Opinion
D079545
03-21-2023
JOSEPH COLLINS, Plaintiff and Appellant, v. SERVICELINK FIELD SERVICES, LLC, Defendant and Respondent.
Moss Bollinger, Dennis F. Moss, Jeremy F. Bollinger and Ari E. Moss, for Plaintiff and Appellant. Littler Mendelson, Curtis A. Graham, Anthony Ly and Stacey Friedman Blank, for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. 37-2018-00040352-CU-OE-CTL, Gregory W. Pollack, Judge. Reversed.
Moss Bollinger, Dennis F. Moss, Jeremy F. Bollinger and Ari E. Moss, for Plaintiff and Appellant.
Littler Mendelson, Curtis A. Graham, Anthony Ly and Stacey Friedman Blank, for Defendant and Respondent.
DATO, J.
Joseph Collins, a property inspector hired by SoCal Inspectors, Inc. (SoCal), brought a PAGA action against ServiceLink Field Services, LLC (ServiceLink), the entity that engaged SoCal and directed his work. The trial court determined that ServiceLink did not have an employment relationship with Collins and granted its motion for summary judgment.
PAGA is an acronym for the Private Attorney General Act, Labor Code section 2698 et seq. Undesignated statutory references are to the Labor Code.
On independent review, we reverse. The evidence presented in ServiceLink's motion shows it controlled the details of Collins's work and had the right, in its sole discretion, to insist that SoCal "remove" him from the job-either of which is enough to create a triable issue as to whether ServiceLink was Collins's joint employer. (See Medina v. Equilon Enters. (2021) 68 Cal.App.5th 868, 871 (Medina).)
FACTUAL AND PROCEDURAL BACKGROUND
In 2014, Collins entered into a contract with SoCal to provide property inspection services. The agreement indicated that Collins was "acting as an [independent [contractor and not as an employee or agent of SoCal . . . ."
ServiceLink provides "property preservation services" to financial institutions, mortgage companies, and insurers. In 2017, it entered into a Trade Vendor Agreement (Agreement) with SoCal. Over a 10 month period starting in 2017, SoCal completed about 20,000 inspections for ServiceLink.
ServiceLink required SoCal to perform inspections in accordance with its Inspector Field Guide (Inspector Guide). Over the span of nearly 250 pages, it contains detailed "requirements and procedures necessary to complete property inspections." For example, it mandates that inspectors document observations on certain forms and use specified software. It even instructs inspectors on what tools to bring and generally how to behave on the job.
ServiceLink monitors inspectors' performance. It has the "right, at any time, to insist upon removal" of any inspector it "deems unsatisfactory with regards to performing the Services."
Operating through SoCal, Collins conducted more than 2,700 inspections for ServiceLink properties over the span of 507 days. For each, he inspected the property pursuant to the Inspector Guide, completed reports on ServiceLink forms, and uploaded the results to ServiceLink's computers "without any contact from SoCal personnel at least 98.5 [percent] of the time."
ServiceLink paid SoCal a predetermined amount for each type of inspection. Collins was never paid by ServiceLink directly.
In 2020, Collins filed the operative third amended complaint (Complaint) against ServiceLink containing a single cause of action under PAGA. It alleges that he was "jointly employed by ServiceLink and another entity with respect to home inspection work orders" but "treated as an independent contractor." The complaint further alleges that ServiceLink "dictated what the inspectors were to do at each inspection," including "the number of photographs to be taken, what had to be included in each of the photographs," what "inspectors were to observe and report in connection with each inspection," and "who to contact when conducting certain inspections." Together with other wage and hour claims based on various provisions of the Labor Code and the applicable Industrial Welfare Commission (IWC) wage order No. 4 (Cal. Code Regs., tit. 8, §11040), Collins alleges that he and other aggrieved employees were entitled to but not paid a minimum wage.
Collins sued only ServiceLink. In the superior court, his lawyer explained, "Southern Cal was not named in this case" because "[t]hey're not an asset-rich organization" and "[t]he joint employer" theory "is joint and several liability."
The procedural history of this case, as recounted by ServiceLink, includes a federal court complaint, a state court demurrer, and two prior iterations of the Complaint. But earlier in the case, in a ruling ServiceLink does not challenge, the superior court rejected its contention that admissions in these pleadings precluded Collins from asserting that ServiceLink was a joint employer. Accordingly, they play no part in our analysis.
