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1 DAMON M. OTT, Bar No. 215392
dott@littler.com
2 COURTNEY CHAMBERS, Bar No. 312011
cchambers@littler.com
3 ROBERT GEIGER, Bar No. 322914
rgeiger@littler.com
4 LITTLER MENDELSON, P.C.
333 Bush Street, 34th Floor
5 San Francisco, California 94104
Telephone: 415.433.1940
6 Fax No.: 415.399.8490
7 Attorneys for Defendant
VANGUARD CLEANING SYSTEMS, INC.
8
(ADDITIONAL COUNSEL ON NEXT PAGE)
9
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 COUNTY OF SAN MATEO
12
13 ALIDA MAZARIEGOS, PAULA GONZALEZ, Case No. 20-CIV-04267
and JAIME AMAYA,
14 COMPLEX ACTION
Plaintiff,
15 ASSIGNED FOR ALL PURPOSES TO
v. HONORABLE NANCY L. FINEMAN,
16 DEPT 4
VANGUARD CLEANING SYSTEMS, INC.;
17 RR FRANCHISING, INC., D/B/A JOINT NOTICE OF NEW AND
VANGUARD CLEANING SYSTEMS OF RELEVANT AUTHORITY BY
18 SOUTHERN CALIFORNIA AND D/B/A DEFENDANTS
VANGUARD CLEANING SYSTEMS OF
19 NORTHERN CALIFORNIA; BUDDHA Date: July 26, 2022
CAPITAL CORPORATION, D/B/A Time: 2:00 p.m.
20 VANGUARD CLEANING SYSTEMS OF Dept.: 4; Ctrm. G
SACRAMENTO, D/B/A VANGUARD
21 CLEANING SYSTEMS OF THECENTRAL
VALLEY, AND D/B/AVANGUARD
22 CLEANING SYSTEMS OF THE CENTRAL
COAST; AND WINE COUNTRY
23 VENTURES, INC. D/B/A VANGUARD
CLEANING SYSTEMS OF THE NORTH
24 BAY, AND DOES 1 THROUGH 10,
INCLUSIVE,
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Defendant.
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L IT TL E R ME N DE LS O N , P .C .
3 3 3 B u sh St r ee t
3 4 t h F l o or
Case No. 20-CIV-04267
S a n F ra n c i s co , C A 94 1 0 4
4 1 5 . 43 3 . 19 4 0
NOTICE OF NEW AND RELEVANT AUTHORITY
1 MICHAEL A. HOOD (SBN 71258)
JACKSON LEWIS P.C.
2 200 Spectrum Center Drive, Suite 500
Irvine, CA 92618
3 Telephone: (949) 885-1360
Facsimile: (949) 885-1380
4 E-mail: michael.hood@jacksonlewis.com
5
Adam L. Lounsbury (pro hac vice)
6 JACKSON LEWIS P.C.
701 E. Byrd Street, 17th Fl.
7 Richmond, VA 23219
Telephone: (804) 212-2863
8 E-mail: adam.lounsbury@jacksonlewis.com
9 Attorneys for Defendants RR Franchising, Inc.,
Buddha Capital Corporation and Wine Country Ventures, Inc.
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1 TO THE COURT, PLAINTIFFS AND THEIR ATTORNEYS OF RECORD:
2 Defendants Vanguard Cleaning Systems, Inc. (“VCS”); RR Franchising, Inc., d/b/a Vanguard
3 Cleaning Systems of Southern California and d/b/a Vanguard Cleaning Systems of Northern
4 California (“RR Franchising”); Buddha Capital Corporation, d/b/a/ Vanguard Cleaning Systems of
5 Sacramento, d/b/a Vanguard Cleaning Systems of the Central Valley, and d/b/a/ Vanguard Cleaning
6 Systems of the Central Coast (“Buddha Capital”); and Wine Country Ventures, Inc. d/b/a Vanguard
7 Cleaning Systems of the North Bay (“Wine Country”) (“Defendants”) hereby jointly submit this Notice
8 of New and Relevant Authority. By this Notice, Defendants request that this Court consider the July 5,
9 2022 decision of the U.S. Court of Appeals for the Ninth Circuit entitled Bowerman v. Field Asset Services,
10 Inc., et al., Nos. 18-16303 and 18-17275 (“Bowerman”), reported after Defendants filed and served their
11 Oppositions to Plaintiffs’ Motion for Class Certification. The Bowerman decision was certified for
12 publication on July 5, 2022 and reversed a district court decision on which Plaintiffs relied in their
13 Motion for Class Certification.
14 In Bowerman, a class action case involving claims based on a theory of independent contractor
15 misclassification, the Ninth Circuit addressed the following issues relevant to Plaintiffs’ Motion for
16 Class Certification:
17 1. The Ninth Circuit considered whether the lack of common evidence to prove liability
18 for violations of class members’ entitlement to overtime and expense reimbursements prevented class
19 certification. Bowerman at 17.
20 2. The Ninth Circuit considered whether “the district court abused its discretion by
21 certifying the class, despite the predominance of individualized questions over common ones.”
22 Bowerman at 17.
23 3. The Ninth Circuit considered whether the “excessive difficulty” of calculating
24 individual damages prevents class certification. Bowerman at 22.
25 4. The Ninth Circuit considered whether the Borello standard or the ABC test applies to
26 the employment classification test is to be used for expense reimbursement claims made under Labor
27 Code section §2802. Bowerman at 17.
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1 5. The Ninth Circuit considered whether the joint employment or direct employment tests
2 apply to the plaintiffs’ claims, because Dynamex does not apply to joint employment claims, or to
3 claims that are not based on or rooted in one of California’s wage orders.” Id. at 17.
