Johnson v. WinCo Foods, LLC

37 F.4th 604

Alfred JOHNSON, individually and on behalf of other members of the general public similarly situated, Plaintiff-Appellant,

v. WINCO FOODS, LLC, a Delaware limited liability company; WinCo Holdings, Inc., an Idaho corporation, Defendants-Appellees,andDoes, 1 through 10, inclusive, Defendant.

No. 21-55501

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 4, 2022 Pasadena, California

Filed June 13, 2022

Melissa Grant (argued), Ryan H. Wu, and Tyler Anderson, Capstone Law APC, Los Angeles, California, for Plaintiff-Appellant.

Kiran Aftab Seldon (argued), Kristina M. Launey, and Michael Kopp, Seyfarth Shaw LLP, Los Angeles, California, for Defendants-Appellees.

Before: Mary M. Schroeder, Sidney R. Thomas, and Carlos T. Bea, Circuit Judges.

SCHROEDER, Circuit Judge:

Overview

WinCo Foods requires a drug test of successful applicants for employment before they can begin the duties of the job. Plaintiff Johnson represents a class of employees seeking reimbursement for the time and travel expenses required to take the test. The district court entered judgment in favor of WinCo on the ground that under California law, plaintiffs were not yet employees when they took the drug test. Plaintiffs appeal contending that they were employees. We affirm.

The same issues have arisen in a number of similar cases removed from California state courts to federal district court. The other district courts in those cases have also ruled in favor of the employer. See Gallegos v. Atria Mgmt. Co. , No. EDCV 16-00888 JGB (Spx), 2018 WL 7500277 (C.D. Cal. Feb. 22, 2018) ; Brum v. MarketSource, Inc. , No. 2:17-cv-241-JAM-EFB, 2017 WL 4883376 (E.D. Cal. Oct. 27, 2017) ; Hakeem v. Transdev Servs., Inc. , No. 19-cv-02161-VC, 2021 WL 1626486 (N.D. Cal. Apr. 27, 2021). There is as yet, however, no authoritative California state court decision. We therefore affirm in a published opinion.

Plaintiffs have two principal contentions. First they argue that because the tests were administered under the control of the employer, plaintiffs must be regarded as employees, as California law applies a control test to determine whether an employment relationship exists. See Martinez v. Combs , 49 Cal. 4th 35, 64, 109 Cal.Rptr.3d 514, 231 P.3d 259 (2010). Second, and alternatively, they contend that under California law the test should be regarded as a "condition subsequent" to their hiring as employees. See Cal. Civ. Code § 1438.

Neither contention can succeed. The control test relates to control over the manner of performance of the work itself, not the manner of establishing qualifications to do the work. There was no condition subsequent because plaintiffs were not hired until they established they were qualified.

Background of this Litigation

The facts are not complicated. WinCo Foods LLC and WinCo Holdings, Inc. (collectively "WinCo") operate a supermarket chain with just over 100 locations across the western United States, including California. When WinCo hires new employees, a Hiring Manager calls successful applicants to extend what WinCo terms a contingent offer of employment. The offer includes the job title, the pay, and the job location. Using the instructions in WinCo's "Verbal Contingent Job Offer Talking Points," the Manager discusses the offer with the applicant. Per those instructions, the Hiring Manager informs the applicant of a mandatory drug test: "as part of your contingent job offer with WinCo Foods, we will be conducting a pre-employment background check and drug test on you." When an applicant consents, WinCo instructs applicants to report to a testing location. WinCo pays the drug testing facility's fee, but does not compensate for the travel expenses and time required to undergo the testing.

On August 23, 2017, Plaintiff Alfred Johnson, on behalf of himself and other WinCo employees in California, filed this class action in California state court. WinCo removed the case to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332(d). Johnson filed his first amended complaint, which forms the basis of this appeal, claiming compensation as an employee for the time and expenses of taking the drug test. Johnson alleges violations of the California Labor Code relating to the payment of wages and business-related expenses and the California Business & Professions Code §§ 17200, et seq. , proscribing unfair business practices. The district court granted Johnson's motion for class certification and both sides then moved for summary judgment. The district court held that Johnson and class members were not employees of WinCo Foods when they underwent drug testing and the court granted WinCo's motion for summary judgment.

