Opinion
CASE NO. 8:09-CV-1985-T-17TBM.
September 29, 2011
ORDER
This cause is before the Court on:
Dkt. 132 Motion for Class Certification of State Law Claims Dkt. 135 Response Dkt. 136 Response Dkt. 137 Motion for Leave to File Reply Dkt. 139 Response In the Second Amended Complaint, Plaintiffs have alleged a common law claim for unjust enrichment in Count III, a common law claim for conversion in Count IV, a statutory claim for damages under the Florida Deceptive and Unfair Trade Practices Act, Ch. 501.201-501.213, Florida Statutes in Count V, and an injunction prohibiting Defendants from mischaracterizing their employees in the future under FDUTPA in Count VI. Plaintiffs now seek class certification as to those claims under Rule 23, Fed.R.Civ.P.The proposed class representatives are Michael Scantland, Frederick Hauser, III, Joshua Farrell, Philip Zapata, Leon Sperry and Terrence Downs. Plaintiffs propose a class period that begins four years prior to the commencement of this lawsuit based on the statute of limitations applicable to Plaintiffs' claims under FDUTPA and as to the unjust enrichment claim. If a class is certified as to Plaintiffs' conversion claim, Plaintiffs propose a class period that begins five years prior to commencement of this lawsuit.
Defendant Jeffry Knight, Inc. d/b/a Knight Enterprises opposes Plaintiffs' Motion. Defendant opposes Plaintiffs' Motion because it is untimely; Defendant further opposes Plaintiffs' Motion on the basis that there are conflicts within the class which prevent Plaintiffs from meeting the requirements of Rule 23(a), and because individual issues predominate over common issues.
Defendant Bright House Networks filed a response, but has now been dismissed from this case.
The merits of Plaintiff's claims are not to be evaluated when determining whether the requirements of Rule 23 have been satisfied. Kirkpatrick v. J.C. Bradford Co., 827 F.2d 718, 722 (11th Cir. 1987). However, a court "may look beyond the allegations of the complaint in determining whether a motion for class certification should be granted." Kirkpatrick, 827 F.2d at 722. "It is necessary to analyze the plaintiff['s] factual allegations, the record evidence pertinent to class action issues, and the applicable law in order to understand and evaluate the propriety of the class action device . . ." Anderson v. Bank of the South N.A., 118 F.R.D. 136, 138 (M.D. Fla. 1987);see also Love v. Turlington 733 F.2d 1562, 1564 (11th Cir. 1984) (stating that the limitation on examining the merits "should not be talismanically invoked to artificially limit a trial court's examination of the factors necessary to a reasoned determination of whether a plaintiff has met her burden of establishing each of the Rule 23 class action requirements"). "[B]efore a district court determines the efficacy of class certification, it may be required to make an informed assessment of the parties' evidence. That a trial court does so does not mean that it has erroneously `reached the merits' of the litigation." Cooper v. Southern Co., 390 F.3d 695, 712-713 (11th Cir. 2004) (citing Kirkpatrick, 827 F.2d at 722).
I. Background
Defendant Jeffry Knight, Inc. d/b/a Knight Enterprises is in the business of providing telecommunications installation and repair services. Defendant's business model is based on using independent contractors rather than employees to perform these services. All technicians performing telecommunications and installation repair services for Defendant are classified as independent contractors.
Plaintiffs and putative class members provided telecommunications installation and repair services for Defendant in Florida between 2005 and the present. The services were performed for customers of Bright House Networks, a company which provides telecommunications services to customers in Florida. In order to perform services for Defendant, technician were required to sign an agreement classifying them as "independent contractors." The services performed by all technicians were "cable related services, repairs, and maintenance, and such other servicers as are reasonably related to providing these services. The technicians performed services as installation technicians, service technicians, lead technicians, quality control technicians, and PC technicians.