4 6. The Ninth Circuit held that a court “need not decide whether common evidence can
5 prove that [a putative employer] has a uniform policy of misclassifying its vendors” when the putative
6 employer’s “liability to any class member for failing to pay them overtime wages or to reimburse their
7 business expenses would implicate highly individualized inquiries on whether that particular class
8 member ever worked overtime or ever incurred any ‘necessary’ business expenses. Cal. Lab. Code §
9 2802(a). Under such circumstances, class certification is improper.” Bowerman at 19 (emphasis in
10 original).
11 7. The Ninth Circuit held that “a putative employer cannot be liable to an entire class of
12 putative employees for failing to reimburse their business expenses and pay them overtime unless the
13 putative employer in fact failed to do so for each of them,” and “for the very same reason,” class
14 certification of such claims is improper. Bowerman at 40.
15 8. The Ninth Circuit recognized that “control over how a result is achieved lies at the
16 heart of the common law test for employment.” Bowerman at 29 (emphasis in original). Further
17 stating, “California law is clear that “[i]f control may be exercised only as to the result of the work
18 and not the means by which it is accomplished, an independent contractor relationship is established.”
19 Bowerman at 29 (citations omitted).
20 9. The Ninth Circuit held that “[r]equiring a worker to complete a task within a desired
21 timeframe is a quintessential example of controlling the result of that worker’s job performance”; and
22 rejected the district court’s conclusion that a requirement to complete an assignment within a seventy-
23 two-hour deadline constituted control over the means of completion. Bowerman at 30-31.
24 10. The Ninth Circuit held that “the right to control results [as opposed to means] is a
25 ‘broad’ one, encompassing ‘the right to inspect, the right to make suggestions or recommendations as
26 to details of the work, [and] the right to prescribe alterations or deviations in the work,’ none of which
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1 “chang[e] the relationship from that of owner and independent contractor.” Bowerman at 31-31
2 (citation omitted).
3 11. The Ninth Circuit held that “Bowerman’s claims (and those of other sole proprietors)
4 are not joint employment claims,” but noted that “FAS’s joint employment argument would likely
5 succeed were an actual employee of a vendor suing FAS, claiming that FAS was an employer.” The
6 court further noted that “some of the class members’ theories of liability could depend on their ability
7 to establish that FAS was a joint employer. On remand, the district court may consider the joint
8 employment issue in the first instance for class members who own or operate LLCs or corporations,
9 which are distinct legal entities.” Bowerman at 28.
10 A copy of the decision is attached hereto as Exhibit A.
11 Dated: July 15, 2022
/s/ Robert Geiger
12 DAMON M. OTT
COURTNEY CHAMBERS
13 ROBERT GEIGER
LITTLER MENDELSON, P.C.
14
Attorneys for Defendant
15 VANGUARD CLEANING SYSTEMS, INC.
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Dated: July 15, 2022
19 /s/ Adam Lounsbury
MICHAEL HOOD
20 ADAM LOUNSBURY
21 Attorneys for Defendants
RR FRANCHISING, INC.; BUDDHA
22 CAPITAL CORPORATION, AND WINE
COUNTRY VENTURES, INC.
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4886-1256-9640.2 / 103116-1002
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Exhibit A
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\FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FRED BOWERMAN; JULIA Nos. 18-16303
BOWERMAN, on behalf of themselves 18-17275
and all others similarly situated,
Plaintiffs-Appellees, D.C. No.
3:13-cv-00057-
v. WHO
FIELD ASSET SERVICES, INC.; FIELD
ASSET SERVICES, LLC, n/k/a Xome OPINION
Field Services, LLC,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
William Horsley Orrick, District Judge, Presiding
Argued and Submitted July 20, 2021
Submission Vacated September 23, 2021
Resubmitted June 23, 2022
San Francisco, California
Filed July 5, 2022
Before: William A. Fletcher, Mark J. Bennett, and
Bridget S. Bade, Circuit Judges.
Opinion by Judge Bennett
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2 BOWERMAN V. FIELD ASSET SERVICES
SUMMARY *
Class Action / Attorneys’ Fees
The panel reversed the district court’s class certification
order of a class of 156 individuals who personally performed
work for Field Asset Services, Inc. (“FAS”), reversed the
partial summary judgment in favor of the class, vacated the
interim award of more than five million dollars in attorneys’
fees, and remanded for further proceedings.
FAS is in the business of pre-foreclosure property
preservation for the residential mortgage industry. Plaintiff
Fred Bowerman was the sole proprietor of BB Home
Services, which contracted with FAS as a vendor.
Bowerman alleged that FAS willfully misclassified him and
members of the putative class as independent contractors,
rather than employees, resulting in FAS’s failure to pay
overtime compensation and to indemnify them for their
business expenses.
FAS first argued that the district court abused its
discretion by certifying the class, despite the predominance
of individualized questions over common ones. Under Fed.
R. Civ. P. 23(b)(3), a district court must find that common
questions of fact or law to class members predominate over
individual members’ questions before certifying a class. The
panel held that the class members could not establish FAS’s
liability for failing to pay overtime wages or to reimburse
expenses by common evidence. The panel reversed the class
certification because the class members failed to
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
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BOWERMAN V. FIELD ASSET SERVICES 3
demonstrate that FAS’s liability was subject to common
proof. Even if class members needed to prove only that they
were misclassified as independent contractors to establish
FAS’s liability by common evidence, class certification
would still be improper under Rule 23(b)(3) because the
class members failed to show that “damages are capable of
measurement on a classwide basis.” Comcast Corp. v.
Behrend, 569 U.S. 27, 34 (2013). Even under a narrow
interpretation of Comcast Corp., the class members cannot
establish predominance. Nor have the class members shown
that damages can be determined without excessive difficulty.
FAS first argued that the district court abused its
discretion by certifying the class, despite the predominance
of individualized questions over common ones. Under Fed.
