Employment Contract Seeks to Avoid California Law

cal. app. 4th 188, 203 (ct. app. 1995) (termination provision wait at a stop without notifying the dispatcher first" and "al- this appeal from a judgment of the united states district ponderance of the evidence that the drivers were independent the judgment of the district court granting egl's motion enforcement of the contract itself; they do not "encompass all cause." borello, 769 p.2d at 404 (quoting tieberg v. unem- shirts, safety boots and an egl identification card. although before: michael daly hawkins and sidney r. thomas, (ct. app. 1996) (contract with two-week notice termination 934 (quoting grant v. woods, 71 cal. app. 3d 647, 653 (ct. business. paid by the article is indicative of an independent contractor "[t]he defendant has the obligation to prove that the plaintiffs dards set forth in labor code section 2750.50, id., which pro- sistent with employee status). renewed. this was not a circumstance where a contractor was low[ing the] dispatcher to make the service decisions." simi- ally speaking, the burden of proof is on the party attacking the to the contrary." id. at 916; see also cristler v. express mes- the inferences are subject to legitimate dispute." id. at 1543. motion for summary judgment. whether the principal or the worker supplies the today's market, the team must be able to identify at a provide freight pick-up and delivery services for egl in cali- method, manner and means of performance of its contractual 10078 narayan v. egl, inc. drivers' handbook instructed the egl drivers on, inter alia, tor and (2) agrees that the contract would be interpreted in scheduled paydays." narayan, 2007 wl 2021809, at *9 n.12. license and must learn special driving skills, from individuals novo. bagdadi v. nazar, 84 f.3d 1194, 1197 (9th cir. 1996). a choice-of-law clause in a contract defining performers as november 4, 2009--san francisco, california ules, were paid on a per job basis, and determined their own notwithstanding the terms of the agreements, the drivers its obligations under the labor code by inserting a clause in 10, 2007). consequently, the district court granted egl's job; (g) whether or not the work is a part of the regu- for the northern district of california deliveries that they generally had to accept as an all-or- 10077narayan v. egl, inc. money damages for unpaid overtime wages, business their drivers owned their own trucks or vans as noted above, alleging that they were egl employees who were deprived of a task for the trier of fact--if, under the governing legal rule, how to communicate with egl's dispatch, instructing drivers rather, `an inference as to another material fact may be drawn get the freight picked up or delivered. to be competitive in drawing of inferences from subordinate to `ultimate' facts is driven for other delivery companies because egl required egl operates through a network of over 400 facilities located moreover, there was evidence that egl's drivers were pickup or delivery site, "don't ride around for 15 or 30 min- [egl's] commitment to excellence." indeed, the video contractual provision." stier, 992 s.w.2d at 434 (internal quo- independent contractor"). context, statutes enacted to confer special benefits on workers judgment. trier of fact. be considered to be employees of" egl. the terms of the acknowledges that "for our company to continue to grow, cal. app. 4th 1477, 1485 (ct. app. 2003) (that reporter was that is texas law. with an employee relationship, particularly where other indi- nonetheless, none of the plaintiff drivers hired helpers to per- no. 07-16487 10072 narayan v. egl, inc. with an employment-at-will relationship or parties in a contin- not required to possess any special license beyond a normal borello, 769 p.2d at 403 ("the label placed by the parties on "independent contractors" because the claims arose under a subsidiaries, eagle freight services (collectively, "egl"), by cases in other jurisdictions. these include: [13] ultimately, under california's multi-faceted test of terms of the agreements, the drivers were not employees. instead they were independent contractors who were not enti- cia of employment are present. ali v. l.a. focus publ'n, 112 10076 narayan v. egl, inc. arrangements." sec'y of labor v. lauritzen, 835 f.2d 1529, there was no contemplated end to the service relationship at v. cv-05-04181-rmw plaintiffs-appellants. to those benefits depends on whether they are employees of employee relationship in california, the employer may avoid 10075narayan v. egl, inc. similarly, setting aside evidence that the plaintiff drivers 1940). as the supreme court of california has held, "[t]he for summary judgment is reversed and remanded. (the fact that worker was paid on a commission basis is con- overcome in light of the second special consideration in this tive. there, the third circuit held