by Ceva Freight, LLC and EGL, Inc. and/or any other entities with, controlling, or controlled by Ceva Freight, LLC or EGL, Inc., Plaintiffs,

v.CEVA FREIGHT, LLC and EGL, LLC, Defendants.

No. 10–cv–5594 (ADS)(AKT).

United States District Court, E.D. New York.

Aug. 11, 2012.

Virginia & Ambinder LLP, by: Lloyd Robert Ambinder, Esq., James Emmet Murphy, Esq., of Counsel, New York, NY, for the Plaintiffs.

Leeds Morelli & Brown, PC, by: Jeffrey Kevin Brown, Esq., Jessica Lorraine Parada, Esq., Michael Alexander Tompkins, Esq., of Counsel, Carle Place, NY, for the Plaintiffs.

O'Melveny & Myers LLP, by: Jeffrey I. Kohn, Esq., Jennifer Merzon Evans, Esq., of Counsel, New York, NY, for the Defendants.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

This proposed class action, concerning alleged unpaid wages and overtime wages, was brought pursuant to the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”). The Defendants have now moved for summary judgment, arguing that the Plaintiffs are not entitled to recovery under either statute because they are properly classified as “independent contractors” rather than “employees”. For the reasons set grants the Defendants' motion.

I. BACKGROUND

A. Factual Background

The Plaintiffs are workers who presently are or were formerly employed by the Defendants, CEVA Freight, LLC (“CEVA”) and EGL, LLC (“EGL”) (collectively the “Defendants” or “CEVA”). CEVA is a supply chain management, transportation, and logistics services company. In particular, CEVA provides services such as air and ocean freight forwarding, customs brokerage, pick-up and delivery services, warehousing, and materials management. As a general matter, CEVA does not use employee drivers or CEVA-owned vehicles to provide domestic pick-up and delivery services. According to CEVA, it contracts with outside trucking businesses to provide these services, pursuant to independent contractor agreements.

There are a total of five plaintiffs who have filed consent forms in this action. Four of the five Plaintiffs—Andrew Huggins (“Huggins”), Franklin Browning (“Browning”), Trevor Halls and Winston James (“James”) (the “Plaintiffs”)—provided pick-up and delivery services to CEVA pursuant to Agreements for Leased Equipment and Independent Contractor Services (collectively, the “Agreements”) with CEVA and/or its predecessor or affiliated entities. The remaining Plaintiff, Hugh Halls, did not execute an agreement with CEVA but provided services pursuant to the agreement executed by the Plaintiff Trevor Halls, in his capacity as the President and CEO of Halls Trucking Corporation, which is a corporation co-owned by Trevor Halls and Hugh Halls. (Defs. 56.1 Stmt., ¶ 1.) Both before and after providing services to CEVA, the Plaintiffs provided pick-up and delivery services to other companies utilizing vehicles that the Plaintiffs owned. (Defs. 56.1 Stmt., ¶ 2.)

The Agreements between the parties, entitled “Agreement for Lease Equipment and Independent Contractor Services (Pick–Up & Delivery)”, governed their business relationship and described in various respects how the Plaintiffs would be treated by CEVA. The contracts stated that neither the Plaintiffs nor their employees or agents would be considered employees of CEVA, and that nothing in the Agreements would be construed to create an employment relationship between the Plaintiffs and CEVA. The Plaintiffs also agreed to immediately notify a CEVA manager if, at any time during the term of their contracts, they believed that anything other than an independent contractor relationship existed between themselves and CEVA. ( See Agreements, § 1.)

In order to effectuate the pick-up and delivery services, the Plaintiffs leased to CEVA the vehicles that they owned. (Agreements, § 2.01.) The Plaintiffs were responsible for all costs and expenses incidental to the maintenance, repair and operation of the vehicles that they leased to CEVA, including automobile insurance. The trucks were covered with vinyl CEVA logos on all sides of the vehicles. After 2003, these signs were affixed so that they were permanent. (Browning Dep. at 160:13–14.)

Although another passenger was not permitted in the Leased Vehicle without the prior written approval of CEVA, under the Agreements the Plaintiffs did have the ability to hire others to perform or assist in performing their contractual obligations. In addition, the Plaintiffs were required to wear CEVA uniforms, under threat of termination.

