Martel v. Hearst Communications, Inc.

Background

Paul Martel delivers newspapers for the San Francisco Chronicle. He had delivered the Chronicle since the 1980s and signed a new contract with Hearst Communications, Inc. in 2008, changing from a “carrier” role to a “dealer” role with additional responsibilities. Martel alleged that Hearst misclassified him as an independent contractor and asserted eight California Labor Code violations, including a claim under Section 17200.

The parties filed cross-motions for summary judgment on whether Hearst properly classified Martel as an independent contractor. Hearst separately moved for summary judgment based on Martel’s failure to provide sufficiently detailed calculations of his claimed damages under Federal Rule of Civil Procedure 26(a).

Employment Classification

The court held that the California Supreme Court’s Borello standard applied because newspaper distribution was exempt from California Assembly Bill 5’s adoption of the Dynamex standard. Under Borello, the principal question is whether the alleged employer has the right to control the manner and means of accomplishing the desired result.

The court found no genuine dispute of material fact that Martel was an employee under the control test. His contract required him to deliver complete, assembled newspapers in specified condition to subscribers in a designated area by stated deadlines. The newspapers were available only during specified overnight hours, and failing to arrive or deliver on time could constitute a contract breach requiring Martel to pay associated costs.

The court also considered Martel’s daily work. He checked for route changes, prepared or loaded newspapers, distributed them to subcontractors, completed his route, and monitored Hearst’s online delivery portal for service checks, redeliveries, and complaints. The court concluded that the pickup times, delivery deadlines, penalties, and additional duties gave Martel little freedom over his working hours or how he completed the job.

Although the contract allowed Martel to choose certain delivery details and hire or fire subcontractors without Hearst’s approval, the court found that these freedoms were limited in practice. Martel’s route was large enough that he needed subcontractors, but his pay and the available workers limited his practical choices. The court also found that Martel’s use of a vehicle and sorting space did not establish meaningful independence because his equipment choices depended partly on his finances and his sorting space was subleased from Hearst.

The court then considered Borello’s secondary factors, including whether the worker operated a separate business, the skill required, who supplied tools and the workplace, the length of the relationship, the payment method, whether the work was part of the company’s regular business, and the parties’ understanding of their relationship. The court found several factors favoring employee status. Martel could be terminated without cause on 30 days’ notice, had continuously delivered newspapers for Hearst since the 1980s, and performed work connected to Hearst’s publication and distribution business.

Some factors favored contractor status. The contract called itself a “Contractor Home Delivery Agreement,” Martel referred to himself as a contractor on tax forms, newspapers had historically been delivered by independent contractors, Martel was paid by the piece rather than by the hour, and Hearst did not closely supervise each delivery. The court concluded that these factors did not outweigh Hearst’s control and the other factors favoring employee status. It ruled that Hearst had improperly classified Martel as an independent contractor.

Damages Disclosures

Martel’s amended disclosures listed claimed unpaid wages, liquidated damages, meal-and-rest-break penalties, unreimbursed business expenses, wage-statement penalties, and attorney’s fees. The disclosures did not provide specific calculations for each category.

The court found that Martel violated Rule 26(a)(iii), which requires a party to provide a computation of each category of claimed damages and supporting materials. Martel argued that he had provided a spreadsheet and discussed the calculations during mediation, but the court held that these communications did not satisfy the rule’s requirement that disclosures be written, signed, and served. The court also noted mediation confidentiality concerns.

The court nevertheless denied Hearst’s motion for summary judgment on the damages-disclosure issue. Because the trial would be postponed for at least three months due to coronavirus-related limits on civil jury trials, the court allowed Martel to amend his disclosures again. Martel was required to pay Hearst’s expenses and fees directly attributable to the amended disclosures, including the cost of a new deposition concerning them. Hearst could seek those fees and costs within 63 calendar days of the order.

Disposition

The court granted Martel’s motion for summary judgment and denied Hearst’s motion for summary judgment. It denied as moot any evidentiary objections not addressed in the order. The court vacated the scheduled trial and pretrial conference and set a further case-management conference for October 22 at 11 a.m.