that federal rather than new same under california law. narayan v. egl, inc., no. cv-05- (calling similar provision "narrow"). they govern claims that (second) of agency that may point to an employment rela- poses." egl imposed requirements on their drivers' vehicles code. relying on a choice-of-law clause in the agreements, cal. lab. code �� 226.7 & 512. these provisions are part of whether the plaintiff drivers were required to work regular (ct. app. 2008) (termination with thirty-day notice require- law designated in that contract. wash. mut. bank, fa v. information at the actual shipping points, and you are a source tions or for customers requiring local pick-up and delivery wise governing law--not the parties--gives to the term "em- california to the facts in this case. the only reference to fac- mohit narayan, hanna rahawi and thomas heath (the of an employment relationship between the plaintiff drivers the california labor code. whether the drivers are entitled a broad regulatory policy defining the obligations that " `the this means that, in order to prevail on its motion for summary lez v. workers' comp. app. bd., 46 cal. app. 4th 1584, 1593 vices, a subsidiary of egl. after the district court entered final judgment employment development department of california (at cise independent discretion and judgment to determine the judgment, drawing all justifiable inferences from the uncon- would be no different if california law governed." narayan, [3] cbs corp. v. fcc, 535 f.3d 167 (3d cir. 2008), under the laws of texas and headquartered in texas.1 "rise or fall on the interpret[ation] and enforce[ment] of any decision to deny summary judgment, it is not without signifi- court sitting in diversity applies the choice-of-law rules of the the employee acknowledges that he is an independent contrac- tiff drivers also submitted evidence that, although their judge for the eastern district of new york, sitting by designation. the delivery services provided by the egl drivers were an critical shipments." the video goes on to describe the drivers lar business of the principal; and (h) whether or not mon law."). them to affix egl logos to their trucks, which the plaintiff truck drivers require "abilities beyond those possessed by a case, namely, the multi-faceted test that applies in resolving most favorable to the nonmoving party, whether genuine air couriers int'l v. employ. dev. dep't, 150 cal. app. 4th standing that no one factor is decisive, and that it is the rare who deliver newspapers in cars). weight depends on particular combinations." id. at 404 (inter- inter alia, require employers to pay overtime compensation, we review a district court's grant of summary judgment de the job they do." borello endorsed other factors derived from the restatement ered. indeed, one of egl's dispatchers testified that one of law, once a plaintiff comes forward with evidence that he pro- 2006) (courier service drivers did not require a high level of korman, district judge: also home interior & gifts, inc. v. veliz, 695 s.w.2d 35, 40- tention of the parties is to . . . create a vendor/vendee relation- the drivers' claims involve entitlement to benefits under law center, san francisco, california, and cynthia rice, 923 (ct. app. 2007). thus, the district judge observed that "in 1988)). as judge easterbrook observed in a closely analogous weigh all of the incidents of the relationship with the under- engaged in did not require a high level of skill. drivers were inherent in the nature of the work and not determinitive of the deliver packages (e.g., hand trucks, lift gates, etc.), but egl industry standard, the dot regulation, and . . . customer's employee for federal tax purposes (applying federal law) and motion of an employer for summary judgment dismissing egl moved for summary judgment arguing that, under the contracts purportedly gave them the right to pick and choose matthew goldberg, the legal aid society -- employment [9] the record also shows that egl controlled many other method of payment, whether by the time or by the [i]f we are to have multiple factors, we should also in a distinct occupation or business; (b) the kind of apply the relevant factors identified by the supreme court of mechanically as separate tests; they are intertwined and their disputes between the parties." stier v. reading & bates corp., narayan's request) have determined that narayan was an [5] the drivers here have established a prima facie case. years old, although egl disputes whether these requirements mohit narayan; hannah rahawi; cir. 2005). california, the forum state, ordinarily examines simply not significant under california's test of employment. helpers; (3) whether the service rendered requires a egl required that they affix egl logos to the outside of their dent contractor or employee." id. at 404 n.5. 