The Agreements stated that the Plaintiffs agreed “to direct the operation of the Leased Vehicle and to determine the method, manner and means of performing the contractual obligations under [the] Agreement in all respects including, but not limited to, such matters as the rejection and acceptance of dispatches offered by [CEVA]; the days and time [the Plaintiffs] will operate the Leased Vehicle; the routes traveled; parking sites, and the repair of the Leased Vehicle, provided that [the Plaintiffs] fully and efficiently perform[ed their] obligations under [the] Agreement.” ( Id.) However, the Plaintiffs testified that they were typically assigned to one service area. ( See, e.g., Browning Dep. at 126:14–25 (“I had the 119 zip code so I did everything going to the 119 zip code so if there was something going into Queens or Nassau County, that would not go into my truck. That would go to the guy that was doing Nassau County or the guy that was doing Queens, they got that work ...”); Huggins Dep. at 118:15–23 (“due to dispatch giving me the work in that area consistently and a certain spot that covered a span of a certain area we considered it a route because again you go to the same spot”).)

There were some parameters to the Plaintiffs' tasks; namely, CEVA would issue certain instructions regarding the results that the Plaintiffs were to accomplish under the Agreements, such as meeting time-sensitive service parameters, when required by CEVA customers. James testified at his deposition that they were required to comply with whatever decisions the dispatcher made when any issues arose during the course of performing their assignments. Further, the Plaintiffs were in constant contact with the Defendants through the use of Nextel cellular communication devices tied into CEVA's computer system. (Browning Dep. at 198.)

Under the Agreements, the Plaintiffs had the opportunity to decline to perform any pickup or delivery services they wished, provided they advised CEVA. Thus, the Plaintiffs could provide services to CEVA at days and times of their choosing. On the other hand, the Plaintiffs have testified that in practice, they were told that if they were going to go away for a couple of days and hence not do pick-ups and deliveries for CEVA, they needed to notify the Defendants in advance so that the company could find someone to replace them. ( See James Dep. at 213:7–11; Huggins Dep. at 115:8–10.) The Plaintiffs also testified that they were in essence “forced” to work certain days or times, or else CEVA would give the service areas to other drivers.

Accordingly, some of the Plaintiffs' testimony indicates that if they refused an assignment, they could end up with no work for that day. Thus, the Plaintiffs allege that a rejection of a delivery would figure into future delivery orders.

The Plaintiffs had the contractual right under the Agreements to provide pick-up and delivery services to other carriers. However, the Plaintiffs argue that this right was merely theoretical, because in practice the trucks were only to be used for CEVA business. In addition, according to the Plaintiffs, they were required to attend mandatory monthly meetings at CEVA's offices. If the Plaintiffs did not attend these meetings, they claim that they would not be dispatched. (H. Halls Dep. at 91:11–15.)

CEVA never guaranteed that the Plaintiffs would secure a certain amount of work. Rather, it was clear under the Agreement that the provision of services to CEVA could result in a profit or loss. It is undisputed that CEVA did not pay the Plaintiffs based upon the hours that they worked. Rather, CEVA paid the Plaintiffs a fee per pick-up or delivery, based upon the rates included in the Agreements. (See, e.g., Def. Ex. A, § 4.01 (“For performance by Contractor of the contractual obligations under this Agreement, [CEVA] shall compensate Contractor on the basis set forth in Appendix III ...”)). CEVA did not withhold taxes from the compensation that it paid to the Plaintiffs. Instead, it issued IRS Form 1099s to them at the end of each year. Thus, the Plaintiffs were responsible for filing their own income tax returns in connection with their earnings. ( See Agreements, § 4.09; Def. 56.1, at ¶ 5.) Also, it is undisputed that the Plaintiffs regularly took significant tax deductions for expenses they incurred in providing services to CEVA.

1. Andrew Huggins

The Plaintiff Andrew Huggins, through his corporation, AAH Trucking, Inc., began contracting with CEVA on April 20, 2005. Huggins understood that he would be an independent contractor when providing services for CEVA, and it was important to him that he would provide services to CEVA as an independent contractor, in part because he wanted to operate a truck that he owned. (Huggins Dep. at 79–80, 86.) His schedule varied, and he would consent to certain assignments when they were available if he was interested. However, he understood that he was never obligated to accept pick-ups or deliveries. At some point, Huggins was regularly servicing a particular geographic area, because he made more money doing so. ( Id. at 119–121, 207–8.) Nevertheless, he had control over the specifics within the geographic region he chose to take assignments in, so that he would decide what route to take. Huggins testified that he was not usually supervised by CEVA....