ServiceLink moved for summary judgment, asserting the undisputed evidence established that it was not an employer of Collins. In support, it lodged a declaration from one of its officers along with the Agreement and Inspector Guide.
As its briefing makes clear, solely for purposes of the summary judgment motion ServiceLink does not contest Collins's assertion that he was an employee, but simply claims he was not ServiceLink's employee.
The trial court granted summary judgment. In its view, the undisputed evidence established that ServiceLink "did not have the right to . . . fire any individual working for SoCal" and "did not provide [Collins] with training . . . or other business items to perform inspections." The court further determined that Collins did not perform inspections pursuant to ServiceLink's requirements, but rather those of its clients, "Fannie Mae and Freddy Mac."
DISCUSSION
Under PAGA, an "aggrieved employee" may bring a civil action personally and on behalf of other current or former employees for Labor Code violations. (§ 2699, subd. (a).) An "aggrieved employee" is defined as "any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed." (Id., subd. (c), italics added.)
Collins's theory of liability is that he had two employers, ServiceLink and SoCal."' "Joint employment occurs when two or more persons engage the services of an employee in an enterprise in which the employee is subject to the control of both." '" (Morales v. 22nd District Agricultural Association (2018) 25 Cal.App.5th 85, 94, fn. 14.) To be a joint employer, an entity must have had the ability "(a) to exercise control over . . . wages, hours or working conditions, [or] (b) to suffer or permit [the] work, or (c) to engage, thereby creating a common law employment relationship." (Martinez v. Combs (2010) 49 Cal.4th 35, 64 (Martinez).)
In opposing summary judgment, Collins alternatively maintained that the "central issue in this case" was not whether he was jointly employed by SoCal and ServiceLink, but instead whether ServiceLink properly considered him an independent contractor. But because this theory was not alleged in the Complaint, the trial court correctly ruled that ServiceLink was not obligated to negate it. (California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625, 637, fn. 3 ["A party may not oppose a summary judgment motion based on a claim [or] theory . . . not alleged in the pleadings."].)
The parties agree, and we concur, that Martinez is the controlling case on joint employment in California wage order cases.
The relevant wage order in this case, like the one involved in Martinez, defines an "employer" as "any person . . . who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person." (Cal. Code Regs., tit. 8, §§ 11040, subd. 2(H), italics added; see also Martinez, supra, 49 Cal.4th at p. 48, fn. 9.) "Employ," in turn, is broadly defined to mean "engage, suffer, or permit to work." (Cal. Code Regs., tit. 8, §§ 11040, subd. 2(E).) Accordingly, a person may be a joint employer without exercising direct control over the worker. If the hirer exercises enough control over an intermediary entity to indirectly dictate the wages, hours, or working conditions, that is enough to create a triable issue of joint employment. (Medina, supra, 68 Cal.App.5th at p. 879.)
A. On Summary Judgment, ServiceLink Bore the Burden to Negate an Employment Relationship, and Collins Did Not Have to "Prove" Anything.
Where, as here, a defendant moves for summary judgment on a cause of action for which the plaintiff has the burden of proof at trial, it is the defendant's burden to present evidence conclusively negating an essential element of the plaintiff's case. (Doe v. Lawndale Elementary School Dist. (2021) 72 Cal.App.5th 113, 124.) Thus, although at trial Collins would bear the burden to establish joint employment, here it was ServiceLink's burden to demonstrate that as a matter of law on undisputed evidence, it was not his joint employer.
Although the moving party's burden on summary judgment h as been settled law in California for over two decades (see Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850), ServiceLink repeatedly attempts to flip the burden. In both the trial court and on appeal, it maintains that Collins bears the burden to establish joint employment. For example, in the superior court it stated, "Collins cannot satisfy his burden of proof . . . that [ServiceLink] exercised control over his . . . working conditions . . . ." ServiceLink repeatedly makes the same claim in its appellate brief, stating, "To prevail, Collins had to prove that [ServiceLink] . . . exercised control over his wages, hours, or working conditions" and "[a]s the trial court correctly found, Collins failed to meet his burden."
