Ouadani v. Dynamex Operations East, LLC

          MEMORANDUM AND ORDER

          HON. PATTI B. SARIS CHIEF UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         Plaintiff Djamel Ouadani (“Ouadani”) brings this lawsuit against Defendant, Dynamex Operations East, LLC (“Dynamex”), alleging violations of the Fair Labor Standards Act (“FLSA”), and the Massachusetts misclassification and wage laws. He asserts individual, class, and collective claims arising from Dynamex's practice of classifying drivers who perform Google Shopping Express deliveries as independent contractors. Pending before the Court are Ouadani's motion to certify a class of Google Express delivery drivers for his state law misclassification and improper deductions claims and his motion for partial summary judgment on the misclassification claim.

         After hearing, the Court ALLOWS IN PART and DENIES IN PART Ouadani's motion for class certification (Dkt. No. 70) and DENIES his motion for partial summary judgment (Dkt. No. 71).

         FACTUAL BACKGROUND

         The following facts are undisputed except where otherwise stated.

         I. The Parties

         Ouadani performed Google Express deliveries from March 2016 to August 2016. He contracted directly with Selwyn & Bertha LLC (“S&B”), which was one of companies Dynamex used to supply drivers for Google Express deliveries. S&B classified and paid Ouadani as an independent contractor, not an employee.

         Dynamex, which is now doing business as TForce Final Mile LLC, is headquartered in Dallas, Texas and operates a branch office in Wilmington, Massachusetts. Dynamex is a provider of transportation logistics services, which include providing same-day delivery services for its clients. From June 1, 2014 to October 14, 2016, Dynamex contracted with Google Inc. (“Google”) to provide drivers to make Google Express deliveries across several major U.S. cities, including Boston, Massachusetts. Dynamex's Wilmington office was responsible for Google Express deliveries in the Greater Boston area.

         II. Dynamex's Business

         a. The Google Express Contract

         Google Express is a same-delay delivery service that allows consumers to place delivery orders online from local retail stores such as Target, Walgreens, or Staples. Dynamex entered into a Statement of Work (“SOW”) with Google effective June 1, 2014. Under the SOW, it agreed to provide drivers to perform Google Express deliveries for a two-year period. Prior to the expiration of the SOW, Dynamex and Google entered into an amendment to the SOW (“Amended SOW”) effective June 1, 2016. The Amended SOW was to last until November 30, 2016 unless otherwise terminated by the parties. The SOW and the Amended SOW included substantially the same terms. Google terminated the Amended SOW sometime in October 2016. Dynamex stopped performing services under the Amended SOW on October 14, 2016.

         The SOW (and the Amended SOW) included a list of minimum qualifications for Google Express drivers. Drivers were required to have at least two years of experience, have a clean driving record, speak fluent, understandable English, and be comfortable using a smartphone and related technology. They were also required to be well-groomed and wear approved Google apparel. Dynamex was responsible for making sure drivers satisfied these qualifications. The SOW also required that the drivers complete a Google Express orientation and abide by Google's standard operating procedures in making deliveries. Dynamex was responsible for training the drivers on Google's standard operating procedures. This included administering Google-designed training programs but also “developing and coordinating orientation programs based on identified needs.” Dkt. No. 72-3 at 3-4. For example, it was Dynamex's responsibility to “initiat[e], maintain[] and supervis[e] all necessary safety precautions and programs.” Id. at 4. Once drivers were trained, Dynamex had a continuing obligation to monitor driver performance to ensure that deliveries were made on time and in accordance with Google's standard operating procedures.

         b. Masters, Agents, and Indirect Drivers

         Dynamex contends it did not have any W-2 employees that performed Google Express deliveries. In the beginning, deliveries were performed by (1) independent contractors who contracted directly with Dynamex, (2) drivers who worked for Master Independent Contractors (“Masters”) that contracted with Dynamex, and (3) drivers who worked for Agents that contracted with Dynamex. After October 31, 2014, however, Dynamex ceased contracting directly with individual drivers and, from that point forward, all Google Express deliveries were made by drivers who were associated with either a Master or an Agent.^[1]

