Sotelo v. Medianews Grp., Inc.

• Decision Date: 19 September 2012
• Docket Number: No. A130585.,A130585.
• Citation: 143 Cal.Rptr.3d 293,207 Cal.App.4th 639
• Court: California Court of Appeals Court of Appeals
• Parties: Cynthia SOTELO et al., Plaintiffs and Appellants, v. MEDIANEWS GROUP, INC. et al., Defendants and Respondents.

207 Cal.App.4th 639

143 Cal.Rptr.3d 293

Cynthia SOTELO et al., Plaintiffs and Appellants,

v.MEDIANEWS GROUP, INC. et al., Defendants and Respondents.

No. A130585.

Court of Appeal, First District, Division 2, California.

May 31, 2012.

Review Denied Sept. 19, 2012.

Cotchett, Pitre & McCarthy, Frank M. Pitre, Niki B. Okcu, Burlingame, Carcione, Cattermole, Dolinski, Stucky, Markowitz & Carcione, Joseph W. Carcione, Jr., Roger W. Stucky, Joshua S. Markowitz, Redwood City, and Neal A. Markowitz, for Plaintiffs and Appellants.

Perkins Cole, Sue J. Stott, and Farschad Farzan, San Francisco, for Defendants and Respondents.

LAMBDEN, J.

Cynthia Sotelo, Jose Garcia, Jessica Garcia, Joseph Garcia, Ashley Garcia, Tiffany R., and Brandon L., appeal from the trial court's denial of their motion for class certification in a suit alleging that respondents engaged them, and those similarly situated, to work as independent contractors though they were actually employees, and that as a result of this misclassification, respondents are liable under several causes of action. Appellants seek reversal of the court's order denying class certification. We affirm the order of the trial court.

BACKGROUND

The initial complaint was filed in 2006 and was later amended several times, culminating in a sixth amended complaint, filed in February 2008. In this most recent amendment, appellants allege that respondents (who are described as inter-connected newspaper publishers and conglomerates operating newspapers in California) hired low-wage “independent contractors” (hereafter ICs) responsible for inserting advertisements into papers, folding and bagging newspapers, delivering newspapers to subscribers, and/or supervising others who performed those tasks. The complaint identifies two tiers of independent contractors: (1) lower level “carriers” who insert, fold, bag, and deliver papers and (2) higher level “distribution contractors” or “district managers” (hereafter distributors) who, whether or not they also carry, oversee carriers and report to acknowledged employees of the respondents. Appellants allege that individuals who perform such tasks are actually employees and that the independent contractor arrangement is a sham, used knowingly and deliberately by respondents to evade their legal responsibilities to the employees.

The complaint alleges nine causes of action: (1) fraud, based on the allegedly false representations to the workers that they are independent contractors and not employees; (2) concealment by the respondents of the true nature of the employment relationship; (3) violation of Californiaminimum wage and overtime pay laws; (4) failure to pay wages due at termination; (5) failure to maintain records and provide accurate itemized wage statements; (6) failure to provide meal breaks; (7) failure to provide rest breaks; (8) violation of Labor Code section 2802 (indemnification of employee expenses made in the discharge of their duties); and (9) violation of Business and Professions Code section 17200 (unfair or fraudulent business act or practice), alleging, inter alia, that respondents retained gratuities that customers meant to go to carriers.

The complaint specifies the class as “all persons who, between September 1, 2002, and the present, worked at any time for or on behalf of any California newspaper owned by MEDIANEWS GROUP, INC., in folding, inserting advertising materials into, bagging, bundling, loading, and/or delivering said newspaper to its residential subscribers, and/or in overseeing such work by other individuals on any such newspaper's behalf (hereinafter sometimes summarized as ‘newspaper assembly and delivery work’), and whom no defendant has acknowledged to be its employee in the performance of such work. Excluded from the class are defendants and individuals whom defendants have acknowledged as their employees at any time since September 1, 2002; the parents, subsidiaries, and affiliates of defendants' companies; the officers and directors of these companies; any entity in which any defendant has a controlling interest; and the legal representatives, successors, and assigns of any excluded persons.”

