Collinge v. Intelliquick Delivery, Inc.

• Decision Date: 23 March 2015
• Docket Number: 2:12-cv-00824 JWS
• Citation: Collinge v. Intelliquick Delivery, Inc., 2:12-cv-00824 JWS (D. Ariz. Mar 23, 2015)
• Parties: David Collinge, et al., Plaintiffs, v. IntelliQuick Delivery, Inc., an Arizona corporation, et al., Defendants.
• Court: U.S. District Court — District of Arizona

David Collinge, et al., Plaintiffs, v. IntelliQuick Delivery, Inc., an Arizona corporation, et al., Defendants.

2:12-cv-00824 JWS

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

March 23, 2015

ORDER AND OPINION

[Re: Motions at docs. 303 and 310]

I. MOTIONS PRESENTED

At docket 59 the court conditionally certified a collective action brought by plaintiffs David Collinge, et al. (collectively "plaintiffs") to enforce the Fair Labor Standards Act ("FLSA").¹ At docket 310 defendants IntelliQuick Delivery, Inc., et al. (collectively, "defendants") move for decertification of the FLSA class pursuant to 29 U.S.C. § 216(b). Plaintiffs oppose at docket 318. Defendants reply at 326. Additionally, at docket 303 plaintiffs move for class action certification on their non-FLSA claims (Counts II-V of the Second Amended Complaint ("the Complaint"))pursuant to Federal Rule of Civil Procedure 23. Defendants oppose at docket 319. Plaintiffs reply at docket 325. Oral argument was heard on March 17, 2015.

II. BACKGROUND

Plaintiffs and the proposed class currently work or have worked for IntelliQuick Delivery, Inc. ("IntelliQuick") as delivery drivers. Plaintiffs maintain that they have been misclassified as independent contractors when they are actually employees, and as a result defendants have violated their rights under various wage and hour laws. Count I of the Complaint alleges FLSA violations and is the subject of defendants' present motion for decertification. The FLSA class that was conditionally certified consists of "All current and former drivers or couriers, who made pick-ups or deliveries for or on behalf of IntelliQuick Deliveries, Inc. as a Freight Driver, Route Driver, or On-Demand Driver within the State of Arizona and who were or are classified or paid as independent contractors or not classified or paid as employees at any time on or after April 9, 2009."²

Plaintiffs non-FLSA claims allege violations of Arizona's Wage Act (Count II), restitution and unjust enrichment (Count III), violations of the Family and Medical Leave Act ("FMLA") (Count V), and seek a declaratory judgment that several of defendants' contracts are unenforceable (Count IV). Plaintiffs now seek class certification on these non-FLSA claims as well as certification of the following four subclasses of drivers:

Subclass A - Freight Drivers: All Drivers who use vehicles or vans that are owned or leased by IntelliQuick or [Majik Leasing, LLC] to make deliveries and pick-ups for or on behalf of IntelliQuick or its customers.

Subclass B - Route Drivers: All Drivers who generally use their own vehicles to make deliveries and pick-ups on an assigned route for or on behalf of IntelliQuick or its customers.

Subclass C - On-Demand Drivers: All Drivers who generally use their own vehicles to make specific deliveries and pick-ups for or on behalf of IntelliQuick or its customers and who have not been assigned a regular route.

Subclass D - FMLA Covered Drivers: All Drivers who have worked in excess of 1,250 hours during any 12-month period of time and are or were eligible for FMLA leave.³

III. DISCUSSION

A. FLSA decertification

Section 207(a) of Title 29 requires employers to pay their nonexempt employees who work more than forty hours a week overtime compensation, and Section 206 requires employers to pay their employees a minimum wage. Section 216(b) states that actions to recover unpaid overtime or minimum wages "may be maintained against any employer . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated." Section 216(b) requires that employees file consent in writing in order to become plaintiffs. A class may include any employee who is "similarly situated" to the named plaintiff employees. Although the Ninth Circuit has not yet sanctioned a procedure for district courts to use when determining whether workers are similarly situated, a majority of courts employ an ad hoc two-step approach.⁴

At the first step, plaintiffs must make a "modest factual showing" that they and the potential opt-in plaintiffs were victims of a common policy or plan that violated the law. If they can do so, as plaintiffs have here, the court will send notice to the potential opt-in plaintiffs who may be similarly situated to the named plaintiffs.⁵ This first step is referred to as "conditional certification" because "the decision may be reexamined once the case is ready for trial."⁶

