Anfinson v. Fedex Ground Package Sys. Inc.

• Decision Date: 20 December 2010
• Docket Number: No. 63518-2-I.,63518-2-I.
• Citation: 244 P.3d 32,159 Wash.App. 35
• Parties: Randy ANFINSON; James Geiger; and Steven Hardie, individually and on behalf of others similarly situated, Appellants, v. FEDEX GROUND PACKAGE SYSTEM, INC.; John Schnebeck; Cheryl Pilakowski; and John Does 1 through 10, Respondents.
• Court: Washington Court of Appeals

244 P.3d 32

159 Wash.App. 35

Randy ANFINSON; James Geiger; and Steven Hardie, individually and on behalf of others similarly situated, Appellants,

v.FEDEX GROUND PACKAGE SYSTEM, INC.; John Schnebeck; Cheryl Pilakowski; and John Does 1 through 10, Respondents.

No. 63518-2-I.

Court of Appeals of Washington, Division 1.

Dec. 20, 2010.

Martin S. Garfinkel, William Joel Rutzick, Schroeter Goldmark & Bender, Rebecca Jane Roe, Attorney at Law, Lawrence Rea Schwerin, Dmitri L. Iglitzin, Schwerin Campbell Barnard Iglitzin & Lavitt, Seattle, WA, for Appellants.

Kelly Patrick Corr, Guy Paul Michelson, Kevin Carl Baumgardner, Emily J. Brubaker, Corr Cronin Michelson Baumgardner & Preece LLP, Seattle, WA, Chris A. Hollinger, O'Melveny & Meyers LLP, San Francisco, CA, for Respondents.

COX, J.

¶ 1 Jury instructions are sufficient if they permit each party to argue their theory of the case, do notmislead the jury, and when read as a whole, properly inform the jury of the applicable law.¹ Here, pickup and delivery drivers working for FedEx Ground Package System, Inc., (FedEx) sued for relief under the Washington Minimum Wage Act (MWA) on behalf of themselves and other drivers similarly situated. They claim a right to overtime pay and attorney fees. They also seek reimbursement for the expenses of their uniforms under the Industrial Welfare Act (IWA).

¶ 2 The primary issue in this case of first impression is whether the court properly instructed the jury on the legal standard for determining whether the drivers are employees or independent contractors for purposes of the MWA. Other jury instructions are also at issue. For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.

¶ 3 Randy Anfinson and two other drivers sued FedEx in December 2004, seeking relief on behalf of themselves and others similarly situated. The trial court granted their motion to certify this case under CR 23 as a class action on behalf of approximately 320 FedEx drivers (collectively, "Anfinson"). The class is defined as:

[A]ll persons who performed services as a pick up and delivery driver, or "contractor," for defendant during the class period (December 21, 2001 through December 31, 2005) who signed (or did so through a personal corporate entity) a FedEx operating agreement and who handled a single route at some point during the class period; excluding persons who only performed or filled one or more of the following positions during the class period: multiple route contractors, temporary drivers, line-haul drivers, or who worked for another contractor.²

¶ 4 Anfinson seeks overtime wages under the MWA for a period commencing three years prior to December 2004, when this action was filed. The essence of this claim is that the FedEx drivers are "employees" under the MWA, not"independent contractors," as the company classifies them. Anfinson also seeks attorney fees under the MWA and other statutes.

¶ 5 Anfinson also seeks reimbursement for the cost of uniforms under the IWA, RCW 49.12.450. The parties stipulated that if the jury determined that the class members were employees and not independent contractors, FedEx would be liable for overtime wages under the MWA and uniform reimbursement under the IWA.³

¶ 6 The court bifurcated the trial into two phases. The first phase was the liability phase and the second phase was to have addressed damages.

¶ 7 A central issue for the liability phase was how the trial court should instruct the jury on the legal standard for whether the drivers are employees of FedEx or independent contractors. The court, drawing on submissions from the parties and its own research, fashioned a preliminary and a final instruction for the jury on this question. They were worded substantially the same. These instructions are the primary issue on appeal.

¶ 8 After a four week trial on liability issues, the jury returned a defense verdict for FedEx. The jury decided that the class members were independent contractors, not employees.⁴ The court entered judgment on that verdict, dismissing the case.⁵

¶ 9 Anfinson appeals.

JURY INSTRUCTIONS

¶ 10 Anfinson challenges both the trial court's decisions to give certain instructions and its refusal to give others. We agree with some of these challenges and disagree with others.

