Flores v. Velocity Express, LLC
| Decision Date | 24 April 2017 |
| Docket Number | Case No. 12-cv-05790-JST. |
| Parties | Phillip FLORES, et al., Plaintiffs, v. VELOCITY EXPRESS, LLC, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Caleb Marker, Christopher Paul Ridout, Zimmerman Reed LLP, Manhattan Beach, CA, Charles R. Ash, Pro Hac Vice, Jason J. Thompson, Pro Hac Vice, Jesse L. Young, Neil B. Pioch, Pro Hac Vice, Sommers Schwartz, P.C., Southfield, MI, David H. Grounds, Jacob R. Rusch, Molly Elizabeth Nephew, Pro Hac Vice, Timothy J. Becker, Johnson Becker, PLLC, Saint Paul, MN, for Plaintiffs.
Andrew Michael Spurchise, Littler Mendelson, P.C., New York, NY, Alexander Hurd Scherbatskoy, Aurelio Jose Perez, Byung–Kwan Park, Emily Erin O'Connor, Jessica Xing Yun Rothenberg, Robert G. Hulteng, Littler Mendelson, P.C., San Francisco, CA, for Defendants.
ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT
Re: ECF No. 241
Before the Court is Plaintiffs' motion for partial summary judgment as to misclassification and willfulness. ECF No. 241. The Court will grant the motion in its entirety.
In this collective action, Plaintiffs allege that Defendants violated the Fair Labor Standards Act ("FLSA") and California law by misclassifying their drivers as independent contractors. The following facts are undisputed except where noted.
Beginning in December 2009, Defendant Velocity Express, LLC ("Velocity") began operating its delivery logistics, freight forwarding, and brokering business. Wheeler Decl., ECF No. 44-1 at 3, ¶ 3. In its standard services proposal to its customers, Velocity described itself as "America's largest national ground shipping provider dedicated exclusively to regional delivery." ECF No. 242-6 at 2. Velocity's managerial employees testified that Velocity was primarily a delivery business. See Curcuru Depo., ECF No. 242-12 at 70-71 (); Healey Depo., ECF No. 242-16 at 4-5 (). Velocity went defunct in December 2013. ECF No. 150 at 5.
Defendant TransForce, Inc. ("TransForce") is a transportation logistics company. ECF No. 150 at 6-7. Defendant Dynamex, Inc. ("Dynamex") is a transportation service provider and a subsidiary of TransForce. Id. TransForce and Dynamex purchased Velocity in 2012, before Velocity went defunct. ECF No. 147 at 6.
Velocity did not own its own vehicles, but rather hired drivers as independent contractors to perform delivery services. Wheeler Decl., ECF No. 44-1 ¶ 6.
To qualify as a driver, an individual had to meet the minimum age requirements, have a car and a valid driver's license, speak English, and pass the required background and drug screens. ECF No. 242-59; Odud Depo., ECF No. 242-7 at 126-128; see also, ECF No. 242-34 at 3. Drivers were also required to successfully complete a Department of Transportation–required road rest and obtain insurance that complied with Velocity's insurance requirements (at least an A- rating) or, alternatively, enroll in Velocity's insurance program. ECF No. 242-59; Healey Depo., ECF No. 242-16 at 18-20. Velocity penalized drivers who did not meet its insurance requirements by deducting $50 per week from their pay. ECF No. 242-23. An individual did not need to have any particular level of education, specialized training, or special license to be a driver for Velocity. Healey Depo., ECF No. 242-16 at 36-37.
Before a driver began working for Velocity, he or she was required to sign the "Independent Contractor Agreement for Transportation Services." ECF No. 242-9; Odud Depo., ECF No. 242-7 at 108-09; Wheeler Depo., ECF No. 242-8 at 7. All three bellwether Plaintiffs1 signed this agreement. See ECF Nos. 242-78, 242-27, 242-30 at 3.
Pursuant to that agreement, the driver "shall provide and use for the performance of his services hereunder a lawfully registered and safe vehicle capable of satisfying [Velocity's] and its customers' Control and Custody standards." Id.¶ 8(a). Drivers are also "required to satisfy customer contractual requirements regarding drivers' qualifications, such as minimum age, experience, good driving records, criminal history, drug screening, etc." Id. In addition, drivers "shall obtain appropriate signage for its motor vehicle" consistent with customer expectations. Id.¶ 8(d). Drivers were also required to "wear the appropriate uniform at all times while performing services under this Agreement." Id.¶ 12. Drivers and any substitute drivers that they employed were required to comply with Velocity's substance abuse policy, Velocity's drivers' qualification policy, and all similar customer qualification requirements. Id.¶ 16.