This misdirection took on a life of its own. Copying a paragraph nearly verbatim out of ServiceLink's points and authorities, the trial court began its analysis by stating, "Plaintiff bears the burden of establishing the existence of a joint employment relationship with Defendant." That was a mistake. Opposing summary judgment, Collins did not have the burden to prove anything. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) Only if ServiceLink met its burden as moving party would Collins have to do something. And even then, he would not be required to "prove" his case. He would only have to offer admissible evidence from which a jury could reasonably find in his favor. (See Flores v. City of San Diego (2022) 83 Cal.App.5th 360, 372.)
B. ServiceLink Failed to Establish It is Not a Joint Employer
Quite apart from anything presented by Collins, the evidence ServiceLink submitted itself creates a triable issue that it was Collins's joint employer. Under the exceedingly broad and alternative test for employment articulated in Martinez, supra, 49 Cal.4th 35, there are many relevant considerations. Still, there is no dispute that a central and most important factor in determining who is an employer is the defendant's right to control the means and manner of the workers' performance. (See St. Myers v. Dignity Health (2019) 44 Cal.App.5th 301, 311-312 [applying common law test].) Control may be of the employment itself, in that the defendant has the effective ability to define the task as well as hire and fire the worker. Or it may involve the extent to which the defendant specifies the conditions under which workers perform their jobs.
1. Triable Issue on Suffer or Permit to Work
Perhaps the epitome of control is the hirer's right to terminate the relationship without liability, that is, to "suffer or permit" the person to engage in the work. Here, the Agreement gives ServiceLink-in its sole discretion-the power to prohibit Collins from doing its work:
"[ServiceLink] shall have the right, at any time, to insist upon removal of any [SoCal] [p]ersonnel whom [ServiceLink] deems unsatisfactory with regards to performing the Services."
In granting summary judgment, the trial court determined that ServiceLink "did not have the right to . . . fire any individual working for SoCal." Literally, that is correct. But in practical effect, there may be little (if any) difference between having the authority to directly terminate and ServiceLink's right, in its sole discretion, to insist that SoCal "remove" the undesired employee from all ServiceLink work. In either situation, the employee is precluded from performing certain assignments. In some cases- for example, where there is not a significant amount of other work-the power to remove may be tantamount to the power to terminate. In other cases, perhaps not. The significance of the right to remove in this case remains a question of fact. Without additional evidence, it is not determinative that SoCal could theoretically retain such an employee to work on non-ServiceLink accounts. (See Medina, supra, 68 Cal.App.5th at p. 880 [the "contractual ability to remove employees from a particular [gasoline] station" supported finding of joint employer status].)
ServiceLink's ability to direct the removal of a specific employee distinguishes this case from the argument rejected by the Supreme Court in Martinez, that potentially ceasing to do business with the direct employer does not constitute the power to terminate. (Martinez, supra, 49 Cal.4th at p. 70 ["[A] business relationship, standing alone, does not transform the purchaser into the employer of the supplier's workforce"].) ServiceLink also protests that it "never exercised" its right to remove Collins, was unaware of any information that would have "allowed" it to do so, and did not ask SoCal to remove any of its workers. But the putative employer need not exercise such rights to be treated as a dual employer. "[I]t is the right to control and not the exercise of that right that is the test." (Sully-Miller Contracting Co. v. California Occupational Safety &Health Appeals Bd. (2006) 138 Cal.App.4th 684, 693.)
2. Triable Issue on Control of Working Conditions
In any event, even without having the power to terminate, ServiceLink was not entitled to summary judgment because the evidence would also support a finding that it dictated Collins's working conditions. The Inspection Guide incorporates "detailed inspection information" containing meticulous instructions that Collins was required to follow. These included: (1) what to say to certain occupants; (2) what to wear on the job; (3) mandatory forms for reporting inspection results; (4) required findings for certain amenities on the property; (5) mandatory reporting of specified conditions of the land; (6) the "turnaround time" for completing assignments and grounds for requesting additional time; (7) the duty to regularly check for communications from ServiceLink; (8) "minimum photo requirements" and how to upload photographs; (9) certain prohibitions on submitting photographs; (10) rules about sales tax; (11) performance evaluation standards; (12) reporting property damage; (13) instructions on documenting personal property; (14) rules pertaining to damage to the exterior of a building; (15) how to handle "time-sensitive" matters; (16) checking utility meter readings; (17) dealing with properties in certain court proceedings); (18) handling vacant property and (19) policies regarding animals found on the property.