I. The Control Test Does Not Apply

Johnson argues that he and his fellow class members were employees when they took the drug tests because WinCo exerted sufficient control over the drug testing process to render them employees. Johnson relies on California case law that looks to how much control the putative employer exerts over the putative employee's performance of the job to evaluate whether there was an employment relationship between the two parties. See, e.g., Martinez , 49 Cal. 4th at 64, 109 Cal.Rptr.3d 514, 231 P.3d 259 ; S.G. Borello & Sons, Inc. v. Dep't of Indus. Relations , 48 Cal. 3d 341, 350, 256 Cal.Rptr. 543, 769 P.2d 399 (1989). The parties do not dispute that WinCo exercises control over the mandatory drug testing by prescribing the time and date of the tests, the facility where the tests take place, and the scope of those tests. The problem with Johnson's argument is that control over a drug test as part of the job application process is not control over the performance of the job.

We look to California law. For purposes of the California Labor Code, the Industrial Welfare Commission ("IWC") defines an employer as "any person ... who ... employs or exercises control over wages, hours, or working conditions of any person." Martinez , 49 Cal. 4th at 64, 109 Cal.Rptr.3d 514, 231 P.3d 259 (quoting Wage Order No. 14, Cal. Code Regs. tit. 8, § 11140(2)(C), (F) ). Relying on the IWC definitions, the Supreme Court of California established the control test, looking to whether a person controls the manner and means of accomplishing a desired service as the principal test of an employment relationship. S.G. Borello & Sons, Inc. , 48 Cal. 3d at 350, 256 Cal.Rptr. 543, 769 P.2d 399.

In Martinez , the Supreme Court of California used this control test to decide whether the defendants in that case were joint employers and thus liable for unpaid wages and liquidated damages. 49 Cal. 4th at 48, 71, 109 Cal.Rptr.3d 514, 231 P.3d 259. The employees were strawberry pickers hired by a farmer who was bankrupt and they attempted to secure wages from the merchants who sold the strawberries. Id. at 42–43, 48, 109 Cal.Rptr.3d 514, 231 P.3d 259. The court held the merchants were not liable. Id. at 71–77, 109 Cal.Rptr.3d 514, 231 P.3d 259. The plaintiffs were working for the growers and the growers, not the merchants, exercised the requisite control over working conditions. See id. In this case, by contrast, the class members were not performing work for an employer when they took the preemployment drug test; they were instead applying for the job. They were not yet employees.

This conclusion is further supported by California case law recognizing the ubiquity of preemployment drug tests. See Loder v. City of Glendale , 14 Cal. 4th 846, 886, 59 Cal.Rptr.2d 696, 927 P.2d 1200 (1997). The Supreme Court of California recognized that there is a "general societal understanding that ... all job applicants submit to a medical examination prior to hiring" and that "[p]re-employment physical examination, including urinalysis, is simply too familiar a feature of the job market on all levels." Id. (internal citations omitted). The court held that preemployment tests constituted a lesser invasion of privacy than requiring testing of those already employed. Id. at 886–87, 59 Cal.Rptr.2d 696, 927 P.2d 1200.

Drug testing, like an interview or preemployment physical examination, is an activity to secure a position, not a requirement for those already employed. As the district court below observed,

There are many ways in which employers exercise some degree of control over job applicants. They may require that applicants appear at a certain time and place for an interview; that they undergo a writing or skills test; that they interview in a certain fashion—such as on a panel with other applicants; that they pass a background check; and so on. The fact that employers control the "manner" in which these activities take place does not magically convert applicants into employees.

Johnson v. WinCo Foods, LLC , No. ED CV 17-2288-DOC (SHKx), 2021 WL 71435 at * 4 (C.D. Cal. Jan. 5, 2021).

Johnson relies on a case involving staffing agencies, Betancourt v. Advantage Human Resourcing, Inc. , No. 14-cv-01788-JST, 2014 WL 4365074 (N.D. Cal. Sept. 3, 2014). It does not further plaintiffs' position. In Betancourt , the defendant was an agency supplying temporary staff. Id. at *1. The defendant hired the plaintiffs as its temporary workers so that they could be considered for hire by defendant's clients. Id. The plaintiffs were considered employees of the staffing agency because it controlled the time, location, and manner of the placement interviews. Id. at *4–*5.

The key difference is that the plaintiffs in Betancourt were doing the employment agency's work when they went to the job interviews, whereas Johnson and fellow class members were not doing work for WinCo when they took the drug tests. The court in Betancourt concluded that the plaintiff class members were required to report for job interviews as a part of their work for the agency. Betancourt , 2014 WL 4365074, at *7. The agency controlled the manner in which the class members did their work for the agency, and that work was applying for jobs with third parties. Id....