Goro v. Flowers Foods, Inc.

• Court: District Court, S.D. California
• Decided: February 18, 2020
• Docket: 3:17-cv-02580
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SIMON GORO, an individual; TONY Case No.: 17-CV-2580 JLS (JLB) RUSSELL, an individual; REY PENA, an 12 individual; JOSE PENA, an individual; ORDER: (1) GRANTING 13 JEFF BELANDER, an individual; and DEFENDANTS’ MOTION TO STAY; GUISEPPE ZIZZO, an individual, AND (2) DENYING WITHOUT 14 PREJUDICE CROSS-MOTIONS Plaintiffs, 15 FOR PARTIAL SUMMARY v. JUDGMENT 16

FLOWERS FOODS, INC., a Georgia 17 (ECF Nos. 99, 100, 104, 105, 141) Corporation; FLOWERS BAKING CO. 18 OF CALIFORNIA, LLC, a California limited liability company; FLOWERS 19 BAKING CO. OF HENDERSON, LLC, a 20 Nevada limited liability company; and DOES 1 through 100, inclusive, 21 Defendants. 22

23 24 Presently before the Court is Defendants Flowers Foods, Inc.; Flowers Baking Co. 25 of California, LLC; and Flowers Baking Co. of Henderson, LLC’s Motion to Stay (“Mot.,” 26 ECF No. 141). Also before the Court are Plaintiffs’ Response in Opposition to (“Opp’n,” 27 ECF No. 143) and Defendants’ Reply in Support of (“Reply,” ECF No. 145) the Motion; 28 Plaintiffs’ three Notices of Supplemental Authority (ECF No. 146, 153, 163), to which 1 Defendants filed Objections (ECF Nos. 148, 154, 164); and Defendants’ four Notices of 2 Supplemental Authority (ECF Nos. 155, 156, 162, 165). After reviewing the Parties’ 3 arguments and the law, the Court GRANTS Defendants’ Motion to Stay. 4 BACKGROUND 5 Plaintiffs Simon Goro, Tony Russell, Rey Pena, Jose Pena, Jeff Belander, and 6 Guiseppe Zizzo work as distributors for Defendants Flowers Foods, Inc.; Flowers Baking 7 Company of Henderson, LLC; and Flowers Baking Company of California, LLC. Second 8 Amended Complaint, ECF No. 95 at 2. All of Plaintiffs’ claims stem from their allegation 9 that Defendants intentionally misclassified them as independent contractors instead of 10 employees, thereby denying Plaintiffs certain rights and benefits afforded to employees, 11 including overtime wages, rest and meal periods, payment for all time worked, accurate 12 wage statements, indemnification for expenses, and protection from unlawful wage 13 deductions. Id. at 7–9. 14 After this litigation commenced, the California Supreme Court announced in 15 Dynamex Operations West Inc. v. Superior Court, 4 Cal. 5th 903 (2018), a new standard 16 to distinguish independent contractors from employees: the “ABC Test.” Id. at 916. The 17 Dynamex Court made clear that the ABC Test prospectively replaced the former 18 multifactor standard set forth in S.G. Borello & Sons, Inc. v. Department of Industrial 19 Relations, 48 Cal. 3d 341 (1989), see Dynamex, 4 Cal. 5th at 964, but did not state whether 20 the ABC Test would apply retroactively. See generally id. The Ninth Circuit subsequently 21 decided that the ABC Test applies retroactively, see Vazquez v. Jan-Pro Franchising Int’l, 22 Inc., 923 F.3d 575 (9th Cir. 2019); however, on rehearing, the Ninth Circuit withdrew its 23 ruling and certified the question to the California Supreme Court. See Vazquez v. Jan-Pro 24 Franchising Int’l, Inc., No. 17-16096, 2019 WL 4648399 (9th Cir. Sep. 24, 2019). On 25 November 20, 2019, the California Supreme Court granted the Ninth Circuit’s request for 26 certification. See Vazquez v. Jan-Pro Franchising Int’l, Inc., No. S258191 (Cal. Nov. 20, 27 2019). 28 /// 1 LEGAL STANDARD 2 “[T]he power to stay proceedings is incidental to the power inherent in every court 3 to control the disposition of the causes on its docket with economy of time and effort for 4 itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). In 5 the interests of judicial economy, a court may grant a stay pending the outcome of other 6 legal proceedings related to the case. