Saucedo v. John Hancock Life & Health Ins. Co.

• Court: Washington Supreme Court
• Decided: March 3, 2016
• Docket: 91945-3
• Status: Published

Opinion

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IN THE SUPREME COURT OF THE STATE OF WASHINGTON

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT NO. 91945-3 IN

ABELARDO SAUCEDO; FELIPE ENBANC ACEVEDO MENDOZA; JOSE VILLA MEDONZA; JAVIER SAUCEDO; MAR 0 3 2016 SANDRA SAUCEDO, Individually, and on Filed ,. ---'----~-

behalf of all other similarly situated persons,

Appellees,

v.

JOHN HANCOCK LIFE & HEALTH INSURANCE CO.; TEXAS MUNICIPAL PLANS CONSORTIUM, LLC,

Defendants,

NW MANAGEMENT AND REALTY SERVICES, INC.; JOHN HANCOCK LIFE INSURANCE COMPANY,

FARMLAND MANAGEMENT SERVICES,

A ellant.               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

ABELARDO SAUCEDO; FELIPE ACEVEDO MENDOZA; JOSE VILLA MEDONZA; JAVIER SAUCEDO; SANDRA SAUCEDO, Individually, and on behalf of all other similarly situated persons,

JOHN HANCOCK LIFE INSURANCE COMPANY; JOHN HANCOCK LIFE & HEALTH INSURANCE CO.; TEXAS MUNICIPAL PLANS CONSORTIUM, LLC,

Appellants,

FARMLAND MANAGEMENT SERVICES; NW MANAGEMENT AND REALTY SERVICES, INC.,

Defendants.

ABELARDO SAUCEDO; FELIPE ACEVEDO MENDOZA; JOSE VILLA MEDONZA; JAVIER SAUCEDO; SANDRA SAUCEDO, Individually, and on behalf of all other similarly situated persons,

2               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

JOHN HANCOCK LIFE INSURANCE COMPANY; JOHN HANCOCK LIFE & HEALTH INSURANCE CO.; TEXAS MUNICIPAL PLANS CONSORTIUM, LLC; FARMLAND MANAGEMENT SERVICES,

NW MANAGEMENT AND REALTY SERVICES, INC.,

Appellant.

GORDON McCLOUD, J.-This case is a class action lawsuit by farm workers

against four corporate defendants. It requires us to answer two questions, certified

to this court by the United States Court of Appeals for the Ninth Circuit, about

Washington's farm labor contractor act (FLCA), chapter 19.30 RCW. The first

question implicates RCW 19.30.010(2). That statute defines a "farm labor

contractor" as "any person, or his or her agent or subcontractor, who, for a fee,

performs any farm labor contracting activity." Another FLCA provision, RCW

19.3 0.01 0(3 ), then defines "farm labor contracting activity" as "recruiting, soliciting,

employing, supplying, transporting, or hiring agricultural employees." The second

question implicates RCW 19.30.200. That statute imposes joint and several liability

for FLCA violations on "[a]ny person who knowingly uses the services of an

3               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

unlicensed farm labor contractor" and then states, "In making determinations under

this section, any user may rely upon either the license issued by the director [of the

Department of Labor & Industries (Department)] to the farm labor contractor under

RCW 19.30.030 or the director's representation that such contractor is licensed as

required by this chapter."

The certified questions require us to decide whether defendant/appellant NW

Management and Realty Services Inc. is a "farm labor contractor" under RCW

19.30.01 0(2) and, if so, whether the other defendants "knowingly use[d]" its services

under RCW 19.30.200. (There is no dispute that NW was unlicensed at all times

relevant to this case.)

FACTS

Defendant/Appellant John Hancock Life Insurance Company owns

defendant/appellant John Hancock Life & Health Insurance Co. (collectively

Hancock companies). Together with defendant/appellant Texas Municipal Plans

Consortium LLC (TMP), the Hancock companies owned three apple orchards.