The second stage occurs after discovery and is triggered by an employer's motion for decertification. "At the second stage, the district court will, on a fuller record,determine whether a so-called 'collective action' may go forward by determining whether the plaintiffs who have opted in are in fact 'similarly situated' to the named plaintiffs."⁷ "This second stage is less lenient, and the plaintiff bears a heavier burden."⁸ To determine whether plaintiffs are similarly situated at the second stage, courts review several factors, including (1) the "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 and procedural considerations."⁹ The ultimate decision whether to decertify the class "rests largely within the district court's discretion."¹⁰

1. The individual plaintiffs' factual and employment settings are similar

Plaintiffs claim that the opt-in class members are similarly situated to the named plaintiffs because they are victims of a common policy or plan that mischaracterizes them as independent contractors when in fact they are employees. The parties agree that the test for determining whether the drivers are employees is the "economic realities" test, which utilizes a non-exhaustive list of six factors set forth by the Ninth Circuit in Real v. Driscoll Strawberry Associates, Inc.¹¹ The ultimate focus of the economic realities test is whether "as a matter of economic reality, the individuals 'are dependent upon the business to which they render service.'"¹² The court's task at thisstage of the litigation is not to consider the merits whether the economic realities test is satisfied, but rather to decide whether the factual and employment settings of the opt-in plaintiffs and the named plaintiffs are similar. The factual and employment "settings" at issue in this case are those that relate to the econom ic-realities-test factors. These six factors are:

(1) "the degree of the alleged employer's right to control the manner in which the work is to be performed;"

(2) "the alleged employee's opportunity for profit or loss depending upon his managerial skill;"

(3) "the alleged employee's investment in equipment or materials required for his task, or his employment of helpers;"

(4) "whether the service rendered requires a special skill;"

(5) "the degree of permanence of the working relationship;" and

(6) "whether the service rendered is an integral part of the alleged employer's business."¹³

According to defendants, numerous factual differences in the drivers' work settings render them disparately situated for Section 216(b) purposes. Although defendants do not separate them out as such, these alleged differences appear to relate to the first three economic-realities-test factors. Thus, defendants effectively concede that the individual plaintiffs are similarly situated with regard to factors four, five, and six.

a. Plaintiffs are similarly situated with regard to the degree of control that IntelliQuick exercises over their work performance

All IntelliQuick drivers are subject to the same work contract that, according to defendants, "sets forth the parameters of the working relationship."¹⁴ More importantly, once hired, the drivers are trained by defendants¹⁵ and subject to a series of "uniform standard operating procedures" ("SOPs")¹⁶ that tell them what they are required to do,¹⁷within which "time frame" they must do it,¹⁸ what they are required to wear,¹⁹ and which equipment they must use.²⁰ Further, IntelliQuick monitors its drivers' work using its "CXT system," which allows IntelliQuick to know where its drivers are at all times and to communicate with them.²¹

If drivers commit what IntelliQuick refers to as "service failures," such as late or missed deliveries or violations of IntelliQuick policy, IntelliQuick may sanction them with "chargebacks" (i.e., financial penalties).²² IntelliQuick maintains a "care ticket system" to, among other things, document customer complaints and service failures.²³ This care ticket system shows that IntelliQuick closely monitors the details of its drivers' activities²⁴ and routinely metes out chargebacks or other discipline when a driver's performance falls below expectations.²⁵ The evidence does not show some drivers are subject to these policies and procedures and others are not; to the contrary, it shows that all of IntelliQuick's drivers are similarly situated with regard to the level of control that IntelliQuick exercises over their work.

Despite this evidence, defendants assert that IntelliQuick exercises a disparate degree of control over its individual drivers' work performance for numerous reasons. They first argue that "individual supervisors could variously affect" the degree of controlthat IntelliQuick exercises over its drivers.²⁶ Defendants rely on the deposition testimony of former IntelliQuick representative Jason Ortiz ("Ortiz"), who stated that he had the words "direction and control" "drilled into [his] head" in training. Ortiz testified that after that training "the whole direction and control thing" continued in his interactions with IntelliQuick drivers, which meant, "you do not give them direction, you're not giving control."²⁷ Defendants contrast this with Ortiz's testimony that he witnessed other IntelliQuick "managers, dispatchers, and supervisors" exercising "direction and control over the drivers."²⁸ This testimony is far too vague to be informative.

D...