On August 27, 2014, the Ninth Circuit ruled in a pair of cases (filed in California and Oregon) against FedEx Ground Package System, Inc., that FedEx had misclassified delivery truck drivers as independent contractors, when they were in fact employees. The panel reversed a multidistrict litigation (“MDL”) court’s grant of summary judgment in favor of FedEx as to whether the drivers were employees. U.S. Circuit Judges Alfred T. Goodwin, Stephen S. Trott, and William A. Fletcher sat on the panels that considered both cases; Judge Fletcher wrote opinions for both panels. The California case is Alexander et al. v. FedEx Ground Package System Inc., Nos. 12-17458 and 12-17509 (slip opinion available here). The Oregon case is Slayman et al. v. FedEx Ground Package System Inc., case numbers 12-35525 and 12-35559 (slip opinion available here).
The California and Oregon suits, along with suits from other states, were consolidated in multidistrict litigation involving similar claims that FedEx had misclassified its drivers as independent contractors, and certified as class actions. The Indiana federal court serving as the MDL court denied plaintiffs’ motion for partial summary judgment alleging that FedEx drivers in California were employees rather than independent contractors and granted FedEx’s cross-motion for summary judgment. Additionally, the California plaintiffs had brought claims under the federal Family Medical Leave Act (“FMLA”), which the MDL court declined to certify as a class. The MDL court then remanded Alexander to the district court to resolve the plaintiffs’ claims under FMLA. After the FMLA claims were settled, the district court entered final judgment, which the plaintiffs appealed, challenging the MDL court’s grant of summary judgment to FedEx on the employment/independent contractor status issue.
The Ninth Circuit reversed, finding that under FedEx’s operating agreement, FedEx had broad authority to prescribe how the drivers carried out their deliveries. Although the agreement allowed drivers to supply their own trucks and to pay for their own uniforms, the agreement also specified the size, color, shelving, and maintenance of those trucks; drivers’ personal grooming and appearance; and the condition of the uniforms. Additionally, although FedEx did not expressly specify working hours or delivery routes, FedEx dictated that drivers pick up and deliver packages within a certain geographic area and time window, required them to follow FedEx guidelines for “Safe Driving Standards,” and provided training for drivers on job performance and interacting with customers, in order to “[f]oster the professional image and good reputation of FedEx.” Id. at 6-11. Accounting for FedEx’s broad authority and weighing it against other factors, the appeals court said, in applying the Borello “necessary control” test, FedEx’s extensive right to control the manner in which its drivers performed their work was the most important factor, and strongly favored employee status. Id. at 31. The court held that the plaintiffs were, as a matter of law, employees under California’s right-to-control test. Id.
U.S. Circuit Judge Trott concurred in the California opinion, writing “Abraham Lincoln reportedly asked, ‘If you call a dog’s tail a leg, how many legs does a dog have?’ His answer was, ‘Four. Calling a dog’s tail a leg does not make it a leg.’” Id. at 34. He concluded that “[l]abeling the drivers ‘independent contractors’ in FedEx’s operating agreement does not conclusively make them so. . . . Although our decision substantially unravels FedEx’s business model, FedEx was not entitled to ‘write around’ the principles and mandates of California Labor Law.” Id. at 35.