The Hancock companies and TMP leased all three orchards to

defendant/appellant Farmland Management Services. Under the governing lease

agreements, the Hancock companies and TMP paid Farmland a "Management Fee"

in exchange for either operating and managing the orchards or subleasing the

4               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

orchards to a third party operator/manager. Appellants' Joint Excerpts of Sealed

Record (ESR) at 98 (boldface omitted). The Hancock companies and TMP also

reimbursed Farmland for operating costs and collected all profits.

Farmland subleased the orchards to NW. Under the governing sublease

agreement, Farmland paid NW a per-acre fee, reimbursed NW for all operating

costs, and collected all profits. Ultimately, pursuant to all the lease and sublease

agreements, the Hancock companies and TMP paid all of NW' s costs and collected

all of the orchards' profits, minus Farmland's "Management Fee." Id. (boldface

omitted).

The sublease agreement between Farmland and NW provided that NW "will

hire, employ, discharge and supervise the work of all employees and independent

contractors performing labor and/or services on the [orchards and that NW] shall be

the employer of record of all persons employed to perform work on the [orchards]."

ESR at 38. The agreement left the details of orchard management largely to NW' s

discretion, but it provided that NW would "operate and use the orchard Properties

for the sole purpose of conducting a first-class agricultural operation" and it required

NW to submit to Farmland a yearly "Farm Operating Plan" that included NW's

anticipated budget for the coming year. ESR at 37, 40. Farmland then sent this

budget to the Hancock companies for approval.

5               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

Farmland's lease agreements with the Hancock companies and TMP required

Farmland to either obtain necessary licenses or require any third party to do so. A

representative for Farmland told a representative for the Hancock companies that

Farmland had fulfilled this contractual obligation. It is undisputed, however, that

NW never obtained a farm labor contractor license.

The plaintiffs/appellees, a class of 722 former NW employees, sued the

defendants in the United States District Court for the Eastern District of Washington·

for violations of state and federal law, including the FLCA. The district court

certified the plaintiff class as to two FLCA claims: (1) that NW violated RCW

19.30.11 0(1) by failing to carry a current farm labor contractor's license, and (2) that

NW violated RCW 19.30.11 0(7) by making false and misleading representations

about worker compensation. The plaintiffs allege, in part, that Farmland and the

Hancock companies are jointly and severally liable for NW' s violations, under RCW

19.30.200, because they used the services of an unlicensed farm labor contractor

without either inspecting NW' s license or verifying licensure with the Department.

Farmland, the Hancock companies, and TMP each moved to dismiss, arguing

that RCW 19.30.200 penalizes only defendants with actual or constructive

knowledge that a contractor is unlicensed. The trial court denied the motions,

concluding that the FLCA imposes an affirmative duty on such defendants to verify

6               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

proper licensure. All the defendants then moved for summary judgment on the

ground that NW was not a "farm labor contractor" as defined in RCW 19.30.010(2)

because it was instead an "agricultural employer" (defined in RCW 19.30.010(4)).

The district court also denied that motion, concluding that those two definitions are

not mutually exclusive.

The plaintiffs then moved for summary judgment, arguing that NW was a

farm labor contractor under the FLCA; that NW violated the FLCA by failing to

obtain a farm labor contractor's license and by failing to provide the plaintiffs with

required disclosures; and that Farmland, the Hancock companies, and TMP are

jointly and severally liable for NW's violations. The district court granted the

motion and awarded the plaintiffs damages of $500 per class member per violation

per year worked, for a total of $1,004,000. The court also awarded the plaintiffs

attorney fees.

The defendants appealed to the Ninth Circuit, briefing these issues on the

merits and filing a joint excerpts of record (ER) containing the relevant documents.

Then, on August 5, 20 15, the Ninth Circuit certified the disputed questions to this

court. Saucedo v. John Hancock Life & Health Ins. Co., 796 F.3d 1016 (9th Cir.

