Linton v. Desoto Cab Co., A146162

• Decision Date: 05 October 2017
• Docket Number: A146162
• Citation: 223 Cal.Rptr.3d 761,15 Cal.App.5th 1208
• Court: California Court of Appeals Court of Appeals
• Parties: Darnice LINTON, Plaintiff and Appellant, v. DESOTO CAB COMPANY, INC., Defendant and Appellant.

15 Cal.App.5th 1208

223 Cal.Rptr.3d 761

Darnice LINTON, Plaintiff and Appellant,

v.DESOTO CAB COMPANY, INC., Defendant and Appellant.

A146162

Court of Appeal, First District, Division 1, California.

Filed October 5, 2017

Seibert & Bautista, Shannon Seibert, Joe Bautista, San Francisco, for Defendant and Appellant DeSoto Cab Company, Inc.

State of California Division of Labor Standards Enforcement, M. Colleen Ryan, for Plaintiff and Appellant Darnice Linton.

Dondero, J.Plaintiff Darnice Linton appeals from a judgment in favor of defendant DeSoto Cab Company. Defendant initiated the trial court proceeding after the Labor Commissioner found in favor of plaintiff on his claim for unpaid wages. Plaintiff had alleged defendant violated certain wage and hour laws by requiring him to pay a set fee (known as a "gate fee") in exchange for obtaining a taxicab to drive for each of his shifts. After a bench trial, the court concluded plaintiff was not entitled to recover the gate fees because he was an independent contractor and not an employee of defendant. In so ruling, the court determined that several relevant cases, including the Supreme Court's seminal case S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399 ( Borello ), are not controlling under the circumstances at issue here. We conclude the court erred in its legal analysis. The judgment is therefore reversed. Our conclusion renders moot defendant's appeal of the court's order denying its claim for costs.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

I. Background

Defendant has a fleet of about 230 taxicabs in San Francisco. Plaintiff drove its taxicabs from September 2008 to August 2012. Plaintiff initiated the relationship with defendant by filling out an Application for Lease. The application requested his social security number. He was required to show he was eligible to work in the United States. He also had to bring in his driver's license, a DMV printout, and his "A" card, which is currently issued by the San Francisco Municipal Transportation Agency (SFMTA). An "A" card allows individuals to drive a taxicab in San Francisco. Subsequently, he was retained by Greg Cochran, defendant's operations manager.

On September 5, 2008, plaintiff signed a 15-page Taxicab Lease Agreement (Agreement) that was drafted by defendant. The content on the form is preprinted, and plaintiff did not negotiate any of its terms. The Agreement includes language disclaiming any employment relationship between the parties. Either party could cancel with 30 days' notice, or without notice in the event of a breach. After the Agreement was executed, plaintiff gave defendant's cashier a security deposit of $500. He also attended an orientation that lasted about three hours, during which Cochran explained the company's procedures, including advice on how drivers should treat their customers. Cochran testified that defendant could not operate as a business without the taxicab drivers who lease and drive its cabs.

In order to begin a shift, taxi drivers check in with the cashier and are assigned a cab. Drivers receive the cab's keys, a taxi medallion, and a "waybill." The bottom of each waybill states: "DRIVE CAREFULLY.

DRESS NEATLY. BE COURTEOUS." At the end of a driver's shift, he or she returns the cab, the medallion, and the waybill, and pays the cashier the gate fee for the leasing of the vehicle. Drivers keep the fares and tips that they receive from their passengers, and they are not required to account to defendant for their fares. Defendant's only income under the Agreement is the gate fee.

Plaintiff initially was given day shifts from 3:00 a.m. to 1:00 p.m., Monday through Friday. He was required to lease the cab for 10 hours each shift. He would drive different vehicles, depending on availability. The gate fee was about $100 per day. Plaintiff also would often tip dispatchers and cashiers when he picked up and dropped off the cab. He did not believe he had the ability to negotiate the gate fee, which was set by defendant. His goal was to take home at least $200 per shift after the gate fee and gas. About three or four times a year he would lose money on a shift, or just break even. Sometimes defendant asked him to return a cab before his shift ended. This happened on about six or seven occasions.

When plaintiff was working, defendant's dispatch would relay requests from customers and radio the customers' locations. Plaintiff and other drivers could then respond with their locations. Dispatch would assign the closest driver to pick up the customer. Plaintiff was free to reject or accept dispatch calls. Defendant does not control how much money drivers make during their shifts. It does not require drivers to check in during their shifts or report when they take breaks. However, defendant's cabs are equipped with GPS tracking. The cabs also have audio and video recording devices that are mounted on the windshield and record video inside and outside of the cab.