R. Civ. P. 23(b)(3), a district court must find that common
questions of fact or law to class members predominate over
individual members’ questions before certifying a class. The
panel held that the class members could not establish FAS’s
liability for failing to pay overtime wages or to reimburse
expenses by common evidence. The panel reversed the class
certification because the class members failed to
demonstrate that FAS’s liability was subject to common
proof. Even if class members needed to prove only that they
were misclassified as independent contractors to establish
FAS’s liability by common evidence, class certification
would still be improper under Rule 23(b)(3) because the
class members failed to show that “damages are capable of
measurement on a classwide basis.” Comcast Corp. v.
Behrend, 569 U.S. 27, 34 (2013). Even under a narrow
interpretation of Comcast Corp., the class members cannot
establish predominance. Nor have the class members shown
that damages can be determined without excessive difficulty.
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4 BOWERMAN V. FIELD ASSET SERVICES
Second, FAS argued that S.G. Borello & Sons, Inc. v.
Department of Industrial Relations, 769 P.2d 399 (Cal.
1989) (“ Borello”), not Dynamex Operations West, Inc. v.
Superior Court, 416 P.3d 1 (Cal. 2018) (“ Dynamex”),
applied to all the class members’ claims. The panel held that
the California Court of Appeal has repeatedly limited
Dynamex’s applications to claims based on or “rooted in”
California’s wage orders. Here, the class members’ expense
reimbursement claims were not based on a California wage
order, but on Cal. Labor Code § 2802. Nor were they “rooted
in” a California wage order, even though the class members
belatedly invoked Wage Order 16-2001 in their class
certification briefing. The panel rejected FAS’s contention
that Borello governed because the overtime claims were
“joint employment” claims to which Dynamex did not apply.
The panel held that Dynamex applied to Bowerman’s
overtime claims. The panel noted that FAS’s joint
employment would likely succeed were an actual employee
of a vendor suing FAS, claiming that FAS was an employer.
On remand, the district court may consider the joint
employment issue in the first instance for class members
who own or operate LLCs or corporations, which are distinct
legal entities.
Third, FAS contended that the district court erred by
granting summary judgment under Borello’s multifactor and
fact-intensive inquiry because, among other reasons, FAS
did not control the manner and means of the class members’
work. The panel first considered the expense reimbursement
claims. The panel held that Borello governed the class
members’ reimbursement claims. Under Borello, the
existence of an employment relationship is a question for the
trier of fact, and the district court erred in finding no triable
issue of material fact.
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BOWERMAN V. FIELD ASSET SERVICES 5
Third, FAS contended that the district court erred by
granting summary judgment under Borello’s multifactor and
fact-intensive inquiry because, among other reasons, FAS
did not control the manner and means of the class members’
work. The panel first considered the expense reimbursement
claims. The panel held that Borello governed the class
members’ reimbursement claims. Under Borello, the
existence of an employment relationship is a question for the
trier of fact, and the district court erred in finding no triable
issue of material fact.
Next, the panel considered the overtime claims.
Dynamex adopted the “ABC test” to determine employee
status for purposes of wage and hour claims like the class
members’ overtime claims. The ABC test presumptively
considers all workers to be employees, and permits workers
to be classified as independent contractors only if the hiring
business shows that the worker in question satisfies each of
three conditions – A, B, and C. The panel held that summary
judgment would not be proper under parts A or C of the test
because there were genuine disputes of material fact –
whether the vendors were free from FAS’s control, and
whether the vendors were engaged in an independently
established trade, occupation, or business. The panel further
held that summary judgment would be proper under part B
of the test, which requires that the worker perform work that
is outside the usual course of the hiring entity’s business, but
FAS failed to satisfy part B. The facts supported the
conclusion that the vendors performed services for FAS in
the usual course of FAS’s business. This alone was
dispositive of Bowerman’s employee status under Dynamex.
In addition to Dynamex considerations, since the district
court’s summary judgment decision, Cal. Labor Code § 2776
enacted a retroactive business-to-business exception to the
ABC test, which provides that Dynamex does not apply to a
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6 BOWERMAN V. FIELD ASSET SERVICES
bona fide business-to-business contracting relationship if a
business service provider contracts to provide services to
another such business. In this case, the determination of
employee/independent contractor status of the business
provider is governed by Borello if the contracting business
demonstrates that twelve criteria are satisfied. Viewing
these criteria, the panel held that there was a genuine dispute
of material fact as to whether the exception applied to FAS
and its vendors. The panel concluded that because of the
enactment of section 2776, summary judgment was no
longer warranted on the class’s overtime claims, even
though summary judgment would be proper on those claims
under Dynamex for sole proprietors like Bowerman.
The panel also held that there was a genuine dispute of
material fact as to whether the class members ever incurred
reimbursable expenses or ever worked overtime. Summary
judgment was improper because a putative employer cannot
be liable to an entire class of putative employees for failing
to reimburse their business expenses and pay them overtime
– unless the putative employer in fact failed to do so for each
of them.
Fourth, FAS argued that the district court abused its
discretion by awarding attorneys’ fees. The attorneys’ fee
award on appeal was an interim award. The panel held that
this case presented “extraordinary circumstances” that
justified the exercise of pendent appellate jurisdiction over
the interim fee award. The panel joined a majority of sister
circuits, and held as a matter of first impression, that it could,
and would, here, exercise pendent appellate jurisdiction over
interim fee awards that are inextricably intertwined with or
necessary to ensure meaningful review of final orders on
appeal. The panel further held that the interim award of
attorneys’ fees must be vacated because the class
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BOWERMAN V. FIELD ASSET SERVICES 7
certification and summary judgment orders were issued in
error.
COUNSEL
Frank G. Burt (argued) and Brian P. Perryman, Faegre
Drinker Biddle & Reath LLP, Washington, D.C.; Robert G.