2015).

7               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

ANALYSIS

Certified questions are matters of law reviewed de novo and iri light of the

record certified by the federal court. Carlsen v. Global Client Solutions, LLC, 171

Wn.2d 486, 493, 256 P.3d 321 (2011). Because the questions in this case pertain to

a motion for summary judgment, we perform the same inquiry as the district court.

Smith v. Safeco Ins. Co., 150 Wn.2d 478, 483, 78 P.3d 1274 (2003).

I. The first certified question: Does the FLCA, in particular RCW 19.30.010(2), include in the definition of a "farm labor contractor" an entity who is paid a per-acre fee to manage all aspects of farming- including hiring and employing agricultural workers as well as making all planting and harvesting decisions, subject to approval-for a particular plot of land owned by a third party? Answer: Yes. As noted above, RCW 19.30.010(2) defines a "farm labor contractor"' as "any

person, or his or her agent or subcontractor, who, for a fee, performs any farm labor

contracting activity." Another FLCA provision in turn defines "farm labor

contracting activity" to mean "recruiting, soliciting, employing, supplying,

transporting, or hiring agricultural employees." RCW 19.30.010(3).

NW is a farm labor contractor under the plain language of these provisions.

Pursuant to their sublease agreement, Farmland paid NW a per-acre fee "[a]s

compensation for the services rendered by [NW] under this Agreement." ESR at 43.

And pursuant to that agreement, those services included "hir[ing], employ[ing],

discharg[ing] and supervis[ing] the work of all employees and independent

8               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

contractors performing labor and/or services on the 'Properties'." ESR at 38. That

contractual arrangement places NW squarely within the plain definition of "farm

labor contractor" under the FLCA: at a minimum, NW "employ[s]" and "hir[es]

agricultural employees" in exchange "for a fee." RCW 19.30.010(3), (2).

The defendants make two main arguments to support their contrary

interpretation of the statute. 1

First, the defendants point to a provision in the FLCA making that chapter

inapplicable to "any person who performs any [farm labor contracting activities]

only within the scope of his or her regular employment for one agricultural employer

on whose behalf he or she is so acting, unless he or she is receiving a commission or

fee, which commission or fee is determined by the number of workers recruited."

RCW 19.30.010(6) (emphasis added). The parties refer to this provision as the

single-employer exemption. The defendants don't argue that the single-employer

exemption actually applies to NW; they argue, instead, that the logic underlying the

1 The defendants also attempt to avoid the statute's plain terms by citing a brief passage of dictum from Perez-Farias v. Global Horizons, Inc., which addressed provisions in the FLCA governing damages in a civil suit. 175 Wn.2d 518,521,286 P.3d 46 (2012). The passage states that the FLCA protects farm workers by regulating the activities of "farm labor contractors," who "act as intermediary between farm workers and farmer [and] [g]enerally ... recruit, transport, house, and supervise farm workers, and handle their pay arrangements." Id. The defendants would like us to interpret this passage as an exclusive list of all farm labor contracting activities, but doing so conflicts with the plain terms of the statutes at issue here. 9               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

exemption applies equally to entities like NW. They contend that the legislature

exempted single-employer contractors from FLCA coverage because "their ties to

one farmer ensured the requisite stability, permanence, and accountability" and that

NW possesses all of those qualities, having worked almost exclusively for Farmland

and in the same general area for roughly 20 years. Br. ofDefs.-Pet'rs at 22-23. Their

unstated conclusion is that these attributes make them as deserving of an exemption

as someone actually eligible for the enacted single-employer exemption. But the

legislature is the body that gets to make that policy decision by defining "farm labor

contractor." RCW 19.30.010(2). If NW fits the definition of a "farm labor

contractor," RCW 19.30.010(2), and is not eligible for any statutory exemption, then

it must abide by the FLCA's licensure requirements. We have no authority to read

a new exception into the statute on policy grounds. See Michigan v. Bay Mills Indian

Cmty., 572 U.S._, 134 S. Ct. 2024,2034, 188 L. Ed. 2d 1071 (2014) ("This Court

has no roving license, in even ordinary cases of statutory interpretation, to disregard

clear language simply on the view that ... Congress 'must have intended' something

'broader."').

