In Considering Class Action Certification in 28 Labor Law Class Action Lawsuits Centralized by the Judicial Panel on Multidistrict Litigation, 19 Cases Satisfied Class Action Prerequisites but 9 other Putative Class Actions would Require Individualized Inquiries Sufficient to Defeat Class Action Treatment Indiana Federal Court Holds
Numerous class action lawsuits were filed against FedEx Ground alleging that the company misclassified its pickup and delivery drivers as independent contractors rather than employees; the Judicial Panel on Multidistrict Litigation consolidated the class actions in the Northern District of Indiana, and the plaintiffs in the class action cases characterized as “Wave 1,” “Wave 2” and “Wave 3” moved the district court for class action certification. In re FedEx Ground Package System, Inc., Employment Prac. Litig., ___ F.Supp.2d ___ (N.D. Ind. March 25, 2008) [Slip Opn., at 1]. As the federal court summarized, these class action plaintiffs “assert that although FedEx Ground represents to its drivers that they are only partnering with FedEx Ground and will essentially own their own businesses, all FedEx Ground drivers sign the FedEx Ground Operating Agreement, which actually reserves to FedEx Ground the right to exercise pervasive control over the method, manner, and means of the drivers’ work,” id. FedEx opposed class action treatment, arguing that “the plaintiffs’ claims turn on individualized issues, including whether contractors should be classified as employees under the states’ statutory tests, and whether any individual contractor can meet the high bar for rescission of his individual contract.” Id., at 2. In a 164-page opinion, the district court certified the Wave 1, Wave 2 and Wave 3 cases as class actions with respect to cases involving drivers from Alabama, Arkansas, California, Florida, Indiana, Kentucky, Maryland, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, West Virginia and Wisconsin; the court denied class action treatment for drivers from Illinois, Iowa, Massachusetts, Michigan, Mississippi, Missouri, Montana, South Dakota and Virginia. Id., at 3. The district court noted that it had previously granted class action certification with respect to drivers from Kansas, id., at 9, bringing to 20 the total number of states for which class action treatment has been approved.
Given the extraordinary length and detail of the district court opinion, we provide here only a broad outline of its holdings. Because it had previously granted class action treatment on behalf of the Kansas drivers, the district court used its prior ruling as a benchmark against which it considered the new class action certification motions. In re FedEx Ground, at 9. The court held that class action complaints containing only former drivers as named-plaintiffs could still proceed as class actions on behalf of former and current drivers because “courts have held that former employees have standing to represent a class consisting of both current and past employees.” Id., at 10 (citations omitted); see also, e.g., id., at 24-25 and 30. But with respect to defense attorney efforts to defeat class action treatment on the ground that individual inquiries would be required to determine whether the Operating Agreements were valid and the manner and extent to which the “right to control” will impact the validity of the Operating Agreements, the federal court rejected this argument with respect to the laws of certain states, see, e.g., id., at 14-16 (Tennessee), 25-27 (Arkansas) and 39-42 (Texas), but agreed with FedEx Ground that common questions would not predominate under the laws of other states, see, e.g., id., at 18-20 (Montana), 20-23 (Mississippi) and 80-84 (Michigan). For example, with respect to the Missouri putative class action, the district court explained that class action certification was not warranted because “Whether FedEx Ground has the right to control its drivers within the meaning of Missouri agency law cannot be resolved by simple reference to the Operating Agreements and corporate policies.” Id., at 105. Rather, “Missouri courts define the ‘right to control’ with reference to the actual exercise of control, [citation], which will require a driver-by-driver, terminal-by-terminal, supervisor-by-supervisor analysis that is unnecessary in most other states.” Id., at 105-06. This presented the primary basis for the difference among states for which the court certified class actions and states for which it denied motions for class certification.
The district court also found persuasive defense arguments that Massachusetts employs a “multi-factor tests to determine employment status,” In re FedEx Ground, at 59, as does Iowa, see id., at 122-24, such that individual inquiries would be required to determine the “actual relationship” between FedEx Ground and its drivers, see id., at 59-61. Accordingly, it denied class action certification for Massachusetts drivers. Similarly, the court found that South Dakota law “ask[s] whether the worker…[is] customarily engaged in an independently established trade, occupation, profession or business,” which “cannot be resolved on a class-wide basis.” Id., at 113.
The federal court ended with two important points. First, it addressed the defense concern that “once classes are certified, the plaintiffs will turn their focus from the Operating Agreement to anecdotal evidence and the experience of individual drivers.” In re FedEx Ground, at 153. The court reminded plaintiffs’ counsel that its rulings were based on the assumption that “plaintiffs will not, at the summary judgment or trial stages, present evidence other than the Operating Agreements and generally applicable FedEx policies.” Id. If that proves to be untrue, then “several of today’s rulings must be reconsidered.” Id., at 153-54. Second, the court expressed its displeasure with defense counsel’s creative interpretation of certain case holdings, and warned “whatever counsel signs future FedEx Ground briefs to carefully read both the authorities cited in those briefs and Rule 11 of the Federal Rules of Civil Procedure.” Id., at 154.
NOTE: With respect to the California class action’s claims under the federal Family and Medical Leave Act (FMLA), the federal court agreed that drivers would be required to establish several factual elements that present individual questions. In re FedEx Ground, at 66. Accordingly, while the court certified much of the proposed California class action, it refused to do so with respect to the class action’s FMLA claim.