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 7 857, 863–64 (9th Cir. 1979). When determining whether to stay an action, a court must 8 weigh competing interests that the granting or denial of a stay will affect, including: 9 (1) “the possible damage which may result from the granting of a stay;” (2) “the hardship 10 or inequity which a party may suffer in being required to go forward;” and (3) “the orderly 11 course of justice measured in terms of the simplifying or complicating of issues, proof, and 12 questions of law which could be expected to result from a stay.” CMAX, Inc. v. Hall, 300 13 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254–55). “If there is even a fair 14 possibility that the stay for which [the movant] prays for will work damage to someone 15 else,” the movant “must make out a clear case of hardship or inequity in being required to 16 go forward.” Id. (quoting Landis, 299 U.S. at 255). “The proponent of a stay bears the 17 burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citing Landis, 18 299 U.S. at 255). 19 ANALYSIS 20 Defendants ask the Court to stay this action pending the California Supreme Court’s 21 ruling on whether the ABC Test applies retroactively.1 Mot. at 2. 22 /// 23 /// 24

25 1 In their Motion, Defendants also ask the Court to issue a stay pending the Ninth Circuit’s ruling in 26 Western States Trucking Association v. Andre Schoorl, et al., No. 19-15974 (9th Cir.), on the question of whether the Federal Aviation and Administrative Authorization Act (“FAAAA”) preempts prong “B” of 27 the ABC Test. While this Motion was pending, that appeal was voluntarily dismissed, see 2019 WL 28 5212963 (9th Cir. Sept. 5, 2019), “so FAAAA preemption is no longer at issue” for the purposes of this 1 I. The Balance of Hardship or Inequity Between Plaintiffs and Defendants 2 First, the Court must balance the “possible damage [to Plaintiffs] which may result 3 from the granting of a stay,” with “the hardship or inequity which [Defendants] may suffer 4 in being required to go forward.” CMAX, 300 F.2d at 268. 5 Plaintiffs contend they will be “severely prejudiced” if the Court issues a stay. 6 Opp’n at 10–15. Plaintiffs first contend that a stay will result in the loss or deterioration 7 of evidence causing prejudice to Plaintiffs. Id. at 10. Plaintiffs argue that, as time passes, 8 their “memories and their ability to recall facts” will fade and pertinent witnesses may 9 become unavailable. Id. But this does not amount to prejudice sufficient to deny the stay. 10 Discovery proceedings have already taken place, “and hence there is presumably no 11 problem of preserving evidence.” See CMAX, 300 F.2d at 269; see also Burnell v. Swift 12 Transportation Co., No. EDCV1000809VAPOPX, 2011 WL 13352810, at *5 (C.D. Cal. 13 Jan. 20, 2011) (“While the risk of lost evidence is inherent in every stay, Plaintiffs’ risk in 14 this case is mitigated considerably by the fact that they already have received some 15 informal discovery.”). And “[i]f there were such a problem” preserving evidence, 16 “application [can] be made . . . to permit further discovery proceedings.” See CMAX, 300 17 F.2d at 269. 18 Plaintiffs also contend that the indefinite length and anticipated lengthy stay would 19 be prejudicial. Mot. at 12. While staying this case will certainly delay proceedings, the 20 Court finds that because the California Supreme Court has now granted the Ninth Circuit’s 21 request and will answer the question expeditiously, any wait for an answer to this important 22 issue would be neither indefinite nor unreasonable. See Burnell, 2011 WL 13352810, at 23 *5 (finding stay pending California Supreme Court decision “cannot be said to be 24 ‘indefinite’”). 