¶ 11 Jury instructions are sufficient if they permit each party to argue their theory of the case, do not mislead the jury, and when read as a whole, properly inform the jury of the applicable law.⁶ No more is required.⁷

¶ 12 "On appeal, jury instructions are reviewed de novo, and an instruction that contains an erroneous statement of the applicable law is reversible error where it prejudices a party." ⁸ An error is prejudicial if it affects the outcome of the trial.⁹

When the record discloses an error in an instruction given on behalf of the party in whose favor the verdict was returned, the error is presumed to have been prejudicial, and to furnish ground for reversal, unless it affirmatively appears that it was harmless....

A harmless error is an error which is trivial, or formal, or merely academic, and was not prejudicial to the substantial rights of the party assigning it, and in no way affected the final outcome of the case.¹⁰

¶ 13 In contrast, a trial court's decision whether to give a particular instruction to the jury is a matter that we review only for abuse of discretion.¹¹ The abuse of discretion standard also applies to questions about the number of instructions and the specific wording of instructions.¹²

¶ 14 Refusal to give a particular instruction is an abuse of discretion only if the decision was "manifestly unreasonable, or [the court's] discretion was exercised onuntenable grounds, or for untenable reasons." ¹³ If a party's theory of the case can be argued under the instructions given as a whole, then a trial court's refusal to give a requested instruction is not reversible error.¹⁴

¶ 15 The fact that a proposed jury instruction includes language used by a court in the course of an opinion does not necessarily make it a proper jury instruction.¹⁵

Preliminary Instruction and Instruction 9

¶ 16 Anfinson's primary argument is that the court's preliminary instruction, as well as Instruction 9 (collectively, "Instruction 9"), misstates the law. Specifically, the class members argue that this instruction erroneously states the legal standard for distinguishing between employees and independent contractors for purposes of the MWA. Anfinson argues Instruction 9, which focuses on whether an employer has the "right to control the details of the class members' performance of the work" is incorrect. We hold that Instruction 9 incorrectly states the law and was prejudicial to Anfinson.

¶ 17 In considering Anfinson's arguments, we have several preliminary observations. First, the question whether the FedEx drivers are employees or independent contractors for purposes of the MWA is a question of first impression in Washington. Second, there are a wide variety of approaches in other states that have considered the same or similar questions.¹⁶ Third, in contrast to the multiplicity of approaches by various states, the Supreme Court and allfederal circuits agree that "the economic realities" test is the applicable test for the Fair Labor Standards Act (FLSA), on which the MWA is based.¹⁷ Finally, Anfinson submitted supplemental authority during this appeal stating the approach taken by the Washington Department of Labor and Industries (DLI) on this question.¹⁸ For the reasons that we explain later in this opinion, that authority from DLI is helpful in deciding this question.

¶ 18 That said, we focus first on the question of what legal standard should control, for purposes of the MWA, whether one is an "employee" or an "independent contractor." This is a mixed question of fact and law.¹⁹

¶ 19 Here, the trial court's Instruction 9 states:

You must decide whether the class members were employees or independent contractors when performing work for FedEx Ground. This decision requires you to determine whether FedEx Ground controlled, or had the right to control, the details of the class members' performance of the work.

In deciding control or right to control, you should consider all the evidence bearing on the question, and you may consider the following factors, among others:

1. The degree of FedEx Ground's right to control the manner in which the work is to be performed;

2. The class members' opportunity for profit or loss depending upon each one's managerial skill;

3. The class members' investment in equipment or materials required for their tasks, or their employment of others;

4. Whether the service rendered requires a special skill;

5. The degree of permanence of the working relationship;

6. Whether the service rendered is an integral part of FedEx Ground's business;

7. The method of payment, whether by the time or by the job; and

8. Whether or not the class members and FedEx Ground believed they were creating an employment relationship or an independent contractor relationship.

Neither the presence nor the absence of any individual factor is determinative.²⁰

¶ 20 The overtime wage provision of the MWA that is primarily at issue for purposes of Instruction 9 is RCW 49.46.130. That statute states in relevant part:

(1) Except as otherwise provided in this section, no employer shall employ any of his [or her] employees for a work week longer than forty hours unless such employee receives compensation for his [or her] employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he [or she] is employed.²¹

¶ 21 RCW 49.46.010, the definitional section of the MWA states:

....

(3) " Employ " includes to permit to work;

(4) " Employer " includes any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee;

(5) " Emplo

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