The complaint also identifies two subclasses: (1) a “minor subclass,” consisting of “all class members who were under the age of 18 years old at any time while they performed work folding, inserting advertising materials into, bagging, loading, and/or delivering newspapers to subscribers for any of the defendants during the class period,” and (2) a “final pay subclass,” consisting of “all class members who, during the period after September 1, 2002, have either voluntarily stopped performing newspaper delivery and assembly work on defendants' behalf or have been terminated by any defendant or its agents from continuing to perform such work.”

Each of the causes of action listed above were alleged on behalf of all plaintiffs and of the class, except for the fourth cause of action, failure to pay wages due upon termination, which was alleged on behalf of three plaintiffs and the final pay subclass.

In 2010, appellants moved for class certification. In support of their motion, appellants submitted the declarations of the named plaintiffs and 11 additional contractors. Respondents submitted 111 declarations, including 101 contractor and 10 employee declarations. In addition, the evidence submitted in support of and in opposition to the motion contains portions of deposition transcripts, various documents produced during discovery, and attorney declarations.

The evidence in the record indicates that members of the proposed class accomplished their work in a variety of arrangements. Rami Haddad, a distributor, has incorporated a business that has contracts with multiple newspapers, maintains its own warehouse, and engages both employees and IC carriers. Appellant Sotelo began as a carrier and then became a distributor, contracting exclusively with one newspaper. She used the services of approximately 14 ICs who subcontracted with her. Paul Masminster had two routes that he delivered substantially on his own. Some ICs engaged their family members to assist with the contracted work.

Respondents' records identified approximately 5,000 individuals who had signed a contract with a newspaper. However, because putative class members retained the assistance, with or without a contract, of others who remained unknown to respondents, the actual size of the proposed class is unknown.

After the parties had briefed the motion for class certification, the trial court issued a tentative ruling that apparently was much the same as the final order. During the hearing, appellants attempted to address the court's concerns. In response to the court's ascertainability concerns, they proposed restricting the class to those who had signed a contract with a newspaper, those who had subcontracts with a distributor, and those who had been issued 1099 forms. They made clear that they were dropping their request to certify a subclass of minors; and they proposed to satisfy the court's concerns over the preponderance of common issues of fact and law by creating other subclasses. They also proposed some procedural methods to address the court's manageability concerns.

The trial court denied appellants' motion for class certification and appellants timely appealed.

DISCUSSION

I. Standard of Review

Class actions in California are governed by Code of Civil Procedure section 382, authorizing such suits “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.”

“To obtain certification, a party must establish the existence of both an ascertainable class and a well-defined community of interest among the class members.” ( Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435, 97 Cal.Rptr.2d 179, 2 P.3d 27 [citing Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470, 174 Cal.Rptr. 515, 629 P.2d 23].) This requires an inquiry into numerosity, ascertainability, whether common questions of law or fact predominate, whether the class representatives have claims or defenses typical of the class; and whether the class representatives can represent the class adequately. (See Linder, at p. 435, 97 Cal.Rptr.2d 179, 2 P.3d 27.) “Other relevant considerations include the probability that class members will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” ( Ibid.) It is plaintiff's burden to support each of the above factors with a factual showing. ( Hamwi v. Citinational–Buckeye Inv. Co. (1977) 72 Cal.App.3d 462, 471–472, 140 Cal.Rptr. 215.)

A trial court's ruling on a motion for class certification is reviewed for abuse of discretion. ( Sav–On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, 17 Cal.Rptr.3d 906, 96 P.3d 194( Sav–On ).) When there is substantial evidence supporting a trial court's ruling, it will not generally be disturbed unless the court employed improper criteria or made erroneous legal assumptions. ( Id. at pp. 326–327, 17 Cal.Rptr.3d 906, 96 P.3d 194.)

II. Ascertainability of the Proposed Class

The ascertainability requirement is a due process safeguard, ensuring that notice can be provided “to putative class members as to whom the judgment in the action will be res judicata.” ( Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 914, 107 Cal.Rptr.2d 761( Hicks ).) “Class members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records. [Citation.]” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932, 179 Cal.Rptr. 287.) In determining whether a class is ascertainable, the trial court examines the class definition, the size of the class and the means of identifying class members. (...