Gray v. FedEx Ground Package Sys., Inc.

• Decision Date: 21 August 2015
• Docket Number: No. 14–3232.,14–3232.
• Citation: 799 F.3d 995
• Parties: Reginald GRAY ; Jammie Hill; Marcus Holmes, Plaintiffs–Appellees Roy Patton, Jr.; Tom Skundrich, Jr., Plaintiffs James Tichenor; Carl Tucker, Plaintiffs–Appellees Rick Hendricks, Plaintiff Bobby Brown; Michael Jost ; Rich Mitchell, Plaintiffs–Appellees Mike Sheffer, Plaintiff John Waweru, Plaintiff–Appellee Kevin Pour; Jamie Tenison; Seid Huskic; Bob Candella; Michael Light; Mike Sanders; Bob Arbutti; Ken Stibor; Gary Austin; Don Blackmon; Robert Hansen; Bob O'Keefe; Luther McLain; Bob Lee Baker; Dave King, Plaintiffs v. FEDEX GROUND PACKAGE SYSTEM, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

799 F.3d 995

Reginald GRAY ; Jammie Hill; Marcus Holmes, Plaintiffs–AppelleesRoy Patton, Jr.; Tom Skundrich, Jr., PlaintiffsJames Tichenor; Carl Tucker, Plaintiffs–AppelleesRick Hendricks, PlaintiffBobby Brown; Michael Jost ; Rich Mitchell, Plaintiffs–AppelleesMike Sheffer, PlaintiffJohn Waweru, Plaintiff–AppelleeKevin Pour; Jamie Tenison; Seid Huskic; Bob Candella; Michael Light; Mike Sanders; Bob Arbutti; Ken Stibor; Gary Austin; Don Blackmon; Robert Hansen; Bob O'Keefe; Luther McLain; Bob Lee Baker; Dave King, Plaintiffs

v.FEDEX GROUND PACKAGE SYSTEM, INC., Defendant–Appellant.

No. 14–3232.

United States Court of Appeals, Eighth Circuit.

Submitted: June 9, 2015.

Filed: Aug. 21, 2015.

K. Lee Blalack, II, argued, Washington, DC (Rachel L. Schy, Scott M. Voelz, Los Angeles, CA, on the brief), for Defendant–Appellant.

John Edward Toma, Jr., argued, Gulf Breeze, FL (Stacy Ann Burrows, Catherine R. McLeod, Kansas City, MO, on the brief), for Plaintiffs–Appellees.

Before GRUENDER, MELLOY, and BENTON, Circuit Judges.

Opinion

GRUENDER, Circuit Judge.

Across the country, FedEx drivers have sued to prove that they are employees, not independent contractors as FedEx claims, and thereby secure benefits such as overtime pay and greater labor rights. See In re FedEx Ground Package Sys., Inc. Emp't Practices Litig., 758 F.Supp.2d 638, 654 (N.D.Ind.2010). As one court has explained, FedEx “carefully structured its drivers' operating agreements so that it could label the drivers as independent contractors ... to avoid the additional costs associated with employees. In other words,” the question is close “by design.” Craig v. FedEx Ground Package Sys., Inc., 300 Kan. 788, 335 P.3d 66, 72–73 (2014) (per curiam).¹

But here we need not answer that question. Here the district court granted partial summary judgment to plaintiffs, finding no genuine dispute that they were FedEx employees, even though under Missouri law employment status is an issue of fact. The question for us is thus only whether a reasonable jury could disagree and conclude that plaintiffs were independent contractors. We hold that it could, and we therefore reverse and remand.

I.

FedEx Ground Package System, Inc., contracts with operators to take packages from its terminals and then, in the familiar white trucks and vans, deliver those packages to homes and businesses. FedEx divides the country into thousands of territories, each assigned to an operator who makes deliveries there. Plaintiffs in this appeal are all former operators who allege that they should have been treated as employees. They claim that FedEx defrauded them as to their employment status, thereby denying them benefits such as overtime pay and workers' compensation.

Plaintiffs entered into substantively identical operating contracts with FedEx, contracts that had several important features. Operators were not required to drive personally. Rather, they could hire others, subject to FedEx's qualifications, to drive for them. The operators also received a proprietary interest in servicing their territories, an interest that they could sell to others, again subject to FedEx's approval. FedEx could not fire the operators at will during their contract terms of one, two, or three years, but it could fire them for cause, and it could choose not to renew their contracts for any reason. Operators provided their own vehicles. FedEx paid them based on (among other things) the numbers of packages and stops serviced. And FedEx managers could supervise an operator by riding along on delivery runs four times a year. Ultimately, at least according to the contracts, operators controlled “the manner and means” used to make their deliveries. According to the contracts, an operator made deliveries “strictly as an independent contractor, and not as an employee of FedEx.”