About 60 percent of plaintiff's fares came from customer street hails. Dispatch radio calls accounted for around 35 to 40 percent of his fares, with about 2 percent coming via his personal cell phone. About once or twice a month, defendant asked him to accept a discounted fare, such as when he would transport a blood specimen from Blood Centers of the Pacific to a hospital. Defendant had a contract with the blood bank for this purpose. Drivers were paid a flat rate to transport blood specimens. Plaintiff did not set the flat rate.

After plaintiff was involved in an accident in October 2011, he received a warning letter from defendant's general manager. He was told that if he had another accident the lease agreement could be cancelled. He received a notice of termination on August 18, 2012, shortly after he was accused of obtaining a passenger's credit card information and making repeated charges on her account.

II. The Labor Commissioner's Order

On August 5, 2013, plaintiff filed a claim with the Labor Commissioner's office contending that he had been misclassified as an independent contractor instead of as an employee. The claim alleged plaintiff was owed: (1) Wages for the period from August 5, 2010 to August 15, 2012, in the amount of $65,445, (2) wages for the period from August 15 to September 14, 2012, in the amount of $2,583, (3) overtime wages earned from August 2010 to August 2012, at $7,632 per year, and waiting time penalties pursuant to Labor Code sections 201 and 203,¹ at the daily rate of $215.32.

On June 2, 2014, the Labor Commissioner issued an order holding that plaintiff was an employee and assessing wages, interest, and waiting time penalties against defendant under sections 221, 98.1, subd. (c), and 203. Defendant was ordered to reimburse plaintiff for gate fees paid from August 2010 to August 2012, in the amount of $50,180.² Plaintiff was also awarded $9,018 in interest on this amount and $6,459 in penalties for nonpayment of wages.

In its findings of fact, the Labor Commissioner found that plaintiff had exercised complete discretion in the manner in which he operated the taxicabs. However, the Labor Commissioner concluded plaintiff had provided services to defendant as an employee, based on the factors set forth in Borello , supra , 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399, as well as our opinion in Yellow Cab Cooperative, Inc. v. Workers' Comp. Appeals Bd. (1991) 226 Cal.App.3d 1288, 277 Cal.Rptr. 434 ( Yellow Cab ).

On June 18, 2014, defendant filed a notice of appeal of the Labor Commissioner's decision pursuant to section 98.2. That section provides for a de novo proceeding in the superior court. (§ 98.2, subd. (a).)

III. Proceedings at Trial

Plaintiff's claims are based on sections 201,³ 203,⁴ and 221.⁵ These statutes are found in Division 2 of the Labor Code (§ 200 et seq. ), entitled "Employment Regulation and Supervision."⁶ A bifurcated court trial was held to first address the issue of whether plaintiff was an employee of defendant or an independent contractor. In its trial brief, defendant argued that plaintiff was never an employee, but was instead a lessee whose remedies were limited to the remedies provided for under the leasing provisions of California's Commercial Code at section 10501 et seq. After the close of evidence and concluding arguments, the trial court orally issued a tentative ruling against plaintiff, finding he was not defendant's employee.

IV. The Statement of Decision

On May 5, 2015, plaintiff submitted a request for a statement of decision including a total of 64 separate issues to be addressed.

On May 29, 2015, the trial court executed and filed a 34-page proposed statement of decision prepared by defendant.

On June 10, 2015, plaintiff filed a 32-page pleading containing 99 objections to alleged "omissions and ambiguities" contained in the proposed statement of decision.

On June 24, 2015, plaintiff submitted further objections to defendant's statement of decision.

On June 26, 2015, the trial court issued a revised 39-page statement of decision. In its ruling, it concluded that Borello and its taxicab-related progeny Yellow Cab and Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd. (1991) 235 Cal.App.3d 1363, 1 Cal.Rptr.2d 64 ( Santa Cruz ) are not controlling, rationalizing that these cases were distinguishable because plaintiff's claims do not concern worker's compensation or unemployment insurance benefits.

On July 13, 2015, the trial court filed its judgment. The court declined to award defendant costs, citing to section 98.2 and Code of Civil Procedure section 1032, subdivision (d).

On August 31, 2015, plaintiff filed an appeal from the judgment.

On September 28, 2015, defendant filed an appeal from the portion of the judgment denying it costs.

DISCUSSION

I. Standard of Review

A trial court's findings and judgment "must be sustained if they are supported by substantial evidence, even though the evidence could also...