In the Second Amended Complaint (Dkt. 39), Plaintiffs allege that Defendant, by classifying Plaintiffs as independent contractors, avoids any obligation to pay payroll taxes, workers' compensation insurance, health insurance, unemployment insurance, overtime, and other such benefits. Plaintiffs further allege that if Defendant is unsatisfied with work performed by Plaintiffs, Defendant requires Plaintiffs to go out and correct any deficiency, and to make any repairs. On such occasions, Plaintiffs are not paid for the time working to correct the problems. Defendant also makes deductions from Plaintiffs' pay if, upon review of a job, a Bright House employee decides the job has not been done correctly. Defendant also requires Plaintiffs to provide a retainer upon being hired. Defendant holds onto the retainer for at least a year after a contractor ceases to work for Defendant, and makes deductions from the retainer when Defendant Knight or Bright house decides that a job performed by a contractor prior to their leaving their position was not completed correctly.
The basis of Count III, Unjust Enrichment, and Count IV, Conversion, includes Defendant's failure to pay Plaintiffs wages due them for time spent performing repair work on prior job assignments, as well as improper deductions from their pay and from the retainer provided to Defendant ("chargebacks").
The basis for Count V, Florida Deceptive and Unfair Trade Practices — Damages, and Count VI, Florida Deceptive and Unfair Trade Practices — Injunction, is Defendant's misclassification of Plaintiffs as independent contractors rather than employees, thereby depriving Plaintiffs of all manner of federal and state rights, and requiring Plaintiffs to suffer deductions and incur expenses that would not occur if Plaintiffs had been properly classified as employees. Plaintiffs allege that Defendant's misclassification of Plaintiffs as independent contractors, even though Defendant knows that Plaintiffs have no real proprietary interest and are entirely dependent upon Defendant for their income is unlawful, and that the relationship should be treated as master-servant rather than company-subcontractor. Plaintiffs allege that Defendant's practices constitute unconscionable acts or practices and/or deceptive acts and/or practices in the conduct of trade or commerce in violation of FDUTPA.
II. Legal Standard for Class Certification
A class action may be maintained only if:
1. The class is so numerous that joinder of all parties is impracticable, and
2. There are questions of law or fact common to the class, and
3. The claims or defense of the representative parties are typical of the claims or defenses of the class; and
4. The representative parties will fairly and adequately protect the interest of the class.
One of the following must also be satisfied:
1. Prosecuting separate actions by or against individual class members would create a risk of:
a. Inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
b. Adjudication with respect to individual class members that as a practical matter would be dispositive of the interest of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interest; or
2. The party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
3. The court finds that the questions of law or fact common to the class members predominate over any questions affecting only individual members, and that a class action is superior to the other available methods for fairly and efficiently adjudicating the controversy.
Matters pertinent to these findings include:
a. the class members' interest in individually controlling the prosecution or defense of separate actions;
b. The extent and nature of any litigation concerning the controversy already begun by or against class member;
c. The desirability or undesirability of concentrating the litigation of the claims in the particular forum;
d. The likely difficulties in managing the class action.Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004).
II. Issues A. Standing
Prior to the certification of a class and before undertaking any analysis under Rule 23, the Court must determine that at least one named class representative has Article III standing to raise each class claim. Prado-Steiman ex rel Prado v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000). Under the principles of standing, "a plaintiff must allege and show that he personally suffered injury." Griffin v. Dugger, 823 F.2d 1476, 1482 (11th Cir. 1987). The Court must determine whether the class representative is "part of the class and possess[es] the same interest and suffer[ed] the same injury as the class members."Prado-Steiman, 221 F.3d at 1279 (citations omitted).
The affidavits/supplemental affidavits of Michael Scantland, Joshua Farrell, Frederick Hauser, III, and Philip Zapata, class representatives, are attached to Plaintiffs' Motion for Class Certification, and establish standing as to individual technicians.
Defendant argues that the named Plaintiffs lack standing to represent the corporate entities which may be or should be advocating claims. Defendant argues that some of the named Plaintiffs were incorporated, and Defendant contracted with the corporation and not with the purported Plaintiff as an individual. Defendant further argues that some technicians allegedly within the class do not have claims in their individual capacity; if a retainer is to be returned or chargeback money is owed, these would be due to the corporation.