         Masters were the primary source of drivers Dynamex used to complete Google Express deliveries. Masters contracted directly with Dynamex. In order to be eligible, Masters were required to have a business license and be an incorporated company, limited liability company (“LLC”), or special corporation. There were two type of drivers provided by Masters: the owners of the contracting “Master” entities and other individuals who contracted with or were employed by Masters. Dynamex referred to the latter group as “Indirect Drivers.” Masters were required to have at least one Indirect Driver (the owners were permitted but not required to be drivers). Masters also had to provide insurance for their drivers, which they could purchase through Dynamex. Dynamex used at least 19 Masters to perform Google Express deliveries in Massachusetts: Banana Hill Courier Service, Braulio Vega, Elite Delivery Services Inc., Eureka Logistics, Omega Express Courier Service, R&R Courier Service, LLC, Rafferty & Family Enterprises, LLC, Red Line Trucking LLC, RMB Transport, Roberto Ozuna LLC, S&B, ^[2] Sam Courier, Soni Courier Service LLC, TDOO Express Services Inc., Thomas Multi Services LLC, Time Bandit Courier, Topline Courier, United Transportation System LLC, and World Trans Inc. In total, Masters provided Dynamex with 122 Indirect Drivers that performed Google Express deliveries in Massachusetts during the proposed class period.

         Agents were larger transportation companies that Dynamex used when it needed additional drivers to cover excess demand for Google Express delivery services. Agents also contracted directly with Dynamex. Like Masters, Agents were required to have a business license and be an incorporated company, LLC, or special corporation. Unlike Masters, however, they needed to have a verifiable brick-and-mortar location, a website, and more than ten total drivers. Agents also had to perform their own background checks, drug tests, and vehicle checks and were solely responsible for providing insurance for their drivers. Finally, 50% or more of Agents' business had to come from companies other than Dynamex. Dynamex referred to all drivers provided by Agents as “Indirect Drivers.” Dynamex used two Agents to perform Google Express deliveries in Massachusetts: Famm Driving and Patriot Express Logistics LLC. In total, Agents provided Dynamex with eight Indirect Drivers that performed Google Express deliveries in Massachusetts during the proposed class period.

         In general, Dynamex did not require its Masters to classify their drivers as either W-2 employees or independent contractors. However, Elite Delivery Services Inc., Omega Express Courier Service, LLC, Rafferty & Family Enterprises LLC, and Topline Courier signed a “Broker/Motor Carrier Master Agreement” with Dynamex in 2009 which required that all drivers either be “directly employed and paid hourly by [the Master] or provided to [the Master] by a bona fide employment staffing agency.”^[3] Dkt. No. 79-2 at 16-17, 27-28, 56-57, 171-72. A representative from R&R Courier Service, LLC also has submitted an affidavit stating that it employed its Indirect Drivers as W-2 employees. In total, the Masters and Agents who are known to have used W-2 employees provided Dynamex with 18 Indirect Drivers. Meanwhile, S&B classified its Indirect Drivers as independent contractors who filed Form 1099s with the IRS. Ouadani also attempted to subpoena employment records from 19 of the Masters and Agents. Only six Masters or Agents responded to the subpoenas, and only two of those -- Eureka Logistics and Patriot Express Logistics LLC -- produced tax forms for their Indirect Drivers. According to the tax forms, both Eureka Logistics and Patriot Express Logistics LLC paid their Indirect Drivers as independent contractors. In total, the Masters and Agents who are known to have used independent contractors provided Dynamex with 36 Indirect Drivers. It is not clear from the record whether the remaining Masters and Agents classified their drivers as W-2 employees or independent contractors.

         c. Recruiting, Onboarding, and Orientation

         Certain basic facts about the recruiting and onboarding of Indirect Drivers are undisputed. Pursuant to its contracts with the Masters, Dynamex performed the background checks, driving checks, drug tests, and other onboarding tasks for Indirect Drivers who worked for Masters. Dynamex did not perform these tasks for Indirect Drivers who worked for Agents. Rather, under their contracts with Dynamex, the Agents handled most onboarding tasks and certified to Dynamex that they had been completed. Otherwise, the parties extensively dispute the process by which drivers came to be drivers for Google Express.

         Ouadani claims that Dynamex recruited the Indirect Drivers through internet advertisements on websites such as Craigslist and Indeed.com. The advertisements specified that Dynamex was looking for independent contractors with their own vehicles who were willing to work for shift pay and no commissions. Indeed, this is how Ouadani first learned about the opportunity to perform Google Express deliveries. Dynamex concedes that from March 16, 2016 to June 10, 2016 it ran such an advertisement but insists that advertisement was placed by mistake and was an exception to its ordinary practice. Dynamex claims that the rest of time it only advertised for third-party companies (i.e., Masters and Agents) that could provide drivers to perform deliveries for its clients, such as Google. Dynamex also points out that not all the Indirect Drivers approached it directly. Some drivers, for example, were associated with Masters well before they began driving for Google Express. In those cases, the Masters would suggest to Dynamex the drivers they wanted to perform Google Express deliveries, which would trigger the onboarding process.