Hulteng and Aurelio J. Pérez, Littler Mendelson P.C., San
Francisco, California; Barrett K. Green, Littler Mendelson
P.C., Los Angeles, California, for Defendants-Appellants.
Monique Olivier (argued), Olivier Schreiber & Chao LLP,
San Francisco, California; Thomas E. Duckworth,
Duckworth Peters LLP, San Francisco, California; James E.
Miller, Shepherd Finkelman Miller & Shah LLP, Chester,
Connecticut; for Plaintiffs-Appellees.
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8 BOWERMAN V. FIELD ASSET SERVICES
OPINION
BENNETT, Circuit Judge:
Defendant-Appellant Field Asset Services, Inc.
(“FAS”) 1 appeals the certification of a class of 156
individuals who personally performed work for FAS, the
Plaintiffs-Appellees. It also appeals the final judgment for
eleven class members under Federal Rule of Civil Procedure
54(b), after the district court granted partial summary
judgment to all the class members as to liability. Finally,
FAS appeals the accompanying interim award of more than
five million dollars in attorneys’ fees. We have jurisdiction
pursuant to 28 U.S.C. § 1291 and reverse and remand on all
three issues.
I. FACTS AND PROCEDURAL HISTORY
A. FAS’s Business Model
FAS is in the business of pre-foreclosure property
preservation for the residential mortgage industry. But FAS,
itself, does not perform pre-foreclosure property-
preservation services for its clients. Rather, it contracts with
vendors who perform those services. Some vendors are sole
proprietorships; others are corporations. Vendors have
varying numbers of employees, from at most a few to up to
sixty-five. Some work almost exclusively for FAS; others
perform work for multiple companies, including FAS’s
clients and competitors.
1
The joint motion to amend case caption is GRANTED. FAS is
now known as Xome Field Services, LLC.
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BOWERMAN V. FIELD ASSET SERVICES 9
FAS exercises some control over the vendors’
completion of their work. It requires that jobs be completed
within seventy-two hours; provides detailed instructions for
particular tasks; and imposes insurance, photo
documentation, pricing, and invoicing requirements through
its Vendor Qualification Packets (“VQPs”) and work orders.
It offers training, although the parties dispute whether the
training is mandatory. And FAS monitors the vendors’ job
performance through vendor scorecards and Approved
Vendor Quality Policies (“AVQPs”), which implement a
discipline scale for vendor noncompliance with FAS’s or
FAS’s clients’ instructions. FAS classifies all its vendors as
independent contractors.
B. The Initiation of the Lawsuit and Class Certification
Named Plaintiffs Fred and Julia Bowerman 2 sued in
2013, seeking damages and injunctive relief. Fred
Bowerman was the sole proprietor of BB Home Services,
which contracted with FAS as a vendor. The operative
complaint alleged that FAS willfully misclassified
Bowerman and members of the putative class as independent
contractors rather than employees, resulting in FAS’s failure
to pay overtime compensation and to indemnify them for
their business expenses.
The complaint also sought class certification under
Federal Rule of Civil Procedure 23(b)(3), which the district
court granted for a class defined as:
2
The districtcourt determined thatJulia Bowerman did not fall
within the class definition. That determination isnot challenged on
appeal.
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10 BOWERMAN V. FIELD ASSET SERVICES
All persons who at any time from January 7,
2009 up to and through the time of judgment
(the “Class Period”) (1) were designated by
FAS as independent contractors;
(2) personally performed property
preservation work in California pursuant to
FAS work orders; and (3) while working for
FAS during the Class Period, did not work for
any other entity more than 30 percent of the
time. The class excludes persons who
primarily performed rehabilitation or
remodel work for FAS.
The parties later agreed to fix the class period as beginning
on January 7, 2009, and ending on December 20, 2016. FAS
argued that the proposed class failed Rule 23(b)(3)’s
predominance requirement because of the need for
individualized damages hearings if liability were found. The
district court rejected this argument, quoting our decision in
Leyva v. Medline Industries Inc., 716 F.3d 510 (9th Cir.
2013), for the proposition that “[t]he presence of
individualized damages cannot, by itself, defeat class
certification under Rule 23(b)(3).” Id. at 514.