Second, the defendants argue NW performs too many farming activities to be

a farm labor contractor. They contend that the FLCA embraces a "Tripartite

Scheme" that distinguishes between three mutually exclusive categories:

10               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

"Agricultural employer" (farmer), "Agricultural employee" (workers), and "Farm

labor contractor" (broker). Br. ofDefs.-Pet'rs at 24 (boldface omitted). NW argues

that because it is an agricultural employer, it cannot also be a farm labor contractor.

But the legislature did not make the three categories of "person" defined in RCW

19.30.010(2), (4), and (5) mutually exclusive. As the district court concluded in this

case, "The fact that NW ... also meets the statutory definition of 'agricultural

employer' is irrelevant; [if it was] paid by a third party to 'recruit,' 'employ' and

'supply' farm laborers, see RCW 19.30.010(3), it was required to register." ER at

2 This does not mean that a person becomes a "farm labor contractor" under the FLCA just because he or she employs agricultural workers in a farming operation that eventually turns a profit. In support of their argument that NW did not perform any farm labor contracting activities "for a fee," RCW 19.30.010(2), the defendants cite only one directly relevant case: Escobar v. Baker, 814 F. Supp. 1491, 1495, 1500 n.9 (W.D. Wash. 1993). See Br. ofDefs.-Pet'rs at 20. In Escobar, a farmworker (Soto) worked as a foreman for one defendant (Baker) and as a row boss for another defendant (Dobbins). 814 F. Supp. at 1495-96. Baker gave Soto free gasoline in exchange for his picking up workers in Oregon and driving them to Baker's Washington farm. ld. at 1496. Eventually, through what appears to have been a long-standing informal arrangement between Baker and Dobbins, Soto also transported some of these workers to Dobbins' farm. Jd. The district court held that Soto performed farm labor contracting activities "for a fee" as to Baker, but not as to Dobbins. ld. at 1499-1500. It concluded that the gasoline (from Baker) constituted a "fee" under the FLCA, but that Soto's salary as a row boss (for Dobbins) did not. Id. The court reasoned that a salary can sometimes constitute a "fee" under the FLCA but that to trigger coverage there must be some "tie" between a salary and the farm labor contracting activities. ld. at 1500 n.9.

The defendants cite this portion of Escobar to argue that NW received a fee for its activities as an "'agricultural employer"' rather than a "'farm labor contractor."' Br. of 11               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

II. The second certified question: Does the FLCA, in particular RCW 19.30.200, make jointly and severally liable any person who uses the services of an unlicensed farm labor contractor without either inspecting the license issued by the director of the Department to the farm labor contractor or obtaining a representation from the director of the Department that the contractor is properly licensed, even if that person lacked knowledge that the farm labor contractor was unlicensed? Answer: Yes. RCW 19.30.200 provides, in full:

Any person who knowingly uses the services of an unlicensed farm labor contractor shall be personally, jointly, and severally liable with the person acting as a farm labor contractor to the same extent and in the same manner as provided in this chapter. In making determinations under this section, any user may rely upon either the license issued by the director [of the Department] to the farm labor contractor under RCW 19.30.030 or the director's representation that such contractor is licensed as required by this chapter.

The parties offer competing interpretations of this provision.