         Ouadani also contends that when prospective drivers contacted Dynamex about performing delivery services in response to an advertisement, Dynamex would ask them to come into its Wilmington office. Once there, Dynamex would have the prospective drivers fill out paperwork and submit to a drug test. The paperwork included a job application and consent forms for background and driving checks. Ouadani claims Dynamex then “assigned” prospective drivers to the Masters with whom they would contract directly.

         Dynamex disputes many of the details of how Ouadani characterizes this process. First, it denies that the process always followed this order. Instead, Dynamex contends that ordinarily once a prospective driver contacted the company, it would refer them to the Masters before completing any additional onboarding. Second, it denies that prospective drivers filled out a job application or that it “assigned” the drivers to Masters. Dynamex contends that when prospective drivers first came to its office they were provided with a list of Masters who might be hiring. Both the drivers and the Masters were then free to decide whether or not to enter into an employment relationship. If a prospective driver and a Master did choose to associate, then the Master would send the driver back to Dynamex for onboarding.

         Regardless of how the Indirect Drivers came to Dynamex, the SOW required that all Indirect Drivers complete an orientation program before they could began performing Google Express deliveries. The parties do not dispute the essential details of the orientation program. The first part of the program was a three to five-hour training called “Intrepid” which was designed by Google. Intrepid covered various subjects, including how to interact with customers, perform deliveries, and resolve delivery issues consistent with Google's standard operating procedures. The Indirect Drivers completed the Intrepid training at Dynamex's Wilmington office. The second part of the program was an online training called “Marshall” which also was designed by Google and was intended to familiarize the Indirect Drivers with the Google application they would be using to make deliveries. The final part of the program was an on-the-road orientation where the Indirect Drivers rode along with more experienced drivers to get hands on experience before performing deliveries solo -- the more experienced driver was not always from the same Master or Agent as the trainee driver.

         As part of the onboarding process, Google would issue each driver an email address with the extension “dynamex.courier-ops.com” that Google used to communicate with them. The Indirect Drivers also were required to use a Google-approved phone and a “Socket” scanner. Ouadani claims that Dynamex issued the required phones and scanners to the Indirect Drivers. Dynamex disagrees, claiming that it did not issue or lease any equipment directly to the Indirect Drivers. Instead, the Indirect Drivers leased the phones and scanners from their Masters or Agents, who in turn had leased them from Dynamex, who in turn leased them from Google.

         d. Scheduling and Deliveries

         Once the Indirect Drivers had been onboarded, trained, and supplied with the necessary equipment, they were ready to begin making deliveries. Up until mid-August 2016, the standard Google Express shift was four hours long. From mid-August to October 2016, shifts were between four and six hours long. Shifts were scheduled based on Google's anticipated need for drivers and the availability of individual drivers. Ouadani claims that the drivers reported their availability directly to Dynamex, and then Dynamex scheduled their shifts. Dynamex disputes that this was always the case. According to Dynamex, sometimes the Indirect Drivers would inform Dynamex of their availability, but other times they would inform their Masters or Agents, who in turn would inform Dynamex. Dynamex employees would then input the drivers' availability into the Google application and the drivers would be notified of their assigned shifts.

         Neither Google nor Dynamex required the Indirect Drivers to work a certain number of shifts per week. But the shifts were for pre-determined time slots and, once Indirect Drivers were assigned a shift, they were required to work that shift. If a driver was unable to work an assigned shift, they were supposed to let their Master or Agent know. The Master or Agent would then inform Dynamex. Conversely, if Dynamex needed additional drivers to cover shifts, it would reach out to the Masters and Agents to see if they had any available drivers. Under the SOW, Google charged Dynamex a fee for shifts that went uncovered and, if a shift went uncovered because the assigned driver did not show, Dynamex would pass that charge on to the driver's Master or Agent. S&B, for example, would then pass these fees on to the drivers themselves by deducting from their pay checks. But the parties dispute whether the Masters and Agents always would charge their drivers for missed shifts.

         For each shift, drivers were required to report to an assigned starting location 15 minutes before the shift started. The starting location was selected and communicated to the drivers by Google. Drivers were required to login to the Google Express application five minutes before their shift started, but they could only login if they were already at their starting location. Once a shift started, drivers were required to complete deliveries in the order they were assigned by Google and in accordance with the routes provided by Google. Although drivers primarily took directions from Google during their shifts, they would sometimes receive additional instructions from Dynamex dispatchers. Dynamex claims, however, that when this happened its dispatchers were only relaying instructions that came from Google.