C. Summary Judgment
In March 2017, the district court granted partial
summary judgment in favor of the class members, finding
that they had been misclassified as independent contractors
and that as a result, FAS was liable to them for failing to pay
overtime and business expenses. In making that
determination, the district court relied on California’s
common law test for distinguishing between employees and
independent contractors, as outlined in S.G. Borello & Sons,
Inc. v. Department of Industrial Relations, 769 P.2d 399
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BOWERMAN V. FIELD ASSET SERVICES 11
(Cal. 1989). Under Borello, “the principal test of an
employment relationship is whether the person to whom
service is rendered has the right to control the manner and
means of accomplishing the result desired.” Id. at 404
(citation and alteration omitted). But even though “the right
to control work details is the ‘most important’ or ‘most
significant’ consideration, . . . several ‘secondary’ indicia of
the nature of a service relationship” also bear on the
employee and independent contractor distinction. Id. For
example, Borello noted that “strong evidence in support of
an employment relationship is the right to discharge at will,
without cause.” Id. (citation and alteration omitted). It also
listed the following as secondary indicia of an employment
versus independent contractor relationship:
(a) whether the one performing services is
engaged in a distinct occupation or
business;
(b) the kind of occupation, with reference to
whether, in the locality, the work is
usually done under the direction of the
principal or by a specialist without
supervision;
(c) the skill required in the particular
occupation;
(d) whether the principal or the worker
supplies the instrumentalities, tools, and
the place of work for the person doing the
work;
(e) the length of time for which the services
are to be performed;
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12 BOWERMAN V. FIELD ASSET SERVICES
Preview
1 DAMON M. OTT, Bar No. 215392 dott@littler.com 2 COURTNEY CHAMBERS, Bar No. 312011 cchambers@littler.com 3 ROBERT GEIGER, Bar No. 322914 rgeiger@littler.com 4 LITTLER MENDELSON, P.C. 333 Bush Street, 34th Floor 5 San Francisco, California 94104 Telephone: 415.433.1940 6 Fax No.: 415.399.8490 7 Attorneys for Defendant VANGUARD CLEANING SYSTEMS, INC. 8 (ADDITIONAL COUNSEL ON NEXT PAGE) 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 COUNTY OF SAN MATEO 12 13 ALIDA MAZARIEGOS, PAULA GONZALEZ, Case No. 20-CIV-04267 and JAIME AMAYA, 14 COMPLEX ACTION Plaintiff, 15 ASSIGNED FOR ALL PURPOSES TO v. HONORABLE NANCY L. FINEMAN, 16 DEPT 4 VANGUARD CLEANING SYSTEMS, INC.; 17 RR FRANCHISING, INC., D/B/A JOINT NOTICE OF NEW AND VANGUARD CLEANING SYSTEMS OF RELEVANT AUTHORITY BY 18 SOUTHERN CALIFORNIA AND D/B/A DEFENDANTS VANGUARD CLEANING SYSTEMS OF 19 NORTHERN CALIFORNIA; BUDDHA Date: July 26, 2022 CAPITAL CORPORATION, D/B/A Time: 2:00 p.m. 20 VANGUARD CLEANING SYSTEMS OF Dept.: 4; Ctrm. G SACRAMENTO, D/B/A VANGUARD 21 CLEANING SYSTEMS OF THECENTRAL VALLEY, AND D/B/AVANGUARD 22 CLEANING SYSTEMS OF THE CENTRAL COAST; AND WINE COUNTRY 23 VENTURES, INC. D/B/A VANGUARD CLEANING SYSTEMS OF THE NORTH 24 BAY, AND DOES 1 THROUGH 10, INCLUSIVE, 25 Defendant. 26 27 28 L IT TL E R ME N DE LS O N , P .C . 3 3 3 B u sh St r ee t 3 4 t h F l o or Case No. 20-CIV-04267 S a n F ra n c i s co , C A 94 1 0 4 4 1 5 . 43 3 . 19 4 0 NOTICE OF NEW AND RELEVANT AUTHORITY 1 MICHAEL A. HOOD (SBN 71258) JACKSON LEWIS P.C. 2 200 Spectrum Center Drive, Suite 500 Irvine, CA 92618 3 Telephone: (949) 885-1360 Facsimile: (949) 885-1380 4 E-mail: michael.hood@jacksonlewis.com 5 Adam L. Lounsbury (pro hac vice) 6 JACKSON LEWIS P.C. 701 E. Byrd Street, 17th Fl. 7 Richmond, VA 23219 Telephone: (804) 212-2863 8 E-mail: adam.lounsbury@jacksonlewis.com 9 Attorneys for Defendants RR Franchising, Inc., Buddha Capital Corporation and Wine Country Ventures, Inc. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Case No. 20-CIV-04267 L IT TL E R ME N DE LS O N , P .C . NOTICE OF NEW AND RELEVANT AUTHORITY 3 3 3 B u sh St r ee t 3 4 t h F l o or S a n F ra n c i s co , C A 94 1 0 4 4 1 5 . 43 3 . 19 4 0 1 TO THE COURT, PLAINTIFFS AND THEIR ATTORNEYS OF RECORD: 2 Defendants Vanguard Cleaning Systems, Inc. (“VCS”); RR Franchising, Inc., d/b/a Vanguard 3 Cleaning Systems of Southern California and d/b/a Vanguard Cleaning Systems of Northern 4 California (“RR Franchising”); Buddha Capital Corporation, d/b/a/ Vanguard Cleaning Systems of 5 Sacramento, d/b/a Vanguard Cleaning Systems of the Central Valley, and d/b/a/ Vanguard Cleaning 6 Systems of the Central Coast (“Buddha Capital”); and Wine Country Ventures, Inc. d/b/a Vanguard 7 Cleaning Systems of the North Bay (“Wine Country”) (“Defendants”) hereby jointly submit this Notice 8 of New and Relevant Authority. By this Notice, Defendants request that this Court consider the July 5, 9 2022 decision of the U.S. Court of Appeals for the Ninth Circuit entitled Bowerman v. Field Asset Services, 10 Inc., et al., Nos. 18-16303 and 18-17275 (“Bowerman”), reported after Defendants filed and served their 11 Oppositions to Plaintiffs’ Motion for Class Certification. The Bowerman decision was certified for 12 publication on July 5, 2022 and reversed a district court decision on which Plaintiffs relied in their 13 Motion for Class Certification. 14 In Bowerman, a class action case involving claims based on a theory of independent contractor 15 misclassification, the Ninth Circuit addressed the following issues relevant to Plaintiffs’ Motion for 16 Class Certification: 17 1. The Ninth Circuit considered whether the lack of common evidence to prove liability 18 for violations of class members’ entitlement to overtime and expense reimbursements prevented class 19 certification. Bowerman at 17. 20 2. The Ninth Circuit considered whether “the district court abused its discretion by 21 certifying the class, despite the predominance of individualized questions over common ones.” 22 Bowerman at 17. 23 3. The Ninth Circuit considered whether the “excessive difficulty” of calculating 24 individual damages prevents class certification. Bowerman at 22. 25 4. The Ninth Circuit considered whether the Borello standard or the ABC test applies to 26 the employment classification test is to be used for expense reimbursement claims made under Labor 27 Code section §2802. Bowerman at 17. 28 3 Case No. 20-CIV-04267 L IT TL E R ME N DE LS O N , P .C . NOTICE OF NEW AND RELEVANT AUTHORITY 3 3 3 B u sh St r ee t 3 4 t h F l o or S a n F ra n c i s co , C A 94 1 0 4 4 1 5 . 43 3 . 