ServiceLink contends that Collins forfeited appellate review of this "control" issue because on appeal he "only raises the trial court's determination that [ServiceLink] did not 'suffer or permit' him to work." We disagree; the opening brief adequately raises the "control" issue by stating, "[U]nder the 'suffer or permit' and 'control' tests of 'employee' and 'employer,' [ServiceLink] . . . was an employer . . . ."
In sum, the evidence presented in ServiceLink's motion is sufficient to support a finding that it controlled the details, means, and methods of Collins's work. And as discussed above, there is also a triable issue that it "suffered or permitted" Collins to work on ServiceLink properties because it had the right to have him "remove[d]" from any or all of those projects. In these two key respects, the case is indistinguishable from Medina, supra, 68 Cal.App.5th 868, which reversed summary judgment for a putative employer in a joint-employment case because the defendant "provided extremely detailed technical instructions" for operating the business and had the power to have employees removed from their assigned positions. (Id. at p. 879.)
In seeking to uphold the trial court's ruling, ServiceLink heavily relies on two cases involving Shell and its gas stations that affirmed summary judgment in favor of Shell, the putative joint employer: Curry v. Equilon Enterprises, LLC (2018) 23 Cal.App.5th 289 (Curry) and Henderson v. Equilon Enterprises, LLC (2019) 40 Cal.App.5th 1111 (Henderson).)
ServiceLink repeatedly states that Henderson was decided by this court and rebukes Collins for making a "bold attack on a prior opinion of this Court." But actually, Henderson was decided by Division One of the First Appellate District.
In Curry, the plaintiff was hired as a station manager by ARS, a company that operated certain Shell gasoline stations. (Curry, supra, 23 Cal.App.5th at pp. 294-295.) ARS was responsible for hiring, firing, disciplining, training, and compensating the plaintiff. The court concluded that ARS, not Shell, controlled the plaintiffs working conditions because it" 'maintained the right and ability to assign any employee' to perform tasks'" and" 'maintained control over the daily work of its own employees.'" (Id. at p. 303.) The Curry court rejected the plaintiffs argument that Shell controlled the plaintiffs working conditions through ARS, noting "[the plaintiff's] argument reflects Shell exercised control over [the MSO operator], and, in turn, [the MSO operator] exercised control over [the plaintiff], but [the plaintiff] has not explained how Shell exercised control over [the plaintiff's] wages, hours, or working conditions." (Id. at p. 303.) The court applied a similar analysis to the "suffer or permit to work" definition of employment. It relied on ARS's contractual responsibility for hiring, firing, disciplining, training, compensating, and maintaining payroll records for its employees, and concluded, "Shell did not acquiesce to [the plaintiff's] employment because Shell was not in a position to terminate [the plaintiff] or hire a different person to perform the tasks [the plaintiff] performed." (Id. at p. 311.)
Henderson was essentially a rerun of Curry. It involved the same agreement between Shell and the station operator, and the named plaintiff in that case, as in Curry, was a station manager hired by the third-party operator. Henderson followed Curry on most of the issues, citing Curry extensively and finding it "dispositive of the question before us." (Henderson, supra, 40 Cal.App.5th at pp. 1119-1122.)
In Medina-also involving a Shell gas station and joint employer claims-the appellate court distinguished Curry and Henderson and reversed summary judgment. (Medina, supra, 68 Cal.App.5th at pp. 878-879.) Unlike Curry and Henderson, the evidence in Medina was that Shell had the power to have the station manager fired. (Medina, at p. 878.) Additionally-and disagreeing with Curry and Henderson on this point-Medina explained that "employer" includes a person who" 'directly or indirectly, or through an agent or any other person . . . exercises control over the . . . working conditions of any person.'" (Medina, at p. 879, italics omitted.) Elaborating, the court concluded:
"Thus, a person can be a joint employer without exercising direct control over the employee. If the putative joint employer instead exercises enough control over the intermediary entity to indirectly dictate the . . . working conditions of the employee, that is a sufficient showing of joint employment." (Id. at p. 879.)