         Dynamex also periodically would send emails to its Masters and Agents asking that they remind their drivers about Google's standard operating procedures for making deliveries and/or notify them of changes to those procedures. Google tracked the drivers' performance through its application and would charge Dynamex fees when the drivers did not follow the specified procedures (e.g., showing up late for a shift, making deliveries out of order). Dynamex would then pass these fees on to the drivers' Masters or Agents via deductions from their per shift payments. Again, the parties dispute whether these charges were always passed on to the drivers by their Masters or Agents. The parties also dispute whether Dynamex had the authority to terminate drivers if they failed to perform adequately. Dynamex insists that only Google or the Masters and Agents could terminate a driver.

         While completing Google Express deliveries, drivers were required to wear Google-approved apparel. Ouadani claims that this was a Dynamex requirement, while Dynamex claims it was a Google requirement. What constituted Google-approved apparel meant different things at different times. From June 2014 through at least February 2016, Google required that Indirect Drivers wear uniforms and badges bearing its own logo. And, from at least April 2016 to October 2016, it required uniforms and badges with Dynamex's logo. Drivers were also required periodically to complete supplemental trainings on Google standard operating procedures. These trainings were designed by Google, and Dynamex would notify the drivers of the trainings. As with the uniform policy, the parties disagree about whether Dynamex or Google required the supplemental trainings.

         e. Payment and Deductions

         Dynamex did not directly make payments to the Indirect Drivers. Instead, Dynamex made payments to the Masters and Agents for the shifts their Indirect Drivers worked. These payments were for a per shift amount less any applicable deductions. Dynamex paid a fixed amount per shift regardless of the time needed to complete the shift or the miles driven. This per shift rate was negotiated between Dynamex and the individual Masters and Agents. Dynamex deducted from these amounts various costs for services and equipment, such as background checks, insurance, uniforms, scanners, and radios. Dynamex also took deductions when a driver missed a shift, logged in late for a shift, or when a Google Express customer complained about missing or damaged goods (i.e., customer “cargo claims”). All of this information was tracked in Dynamex's proprietary software system, Dynamex Enterprise Courier Software (“DECS”).

         The parties dispute how the Masters and Agents in turn paid their drivers. There is limited evidence in the record on this score. Ouadani contends that the Masters and Agents simply passed through the payments (and deductions) to the Indirect Drivers. He points to several pieces of evidence to support this theory. One of the forms that Indirect Drivers signed as part of their onboarding was the Indirect Driver/Helper Deduction Agreement (the “Deduction Agreement”). Each Deduction Agreement listed the various deductions Dynamex would take per shift and it was signed by Dynamex, a representative of the Master or Agent, and the Indirect Driver. Also, the “settlement statements” generated by Dynamex's DECS system and sent to the Masters and Agents reflected the “Total payment to driver, ” not the payment to the Master or Agent. And S&B simply passed the per shift payments and deductions on to its Indirect Drivers, albeit after taking a 17.5% cut for itself.

         Dynamex counters that at least some Masters and Agents paid their Indirect Drivers as W-2 employees, but presents no evidence on whether the employees were paid hourly or on a shift basis.

         PROCEDURAL HISTORY

         Ouadani filed this proposed class action on October 11, 2016. His complaint asserts class claims for misclassification under Mass. Gen. Laws ch. 149 § 148B (the “Massachusetts Independent Contractor Statute”) (Count I), improper deductions under Mass. Gen. Laws ch. 149 § 148 (the “Massachusetts Wage Act”) (Count II), minimum wage violations under Mass. Gen. Laws. ch. 151, § 1A (the “Massachusetts Minimum Wage Law”) (Count III), and unjust enrichment (Count IV). It also asserts an individual claim for retaliation (Count V) and a collective action claim for minimum wage violations under the Fair Labor Standards Act (Count VI). Dynamex moved to dismiss and/or compel arbitration of all claims on February 9, 2017. The Court denied Dynamex's motion on May 10, 2017. Dynamex then appealed the Court's decision, and the case was stayed while the appeal was pending. On November 21, 2017, the First Circuit denied Dynamex's appeal. The Court subsequently lifted the stay and discovery on liability proceeded between the parties.

         On October 14, 2018, Ouadani filed a motion for class certification as to Counts I and II. He seeks a class with the following definition:

[A]ll individuals categorized by Dynamex as “indirect drivers” who performed Google Express deliveries between July 16, 2014 and October 14, 2016.

         On the same day, Ouadani also filed a motion for summary judgment as to Count I only. Defendants opposed both motions. The Court held a hearing on Ouadani's class certification and summary judgment motions on January 29, 2019.

         MOTION FOR ...