The agreement was for a monthly term that automatically renewed unless terminated by either party. ECF No. 242-9 ¶ 2; Wheeler Depo., ECF No. 242-8 at 7-8. The agreement could be terminated at any time and for any reason by either party with fourteen days prior written notice to the other party. ECF No. 242-9 ¶ 18. Velocity also had the right to terminate the agreement at any time with five days notice if it determined in its sole discretion that the route was no longer profitable. Id. If either party committed a material breach of the agreement, the other party could immediately terminate the agreement. Id.
Velocity negotiated directly with potential customers, designed the delivery routes, and determined what the route would pay before they hired a driver to perform the route. Wheeler Depo., ECF No. 242-8 at 67-68, 5-6; Curcuru Depo., ECF No. 242-12 at 11-12; Healey Depo., ECF No. 242-16 at 2 (). Once the route was established, Velocity advertised to find a driver to work the route. Wheeler Depo., ECF No. 242-8 at 66-68.
Velocity required its drivers to wear a Velocity uniform and an identification badge. See ECF No. 242-9 at 5; ECF No. 242-31.2 Several of Velocity's managerial employees admit that Velocity required drivers to wear uniforms pursuant to customer requirements. Healey Depo., ECF No. 242-16 at 21; Odud Depo., ECF No. 242-7 at 25; Curcuru Depo., ECF No. 242-12 at 41-42. Certain customers also required the drivers to place signage on their vehicles. ECF No. 245 1 at 266; Odud Depo., ECF No. 242-7 at 95- 104 (discussing signage requirements). For example, one of Velocity's customers expected drivers to comply with best practices regarding "[s]ignage" and "[p]rofessional appearance Both Driver & Vehicle." ECF No. 242-40 at 13.
Velocity gave its drivers a manifest each day that told them what packages to deliver by what time. Healey Depo., ECF No. 242-16 at 38.3 And Velocity's drivers were required to deliver their packages by a certain time pursuant to customer requirements. Odud Depo., ECF No. 242-7 at 55-56, 73; Healey Decl., ECF No. 245-1 at 262, ¶ 4; Curcuru Depo., ECF No. 242-12 at 26-27. Before making their deliveries, drivers had to arrive at Velocity's warehouse to scan and load parcels, which could take up to two or more hours. Odud Depo., ECF No. 242-7 at 48, 50, 55-61, 48. Some drivers were also required to return to the warehouse at the end of the day. Id. at 29, 79.
Velocity required drivers to follow a series of rules when delivering products to its customers. Odud Depo., ECF No. 242-7 at 23. Some of these "standard operating procedures" were developed by Velocity's customers, and Velocity enforced its own standard operating procedures as well. See Curcuru Depo., ECF No. 242-12 at 59-63 (). Drivers were expected to comply with standard operating procedures regarding building security and, in some cases, best practices regarding customer service. ECF No. 242-37; ECF No. 242-40. Velocity also briefed its drivers on "the Velocity Promise" regarding customer service expectations. Odud Depo., ECF No. 242-7 at 22-23. Regardless of whether drivers elected to purchase separate insurance or enroll in Velocity's insurance program, they were required to report even minor accidents to Velocity. Wheeler Depo., ECF No. 242-8 at 71-72.
Plaintiff James Mack worked for Velocity in San Diego for approximately four or five years. Mack Depo., ECF No. 242-28 at 1-3, 7-8, 41, 61. While he was working for Velocity, Mr. Mack worked five or six days a week, depending on the time of year, from around 4:00 a.m. until 7:00 p.m. Id. at 61-63, 21-24.
To perform services for Velocity, Mr. Mack invested in two vans and, a rental truck, and a Velocity shirt. Id. at 36-37, 55-56. Mr. Mack also purchased insurance through Velocity's insurance program, the payments for which were deducted from his weekly settlement check. Id. at 46-47. Mr. Mack hired his wife and son as helpers while working at Velocity, both of whom had to go through Velocity's hiring process. Id. at 25-30, 34.
Mr. Mack would start his work day at Velocity's San Diego warehouse, where he was required to sort and scan his packages for the day and load them onto his vehicle. Id. at 9-12. Before Velocity used scanners, it provided Mr. Mack with a paper log that he was required to fill out and turn into Velocity on a weekly basis. Id. at 13-15. Mr. Mack also ended his day at the warehouse, where he unloaded any returns and scanned packages back in. Id. at 9-12, 17. While performing work for Velocity, Mr. Mack was required to wear a Velocity uniform and identification badge and place a magnetic sign on his vehicle. Id. at 10-13, 55-56.4
During the first "couple of months" that Mr. Mack provided services to Velocity, he also provided services to another company, Central Freight. Id. at 1-2. In addition, Mr. Mack did a few short-term assignments for other companies during his last...
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