Fourth District Upholds Denial of Class Certification
By Nancy Berner
In a positive development for employers and their defense counsel alike, the Fourth District Court of Appeals upheld the San Diego trial court’s denial of class certification in Ali v. U.S.A Cab. The putative class maintained that cab drivers were misclassified as independent contractors and denied, among other things, meal and rest breaks, workers’ compensation coverage and payment of the minimum wage. Of particular note is the appellate court’s analysis of the often tricky interplay between class certification issues and issues that speak to the merits of the case.
In U.S.A. Cab, plaintiffs sought certification of a class of drivers allegedly misclassified as independent contractors, and therefore denied the protections afforded to employees but burdened with the fees and deposits assessable to independent contractors. The putative class consisted of cab drivers who leased cabs from USA Cab, a radio dispatch company that provided a lease agreement designating the leasee as an independent contractor, and setting forth the conditions under which USA Cab provided a taxi at a rate dependent on the leasee’s driving record, and additionally provided insurance, maintenance and use of a radio dispatch service for contacting potential customers. In return, the leasee paid a security deposit, and could collect fares from passengers which he or she was not required to share with the company. USA Cab also provided drivers with a training manual that instructed drivers on the use of the company’s dispatch system, on procedures to use when arriving at a passenger’s address, and on state and local rules regulating cab drivers.
In opposition to the class certification, the trial court considered 36 declarations of taxi drivers testifying not only to variation in individual conduct, but to conduct at variance with Plaintiffs’ allegations of pervasive employer control by USA Cab of the drivers’ activities. The trial court considered evidence that the drivers “promoted their services in Web sites and phone books, and by giving out business cards and their personal cell phone numbers; provided some of their own work tools, such as map books, cell phones, flashlights, computers and credit card machines; set their own rates, such as flat rates per trip or rates below the standard metered rate; did not accept USA Cab's credit card system; obtained fares from sources other than USA Cab's dispatch service; refused fares at their discretion; had other drivers fill in for them, or filled in for other drivers; and used their taxis for personal reasons.” In other words, the trial court’s denial of class certification rested at least in part on consideration of the legal merits of Plaintiffs’ underlying allegation that they were treated as independent contractors rather than employees. The court denied certification because individual issues predominated and because the lack of common issues meant class treatment was not a superior method of litigation and would render a class unmanageable.
Plaintiffs sought review, contending that the trial court’s reliance on the declarations submitted by Defendant was an erroneous ruling on an ultimate issue in the case, namely that the drivers were independent contractors. The Court of Appeals disagreed. Citing to and emphasizing language from a California Supreme Court case relied upon by Plaintiffs, the Court noted that “issues affecting the merits of a case may be enmeshed with class action requirements, such as whether substantially similar questions are common to the class and predominate over individual questions or whether the claims or defenses of the representative plaintiffs are typical of class claims or defenses.” In U.S.A. Cab, the trial court used the declarations to decide the certification issues of commonality, manageability and predominance of individual issues. The appellate court agreed, for example, that the declarations supported the trial court’s conclusion that a class action trial would lead to “a parade of drivers” presenting testimony on individual issues such as the fact of damages, rather that simply the amount of damages.
This appellate decision sounds an encouraging note for those fighting to defeat class certification. As the Court noted in conclusion, “there is no precise test for determining whether common issues predominate, and thus “the court must pragmatically assess the entire action and the issues involved.” Evidence as to the underlying merits of the case may well be persuasive if the evidence speaks pragmatically to the class certification issues as well.