For the purpose of this Motion, the Court will assume that at lease some of the named Plaintiffs have standing, and Plaintiffs could substitute other Plaintiffs, or otherwise resolve the issue as to any Plaintiff which is a corporation.
B. Rule 23(a) 1. Numerosity
Rule 23(a) requires that the class be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). Joinder need not be impossible but merely difficult or inconvenient.Cohen v. Implant Innovations, Inc., 259 F.R.D. 617, 631 (S.D.Fla. 2008). There is no fixed rule; what constitutes numerosity depends on the facts of each case and may involve consideration of factors such as, e.g., the size of the class and geographic dispersion of class members. See Jones v. Jeld-Wen, Inc., 250 F.R.D. 685, 692-93 (S.D. Fla. 2008); Cheney v. Cyberguard. Inc., 213 F.R.D. 484, 489-90 (S.D.Fla. 2003). In this circuit, "[g]enerally, `less than twenty-one is inadequate, more than forty adequate.'" Cheney, 213 F.R.D. at 490 (quoting Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir. 1986)) The sheer number of possible class members may warrant a conclusion that numerosity is satisfied. Jeld-Wen, 250 F.R.D. at 693. Parties seeking class certification need not know the exact number of class members but they "must make reasonable estimates with support as to the size of the proposed class." Id. (internal citation omitted).
Plaintiffs have provided the Declaration of lan Russell to attest that well over a thousand technicians performed the services at issue between 2005 and the present, which satisfies the numerosity requirement.
Defendant does not dispute that Plaintiffs meet the numerosity requirement.
2. Common Questions of Law or Fact
Rule 23(a)(2) requires that there be "questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2). "Commonality refers to the group characteristics of the class as a whole, while typicality refers to the individual characteristics of the representative plaintiff in relation to the class." Cohen, 259 F.R.D. at 631-32 (citing Prado Steiman v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000)). The rule does not require that all of the questions of law or fact raised in the case be common to all the plaintiffs, just that there be at least one issue that affects all or a significant number of proposed class members.Clausnitzer v. Federal Express, Inc., 248 F.R.D. 647, 656 (S.D.Fla. 2008). "The threshold for commonality is not high. . . . [and f]actual differences between class members do not necessarily preclude a finding of commonality. The requirement is met if the questions linking the class members are substantially related to the resolution of the litigation even though the individuals are not identically situated.'" Id. (internal citations omitted).
A. FDUTPA
FDUTPA prohibits "unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce . . ." See Ch. 501.202, Florida Statutes (2007). An unfair practice is "one that `offends established public policy' and one that is `immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.'" Samuels v. King Motor Co. of Fort Lauderdale, 782 So.2d 489, 599 (Fla. 4th DCA 2001). A deceptive practice is "one that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detrimen." Millennium Communications Fulfillment, Inc. v. Office of the Attorney General, 761 So.2d 1256, 1263 (Fla. 3d DCA 2000).
As to the FDUTPA claims for damages and injunctive relief, Plaintiffs argue that common, class-wide evidence will establish that Defendant used a centralized and standardized program to recruit technicians, falsely representing that they would be able to control the means and manner in which their services were performed and that a technician's success or failure would depend upon his or her ability to run the business. Plaintiffs argue that the standard agreement that Defendant provided to all technicians contained this representation. Plaintiffs further argue that common class-wide evidence will establish that Defendant treated the technicians as employees, retaining and exercising extensive rights to direct and control the technicians in the performance of their work. Plaintiffs argue that the main test in determining the existence of an employer-employee relationship is whether the employer has direction and control over the employee.
B. Unjust Enrichment
A claim for unjust enrichment based on a contract implied in law includes the following:
To state a claim for unjust enrichment, a plaintiff must plead the following elements: 1) the plaintiff has conferred a benefit on the defendant; 2) the defendant has knowledge of the benefit; 3) the defendant has accepted or retained the benefit conferred; and 4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying fair value for it.Della Ratta v. Della Ratta, 927 So.2d 1055 (Fla. 4th DCA 2006.
