Cervantes v. CRST Int'l

1

ANTHONY CERVANTES and MIKE CROSS, individually and on behalf of all other similarly situated persons, Plaintiffs, v. CRST INTERNATIONAL, INC. and CRST EXPEDITED, INC., Defendants.

No. 20-CV-75-CJW-KEM

United States District Court, N.D. Iowa, Cedar Rapids Division

May 28, 2024

MEMORANDUM OPINION AND ORDER

C.J WILLIAMS, CHIEF JUDGE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF IOWA

TABLE OF CONTENTS

I. FACTUAL BACKGROUND 4

II. DEFENDANT'S MOTION TO DECERTIFY PLAINTIFFS' FLSA COLLECTIVE ACTION AND RULE 23 CLASS ACTION ....................... 6

A. Applicable Law 6

B. Analysis 8

1. Control.......................................................................10

2. Relative Investments ......................................................14

3. Opportunity for Profit and Loss .........................................15 4. Skill and Initiative .........................................................18

5. Permanency of the Relationship .........................................19 6. Integral to the Business ...................................................20

C. Conclusion ..........................................................................20

III. PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT ...........20

A. Additional Relevant Facts for Plaintiffs' Summary Judgment Motion ....21

B. Summary Judgment Standard ....................................................34

C. Employees or Independent Contractors ........................................36

1. Applicable Law ............................................................36

2. Analysis .....................................................................37

a. Control ..............................................................38

b. Relative Investments ..............................................41

c. Opportunity for Profit and Loss .................................44

d. Skill and Initiative .................................................46

e. Permanency of the Relationship .................................48

f. Integral to the Business ...........................................50

3. Conclusion ..................................................................51

D. Truth in Leasing Act ..............................................................51

1. Applicable Law ............................................................51

2. Analysis .....................................................................52 3. Summation ..................................................................53

E. Conclusion ..........................................................................54

IV. DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT ........54

A. The Owner-Operator Exemption ................................................55

B. Statutes of Limitation ..............................................................68

1. Equitable Tolling ...........................................................69

2. FLSA Statute of Limitations .............................................73

C. Plaintiffs' Unlawful Deductions Claim .........................................74

D. Plaintiffs' Unjust Enrichment Claim ............................................79

E. Plaintiffs' Fraud Claim ............................................................81

V. CONCLUSION .............................................................................85

This matter is before the Court on three motions: a motion for partial summary judgment by both parties, and a motion by defendants to decertify plaintiffs as a class and collective. Specifically, on January 31, 2024, plaintiffs filed their motion for partial summary judgment, (Doc. 328), which defendants resisted. (Doc. 354). Plaintiffs filed a reply to defendants' resistance. (Doc. 362). Also on January 31, 2024, defendants filed a motion for partial summary judgment, (Doc. 333), which plaintiffs resisted. (Doc. 352). Defendants filed a reply to plaintiffs' resistance. (Doc. 364). Also on January 31, 2024, defendants filed a motion to decertify plaintiffs' collective and class action, (Doc. 331), and a brief in support, (Doc. 342), which plaintiffs resisted. (Doc. 346). Defendants filed a reply to plaintiffs' resistance. (Doc. 358).

For the following reasons, the Court denies defendants' motion to decertify the collective and class action, grants-in-part and denies-in-part plaintiffs' motion for partial summary judgment, and grants-in-part and denies-in-part defendants' motion for partial summary judgment.

I. FACTUAL BACKGROUND^[1]

Defendant^[2] provides transportation services to customers throughout the United States by delivering the customers' freight. (Doc. 342, at 10-13). Defendant engages two types of drivers to deliver the freight: so-called “company drivers,” who defendant classifies as employees, and other drivers, who defendant classifies as independent contractors, sometimes called “lease operators.”^[3] Plaintiffs are a group of drivers who fall into the second category-that is, defendant classified them as independent contractors. Plaintiffs, however, claim they were employees of defendant, and not independent contractors. Thus, plaintiffs argue they were misclassified, leading to underpayment in violation of various laws. Thus, the central issue throughout this litigation is whether plaintiffs were employees or independent contractors.