19 4 0 1 5. The Ninth Circuit considered whether the joint employment or direct employment tests 2 apply to the plaintiffs’ claims, because Dynamex does not apply to joint employment claims, or to 3 claims that are not based on or rooted in one of California’s wage orders.” Id. at 17. 4 6. The Ninth Circuit held that a court “need not decide whether common evidence can 5 prove that [a putative employer] has a uniform policy of misclassifying its vendors” when the putative 6 employer’s “liability to any class member for failing to pay them overtime wages or to reimburse their 7 business expenses would implicate highly individualized inquiries on whether that particular class 8 member ever worked overtime or ever incurred any ‘necessary’ business expenses. Cal. Lab. Code § 9 2802(a). Under such circumstances, class certification is improper.” Bowerman at 19 (emphasis in 10 original). 11 7. The Ninth Circuit held that “a putative employer cannot be liable to an entire class of 12 putative employees for failing to reimburse their business expenses and pay them overtime unless the 13 putative employer in fact failed to do so for each of them,” and “for the very same reason,” class 14 certification of such claims is improper. Bowerman at 40. 15 8. The Ninth Circuit recognized that “control over how a result is achieved lies at the 16 heart of the common law test for employment.” Bowerman at 29 (emphasis in original). Further 17 stating, “California law is clear that “[i]f control may be exercised only as to the result of the work 18 and not the means by which it is accomplished, an independent contractor relationship is established.” 19 Bowerman at 29 (citations omitted). 20 9. The Ninth Circuit held that “[r]equiring a worker to complete a task within a desired 21 timeframe is a quintessential example of controlling the result of that worker’s job performance”; and 22 rejected the district court’s conclusion that a requirement to complete an assignment within a seventy- 23 two-hour deadline constituted control over the means of completion. Bowerman at 30-31. 24 10. The Ninth Circuit held that “the right to control results [as opposed to means] is a 25 ‘broad’ one, encompassing ‘the right to inspect, the right to make suggestions or recommendations as 26 to details of the work, [and] the right to prescribe alterations or deviations in the work,’ none of which 27 28 4 Case No. 20-CIV-04267 L IT TL E R ME N DE LS O N , P .C . NOTICE OF NEW AND RELEVANT AUTHORITY 3 3 3 B u sh St r ee t 3 4 t h F l o or S a n F ra n c i s co , C A 94 1 0 4 4 1 5 . 43 3 . 19 4 0 1 “chang[e] the relationship from that of owner and independent contractor.” Bowerman at 31-31 2 (citation omitted). 3 11. The Ninth Circuit held that “Bowerman’s claims (and those of other sole proprietors) 4 are not joint employment claims,” but noted that “FAS’s joint employment argument would likely 5 succeed were an actual employee of a vendor suing FAS, claiming that FAS was an employer.” The 6 court further noted that “some of the class members’ theories of liability could depend on their ability 7 to establish that FAS was a joint employer. On remand, the district court may consider the joint 8 employment issue in the first instance for class members who own or operate LLCs or corporations, 9 which are distinct legal entities.” Bowerman at 28. 10 A copy of the decision is attached hereto as Exhibit A. 11 Dated: July 15, 2022 /s/ Robert Geiger 12 DAMON M. OTT COURTNEY CHAMBERS 13 ROBERT GEIGER LITTLER MENDELSON, P.C. 14 Attorneys for Defendant 15 VANGUARD CLEANING SYSTEMS, INC. 16 17 18 Dated: July 15, 2022 19 /s/ Adam Lounsbury MICHAEL HOOD 20 ADAM LOUNSBURY 21 Attorneys for Defendants RR FRANCHISING, INC.; BUDDHA 22 CAPITAL CORPORATION, AND WINE COUNTRY VENTURES, INC. 23 24 4886-1256-9640.2 / 103116-1002 25 26 27 28 5 Case No. 20-CIV-04267 L IT TL E R ME N DE LS O N , P .C . NOTICE OF NEW AND RELEVANT AUTHORITY 3 3 3 B u sh St r ee t 3 4 t h F l o or S a n F ra n c i s co , C A 94 1 0 4 4 1 5 . 43 3 . 19 4 0 Exhibit A Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 1 of 43 \FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT FRED BOWERMAN; JULIA Nos. 18-16303 BOWERMAN, on behalf of themselves 18-17275 and all others similarly situated, Plaintiffs-Appellees, D.C. No. 3:13-cv-00057- v. WHO FIELD ASSET SERVICES, INC.; FIELD ASSET SERVICES, LLC, n/k/a Xome OPINION Field Services, LLC, Defendants-Appellants. Appeal from the United States District Court for the Northern District of California William Horsley Orrick, District Judge, Presiding Argued and Submitted July 20, 2021 Submission Vacated September 23, 2021 Resubmitted June 23, 2022 San Francisco, California Filed July 5, 2022 Before: William A. Fletcher, Mark J. Bennett, and Bridget S. Bade, Circuit Judges. Opinion by Judge Bennett Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 2 of 43 2 BOWERMAN V. FIELD ASSET SERVICES SUMMARY * Class Action / Attorneys’ Fees The panel reversed the district court’s class certification order of a class of 156 individuals who personally performed work for Field Asset Services, Inc. (“FAS”), reversed the partial summary judgment in favor of the class, vacated the interim award of more than five million dollars in attorneys’ fees, and remanded for further proceedings. FAS is in the business of pre-foreclosure property preservation for the residential mortgage industry. Plaintiff Fred Bowerman was the sole proprietor of BB Home Services, which contracted with FAS as a vendor. Bowerman alleged that FAS willfully misclassified him and members of the putative class as independent contractors, rather than employees, resulting in FAS’s failure to pay overtime compensation and to indemnify them for their business expenses. FAS first argued that the district court abused its discretion by certifying the class, despite the predominance of individualized questions over common ones. Under Fed. R. Civ. P. 23(b)(3), a district court must find that common questions of fact or law to class members predominate over individual members’ questions before certifying a class. The panel held that the class members could not establish FAS’s liability for failing to pay overtime wages or to reimburse expenses by common evidence. The panel reversed the class certification because the class members failed to * This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 3 of 43 BOWERMAN V. FIELD ASSET SERVICES 3 demonstrate that FAS’s liability was subject to common proof. Even if class members needed to prove only that they were misclassified as independent contractors to establish FAS’s liability by common evidence, class certification would still be improper under Rule 23(b)(3) because the class members failed to show that “damages are capable of measurement on a classwide basis.” Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013). Even under a narrow interpretation of Comcast Corp., the class members cannot establish predominance. Nor have the class members shown that damages can be determined without excessive difficulty. FAS first argued that the district court abused its discretion by certifying the class, despite the predominance of individualized questions over common ones. Under Fed. R. Civ. P. 23(b)(3), a district court must find that common questions of fact or law to class members predominate over individual members’ questions before certifying a class. The panel held that the class members could not establish FAS’s liability for failing to pay overtime wages or to reimburse expenses by common evidence. The panel reversed the class certification because the class members failed to demonstrate that FAS’s liability was subject to common proof. Even if class members needed to prove only that they were misclassified as independent contractors to establish FAS’s liability by common evidence, class certification would still be improper under Rule 23(b)(3) because the class members failed to show that “damages are capable of measurement on a classwide basis.” Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013). Even under a narrow interpretation of Comcast Corp., the class members cannot establish predominance. Nor have the class members shown that damages can be determined without excessive difficulty. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 4 of 43 4 BOWERMAN V. FIELD ASSET SERVICES Second, FAS argued that S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399 (Cal. 1989) (“ Borello”), not Dynamex Operations West, Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018) (“ Dynamex”), applied to all the class members’ claims. The panel held that the California Court of Appeal has repeatedly limited Dynamex’s applications to claims based on or “rooted in” California’s wage orders. Here, the class members’ expense reimbursement claims were not based on a California wage order, but on Cal. Labor Code § 2802. Nor were they “rooted in” a California wage order, even though the class members belatedly invoked Wage Order 16-2001 in their class certification briefing. The panel rejected FAS’s contention that Borello governed because the overtime claims were “joint employment” claims to which Dynamex did not apply. The panel held that Dynamex applied to Bowerman’s overtime claims. The panel noted that FAS’s joint employment would likely succeed were an actual employee of a vendor suing FAS, claiming that FAS was an employer. On remand, the district court may consider the joint employment issue in the first instance for class members who own or operate LLCs or corporations, which are distinct legal entities. Third, FAS contended that the district court erred by granting summary judgment under Borello’s multifactor and fact-intensive inquiry because, among other reasons, FAS did not control the manner and means of the class members’ work. The panel first considered the expense reimbursement claims. The panel held that Borello governed the class members’ reimbursement claims. Under Borello, the existence of an employment relationship is a question for the trier of fact, and the district court erred in finding no triable issue of material fact. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 5 of 43 BOWERMAN V. FIELD ASSET SERVICES 5 Third, FAS contended that the district court erred by granting summary judgment under Borello’s multifactor and fact-intensive inquiry because, among other reasons, FAS did not control the manner and means of the class members’ work. The panel first considered the expense reimbursement claims. The panel held that Borello governed the class members’ reimbursement claims. Under Borello, the existence of an employment relationship is a question for the trier of fact, and the district court erred in finding no triable issue of material fact. Next, the panel considered the overtime claims. Dynamex adopted the “ABC test” to determine employee status for purposes of wage and hour claims like the class members’ overtime claims. The ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business shows that the worker in question satisfies each of three conditions – A, B, and C. The panel held that summary judgment would not be proper under parts A or C of the test because there were genuine disputes of material fact – whether the vendors were free from FAS’s control, and whether the vendors were engaged in an independently established trade, occupation, or business. The panel further held that summary judgment would be proper under part B of the test, which requires that the worker perform work that is outside the usual course of the hiring entity’s business, but FAS failed to satisfy part B. The facts supported the conclusion that the vendors performed services for FAS in the usual course of FAS’s business. This alone was dispositive of Bowerman’s employee status under Dynamex. In addition to Dynamex considerations, since the district court’s summary judgment decision, Cal. Labor Code § 2776 enacted a retroactive business-to-business exception to the ABC test, which provides that Dynamex does not apply to a Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 6 of 43 6 BOWERMAN V. FIELD ASSET SERVICES bona fide business-to-business contracting relationship if a business service provider contracts to provide services to another such business. In this case, the determination of employee/independent contractor status of the business provider is governed by Borello if the contracting business demonstrates that twelve criteria are satisfied. Viewing these criteria, the panel held that there was a genuine dispute of material fact as to whether the exception applied to FAS and its vendors. The panel concluded that because of the enactment of section 2776, summary judgment was no longer warranted on the class’s overtime claims, even though summary judgment would be proper on those claims under Dynamex for sole proprietors like Bowerman. The panel also held that there was a genuine dispute of material fact as to whether the class members ever incurred reimbursable expenses or ever worked overtime. Summary judgment was improper because a putative employer cannot be liable to an entire class of putative employees for failing to reimburse their business expenses and pay them overtime – unless the putative employer in fact failed to do so for each of them. Fourth, FAS argued that the district court abused its discretion by awarding attorneys’ fees. The attorneys’ fee award on appeal was an interim award. The panel held that this case presented “extraordinary