Contrary to ServiceLink's contention, Collins's case is more like Medina and distinguishable from Curry and Henderson. Like the plaintiff in Medina, here too Collins could be removed by the putative joint employer at its sole discretion, preventing him from performing any ServiceLink inspections. (Medina, supra, 68 Cal.App.5th at p. 876 [Shell could effectively prevent an employee from working at any of its stations].) Also like the putative employer in Medina, ServiceLink exercised significant control in dictating the manner and method of the work, down to minute details. (Id. at p. 879.)
On the issue of control, ServiceLink points out that Collins never received any orders or directions directly from it, but only from SoCal and through "InspectorADE," a third-party software. It emphasizes that Collins was paid solely by SoCal, and ServiceLink did not provide him with any training, tools, materials, equipment, or "other business items." ServiceLink also did not determine how much time Collins was to spend on each inspection, nor did it determine whether he would accept or decline any particular assignment. It claims it was never aware of any information that would have allowed it to remove Collins from performing inspections. And ServiceLink further maintains that the requirements for the "vast majority" of inspections provided by its vendors are established not by it, but by its clients, including Fannie Mae and Freddie Mac. Citing Martinez, supra, 49 Cal.4th at pages 76-77, it contends that just as the defendant's instructions in that case about how to pack strawberries was insufficient to make it a joint employer, so too here its Inspector Guide does not create a triable issue on control.
ServiceLink's Inspector Guide does contain some client-specific directions. For example, there are two pages of separate instructions for Fannie Mae property, and five pages of instructions for "Disaster Inspections" involving the Federal Emergency Management Agency (FEMA). But the vast majority of the Guide seemingly pertains to property inspections in general. Module 2, for example, is entitled, "Performing Inspections at a [ServiceLink] Property." Moreover, the relevant question is whether Collins has a single employer (SoCal) or two joint employers (SoCal and ServiceLink). Requirements insisted on by ServiceLink's customers as part of their contracts with ServiceLink are still employment conditions dictated by ServiceLink.
There is a significant qualitative difference, however, between (1) instructing a worker not to pack green or rotten strawberries (Martinez, supra, 49 Cal.4th at pp. 45, 76), and (2) requiring a worker adhere to a 250-page manual covering every aspect of how to inspect real property and report observations. Unlike the putative employer of the agricultural workers in Martinez, here ServiceLink controlled every aspect of the inspection process-not just quality control-even to the fine point of when and how to use zip ties to attach notices to property.
ServiceLink relies on several federal cases for the proposition that ensuring compliance with safety regulations or performance criteria does not create a triable issue of joint employment. For example, in Johnson v. Serenity Transp., Inc. (N.D.Cal. 2015) 141 F.Supp.3d 974, the court held that "mere imposition of requirements or oversight" of performance is not enough to make an overseeing entity a joint employer. (Id. at p. 998.) As a general proposition, we do not disagree. But in sharp contrast here, ServiceLink not only graded Collins's performance, it mandated in excruciating detail how he was to inspect property-even providing canned responses to certain questions he might be asked while on the job. Hall v. Apt. Inv. & Management Co. (N.D.Cal. 2011) 2011 U.S. Dist. Lexis 156888, which ServiceLink also cites is similarly off point. In that case, there was no evidence that the putative employer controlled the manner of performing the work, or could discipline the worker and/or terminate the assignment. (Id. at p. *20.)
In any event, even assuming that the evidence supported ServiceLink's assertions, it would simply reflect the litigation reality that cases are seldom entirely one-sided and reasonable minds can often draw different inferences even from undisputed evidence."' "There is no magic formula for determining whether an organization is a joint employer. Rather, the court must analyze 'myriad facts surrounding the employment relationship in question.' [Citation.] No one factor is decisive. [Citations.] '[T]he precise contours of an employment relationship can only be established by a careful factual inquiry.'" '" (St. Myers, supra, 44 Cal.App.5th at p. 311.)
The evidence ServiceLink emphasizes, when juxtaposed against that which Collins relies on, creates a quintessential question of fact on the issue of joint employment. (See Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 1176, 1187 ["' "The question of whether an employment relationship exists 'is generally a question reserved for the trier of fact.'"' "].) Summary judgment was improperly granted.
DISPOSITION
The judgment is reversed. Appellant is entitled to costs on appeal.
WE CONCUR: HUFFMAN, Acting P. J. IRION, J.