Plaintiffs allege that the "independent contractor" agreement signed by all technicians is invalid as it violates Florida public policy, Florida common law and FDUPTA. Plaintiffs argue that the common issue is whether the agreement is invalid because it treats technicians as independent contractors. Plaintiffs contend Plaintiffs provided a benefit to Defendant Knight by performing the work, that Defendant had knowledge of the work, and accepted the benefit of it, and that Defendant did not pay Plaintiffs for the work, either through non-payment for repair work or by taking deductions for chargebacks, and from retainers.
C. Conversion
Under Florida law, conversion is defined as a wrongful taking of personal property with intent to exercise an ownership which is inconsistent with the real owner's right of possession. King v. Saucier, 356 So.2d 930 (Fla. 2d DCA 1978). Plaintiffs argue that the common question is whether the retention of unpaid wages, and the retainer, was wrongful, based on the misclassification of the technicians, and whether the technicians were employees under Florida law.
Defendant does not dispute that there are common questions of law or fact as to the FDUTPA claims, the unjust enrichment claim or the conversion claim.
3. Typicality
Under Rule 23(a), "the claims or defenses of the representative parties [must be] typical of the claims or defenses of the class." Fed.R.Civ.P. 23(a)(3). "The key inquiry in determining whether a proposed class has `typicality' is whether the class representative is part of the class and possesses the same interest and suffers the same injury as the class members."Clausnitzer, 248 F.R.D. at 656 (citation omitted). Typicality requires that the claims of the named representative bear the same essential characteristics of the claims of the class at large. Id. The named representative's claims need not be identical to class members' claims as long as they "arise out of the same conduct and are grounded on the same legal theory."Jeld-Wen, 250 F.R.D. at 694. "The test for typicality, like commonality, is not demanding." Id. (citation omitted).
Plaintiffs argue that Plaintiffs are members of the class they seek to represent, that they performed the same work, were subject to the same types of damages, and were subject to the same control over the manner in which they performed their services.
Defendant argues that there are potential conflicts among Plaintiffs in the proposed class. Defendant argues Plaintiffs who were engaged in quality assurance or quality control have adverse interests to other class members. Where Plaintiffs are seeking the return of monies that were the subject of "chargebacks" and payment for time spent repairing their own work, the existence of a chargeback is an outcome of the quality assurance function. Quality assurance or quality control technicians were engaged to inspect other technicians' work and to determine whether the work was done properly. Defendant argues that if a chargeback has been taken or if the quality control technician who sets the chargeback in motion testifies that the work was defective, the interests of the installing technicians is adverse to the interests of the quality control technicians. Defendant argues that quality control technicians are not appropriate representatives of, and/or members of, a class of installers, and vice versa.
Defendant argues that the claim of Plaintiff Michael Scantland is not typical. Defendant argues that Plaintiff Michael Scantland has filed a worker's compensation claim, alleging that he is entitled to benefits for an injury sustained while he was working as a Knight contractor. Defendant further argues that Plaintiff Scantland has invoked the Internal Revenue Service to conduct an investigation in to the relationship between Knight and its contractors. Defendant argues that Knight was requested to furnish a list of names, Social Security Numbers, addresses and telephone numbers of all workers performing the same work as Plaintiff Scantland. Defendant argues that since some individuals have not filed income tax returns, Plaintiff Scantland's request has placed him in a position where he brought unwelcome attention to the other Plaintiffs such that Plaintiff Scantland's interests are adverse.
This issue is a disputed issue. For the purpose of resolving this Motion, the Court will assume that the typicality requirement is met.
