Scott Tarter v. South East Personnel Leasing, Inc.

PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION OF DEFENDANT’S FOURTH, FIFTH, AND SIXTH AFFIRMATIVE DEFENSES

 

MOVING PARTY: Plaintiff Scott Tarter

RESPONDING PARTY(S): Defendant South East Personnel Leasing, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Scott Tarter Brings a single cause of action against Defendant South East Personnel Leasing, Inc., seeking civil penalties under Labor Code sections 2698, et seq. (“PAGA”), for Defendant’s alleged violations of applicable Labor Code statutes and Wage Order regulations.

Plaintiff now moves for summary adjudication of Defendant’s Fourth, Fifth, and Sixth affirmative defenses.  Defendant opposed.

TENTATIVE RULING:

Plaintiff’s Motion for Summary Adjudication is DENIED in full.

Moving party to give notice, unless waived.  

DISCUSSION:

Motion for Summary Adjudication

I. Evidentiary Objections

Pursuant to CCP § 437c(q), the Court only rules upon objections asserted against evidence which the Court deems to be material to the disposition of this motion, as follows:

Defendant’s Objections to Exhibits 2 through 6 are OVERRULED.

Plaintiff’s Objections to the Declaration of Heather Clark are OVERRULED.

(See generally, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-49.)

II. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

A party may move for summary adjudication as to one or more affirmative defenses if the party contends that there is no merit to an affirmative defense as to any cause of action. (CCP § 437(f)(1).) A motion for summary judgment should be granted only if it completely disposes of an affirmative defense. (§ 437(f)(2).)

III. Analysis

A. Background

Although the precise operations of Defendant’s business may be in dispute, this much appears undisputed: Defendant is a “Professional Employer Organization” (“PEO”) that contracts with businesses to manage those businesses’ employees.  Through this process, Defendant assumes some obligations on behalf of the businesses it contracts with, such as payroll and benefits. 

In this case, Defendant contracted with non-party KVS Trucking, Inc, to provide it employee management services. The parties dispute whether it is Defendant, KVS Trucking, or both who were Defendant’s employer(s). 

B. Fourth Affirmative Defense (No Control Over Plaintiffs’ Wages, Hours or Working Conditions)

Plaintiff moves for summary judgment on Defendant’s Fourth Affirmative Defense. Defendant’s Fourth Affirmative Defense states: “The Complaint, and each cause of action alleged therein, fails because SPLI did not control Plaintiff's wages, hours or working conditions.” (See Answer, 04/30/2018.)

Plaintiff argues this defense fails because express provisions of Defendant’s “California Addendum,” a part of its “Client Leasing Agreement,” “demonstrates that Defendant engaged in, or retained the right to control, activities that constitute control over the wages, hours, or working conditions” of Plaintiff.  (MSJ 12: 2-4; O’Dell Decl., Exh. 3.) In relevant part and among other things, the California Addendum provides that Defendant “Negotiates with Client for such matters as the time of work, the place of work, the type of work, the working conditions, the quality of services, and the price of services”; “Determines Lease Employee assignments or reassignments, even though the Leased Employee retains the right to refuse specific assignments”; and “Sets Leased Employees’ rate of pay, whether or not through negotiation.” (Id; PSSUMF, Issue No. 1, ¶¶ 2, 3, 4.) Plaintiff contends that these factors, among other representations made in the California Addendum, establish that Defendant did control Plaintiff's wages, hours, or working conditions.

Defendant, on the other hand, argues it was not Plaintiff’s employer or joint employer. (DSSDMF, Issue No. 1, ¶ 4.) Rather, that role rested solely with KVS Trucking, Inc., the client who Defendant contracted with. Defendant submits the Declaration of Heather Clark, its Director of Human Resources and Benefits, who attests it was KVS (and not Defendant) who “was responsible for assigning work, scheduling worksite employees (including Plaintiff), recording time, implementing policies related to meal and rest breaks and reimbursements.” (Clark Decl. ¶ 10.) Moreover, Defendant does not “negotiate or set worksite employees' rate(s) of pay; control when worksite employees either report to work and/or stop working; set worksite employees' work schedules; hire, discipline, and/or terminate worksite employees; or train and/or supervise worksite employees as to how to perform their job duties.”  (Id. ¶ 5.) Instead, Defendant merely provided KVS with “certain administrative human resources services,” including: “(a) payroll administration; (b) employment tax administration; (c) unemployment insurance tax administration; and (d) securing/administering workers' compensation benefits.” (Id. ¶ 2.)

While the California Addendum attempts to delineate the respective management roles between Defendant and KVS Trucking, Inc., there is nothing within the plain text of the Addendum that conclusively establishes an employer relationship between Plaintiff and Defendant.  Even if the document did purport to conclusively state that such a relationship existed, Plaintiff cites no authority suggesting that fact would or could be dispositive. 

Going further, Defendant presents evidence that it had little control over Plaintiff's wages, hours, or working conditions. (DSSDMF, Issue No. 1, ¶ 4.)  It is notable that Plaintiff fails to present any of his own testimony (or that of some other “employee”) detailing the relationship between the parties. 

In finding a triable issue of material fact, this court is mindful that it must “liberally construe the evidence in support of the party opposing summary judgment and resolve any doubts concerning the evidence in favor of that party.” (Medina v. Equilon Enterprises, LLC (2021) 68 Cal. App. 5th 868, 874.) Doing so here, this court finds a triable issue of material fact as to whether Defendant controlled Plaintiff’s wages, hours, or working conditions.

