November 18, 2019

November 18, 2019

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District of Massachusetts Grants Class Certification but denies Summary Judgment in Independent Contractor Misclassification Case

On September 13, 2019, the U.S. District Court for the District of Massachusetts granted certification of a class of independent contractor drivers who delivered packages through Dynamex Operations East for Google Express.  Ouadani v. Dynamex Operations East LLC, No. 16-12036, 2019 WL 4384061 (D. Mass. Sept. 13, 2019).  Ouadani, a delivery driver, sued Dynamex on behalf of himself and all others similarly situated, alleging he was misclassified as an independent contractor in violation of federal and state wage laws.  Ouadani sought class certification on two of those claims – improper deductions to drivers’ paychecks and misclassification under Massachusetts law – and sought partial summary judgment on the Massachusetts misclassification claim.  In its ruling, the Court refined and certified the plaintiff’s proposed class, holding that it would not be too taxing to resolve the workers’ claims on a class-wide basis despite variations in their work experiences.  The Court denied Ouadani’s partial summary judgment motion, holding that a jury should resolve the dispute as to whether Dynamex failed the control prong of the pertinent test under the Massachusetts Independent Contractor Statute.

From 2014-2016, Dynamex contracted with Google Express to supply drivers for same-day deliveries in various U.S. cities.  The contract required Dynamex to implement several quality control measures for drivers, including experience and appearance requirements, mandatory training and orientation, and performance monitoring.  To fulfill their obligations under the contract, Dynamex contracted with multiple third parties to procure drivers.  The process for driver scheduling, onboarding, and training as per Google’s requirements varied widely depending on how the driver’s contracts were set up.

At issue in the misclassification claim were two prongs of the Massachusetts Independent Contractor Statute regarding whether a worker has been properly classified as an independent contractor: (1) that the worker is free from the putative employer’s control both under contract and in fact (known as “Prong A”); and (2) that the worker is customarily engaged in an independently established business of the same nature (known as “Prong C”).  Dynamex argued that the proposed misclassification class could not meet the commonality and predominance requirements of Rule 23 given the multiple layers of contractual relationships for each putative class member, and their individualized experiences working for Dynamex.  Dynamex argued that the drivers in the proposed class worked for at least 21 different third party contractors, all with different contracts and different processes for recruiting, onboarding, orientation, uniforms, what types of vehicles they could drive and whether and how much they engaged in their own independently established driving businesses.  With respect to commonality, the Court held that Ouadani had presented evidence of Dynamex policies and practices that were common to all drivers sufficient to show commonality with respect to Dynamex’s control.  As to predominance, the Court noted that it was a closer call but for Prong A, it could resolve the issue of individualized control by narrowing the class and for Prong C, it could look at the drivers’ hourly statistics as a form of common proof amenable to class determination.

Dynamex also argued that the complexity in calculating damages precluded class treatment, given Dynamex made no payments directly to any member of the class and had no knowledge of how they were paid.  The Court noted that in the absence of any evidence in the record of how drivers were paid, it would accept the plaintiff’s proposed inference that the third party contractors merely passed through Dynamex’s payments to the drivers.  The Court conceded that if this inference proved wrong after further discovery it would consider decertification.

Ouadani’s summary judgment arguments on misclassification were similar to his arguments for class certification – i.e., that the issue of control was satisfied as a matter of law by Dynamex’s contract with Google requiring that Dynamex implement policies that applied to all drivers in the class.  The Court denied summary judgment and held that Ouadani could not show as a matter of law that Dynamex had contractual control over the drivers because he did not analyze or include as evidence the individual third party driver contracts, the operative contracts to examine control under Massachusetts law.  Notably, the Court’s discussion that each individual driver contract must be looked at to determine control on the merits appears to conflict with the Court’s holding that Dynamex’s policies and procedures are sufficient common proof for class members to show control. We will continue to watch and report on this case as it develops.

For more discussion of Dynamex’s staffing model and the impact on independent contractor analysis, we previously reported on the California Supreme Court’s unanimous decision against Dynamex Operations West, making it even harder for companies to classify workers as independent contractors (rather than employees.)  This set off a series of related rulings that have the potential to change the landscape for employee classification claims in California.

© 2019 Proskauer Rose LLP.

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Stacey Cerrone, Labor and Employment Attorney, Proskauer Rose Law FIrm
Senior Counsel

Stacey C.S. Cerrone is a senior counsel in the Labor & Employment Law Department, where she focuses her practice on ERISA litigation and labor and employment law.

Stacey represents plan sponsors, plans, directed trustees, and fiduciaries in all phases of litigation and mediation involving all aspects of ERISA, including: class actions and individual claims relating to ERISA's fiduciary duty and prohibited transaction provisions; denials of claims for benefits; church plans, severance plans; ERISA Section 510; retiree benefits; ERISA...

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Gillian Egan employment lawyer Proskauer
Associate

As an associate in the Labor & Employment Law Department, Gillian's practice focuses on assisting employers in a variety of employment matters, including employment discrimination, occupational health and safety, wage and hour, employee relations and other legal matters that touch on employment. She offers counseling and advice, handles litigation and navigates interactions with federal and state agencies. Though she specializes in employment matters, Gillian is also well-versed in a wide range of defense matters, representing financial institutions' interests in litigation and arbitration, general insurance defense and other matters.

Drawing on her experience as a former human resources manager, Gillian has counseled employers on the development of employment policies and procedures, employee training plans and OSHA inspection assistance and response, in addition to other general employment advice.

In addition to her extensive legal experience, Gillian has authored numerous articles and newsletters on myriad topics, including “Unreasonable Requirements for Reasonable Enforcement: ‘Congruence and Proportionality’ After Coleman v. Maryland Court of Appeal,” Cumberland Law Review, Vol 43, 2012; “¡Cuidado! Danger Ahead! The Heeding Presumption and the Duty to Warn in Spanish,” Co-author with Ricardo Woods, DRI Diversity Insider, Spring 2013; “Employers – Check Your Weight-Bias; Obesity, Disability, and the Broadened Coverage of the ADAAA,” The ADLA Journal, January 2014; “Employment Law Update after Burwell v. Hobby Lobby,” Today’s Medical Developments, November/December 2014; “Mandatory Arbitration Agreements, and Common Threats to Their Validity,” Terra-Lex Connections, September 2016.

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