By Mark Chuang
In Ayala v. Antelope Valley Newspapers, the California Supreme Court held that the proper test for determining whether newspaper carriers could proceed as a class on the issue of their employment status was the employer’s right to control their conduct, not how that right was exercised.
In so holding, the state’s highest court reversed a lower court’s denial of class certification to a group of carriers who argued they were improperly classified as independent contractors. The trial court had held that common questions did not predominate because determining each employee’s status would require an individualized determination of how much the employer controlled their work.
Courts will only allow class actions to proceed where common questions of fact and law “predominate.” In Ayala, the Court held that the trial court had applied the wrong analysis to decide whether the predominance element had been satisfied.
Antelope Valley circulates newspapers through individual carriers using a standard form contract. Ayala sued on behalf of a class of carriers that alleged they were improperly treated as independent contractors instead of employees.
The principal test to determine whether an employee or independent contractor relationship exists is whether the employer controls the manner and means of the individual’s work.
Ayala sought class certification, arguing that the common issue among all individuals was the employer’s right to control, as established in the standard form contract that the carriers each signed.
Antelope Valley opposed certification stating that the question of employee status could not be resolved on a common basis but rather would require unmanageable individual issues regarding the degree of control the employer actually exercised over the carriers.
The trial court denied class certification concluding that common issues did not predominate because resolving the question of employee status would require “heavily individualized inquiries” into the employer’s control over the work.
The appeals court reversed in part, and the case eventually reached the California Supreme Court.
The Court held that the trial court had used the wrong analytical approach. What is most important, the Court held, is not how much control an employer exercises, but rather, how much control the employer retains the right to exercise that control. Accordingly, at the certification stage, the relevant inquiry was whether Antelope Valley’s right of control over its employees was sufficiently uniform to permit a class-wide assessment.
The key document on this issue was the standard form contract, which established the employer’s right to control. Because the trial court did not give the contract the consideration it merited, the Court remanded the case with instructions to consider certification again – this time using the correct standard.
Mark Chuang is a summer associate in Barger & Wolen’s San Francisco office.