Sanchez v. Hearst Communications, Inc.

Background

Pablo Sanchez and Violet Alvarez sued Hearst Communications, Inc., alleging that Hearst violated California law by treating newspaper dealers as independent contractors rather than employees. They sought damages, penalties, and injunctive relief. Sanchez and Alvarez moved to certify a class consisting of everyone who personally delivered newspapers for Hearst in California solely under a contractor home-delivery agreement since July 2016. The proposed class included 57 people.

Class-certification analysis

The parties agreed that the alleged misclassification depended on California’s Borello test. That test determines employee or independent-contractor status by examining whether the hiring entity controlled the manner and means of the work, along with other factors. One relevant secondary factor is whether the person performing services operates a distinct occupation or business.

The court focused on differences in the proposed class members’ use of subcontractors. Alvarez used more than a dozen carriers, another proposed class member used seven or eight carriers, one person’s business used at least 50 carriers, and another used two carriers. The record also showed that some class members operated as independent business entities while others did not, and that their work hours varied substantially.

The court explained that using helpers is only one secondary Borello factor and is not automatically decisive on liability. But at the class-certification stage, the court had to consider whether liability could likely be decided for the class as a whole. Because subcontracting behavior could affect the employee-versus-independent-contractor analysis and varied significantly among the proposed class members, the court found potential problems with common questions predominating and with class treatment being the superior method of resolving the dispute.

The plaintiffs had not proposed suitable subclasses or otherwise explained how a trial could handle the differences. The court therefore concluded that, on the existing record, the plaintiffs had not shown that the misclassification issue could be decided on a classwide basis.

Ruling

Judge Vince Chhabria denied the motion for class certification. The denial was without prejudice because the court found a reasonable possibility that a class could be certified on a stronger showing and that additional factual development would not be unduly burdensome. The court scheduled a further case-management conference for May 11, 2022, to discuss how the case would proceed.