The defendants emphasize RCW 19.30.200's first sentence, which limits joint

and several liability to those who "knowingly" use an unlicensed farm labor

contractor. They argue that the second sentence (which lists two ways of

Defs.-Pet'rs at 20. But Escobar is clearly distinguishable from the present case. According to the Escobar court, Soto's driving workers to Dobbins' farm was incidental to and attenuated from the salary he received as Dobbins' row boss. 814 F. Supp. at 1499-1500 & n.9. By contrast, the contract at issue in this case explicitly conditions NW's receipt of the per-acre fee on NW's "hir[ing]" and "employ[ing]" agricultural workers. ESR at 38. The fact that the fee also compensates NW for other activities, such as managing orchards and repairing farm equipment, id., does not mean that NW's farm labor contracting activities are incidental to or attenuated from the per-acre fee.

12               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

determining whether a farm labor contractor has a license) creates a "safe harbor"

for persons who rely on a license or the Department's representation of licensure,

but does not create any affirmative duty to verify licensure. Br. of Defs.-Pet'rs at

39-43. Accordingly, they conclude that the plaintiffs must prove that the Hancock

companies and/or TPM had actual or constructive knowledge that NW was

unlicensed in order to establish joint and several liability under RCW 19.30.200.

The plaintiffs argue that RCW 19.30.200 gives the term "knowingly" a

specific meaning: that a person "knowingly" uses an unlicensed farm labor

contractor if he or she does so without using one of the two methods listed in that

statute's second sentence-inspecting the contractor's license or inquiring about the

contractor's status with the Department. Answering Br. ofPls.-Resp'ts at 24 ("[a]

user is required to make a determination based on one of two [specified] options

[and] [a]fter that determination is made, the user will know whether the labor

contractor possesses a valid Washington license"). Thus, the plaintiffs conclude that

a person who fails to verify in one of these easy, straightforward ways must be

charged with lmowledge and is therefore jointly and severally liable under the statute

for use of an unlicensed farm labor contractor.

"Our fundamental goal in statutory interpretation is to 'discern and implement

the legislature's intent."' O.S.T v. Regence BlueShield, 181 Wn.2d 691, 696, 335

13               Saucedo etal. v. JohnHancockLifelns. Co. etal., No. 91945-3

P.3d 416 (2014) (quoting State v. Armendariz, 160 Wn.2d 106, 110, 156 P.3d 201

(2007)). For the reasons given below, we conclude that the plaintiffs' interpretation

of the statute must certainly be what the legislature intended when it enacted RCW

19.30.200.

First, the statute's plain language-specifically, the "either-or" disjunctive

phrasing that appears in the statute's second sentence-normally implies that one or

the other of two things will occur; it does not imply the option to pursue other,

unspecified alternatives. See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY

728 (2002) (defining "either-or" as "an unavoidable choice or exclusive division

between only two alternatives"). On this point, we note that the FLCA's federal

analog, the agricultural worker protection act (AWPA), contains a "[c]onfirmation

of [r]egistration" provision, 29 U.S.C. § 1842, very similar to RCW 19.30.200. That

provision states, in its entirety:

No person shall utilize the services of any farm labor contractor to supply any migrant or seasonal agricultural worker unless the person first takes reasonable steps to determine that the farm labor contractor possesses a certificate of registration which is valid and which authorizes the activity for which the contractor is utilized. In making that determination, the person may rely upon either possession of a certificate of registration, or confirmation of such registration by the Department of Labor. The Secretary shall maintain a central public registry of all persons issued a certificate of registration.

14               Saucedo eta!. v. John Hancock Life Ins. Co. eta!., No. 91945-3

29 U.S.C. § 1842 (emphasis added). We are not aware of any case law interpreting

this provision to allow "reasonable steps" other than the two listed in the statute. I d.