25 Finally, Plaintiffs contend that a stay would prolong the alleged “continuing harm” 26 caused by the misclassification of Plaintiffs as independent contractors, Opp’n at 10–12, 27 and delay Plaintiffs from receiving the injunctive and monetary relief they seek. Id. at 28 14–15. The Court finds these reasons unavailing as well. Mere delay in receiving damages 1 is an insufficient basis to deny a stay. See Lockyer v. Mirant Corp., 398 F.3d 1098, 1110– 2 112 (9th Cir. 2005). Further, the fact that Plaintiffs have not moved for a preliminary 3 injunction to stop the alleged harm and did not file their case for several years after the 4 alleged harm began lessens the Court’s concerns about delaying prospective relief and the 5 harm continuing. See Gustavson v. Mars, Inc., No. 13-CV-04537-LHK, 2014 WL 6 6986421, at *3 (N.D. Cal. Dec. 10, 2014); see also Quinn-White v. Novartis Pharm. Corp., 7 No. CV164300PSGAGRX, 2016 WL 11519285, at *4 (C.D. Cal. Oct. 7, 2016) (finding 8 that “two years hav[ing] . . . lapsed between Plaintiffs’ injuries and the filing of the 9 Complaint” weighed against finding prejudice to plaintiffs). 10 Turning to the potential prejudice from proceeding without a stay, Defendants 11 contend that moving forward without a clear answer on the Dynamex’s retroactivity “could 12 result in [the Parties] ‘unnecessarily expend[ing] resources engaging in motion practice 13 and planning and preparing for trial . . . [based] on the wrong standard.’” Mot. at 8–9 14 (quoting In re Taco Bell Wage & Hour Actions, No. 1:07-CV-01314-OWW, 2011 WL 15 3846727, at *4 (E.D. Cal. Aug. 30, 2011)). The Court agrees that this would amount to a 16 hardship on Defendants—and Plaintiffs as well—and weighs in favor of granting the stay. 17 Preparing for trial without a clear answer on Dynamex’s retroactivity would cause 18 unnecessary work for the Parties (and the Court), amounting to a hardship in this case. 19 Having weighed the Parties potential hardships, the Court finds Plaintiffs have not 20 shown a “fair possibility” that a stay will cause prejudice, CMAX, 300 F.2d at 268, while 21 Defendants have made a “clear case of hardship” absent a stay. See id. 22 II. The Orderly Course of Justice 23 Next, the Court must consider “the orderly course of justice measured in terms of 24 the simplifying or complicating of issues, proof, and questions of law which could be 25 expected to result from a stay.” Id. 26 Defendants contend that waiting to determine whether the ABC Test applies 27 retroactively would promote judicial efficiency and avoid waste of the Parties’ resources. 28 Mot. at 5–7. The Parties have filed cross-motions for partial summary judgment, see ECF 1 Nos. 99, 104, and both motions raise questions about whether the ABC Test should apply 2 retroactively. See generally id. According to Defendants, the outcome of these motions 3 “may depend upon which test applies—Borello or ‘ABC.’” Mot. at 6 (quoting Bruers v. 4 Flowers Foods, Inc., No. 818CV01442JLSADS, 2019 WL 5867434, at *5 (C.D. Cal. Aug. 5 7, 2019)). Waiting for a decision by the California Supreme Court in Vazquez and getting 6 a definitive answer on Dynamex’s retroactivity would simplify the issues remaining and 7 avoid the potential of wasting resources addressing a standard that is not applicable. Id. 8 Plaintiffs disagree, arguing that the ABC Test will apply regardless of how the 9 California Supreme Court rules in Vazquez and, thus, there is no need to wait for an answer 10 on this question. Opp’n at 7–9. Further, Plaintiffs contend that the Borello and ABC tests 11 have significant overlap, making the determination as to which test applies insignificant to 12 the ultimate outcome. Id. at 8. For these reasons, Plaintiffs contend that the disposition of 13 the pending motions and trial “will largely be the same for the entire claims period 14 regardless of Dynamex’s retroactivity.” Id. at 9. 