In re Field Asset Services, Inc.

Background

The plaintiffs contracted with Field Asset Services (FAS) to provide property-preservation services. Their work included construction, yard work, cleaning, and trash hauling. Three Group One plaintiffs—Darin Bush, Sam Cherrin, and Matthew Cohick—owned and operated corporate entities that contracted with FAS. Cohick’s corporation, Monster Mowers, employed additional workers after it incorporated.

The plaintiffs had initially been members of a certified class action seeking overtime pay, waiting-time penalties, and expense reimbursements. After the class was decertified and the case was remanded, former class members filed individual actions. This order addressed the remaining portion of defendants’ motion for summary judgment concerning the corporate-vendor plaintiffs and joint-employment theories.

Defendants’ Argument

The defendants argued that the three plaintiffs’ claims had to be brought as joint-employment claims because the plaintiffs contracted with FAS through corporate entities. Because the plaintiffs had not pleaded joint-employment claims, defendants argued that all of their claims for overtime, waiting-time penalties, and expense reimbursements should be dismissed.

Court’s Analysis

The court concluded that the plaintiffs were not required to bring joint-employment claims. It explained that the Ninth Circuit’s prior decision did not hold that corporate-vendor plaintiffs could pursue wage-and-hour liability only through a joint-employment theory. Instead, that decision directed the court to consider whether the California business-to-business exception applied and whether the Borello employment test governed.

The court discussed two California worker-classification tests. The ABC test generally requires the hiring entity to establish that the worker was free from control, performed work outside the hiring entity’s usual business, and regularly operated an independently established business. The Borello test uses multiple factors to evaluate whether an employment relationship exists.

Under California Labor Code section 2776, the business-to-business exception applies when specified criteria are met. If the exception applies, the Borello test governs; if the corporate structure was used to avoid wage-and-hour obligations, the ABC test may apply. The court held that this exception was the proper framework for the defendants’ arguments.

The plaintiffs presented evidence that FAS required them to have a business to contract with FAS, while the defendants disputed that contention. The court found that this evidence created a genuine dispute of material fact. It therefore held that the plaintiffs could bring their claims as misclassification claims, while the defendants could argue to the jury that the plaintiffs’ corporate entities had legitimate business-to-business relationships and that FAS did not employ the plaintiffs under the Borello test.

Rulings

The court denied the defendants’ motion for summary judgment on the argument that the claims had to be brought as joint-employment claims. It also denied the related argument that the claims had to be dismissed because they were not pleaded as joint-employment claims. The court amended its prior order to the extent that the prior order was inconsistent with these conclusions, and stated that the disputed questions would go to the jury.

The court separately denied the requests for judicial notice of two lawsuits filed against Cohick’s corporation, finding that those lawsuits were irrelevant to Cohick’s business relationship with FAS.

The remainder of the defendants’ motion was denied.