Accordingly, Plaintiff’s Motion for Summary Adjudication of Defendant’s Fourth Affirmative Defense is DENIED.

C. Fifth Affirmative Defense (Did Not Suffer or Permit Plaintiffs to Work)

Plaintiff next moves for summary adjudication of Defendant’s Fifth Affirmative Defense, which states: “The Complaint, and each cause of action alleged therein, fails because SPLI did not suffer or permit Plaintiff to work.” (See Answer.) 

“[T]he ‘suffer or permit to work’ definition is extraordinarily broad, reaching all individual workers who can reasonably be viewed as working in the [hiring entity's] business.” (Medina, supra, 68 Cal. App. 5th at 875 [quotations omitted].) Under the “suffer or permit to work” standard, “the basis of liability is the defendant's knowledge of and failure to prevent the work from occurring.” (Id.)

Plaintiff contends this affirmative defense fails because “Defendant knew the aggrieved employees were working, had the power to stop or hinder the aggrieved employees from preforming that work, and refrained from doing either.” (MSJ 13: 21-22.) Plaintiff’s evidence in his separate statement includes the same as that presented above, namely, the duties delineated in the California Addendum purporting to show that Defendant “suffered or permitted” Plaintiff to work.  (See PSSUMF, “Issue No. 2,” 1-5.) In addition, Plaintiff also presents an “Applicant Agreement” signed by Plaintiff, in which the parties agreed that Plaintiff would be a “co-employee of [Defendant] and KVS Inc.” (PSSUMF, Issue No. 2, ¶ 6; O’Dell Decl., Exh. 4. [emphasis added].) The Agreement continues that “SPLI has limited responsibilities as a co-employer and does not assume all of the employer responsibilities of [KVS Trucking],” but that “either SPLI or [Plaintiff] can terminate [the] relationship at any time.” (O’Dell Decl., Exh. 4.)

Defendant’s evidence in opposition is much the same as that for the Fourth Affirmative Defense: namely, that it had limited control over Plaintiff’s work, and merely administered or managed payroll, taxes, workers’ compensation, and unemployment benefits. (DSSDMF, Issue No. 2, ¶¶ 4, 6.)

Here, while the admission in the Applicant Agreement that Defendant was Plaintiff’s “co-employer” appears significant, Plaintiff cites no authority suggesting it is dispositive.  Moreover, that representation is contradicted by Defendant’s evidence contending that it did nothing more than administer payroll, taxes, workers’ compensation, and unemployment benefits for KVS Trucking. (DSSDMF, Issue No. 2, ¶ 6.) Thus, at minimum, there is again a triable issue of material fact as to whether Defendant suffered or permitted Plaintiff to work.

Accordingly, Plaintiff’s Motion for Summary Adjudication of Defendant’s Fifth Affirmative Defense is DENIED.

D. Sixth Affirmative Defense (No Common Law Employment Relationship)

Finally, Plaintiff moves for summary adjudication of Defendant’s Sixth Affirmative Defense, which states: “The Complaint, and each cause of action alleged therein, fails because SPLI did not ‘engage’ Plaintiff thereby creating a common law employment relationship.” (See Answer.)

“Under the common law, “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal. 4th 522, 531.) “What matters is whether the hirer “retains all necessary control” over its operations. (Id. [emphasis in original].) “Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because ‘[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent's activities.’” (Id.)  But other secondary factors to consider include “(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.” (Id. at 532.) 

Plaintiff relies on the same contracts to argue that a common law employment relationship existed here. First, it again highlights the California Addendum, which sets forth the contractual control maintained by Defendant.  (PSSUMF, Issue No. 3, ¶¶ 2, 3, 4; O’Dell Decl., Exh. 3.) Second, it again presents the Applicant Agreement, which expressly refers to Defendant as Plaintiff’s “co-employer” and allows Defendant to terminated Plaintiff’s employment. (PSSUMF, Issue No. 3,  ¶ 5, O’Dell Decl., Exh. 4.) Under the common law test, these written contracts are recognizably a “significant factor for consideration” when “assessing a hirer’s right to control a hiree's work.” (Ayala, 59 Cal. 4th at 534.

In opposition, Defendant again argues it did not control the means and manner by which Plaintiff or any other client’s employee performed his work and did not have day to-day control over Plaintiff or any other worker for a client company. (DSSDF, Issue No. 3, ¶¶ 1, 2, 3)

While the contractual term giving Defendant the right to terminate Plaintiff’s employment is “strong[] evidence” of a common law employment relationship, the question is also highly fact intensive. (See Ayala, supra, 59 Cal. 4th at 532 [noting eight other secondary factors a court may consider].) This court is also mindful that “what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise.” (Ayala, supra, 59 Cal. 4th at 533.) The contracts at issue here suggest that Defendant, does in fact, retain the right to exercise control, at least where it is favorable for Defendant to do so.  

Bet that as it may, based on the totality of the evidence submitted here, this court cannot find that these contracts, standing alone, create a common law employment relationship as a matter of law. Rather, Defendant has shown a triable issue of material fact on this affirmative defense as well. 

Accordingly, Plaintiff’s Motion for Summary Adjudication of Defendant’s Sixth Affirmative Defense is DENIED.

Moving party to give notice.

IT IS SO ORDERED.

Dated:   March 14, 2023 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing.  All interested parties must be copied on the email.  It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.