Second, our legislature enacted the FLCA to remedy a pattern of farm worker

exploitation, in part by including tough civil penalty provisions "to compensate

injuries, promote enforcement ... , and deter violations." Perez-Farias v. Global

Horizons, Inc., 175 Wn.2d 518,521, 530,286 P.3d 46 (2012). As a remedial statute

designed to prevent worker exploitation, the FLCA is generally construed liberally

to further this purpose. Id. at 521, 530; see also Drinkwitz v. Alliant Techsystems,

Inc., 140 Wn.2d 291, 301, 996 P.2d 582 (2000) (chapter 49.46 RCW (Washington

Minimum Wage Act)); Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961

P.2d 371 (1998) (chapter 49.52 RCW). The defendants' interpretation of RCW

19.30.200 frustrates this intent by giving "users of farm labor contractors a perverse

incentive to remain deliberately ignorant of a contractor's licensure status." ER at

47. 3 The plaintiffs' interpretation, by contrast, furthers the statute's remedial

3 Thedefendants contend that our legislature considered and rejected arguments that a knowledge prerequisite to liability under RCW 19.30.200 would facilitate intentional ignorance. They are incorrect. That history demonstrates only that our legislature rejected one lobbyist's suggestion that it strike the word "knowingly" from a bill that eventually became RCW 19.30.200. But if the "making determinations" clause is an affirmative inquiry requirement, there was no need to omit the word "knowingly" (and thereby impose the harsh standard of strict liability), RCW 19.30.200, in order to punish intentional Ignorance.

15               Saucedo et al. v. John Hancock Life Ins. Co. et al., No. 91945-3

purpose by codifying straightforward and easily complied with license verification

requirements. 4

In fact, as the district court concluded in this case, the defendants'

interpretation of RCW 19.30.200 "renders the 'determination' requirement

optional." ER at 121-22. Under the defendants' interpretation, if a person elects to

verify licensure, he or she may do so by inspecting the contractor's license or

inquiring with the Department-or not. As a practical matter, this reading renders

RCW 19.30.200's second sentence all but superfluous. The plaintiffs' interpretation

is much more persuasive: that the either/or "making determinations" provision in

RCW 19.30.200 clarifies the meaning ofthe term "knowingly" in the statute's first

sentence.

4 The defendants contend that the rule of lenity applies here because the FLCA imposes some criminal sanctions, specifically on "[a]ny person who violates any provisions of ... chapter [ 19.3 0 RCW], or who causes or induces another to violate any provisions of this chapter." RCW 19.30.150. They argue that the imposition of criminal sanctions triggers the rule of lenity. See United States v. Thompson/Center Arms Co., 504 U.S. 505, 518 n.10, 112 S. Ct. 2102, 119 L. Ed. 2d 308 (1992) (holding that the rule of lenity applies to a tax statute with both criminal and civil applications). But RCW 19.30.200-the specific statute at issue here-imposes no criminal sanctions at all. As noted above, the FLCA imposes criminal penalties on a person who "violates" its provisions. RCW 10.30.150. The only provision violated here was RCW 19.30.110(1), the separate statute that requires a "farm labor contractor" to "[ c]arry a current farm labor contractor's license." RCW 19.30.200 does not establish that duty, which only NW violated; it just clarifies the extent of the other defendants' civil liability for NW's violation. We therefore reject the argument that the rule oflenity applies to that statute. 16               Saucedo eta!. v. John Jlancock Life Ins. Co. eta!., No. 91945-3

CONCLUSION

The plain language of the FLCA compels us to answer yes to both certified

questions. Under RCW 19.30.010(2) and (3), the definition of a "farm labor

contractor" includes an entity who is paid a per-acre fee to manage all aspects of

farming-including hiring and employing agricultural workers as well as making all

planting and harvesting decisions, subject to approval-for a particular plot of land

owned by a third party. Under RCW 19.30.200, any person who uses the services

of an unlicensed farm labor contractor without either inspecting the contractor's

license or obtaining a representation from the Department that the contractor is

properly licensed is jointly and severally liable with that contractor, even if that

person lacked knowledge that the farm labor contractor was unlicensed.

17               Saucedo et al. v. Farmland Mgmt. Servs. et al., No. 91945-3

WE CONCUR:

18'