The Court previously conditionally certified plaintiffs' Fair Labor Standards Act (“FLSA”) claim as a collective action. (Doc. 147). The class definition for the collective action is:

All drivers who drove for CRST Expedited, Inc. at any time on or after October 23, 2017 pursuant to an Independent Contractor Operating Agreement (ICOA) and who have not leased more than one truck at a time to CRST.

(Doc. 157).

The Court also previously certified two of plaintiffs' claims-a claim under the Iowa Minimum Wage Law (“IMWL”) and a claim under the Truth in Leasing Act (“TILA”)-as class actions under Federal Rule of Civil Procedure 23. (Doc. 296). The class definition for these claims is:

All Lease Operators who drove for CRST Expedited Inc. as a Team Driver, Lead Driver, or Solo Driver pursuant to an Equipment Lease to lease a truck from CRST Lincoln Sales, Inc. and an Independent Contractor Operating Agreement (“ICOAs”) with CRST Expedited, Inc. and who have not leased more than one truck at a time to CRST Expedited, Inc. during the applicable limitations period, subject to any equitable tolling and equitable estoppel.

(Id., at 23) (footnote omitted).

As noted above, this order covers three separate motions. The Court will discuss defendant's motion to decertify first, then the cross-motions for partial summary judgment. The Court will discuss additional facts within the analysis of each separate motion as necessary.

II. DEFENDANT'S MOTION TO DECERTIFY PLAINTIFFS' FLSA COLLECTIVE ACTION AND RULE 23 CLASS ACTION

A. Applicable Law

The FLSA enables employees to maintain a collective action against their employer on behalf of “themselves and other employees similarly situated.” 29 U.S.C. § 216(b). Class members must file a consent to sue to become a party plaintiff in a collective action under the FLSA. Id.; see also Schmidt v. Fuller Brush Co., 527 F.2d 532, 536 (8th Cir. 1975). This Court has employed a two-step approach to determine whether it is appropriate to certify a collective action under the FLSA. See, e.g., Salazar v. Agriprocessors, Inc., No. 07-CV-1006-LRR, 2008 WL 782803, at *4-5 (N.D. Iowa Mar. 17, 2008). “The two-step approach ‘distinguishes between conditional class certification, generally made at the ‘notice stage,' and a final class certification determination made after discovery is largely complete.” Id. at *4 (quoting Dietrich v. Liberty Square, L.L.C., 230 F.R.D. 574, 577 (N.D. Iowa 2005)).

The first step is conditional certification, where a plaintiff moves to conditionally certify the action early in the case for purposes of providing notice to similarly situated persons. Id. This lenient standard requires that a plaintiff “merely provide some factual basis from which the court can determine if similarly situated potential plaintiffs exist.” Bouaphakeo v. Tyson Foods, Inc., 564 F.Supp.2d 870, 892 (N.D. Iowa 2008) (internal quotations and citation omitted). Under the FLSA, “[t]he sole consequence of conditional certification is the sending of court-approved written notice to employees, who in turn become parties to a collective action only by filing written consent with the court[.]” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 75 (2013) (internal citation omitted). Here, the Court conditionally certified the collective action under FLSA in January, 2021. (Doc. 147).

The second step-final certification-occurs at the close of discovery. Frazier v. PJIowa, L.C., 337 F.Supp.3d 848, 861-62 (S.D. Iowa 2018). It is plaintiffs' burden at this stage to “demonstrate that they are similarly situated, which is proved if they ‘suffer from a single, FLSA-violating policy, and when proof of that policy or of conduct in conformity with that policy proves a violation as to all the plaintiffs.'” Judkins v. Southerncare, Inc., 74 F.Supp.3d 1007, 1009 (S.D Iowa 2015) (quoting Bouaphakeo v. Tyson Foods, Inc., 765 F.3d 791, 796 (8th Cir. 2014)). This second stage is a factintensive inquiry which requires the Court to consider the following factors: “(1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; [and] (3) fairness...