1545 (7th cir. 1987) (easterbook, j., concurring). issues of material fact exist and whether the district court cor- b.v. v. super. ct., 834 p.2d 1148, 1153 (cal. 1992) (quoting although the district judge applied texas law to determine ing procedure agreements between egl and many of its cus- declarations in the agreements that the drivers were indepen- ployment ins. app. bd., 471 p.2d 975, 979 (cal. 1970)). by contrast, he found that the instant case was distinguishable super. ct., 15 p.3d 1071, 1078 n.3 (cal. 2001). in this case, "[c]ommunicating with dispatch is the single most important law places on an employer without regard to the substance of robert r. roginson, division of labor standards enforce- that they were independent contractors as a matter of law. 10081narayan v. egl, inc. v. fedex ground package sys., inc., 154 cal. app. 4th 1, 6, id. at 404. borello also approvingly cited five factors adopted forum. fields v. legacy health sys., 413 f.3d 943, 950 (9th 10083narayan v. egl, inc. instrumentalities, tools, and the place of work for the ii. propriety of summary judgment under california the complaint was originally filed against egl and eagle freight ser- here, the internal revenue service (at egl's request) and the morning--whether or not packages were available to be deliv- egl, which in turn depends on the definition that the other- boundaries of liability under that scheme. *the honorable edward r. korman, senior united states district nal citation and quotations omitted). "we must assess and countenanced.") moreover, there is an issue of fact over filed a complaint in california against egl and one of its skill); cf. brown, 32 cal. app. 4th at 202-03 (commercial tract terms, or otherwise require there to be a contract. see tractors. of particular relevance here are the provisions that, to prove or disprove the statutory claims, the claims do not contractors. further, in air couriers, the drivers drove regular estrada, 154 cal. app. 4th at 12; jkh enters., inc. v. dep't f.3d 1090, 1097 (9th cir. 2007) (internal citation and quota- the time that the plaintiff drivers began working for egl. other [egl] drivers to be able to avoid unnecessary delays on shifts to the employer, which may prove, if it can, that the were independent contractors"); bemis v. people, 240 p.2d plaintiffs-appellants. argued and submitted services. in over 100 countries. one of the many aspects of egl's ing certain improper deductions from wages, cal. lab. code "drivers") were residents of california who were engaged to breach of the agreement. such an agreement is a substantial management and information services company incorporated drivers' appearance--requiring them to wear egl-branded san francisco, california, amicus curiae in support of the your interactions with the customer, you communicate egl, inc.; eagle freight systems, inc. v. super. ct., 220 cal. app. 3d 864, 877 (ct. app. 1990) vehicles. this requirement was "established due to govern- indicator of an at-will employment relationship. see estrada licenses)"); gonzalez, 46 cal. app. 4th at 1592 (distinguish- s.g. borello & sons, inc. v. dep't of indus. relations, 769 moment's notice exactly where a shipment is in the course of accordance with the laws of another jurisdiction where such the evidence that the plaintiff is entitled to a favorable verdict. employment, there existed at the very least sufficient indicia for the ninth circuit as "our company's largest sales force," because "[t]hrough one direction or the other." nlrb v. friendly cab co., 512 and consequently, california law should apply to define the agreements provide, inter alia, that the drivers "shall exer- [8] the inferences here are subject to legitimate dispute. air couriers, the drivers did not have written contracts, as provided either as part of egl's freight-forwarding opera- ers had to submit advance notice of vacation days. the plain- app. 1977)). drivers contained automatic renewal clauses and could be ter- rectly applied the relevant substantive law." id. summary employment relationship."). thirty-day notice is evidence of at-will employment); gonza- operates under a required contractor's license is an indepen- provision constituted at-will employment where contract pro- cance that, applying comparable factors to those that we apply "logically pertinent to the inherently difficult determination antelope valley press v. poizner, 162 cal. app. 4th 839, 854 discussion background in doing so, we determine, "viewing the evidence in the light which no ascertainable legal rule determines a occupation, with reference to whether, in the local- ship between contractor and [egl]," and acknowledged that california unemployment or disability insurance (applying the application of this standard here. first, under california pac. cattle feeding fund # 1, ltd., 896 s.w.2d 807, 812-13 traffic delays. indeed, the egl drivers were told that showing up late. similarly, the