A quick note on Gonzalez v. San Gabriel Transit, Inc.

In Gonzalez v. San Gabriel Transit, Inc. (October 10, 2019), the Court of Appeal (Second Appellate District, Division Four) reversed and remanded on an appeal from the denial of class certification. Most of the opinion is about the impact of Dynamex, which adopted the “ABC test” after the trial court denied certification. There is some important analysis about what claims are encompassed by the “ABC test,” and the retroactive application. But I’m posting now just to draw attention to a sliver of discussion at the end of the opinion regarding typicality:

Also, SGT maintains that Gonzales’ claims are atypical because, “unlike other class members, [he] never leased a taxi during the class period.” But the class allegations are not premised on having “leased” a vehicle. Rather, Gonzales seeks more generally to certify a class of plaintiffs who “were engaged by [SGT] to drive passengers for hire,” and who “drove” for SGT during the class period, i.e., all “drivers employed by, or formerly employed by [SGT] . . . [during the class period], who were or are classified as independent contractors.” The common allegations of harm suffered by Gonzales and other drivers is that all were misclassified as independent contractors. As such, they were required at their own expense to install equipment and provide tools to access SGT’s dispatch system, and to obtain insurance and perform maintenance, all expenses Gonzales contends should properly be borne by their employer and were denied the benefits of wage order protections.

On remand, SGT must show that the variations in class members’ factual situations are sufficiently wide to defeat class certification. For instance, regardless of a driver’s status as lessee or owner/operator, drivers were charged weekly “lease” fees to perform services under the SGT umbrella. If and to the extent it is important that a driver owned rather than leased a vehicle—which may cause a variation in weekly “lease” rates, insurance, equipment installation fees, or some other business expense—such a difference would likely be a function of the damages to which an individual driver was entitled. That a calculation of individual damages will, at some point, be required does not foreclose the possibility of taking common evidence on the issue of misclassification questions. (Collins v. Rocha (1972) 7 Cal.3d 232, 238.) The overarching inquiry is whether class members were misclassified during the class period. If so, as discussed in the overlapping analysis of commonality above, the class members are entitled to a determination as to whether SGT misclassified them as independent contractors. The fact that individual members of the class have different damages does not preclude class certification. (Sav–On, supra, 34 Cal.4th at pp. 329–330.)

The trial court also alluded to the fact that Gonzales could not demonstrate typicality for the entire class because he never drove LAX or school runs. However, as we have noted, typicality does not require that a class representative have suffered injuries identical to those of other class members. (Martinez v. Joe’s Crab Shack Holdings, supra, 231 Cal.App.4th at p. 375.) Accordingly, the trial court must reevaluate whether the requirements for typicality are satisfied, and whether, given time limitations, the complaint may be amended to add an additional representative plaintiff.

Slip op., at 37-38. This discussion pushes back against a common argument used to try and “thin” a class action down to a subset of the members alleged to be a part of the class. The argument is frequently along the lines of “the plaintiff didn’t work in all of the job positions,” or “the plaintiff didn’t work at all of the locations.” This discussion doesn’t entirely reject such arguments, but it certainly undermines them substantially with a fact pattern that is not particularly unique in wage and hour class actions.

The Ninth Circuit is interested in learning whether the California Supreme Court thinks Dynamex applies retroactively

Here’s a tiny little nugget of interest. Today, in Vazquez v. Jan-Pro Franchising International, Inc. (9th Cir. July 22, 2019), the Ninth Circuit issued an Order granting a Petition for Panel Rehearing. That’s not the interesting part. The stated plan to certify a question to the California Supreme Court is, however, interesting:

The opinion in the above-captioned matter filed on May 2, 2019, and published at 923 F.3d 575, is WITHDRAWN. A revised disposition and an order certifying to the California Supreme Court the question of whether Dynamex Ops. W. Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018), applies retroactively will be filed in due course.

Order, at 2. Do you feel like it never stops? That there is never a moment when you can say, “This is the wage and hour law of California.”? I do.

Ninth Circuit concludes that the Dynamex "ABC test" applies retroactively

I missed this little nugget when it came out last month, but it’s worth noting regardless because it may move the needle in existing cases. In Vazquez, et al. v. Jan-Pro Franchising International, Inc. (9th Cir. May 2, 2009), the Ninth Circuit considered whether Dynamex Ops. W. Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018) applied to a District Court decision that pre-dated Dynamex.

On that point, the Court agreed that the default rule of retroactive application of judicial decisions should apply after a thorough analysis of the limited bases for an exception to that default rule:

Given the strong presumption of retroactivity, the emphasis in Dynamex on its holding as a clarification rather than as a departure from established law, and the lack of any indication that California courts are likely to hold that Dynamex applies only prospectively, we see no basis to do so either.

Slip op., at 26. The Court then considered whether due process considerations could preclude retroactive application and held that such considerations did not:

Applying Dynamex retroactively is neither arbitrary nor irrational. The Dynamex court explained that “wage orders are the type of remedial legislation that must be liberally construed in a manner that services its remedial purpose.” 416 P.3d at 32. Moreover, Dynamex made clear that California wage orders serve multiple purposes. One is to compensate workers and ensure they can provide for themselves and their families. Id. But second, wage orders accord benefits to entire industries by “ensuring that . . . responsible companies are not hurt by unfair competition from competitor businesses that utilize substandard employment practices.” Id. And finally, wage orders benefit society at large. Without them, “the public will often be left to assume responsibility for the ill effects to workers and their families resulting from substandard wages or unhealthy and unsafe working conditions.” Id. It is with these purposes in mind that the California Supreme Court embraced the ABC test and found it to be “faithful” to the history of California’s employment classification law “and to the fundamental purpose of the wage orders.” Id. at 40.

Slip op., at 27-28.

The balance of the Opinion examined the merits of the case, providing significant guidance to the District Court on remand.

Separate from the content of the Opinion, I am impressed by the formatting of the Opinion. The Opinion contains a hyper-linked table of contents that improves navigation through the long decision. Because I was curious about the formatting, I did a quick spot check of recent opinions and could not find a similarly formatted document. This makes me wonder why this is not standard. I note that Judge Block, of the Eastern District of New York (sitting by designation) authored the opinion. If you happen to know why the formatting of this Opinion is so good, leave a comment.

The prevailing plaintiffs were represented by Shannon Liss-Riordan of Lichten & Liss-Riordan P.C., Boston, Massachusetts.