In re Field Asset Servs.

1

In re FIELD ASSET SERVICES, INC., et al., and related cases

No. 3:13-cv-00057-WHO

United States District Court, N.D. California

January 29, 2024

ORDER ON REMAINING ISSUE FROM DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (TRIAL GROUP ONE)

Re: Dkt. No. 651

WILLIAM H. ORRICK, UNITED STATES DISTRICT JUDGE

The parties filed cross motions for summary judgment that I addressed in my prior orders, except for the defendants' argument about the “corporate vendor plaintiffs” and joint employment theories.^[1] This Order addresses those arguments and denies the defendants' motion for summary judgment because the claims are not, and do not need to be joint employment claims.

BACKGROUND

This order incorporates by reference and assumes familiarity with the facts and background laid out in the Prior Orders. In brief, the plaintiffs contracted with the defendants (Field Asset Services, “FAS”) to provide property preservation services at the beginning of the Great Recession and lasting almost until this case was filed in 2013. They performed different tasks at the properties, including construction, yard work, cleaning, and trash hauling. The parties dispute how the tasks and projects were assigned, how much choice the plaintiffs had in accepting or declining projects, how much FAS controlled the execution of the assignments, and how payments worked. Some plaintiffs, including the three at issue in this motion, owned and operated corporate entities that brought on additional people to do the work for FAS. Matthew Cohick's corporation, Monster Mowers, started as a sole proprietorship but after incorporation it employed dozens of W-2 employees.

The plaintiffs were initially members of a certified class action that sued the defendants for overtime pay, waiting time penalties, and expense reimbursements related to their property preservation work. Members of the class were awarded significant damages at trial but on appeal, the Ninth Circuit decertified the class, reversed summary judgment, and remanded for consideration of additional issues. Bowerman v. Field Asset Servs., 60 F.4th 459 (9th Cir. 2023), as amended. Former members of the class subsequently filed individual actions, three of which are at issue in this Order.

LEGAL STANDARD

Summary judgment on a claim or defense is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. Proc. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify “specific facts showing there is a genuine issue for trial.” Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986).

On summary judgment, the court draws all reasonable factual inferences in favor of the non-movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).

“If the nonmovant bears the burden of persuasion on the ultimate issue, the movant may make its required initial showing that there is no genuine dispute of material fact by demonstrating that ‘there is an absence of evidence to support the non-moving party's case.'” Pac. Gulf Shipping Co. v. Vigorous Shipping & Trading S.A., 992 F.3d 893, 897-98 (9th Cir. 2021) (first citing Fed. R. Civ. Proc. 56(c)(1)(A); and then quoting In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)). “The burden of production then shifts to the nonmovant, who must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. (internal quotation marks omitted) (quoting Celotex Corp., 477 U.S. at 324). “The nonmovant's burden of production at this point ‘is not a light one'-it ‘must show more than the mere existence of a scintilla of evidence' or ‘some “metaphysical doubt' as to the material facts at issue.”'” Id. (quoting Oracle Sec. Litig., 627 F.3d at 387). The nonmoving party “must come forth with evidence from which a jury could reasonably render a verdict in the non-moving party's favor,” assuming that “all justifiable inferences are . . . drawn in its favor.” Id. (quoting Oracle Sec. Litig., 627 F.3d at 387).

DISCUSSION

Three plaintiffs in Group 1- Darin Bush, Sam Cherrin, and Matthew Cohick (the “corporate vendor plaintiffs”)-owned and operated corporate entities that contracted with FAS.^[2]The defendants seek summary judgment on their claims for overtime, waiting time penalties, and expense reimbursements because, in the defendants' view these claims had to be brought as joint employment claims rather than independent contractor misclassification claims if the plaintiffs want to hold the defendants liable as employers. Because the plaintiffs did not bring claims under a joint employer theory, defendants argue, they cannot bring the claims at all. All claims must be dismissed. See D. Mot. 23:22-28:7.

The parties' papers were not a vision of clarity. This analysis will explain their arguments, the case law, and the reasons why these claims were properly brought as misclassification claims, along with how the defendants can still assert similar arguments to the jury to defend against liability. First, I will provide a brief overview of how I reached this conclusion. Then, I will lay out the relevant law in the area, including the cases relied upon by the parties. Finally, I will apply the law to this case.

I. OVERVIEW

The defendants largely rely on the Ninth Circuit's decision in Bowerman, arguing that the Ninth Circuit held that the corporate vendor plaintiffs' claims had to be brought as joint employment claims and had to be dismissed if not brought as such. As explained below, that is not what the appellate court held. In instructing me to consider the “joint employment” issues on remand, the Ninth Circuit was responding to the defendants' arguments that the Borello employment test^[3] should apply to these claims, not that these claims were joint employment claims in disguise. And while the defendants have a point that these corporate vendor plaintiffs differ from the sole proprietors in that they operated larger corporate entities that employed other workers-ranging from a dozen to 75 or more-these arguments and defenses fit neatly into the application of the business-to-business (“B2B”) exception.^[4] Indeed, as the plaintiffs pointed out at the hearing, the very existence of the B2B exception shows that the California legislature did not intend to preclude workers from bringing misclassification claims in such situations. Rather, in cases where a plaintiff asserts misclassification but contracted with the putative employer as a corporate entity, the B2B exception addresses whether there was a legitimate business-to-business relationship, such that Borello applies to determine employment liability, or instead whether the incorporation was aimed at preventing the classification of workers as employees, such that the ABC test^[5] applies. If the exception applies-which is plausible, given the current record-then the Borello test applies to determine the defendants' liability. That is exactly what the defendants sought on appeal and so this analysis is what the Ninth Circuit instructed me to address.

To the extent that the defendants argue that the ABC test does not apply to joint employment claims, the cases that reached this conclusion cited the policy reasons for applying the ABC test and reasoned that they do not apply in the joint employment context. But one of those policy reasons is to ensure that an entity does not structure its business solely to misclassify workers and avoid liability under the employment laws, which does apply in this case given the plaintiffs' allegations. And to determine whether the defendants' business structure and classification decisions were designed to avoid such liability, or whether they represented legitimate business-to-business relationships, California law applies the B2B exception.

Accordingly, there is no law that precludes the plaintiffs from bringing these claims as ones for misclassification, or that requires them to bring them as joint employment claims. And all of the defendants' arguments are encompassed by the B2B exception. They may present their arguments about the exception to the jury; their motion for summary judgment is denied.

II. RELEVANT LAW

In Martinez v. Combs, 49 Cal.4th 35, 42-43, 231 P.3d 259, 262-63 (2010), as modified (June 9, 2010), the plaintiffs were agricultural workers directly employed by a strawberry grower, and they alleged that they were not paid minimum wage or overtime as required by state law. For recovery, they sued both the strawberry grower and several produce merchants that regularly purchased the grower's goods, arguing that they were jointly employed by the merchants who were therefore liable for their unpaid wages and damages. See id. at...