record indicates that the driv- ability to determine a driving route is "simply a freedom the `ultimate conclusion as to whether the workers are aspect of the services drivers are paid for. it is not enough to [1] to determine the applicable substantive law, a federal under these circumstances, "we cannot readily say . . . that opinion by judge korman have a trial. a fact-bound approach calling for the opinion 10087narayan v. egl, inc. law expenses, meal compensation and unlawful deductions from the issue whether, assuming the existence of an employer- acknowledging that they were independent contractors" is wages as well as other relief, including statutory penalties. ment relationship. here, the plaintiff drivers worked at egl 41 (tex. app. 1985) (finding employee-employer relationship in favor of the nonmoving party . . . if it is `rational' or `rea- � 221, reimburse employees for necessary business expenses, after the case was removed pursuant to 28 u.s.c. � 1332, were paid on a regular basis, although their salary was based tors that were arguably relevant were addressed in the context least a material issue of fact as to whether they could have uing contractual relationship"). this is not all. er/employee. robinson v. george, 105 p.2d 914, 917 (cal. conclusion the drawing of legitimate inferences from facts are jury func- plays the principal part. that there is a legal overlay here, expressly acknowledging that they were independent appellants. 10082 narayan v. egl, inc. assignments, in practice, egl presented them with batches of "[y]ou are a vital source for shipping leads and competitor (1) the alleged employee's opportunity for profit or tled to the benefits conferred upon employees by the labor ity, the work is usually done under the direction of employees or independent contractors' is one of law. the regarding choice of law de novo. paulsen v. cnf inc., 559 their relationship is not dispositive, and subterfuges are not sonable.' " united steel workers of am. v. phelps dodge of such a relationship. indeed, although it plays no role in our [4] there are two special circumstances that are relevant to for publication dispute. the district court agreed. we review questions california law), respectively. with fourteen-day notice requirement was "consistent either york law governed the question of whether performers were a prima facie case that the relationship was one of employ- troverted evidence, egl would have to establish that a jury the plaintiff drivers was subject to disciplinary action for davis v. team elec. co., 520 f.3d 1080, 1089 (9th cir. 2008). requirements." tions, not those of a judge . . . the evidence of the nonmovant in his favor." anderson v. liberty lobby, inc., 477 u.s. 242, person doing the work; (e) the length of time for the issue whether the drivers are employees. eral matter." id. at 190-92. similarly here, appellants claims (a) whether the one performing services is engaged tions as controlling, and applies a multi-factor analysis in egl's drivers retained the right to employ others to assist in deliveries. moreover, the plaintiff drivers drove exclusively proper loading work method techniques." more than that, appeal from the united states district court nature of the work involved does not change the character of egl's drivers supplied some of the equipment used to sec'y of labor v. lauritzen, 835 f.2d 1529, 1542 (7th cir. employees, contractors, . . . customers, and the general public schedules. contrary to the district judge's suggestion, they are "designed to defeat rather than implement contractual 638, 644 (cal. ct. app. 1952) ("it is also the law that, gener- the district court, as we have previously observed, did not the fair labor standards act that: dent contractors rather than employees, compelled the holding rendered is an integral part of the alleged employer's company policies. the handbook also provided guidelines on routes, worked regular schedules, and were paid on regularly from unsafe and unlawful actions" by a helper or passenger. tiff drivers' tenure with egl also point toward an employ- for several years, and their agreements were automatically united states court of appeals 255 (1986). "a `justifiable inference' is not necessarily the 407. nevertheless, "the individual factors cannot be applied materials required for his task, or his employment of customs brokerage, [and] local pickup and delivery service." r. ted cruz (argued), morgan, lewis & bockius, llp, hous- inc.; and does 1-10, packing tape to their drivers for package pick-ups. while ments, which provides that the contracts "shall be interpreted person is presumed to be a servant in the absence of evidence benefits conferred upon them by the labor code. they sought its contractual obligations to its employee.' " nedlloyd lines general laborer (or, indeed, possessors of ordinary driver's cal. lab. code � 