3. Adequacy of Representation
Rule 23(a)(4) requires a showing that "the representative parties will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a)(4). The analysis "encompasses two separate inquiries: (1) whether any substantial conflicts of interest exist between the representatives and the class; and (2) whether the representatives will adequately prosecute the action." Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 350 F.3d 1181, 1189 (11th Cir. 2003) (citation omitted). In addition to looking at the adequacy of the named representatives, the Court also must examine the adequacy of the representatives' counsel. Dahlgen's Nursery v. E.I. du Pont de Nemours, No. 91-8709-CIV, 1994 WL 1251231, at *6-*7 (S.D.Fla. Oct. 30, 1994). Counsel will be deemed adequate if they are shown to be qualified, adequately financed, and possess sufficient experience in the subject matter of the class action. Id. at *7.
Plaintiffs argue that they are typical of the class, making them adequate representatives for all claims. Plaintiffs argue that counsel is competent class counsel, with extensive experience handling wage and hour class actions. Plaintiffs argue that the requirement of adequacy of representation is met.
As noted above, Defendant has raised an issue as to potential conflicts between class representatives who have been quality control technicians, and as to conflicts between Plaintiff Scantland and other members of the class. For the purpose of resolving this Motion, the Court will assume that at least some of the named Plaintiffs have no conflict of interest.
C. Rule 23(b) 1. Predominance
In order to satisfy the predominance inquiry under Rule 23(b)(3), Plaintiffs need not demonstrate that every question of law or fact is common to the class. See Jones v. Jeld-Wen. Inc., 250 F.R.D. 685 (S.D. Fla. 2008) ("Under Rule 23(b)(3) it is not necessary that all questions of law or fact be common, but only that some questions are common and that they predominate over the individual questions.") (quoting Klay v. Humana, Inc., 382 F.3d 1241, 1254 (11th Cir. 2004)). The predominance inquiry, however, is much more stringent than Rule 23(a)(2)'s requirement of commonality. See Id.; Jackson v. Motel 6 Multipurpose. Inc., 130 F.3d 999, 1005 (11th Cir. 1997).
Plaintiffs argue that common questions of law and fact predominate. Plaintiffs argue that the damage claims are susceptible to class adjudication because all are based on Defendant's alleged deceptive and unfair practice of labeling the technicians as independent contractors.
Defendant argues that, if prosecuted as a class action, this case will break down into an unmanageable variety of individual class issues, the only common issue of law or fact being the alleged misclassification of Plaintiffs. Defendants argue that common issues will not predominate as to the FDUTPA, unjust enrichment, and conversion claims.
A. FDUTPA
Plaintiffs argue that the core of Plaintiffs' claim for damages under FDUTPA are the issues of: 1) whether the technicians have been improperly classified as independent contractors; 2) whether the misclassification constitutes an unfair, unconscionable, or deceptive practice; and 3) whether this practice caused technicians to suffer damages related to unpaid work for repairs, "chargebacks," and the loss of retainers paid to Knight. Plaintiffs argue that these issues can be determined based on common class-wide evidence.
Plaintiffs argue that individual issues will not predominate where there is a central policy of misclassifying workers as independent contractors, that the workers signed the same agreements establishing this classification, that the workers were subject to the same management policies, and worked under similar management. In Re FedEx Ground Package Sys., 273 F.R.D. 424 (N.D. Ind. 2008).
The Court has examined the "Independent Contractor Services Agreement" at issue. The Court notes the following provisions:
2. Work Assignments. To the extent that Knight decides to utilize the services of Contractor, Knight shall (directly or through the Company, at Knight's option provide to Contractor a work order describing the location, providing other relevant contact information, and describing the type of work to be performed. Contractor may decline any work assignments and is not required to maintain a set schedule. Once Contractor has accepted one or more assignments, including a day's worth of assignments, Contractor shall timely complete said assignments pursuant to the terms and conditions of this Agreement and may not thereafter refuse to full complete the accepted assignments. The Contractor agrees to perform specific work for the specific amounts set forth in this Agreement.