15 On the facts of this case, the Court finds that “the prospect of narrowing the factual 16 and legal issues . . . justifies a stay.” Cf. Lockyer, 398 F.3d at 1112. If the Court proceeds 17 without the California Supreme Court’s guidance, it might expend unnecessary resources 18 deciding Dynamex’s retroactivity itself, only to be forced to revisit the same questions after 19 Vazquez is decided. And contrary to Plaintiffs’ contentions, the differences between the 20 Borello standard and the ABC Test are significant—indeed, they could be dispositive. The 21 ABC Test dispenses with many of the Borello secondary factors, gives different weight to 22 the factors that do overlap, and forces the hiring entity to establish all of the ABC Test’s 23 prongs to establish that a worker is an independent contractor, rather than show the balance 24 of the applicable factors weighs in their favor. See Dynamex, 4 Cal. 5th at 957–63. These 25 differences are so striking that courts have acknowledged that Dynamex represented a “sea 26 change” in this area of law, W. States Trucking Ass’n v. Schoorl, 377 F. Supp. 3d 1056, 27 1067 (E.D. Cal. 2019), and “upset a settled legal principle.” Lawson v. Grubhub, Inc., No. 28 15-CV-05128-JSC, 2018 WL 6190316, at *4 (N.D. Cal. Nov. 28, 2018). 1 “In sum, with multiple motions pending before this Court, . . . a stay awaiting clarity 2 ||on Dynamex’s retroactivity would allow for a more orderly disposition of these motions.” 3 || See Henry v. Cent. Freight Lines, Inc., No. 216CVO0280JAMEFB, 2019 WL 5960140, at 4 || *3 (E.D. Cal. Nov. 13, 2019). 5 The Overall Balance Favors Granting the Stay 6 After considering each of the required factors, the Court finds that a stay is 7 || appropriate because the “weighing of the hardships favors the granting of a stay” and “it 8 serve the interests of judicial economy by allowing for development of .. . [a 9 || potentially dispositive] legal issue[].” See Cal. Trout, Inc. v. U.S. Bureau of Reclamation, 10 || 115 F. Supp. 3d 1102, 1117 (C.D. Cal. 2015). The Court therefore exercises its discretion 11 |/to grant a stay pending the California Supreme Court’s decision in Vazquez. See Bruers, 12 WL 5867434, at *5 (granting stay pending decision by the California Supreme Court 13 |}on Dynamex’s retroactivity); Henry, 2019 WL 5960140, at *3 (same); see also Haitayan 14 7-Eleven, Inc., CV 17-7454 DSF (ASx), 2019 WL 2620729, at *2 (C.D. Cal. Apr. 29, 15 2019) (staying action pending Ninth Circuit’s original consideration of Vazquez); Lawson 16 || v. Grubhub, Inc., No. 18-15386, 2019 WL 5876923, at *1 (9th Cir. Sept. 26, 2019) (staying 17 || appeal pending a decision by the California Supreme Court in Vazquez). 18 CONCLUSION 19 Based on the foregoing, the Court GRANTS Defendants’ Motion to Stay (ECF No. 20 pending the California Supreme Court’s decision in Vazquez answering whether 21 ||Dynamex applies retroactively. Because the issues briefed by the Parties will change 22 ||substantially after this issue is decided, the Court DENIES WITHOUT PREJUDICE the 23 || Parties’ Cross-Motions for Partial Summary Judgment (ECF Nos. 99, 104) and associated 24 || Motions to File Documents Under Seal (ECF Nos. 100, 105). 25 IT IS SO ORDERED. 26 ||Dated: February 18, 2020 tt f Le 27 on. Janis L. Sammartino 28 United States District Judge