2802, and provide off-duty meal periods, 10069 independent contractors or employees despite the presence of ment regulations, customer requests, and for security pur- alleged employee's investment in equipment or relationship, but that fact alone is not dispositive if other indi- services include, inter alia, "air and ocean freight forwarding, fornia. all three drivers signed agreements with egl for analysis of the relevant factors, that the result would be the routes." id. these distinctions are neither dispositive nor the 10080 narayan v. egl, inc. 2007 wl 2021809, at *9 n.12. this conclusion is erroneous. every [egl] driver must understand the critical importance of and thomas heath, summary judgment record could find by a preponderance of ment "clearly" gives employer the right to discharge at-will drivers allege could not practically be covered up. under the laws of the state of texas," applies to the current 10073narayan v. egl, inc. vided no consequences for employers' failure to give notice); although drivers generally determined how to get to their des- an employee or an excluded independent contractor." id. at balancing of incommensurables, an approach in number of indicia of an employment relationship, the most i. choice-of-law of indus. relations, 142 cal. app. 4th 1046, 1064 (ct. app. "leased equipment and independent contractor services" f.3d 1061, 1072 (9th cir. 2009). claims for benefits under the labor code principally presents details of their drivers' performance. egl regulated their vide "extensive guidelines for determining whether one who moreover, although california does not regard such declara- obligations," although egl retained the right to "issue rea- 10085narayan v. egl, inc. and egl such that a reasonable jury could find the existence judgment is not appropriate if a reasonable jury viewing the "[n]either contractor nor any of its employees or agents shall an agreement is generally enforceable. 992 s.w.2d 423, 433 (tex. 1999); accord benchmark elecs., to the factual question does not affect the role of the employer relationship in closely analogous circumstances. see an [egl] pickup and delivery driver, you have the key role for egl during their period of employment, and there is at ronald m. whyte, united states district judge, presiding cia of employment are present); toyota motor sales u.s.a., egl, the employer, is a global transportation, supply chain id. at 407. moreover, it characterized as "helpful" the stan- supervision and control." air couriers, 150 cal. app. 4th at 10086 narayan v. egl, inc. clauses, providing under what law an agreement "shall be vided services for an employer, the employee has established california, amici curiae in support of the plaintiffs- ployee." while the contracts will likely be used as evidence case where the various factors will point with unanimity in p.2d 399, 403-07 (cal. 1989) (listing over one dozen factors did not, as a practical matter, determine their own routes, the utes, radio in and ask for help!" court for the northern district of california granting the contractors. this hurdle is particularly difficult for egl to consequently, egl's safety and compliance manual and certain amount of freedom is allowed or is inherent in the how to conduct themselves when receiving assignments and [7] judge easterbrook has keenly observed in a case under tions omitted). the parties believe they are creating the relationship action do not arise from the contracts but from the deceptive foley v. interactive data corp., 765 p.2d 373, 394 (cal. vacated on other grounds, 129 s. ct. 2176 (2009), is instruc- the california labor code ("labor code") confers certain once the employee establishes a prima facie case, the burden packages, responding to customer complaints and handling filed july 13, 2010 sonable and lawful instructions regarding the results to be that are potential claims before they are put into our system their salary was determined in this way is equally consistent 171 cal. app. 4th at 84 (approving a jury instruction that [6] the supreme court of california has enumerated a the scope of a choice-of-law provision in a contract under the that the drivers were independent contractors as a matter of "credibility determinations, the weighing of the evidence, and gers. this requirement was imposed "to safeguard egl received company memoranda and attended meetings on special skill; (4) the degree of permanence of the arose under the labor code, a california regulatory scheme, larly, egl's drivers were told that, if they cannot find a the district court held that the law of texas applied, and that tations omitted) (alterations in original); see also busse v. counsel [2] under texas law, similarly narrow choice-of-law of traffic and road condition information for dispatch and that, "[i]f an employment relationship exists, the fact that a llp, san francisco, california, for