Notwithstanding that label, plaintiffs produce a host of allegations that they say shows that they were employees. FedEx required that operators' vehicles meet certain specifications; that the vehicles bear FedEx's logo; and that the vehicles be painted not just white, but “FedEx White.” Operators could not make personal use of their vehicles without covering up the FedEx logo. They had to provide proof of inspection and maintenance. Drivers had to wear a FedEx uniform, and FedEx even required that their personal appearances be up to “reasonable standards of good order.” Drivers were subject to background, credit, and drug checks. They had to use FedEx package scanners. And, plaintiffs say, FedEx really did control how drivers delivered packages, down to hours worked.

For the most part, plaintiffs' stories are similar. Bobby Brown operated with FedEx Ground from its inception in 2000 until 2006, working one territory until 2003 and another from 2003 until 2006. At one point, Brown had another driver covering his first territory for him. He eventually bought an interest in a new territory from another operator. In 2006, he sold his interest in the second territory.

Reginald Gray bought his territory and a van from another operator in 2002. He formed a limited liability company and paid another plaintiff, Marcus Holmes, to drive a second van. Later he had another plaintiff, Jammie Hill, drive. He used other drivers as needed. Gray sold his territory to another operator in 2006.

Michael Jost operated with FedEx Ground from its inception until 2003. He claims that FedEx forced him to sell his territory, which he did, for about $25,000.

Richard Mitchell operated from 2002 until 2004. He serviced his territory through a company he created. In the last few months of his tenure, he paid a replacement driver. He sold his territory for $2,500.

James Tichenor operated from 2004 to 2006. He serviced his territory through a limited liability company. He sold his territory for $23,500.

Carl Tucker operated from 2003 to 2006. Like Reginald Gray, he paid Jammie Hill to drive for him. He sometimes paid other drivers as well. He sold his territory.

John Waweru operated from 2001 to 2003. He paid plaintiff Marcus Holmes to drive for him for three or four months. Waweru sold his territory as well.

Marcus Holmes, as already mentioned, began his relationship with FedEx by driving for other plaintiffs. He then became an operator himself in 2003 when he took over another operator's territory. Holmes sometimes paid temporary drivers to drive for him. He sold his territory and a vehicle for about $40,000.

Finally, Jammie Hill also began his relationship with FedEx by driving for other plaintiffs. He became an operator in 2004. He sometimes used temporary drivers, one of which he hired to work Fridays and Saturdays. Whether Hill sold his route is unclear from his deposition testimony.

In 2006, this suit was brought in the United States District Court for the Eastern District of Missouri. The suit was then transferred to a multi-district litigation proceeding in the United States District Court for the Northern District of Indiana. That court considered whether operators were independent contractors or employees under the relevant law of dozens of states. In re FedEx, 758 F.Supp.2d at 661–733. Results were mixed. Id. at 734. Considering Missouri law, however, the court denied class certification in favor of a “driver-by-driver, terminal-by-terminal, supervisor-by-supervisor analysis....” In re FedEx Ground Package Sys., Inc. Emp't Practices Litig., 273 F.R.D. 424, 475 (N.D.Ind.2008). The court remanded the case to the Eastern District of Missouri for this analysis.

For our purposes, the case proceeded in Missouri as follows. FedEx and plaintiffs cross-moved for summary judgment on employment status, and the court granted partial summary judgment to the plaintiffs, ruling that they were employees as a matter of Missouri law. The nine plaintiffs here then won at trial. A jury, instructed that the plaintiffs were employees, found that FedEx had defrauded them, denying them each tens of thousands of dollars in benefits by treating them as independent contractors. FedEx now appeals the grant of partial summary judgment on employment status as well as an evidentiary ruling from the trial. It does not attempt to appeal the partial denial of its own motion for summary judgment or otherwise argue that plaintiffs were independent contractors as a matter of law.

II.

We review grants of summary judgment de novo, viewing the facts in the light most favorable to the nonmoving party. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (en banc). Summary judgment is proper only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Torgerson, 643 F.3d at 1042 (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ). Where the record taken as a whole could lead a rational trier of fact to find for the nonmoving party, there is a genuine issue for trial. See id.

Because Missouri law governs this diversity suit, “we are bound by the decisions of the Supreme Court of Missouri.” United Fire & Cas. Co. v. Titan Contractors Serv., Inc., 751 F.3d 880, 883 (8th Cir.2014) (quoting Dannix Painting, LLC v. Sherwin–Williams Co., 732 F.3d 902, 905 (8th Cir.2013) ). If that court “has not addressed an issue” of state law, we predict how it “would rule, and we follow decisions from the intermediate state courts when they are the best evidence of Missouri law.” Id. (quoting Dannix, 732 F.3d at 905 ).

In Missouri, in contrast to the law of some other states, employment status is a question of fact. Compare Huggins v. FedEx Ground Package Sys., Inc., 592 F.3d 853, 857 (8th Cir.2010), with, e.g., Fesler v. Whelen Eng'g Co., 688 F.3d 439, 442 (8th Cir.2012) (applying Iowa law). In other words, a court...