circumstances” that justified the exercise of pendent appellate jurisdiction over the interim fee award. The panel joined a majority of sister circuits, and held as a matter of first impression, that it could, and would, here, exercise pendent appellate jurisdiction over interim fee awards that are inextricably intertwined with or necessary to ensure meaningful review of final orders on appeal. The panel further held that the interim award of attorneys’ fees must be vacated because the class Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 7 of 43 BOWERMAN V. FIELD ASSET SERVICES 7 certification and summary judgment orders were issued in error. COUNSEL Frank G. Burt (argued) and Brian P. Perryman, Faegre Drinker Biddle & Reath LLP, Washington, D.C.; Robert G. Hulteng and Aurelio J. Pérez, Littler Mendelson P.C., San Francisco, California; Barrett K. Green, Littler Mendelson P.C., Los Angeles, California, for Defendants-Appellants. Monique Olivier (argued), Olivier Schreiber & Chao LLP, San Francisco, California; Thomas E. Duckworth, Duckworth Peters LLP, San Francisco, California; James E. Miller, Shepherd Finkelman Miller & Shah LLP, Chester, Connecticut; for Plaintiffs-Appellees. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 8 of 43 8 BOWERMAN V. FIELD ASSET SERVICES OPINION BENNETT, Circuit Judge: Defendant-Appellant Field Asset Services, Inc. (“FAS”) 1 appeals the certification of a class of 156 individuals who personally performed work for FAS, the Plaintiffs-Appellees. It also appeals the final judgment for eleven class members under Federal Rule of Civil Procedure 54(b), after the district court granted partial summary judgment to all the class members as to liability. Finally, FAS appeals the accompanying interim award of more than five million dollars in attorneys’ fees. We have jurisdiction pursuant to 28 U.S.C. § 1291 and reverse and remand on all three issues. I. FACTS AND PROCEDURAL HISTORY A. FAS’s Business Model FAS is in the business of pre-foreclosure property preservation for the residential mortgage industry. But FAS, itself, does not perform pre-foreclosure property- preservation services for its clients. Rather, it contracts with vendors who perform those services. Some vendors are sole proprietorships; others are corporations. Vendors have varying numbers of employees, from at most a few to up to sixty-five. Some work almost exclusively for FAS; others perform work for multiple companies, including FAS’s clients and competitors. 1 The joint motion to amend case caption is GRANTED. FAS is now known as Xome Field Services, LLC. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 9 of 43 BOWERMAN V. FIELD ASSET SERVICES 9 FAS exercises some control over the vendors’ completion of their work. It requires that jobs be completed within seventy-two hours; provides detailed instructions for particular tasks; and imposes insurance, photo documentation, pricing, and invoicing requirements through its Vendor Qualification Packets (“VQPs”) and work orders. It offers training, although the parties dispute whether the training is mandatory. And FAS monitors the vendors’ job performance through vendor scorecards and Approved Vendor Quality Policies (“AVQPs”), which implement a discipline scale for vendor noncompliance with FAS’s or FAS’s clients’ instructions. FAS classifies all its vendors as independent contractors. B. The Initiation of the Lawsuit and Class Certification Named Plaintiffs Fred and Julia Bowerman 2 sued in 2013, seeking damages and injunctive relief. Fred Bowerman was the sole proprietor of BB Home Services, which contracted with FAS as a vendor. The operative complaint alleged that FAS willfully misclassified Bowerman and members of the putative class as independent contractors rather than employees, resulting in FAS’s failure to pay overtime compensation and to indemnify them for their business expenses. The complaint also sought class certification under Federal Rule of Civil Procedure 23(b)(3), which the district court granted for a class defined as: 2 The districtcourt determined thatJulia Bowerman did not fall within the class definition. That determination isnot challenged on appeal. Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 10 of 43 10 BOWERMAN V. FIELD ASSET SERVICES All persons who at any time from January 7, 2009 up to and through the time of judgment (the “Class Period”) (1) were designated by FAS as independent contractors; (2) personally performed property preservation work in California pursuant to FAS work orders; and (3) while working for FAS during the Class Period, did not work for any other entity more than 30 percent of the time. The class excludes persons who primarily performed rehabilitation or remodel work for FAS. The parties later agreed to fix the class period as beginning on January 7, 2009, and ending on December 20, 2016. FAS argued that the proposed class failed Rule 23(b)(3)’s predominance requirement because of the need for individualized damages hearings if liability were found. The district court rejected this argument, quoting our decision in Leyva v. Medline Industries Inc., 716 F.3d 510 (9th Cir. 2013), for the proposition that “[t]he presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3).” Id. at 514. C. Summary Judgment In March 2017, the district court granted partial summary judgment in favor of the class members, finding that they had been misclassified as independent contractors and that as a result, FAS was liable to them for failing to pay overtime and business expenses. In making that determination, the district court relied on California’s common law test for distinguishing between employees and independent contractors, as outlined in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399 Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 11 of 43 BOWERMAN V. FIELD ASSET SERVICES 11 (Cal. 1989). Under Borello, “the principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” Id. at 404 (citation and alteration omitted). But even though “the right to control work details is the ‘most important’ or ‘most significant’ consideration, . . . several ‘secondary’ indicia of the nature of a service relationship” also bear on the employee and independent contractor distinction. Id. For example, Borello noted that “strong evidence in support of an employment relationship is the right to discharge at will, without cause.” Id. (citation and alteration omitted). It also listed the following as secondary indicia of an employment versus independent contractor relationship: (a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; Case: 18-16303, 07/05/2022, ID: 12485909, DktEntry: 77-1, Page 12 of 43 12 BOWERMAN V. FIELD ASSET SERVICES