the defendants-appellees. egl's interpreted and enforced," apply only to the interpretation and the principal or by a specialist without supervision; 10074 narayan v. egl, inc. half factors, the district court held, without undertaking any important of which is the "right to discharge at will, without which the services are to be performed; (f) the altshuler berzon, llp, san francisco, california, for the egl argues that the choice-of-law clause in the agree- circuit judges, and edward r. korman,* district judge. driver is the eyes of a dispatcher. you can identify shipments unique outcome, is one in which the trier of fact business is domestic delivery services. such services may be driver's license, and no skills beyond the ability to drive. benefits on employees that it does not afford independent con- cal. lab. code �� 510 & 1194, prohibit employers from mak- whether a provider of service is an employee or an excluded subject of factual disputes suitable for resolution by summary tomers determined the manner in which drivers made senger sys., inc., 171 cal. app. 4th 72, 83 (ct. app. 2009). because "the drivers were not required to work regular sched- arise out of the contract, involve the interpretation of any con- ment, department of industrial relations, state of california, transit." the egl drivers were also instructed "never [to] moreover, the occupation that the plaintiff drivers were loss depending on his managerial skill; (2) the ing between truckers in brown, who require a special driver's [12] the fact that the drivers here had contracts "expressly 10079narayan v. egl, inc. the delivery was completed, and to immediately report any on a percentage of each delivery. nevertheless, the fact that [11] finally, the length and indefinite nature of the plain- stacey leyton (argued) and michael rubin (briefed), defendants-appellees. ently difficult determination whether a provider of service is accomplished." which the intent of the parties is one of over a dozen and a (c) the skill required in the particular occupation; (d) inc. v. j.m. huber corp., 343 f.3d 719, 727 (5th cir. 2003) all factors were held to be "logically pertinent to the inher- form their duties for egl. ordered to report to the egl station at a set time each the relationship, particularly where the employer has general california rural legal assistance foundation, sacramento, of employer-employee. corp., 865 f.2d 1539, 1542 (9th cir. 1989) (internal citation 04181-rmw, 2007 wl 2021809, at *9 n.12 (n.d. cal. july without cause). but see state comp. ins. fund v. brown, 32 essential part of the regular business of egl. indeed, egl's employment relation." toyota, 220 cal. app. 3d at 876; see is to be believed, and all justifiable inferences are to be drawn (the "agreements"). the agreements provided that the "in- most likely inference or the most persuastive inference. for another is prima facie evidence of employment and such helpers to be approved by it. the same rule applied to passen- instructional video shown to the drivers advises them that "as d.c. no. 1 were enforced. this requirement was imposed to meet "the 1987) (easterbook, j., concurring) (internal citations omitted). damaged freight. the drivers used egl-supplied forms, omitted). trade practices act, the texas securities act, and the com- minated by either party upon thirty-days notice or upon nothing proposition. in some circumstances, standard operat- ton, texas, and y. anna suh (briefed), hunton & williams hired to perform a specific task for a defined period of time. and you ensure our customers' freight is protected by using contact the dispatcher after each delivery stop to report that working relationship; and (5) whether the service opinion --in particular, that they be painted white and less than five in this case, egl was purchased by ceva logistics u.s. holdings, inc. an employer-drafted pre-printed form contract in which: (1) [10] significantly, the contracts signed by the plaintiff to notify the dispatcher before leaving egl's facility dock, to provided other supplies such as egl-branded boxes and 11 (ct. app. 2007) (agreement providing for termination with rule . . . is that the fact that one is performing work and labor would be compelled to find that it had established by a pre- plaintiffs-appellants, tinations). these cases simply reflect the common-sense rule federal regulatory scheme, and "defining the boundaries of performing their contractual obligations, egl required all presumed employee was an independent contractor. cristler, in the shipping process . . . the [egl pickup and delivery] 10084 narayan v. egl, inc. law, he observed in a conclusory footnote that "[t]he result tionship: permissible vicarious liability under that scheme is . . . a fed- (tex. app. 1995) ("the rights, obligations, and cause of of distinguishing a california case that found an employee-