3. Performance. Contractor shall perform the work in a timely and competent manner and all work shall be done in a good and workmanlike manner. Contractor shall use its best efforts to complete all work during regular business hours. Contractor shall comply with all specifications of Knight and the Company regarding the work. Contract shall keep the area in which the work is being performed clean and shall return the area to the condition it was in prior to commencement of the work once the work is completed, including the removal of any debris and excess materials. The manner and means of performance of the work, including technique, sequence, procedures, selection and assignment of employees shall be subject to Contractor's exclusive discretion, supervision and control. Contractor may employ others to assist Contractor in performing the work, in which case Contractor shall be solely responsible for all wages, taxes, workers compensation, unemployment, fringe benefits, and any other matters associated with its employees. Knight shall be under no obligation to assign any work to Contractor. Contractor indemnifies, agrees to defend and holds Knight harmless from any damage, claim, loss, fee or liability arising out of Contractor's failure to satisfactorily complete the work.
. . . .
8. Independent Contractor/No Agency. Contractor will perform the work as an independent contractor of Knight, and this Agreement will not be construed to create a partnership, joint venture or employment relationship between Contractor and Knight. Contractor will retain full control over the manner in which it performs the work and will not be entitled to workers' compensation, unemployment, retirement, insurance or other benefits that may upon occasion be afforded to employees of Knight. Contractor shall have no authority to enter into any agreements binding upon the Company, or to create any other obligations on the part of Knight, and further agrees that Contractor is in no way Knight's agent.
In In Re FedEx Ground Package Systems, supra, the Court distinguished between Keith v. News Sun Sentinel Co., 667 So.2d 167 (Fla. 1995), in which the parties' written contract vested no right to control in the defendant, and the FedEx case, in which the Florida plaintiffs argued that the standard Operating Agreement vested the right to control in FedEx Ground as to make the drivers employees. Unlike the Keith court, which looked to evidence of actual control because a sufficient right did not exist in the contract, the FedEx court did not need to examine the parties' actual practice to find a right to control.
To determine whether a relationship is that of employer-employee or contractor-subcontractor, in Keith v. News Sun Sentinel, 667 So.2d 167, 171 (Fla., 1995), the Florida Supreme Court held:
Hence, courts should initially look to the agreement between the parties, if there is one, and honor that agreement, unless other provisions of the agreement, or the parties' actual practice, demonstrate that it is not a valid indicator of status. In the event that there is no express agreement and the intent of the parties cannot otherwise be determined, courts must resort to a fact-specific analysis under the Restatement based on the actual practice of the parties. Further, where other provisions of an agreement, or the actual practice of the parties, belie the creation of the status agreed to by the parties, the actual practice and relationship of the parties should control. See Cantor v. Cochran, 184 So.2d 173 (Fla. 1966).
In FedEx Ground, it was not necessary for the court to make an individual analysis of other factors in the actual practice of the parties, because the plaintiffs did not contend that those factors made them employees, but rather that employment status could be determined primarily on the terms of the Operating Agreement.
This case is the opposite of the situation as In Re FedEx Ground Package System, Inc.. The independent contractor agreement, which is an integrated contract, expressly provides that the parties to the Agreement understand that the Contractor's status is "independent contractor" and that the Contractor controls the manner and means of performance of the work. The Court does not consider the requirement of compliance with the technical specifications of Defendant and the Company to equate to active supervision and control of the work. An individual analysis of the Restatement factors in the actual practice of the parties would be required.
After consideration, the Court concludes that common questions of law or fact would not predominate as to the FDUTPA claims.
B. Unjust Enrichment
Before the Court can grant relief on an equitable claim, the Court must examine the particular circumstances and assure itself that, without a remedy, inequity would result or persist. Where an individual analysis of the facts would be required as to any express contracts entered into, and the circumstances surrounding each contract, to determine the existence of a contract, or whether a contract implied in law arose, and to consider any resulting inequity, common questions would not predominate over individual questions. Vega v. T-Mobile, Inc., 564 F.3d 1256, 1274 (11th Cir. 2009).
C. Conversion
2. Superiority
ORDERED that the Motion for Class Certification (Dkt. 132) is denied. The Motion for Leave to File Reply (Dkt. 137) is denied as moot.
DONE and ORDERED in Chambers in Tampa, Florida.