EDWARD SLAYMAN; DENNIS MCHENRY; JEREMY BRINKER; JON LEIGHTER; DAVID SPICER, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
FEDEX GROUND PACKAGE SYSTEM, INC., DBA Fedex Home Delivery, Inc., Defendant-Appellee. EDWARD SLAYMAN; DENNIS MCHENRY; JEREMY BRINKER; JON LEIGHTER; DAVID SPICER, individually and on behalf of all others similarly situated, Plaintiffs-Appellees,
FEDEX GROUND PACKAGE SYSTEM, INC., DBA Fedex Home Delivery, Inc., Defendant-Appellant
Argued and Submitted March 6, 2014, Portland, Oregon
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Appeal from the United States District Court for the District of Oregon. D.C. Nos. 3:05-cv-01127-HZ, 3:07-cv-00818-HZ. Marco A. Hernandez, District Judge, Presiding.
The panel reversed the Multidistrict Litigation Court's grant of summary judgment to FedEx Ground Package System, Inc., its denial of plaintiff FedEx drivers' motion for partial summary judgment, and its certification of plaintiffs' classes insofar as they sought prospective relief in two class actions alleging that FedEx drivers in Oregon were employees rather than independent contractors.
The panel held under Oregon law that plaintiff FedEx drivers were employees as a matter of law under both the right-to-control and economic-realities tests. The panel remanded to the district court with instructions to enter summary judgment for plaintiffs on the question of employment status. The panel also held that one of the classes lacked Article III standing to seek prospective relief, and the other class's claims for prospective relief became moot before the Multidistrict Litigation Court certified the class.
Mark. A. Friel, Steve Douglas Larson, Scott Alden Shorr (argued), Stoll Berne, Portland, Oregon, for Plaintiffs-Appellants/Cross-Appellees.
Jonathan Hacker (argued), O'Melveny & Myers LLP, Washington, D.C.; Anton Metlitsky, O'Melveny & Myers LLP, New York, New York; Robert Schwartz and Scott Voelz, O'Melveny & Myers LLP, Los Angeles, California, for Defendant-Appellee/Cross-Appellant.
Richard Pianka, Arlington, Virginia, for Amici Curiae American Trucking Associations, Inc. and Oregon Trucking Associations, Inc.
Before: Alfred T. Goodwin, Stephen S. Trott, and William A. Fletcher, Circuit Judges.
W. FLETCHER, Circuit Judge:
As a central part of its business, FedEx Ground Package System, Inc. (" FedEx" ), contracts with drivers to deliver packages to its customers. The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx's appearance standards. FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform work on those routes, they may do so only with FedEx's consent.
FedEx contends its drivers are independent contractors under Oregon law. Plaintiffs, two classes of FedEx drivers in Oregon, contend they are employees. We agree with plaintiffs.
A. Factual Background
Named plaintiffs, former FedEx drivers, represent two classes comprising approximately 363 individuals who were full-time delivery drivers for FedEx in Oregon at any time between 1999 and 2009. Plaintiff class members worked for FedEx's two operating divisions, FedEx Ground and FedEx Home Delivery. FedEx Ground deals primarily with business-to-business deliveries, while FedEx Home Delivery deals primarily with residential deliveries. The differences between the two divisions do not matter to this appeal.
FedEx characterizes its drivers as independent contractors. FedEx's Operating Agreement (" OA" ) governs its relationship with the drivers. The OA's " Background Statement" provides:
[T]his Agreement will set forth the mutual business objectives of the two parties . . . but the manner and means of reaching these results are within the discretion of the [driver], and no officer or employee of FedEx . . . shall have the authority to impose any term or condition on [the driver] . . . which is contrary to this understanding.
A provision of the OA, titled " Discretion of Contractor to Determine Method and Means of Meeting Business Objectives," states:
[N]o officer, agent or employee of FedEx . . . shall have the authority to direct [the driver] as to the manner or means employed . . . . For example, no officer, agent or employee of FedEx . . . shall have the authority to prescribe hours of work, whether or when the [driver] is to take breaks, what route the [driver] is to follow, or other details of performance.
FedEx's relationship with its drivers also is governed by various policies and procedures prescribed by FedEx.
1. Job Requirements
The OA requires FedEx drivers to pick up and deliver packages within their assigned " Primary Service Area[s]." Drivers must deliver packages every day that FedEx is open for business and must deliver every package they are assigned each day. They must deliver each package within a specific window of time negotiated between FedEx and its customers. After each delivery, drivers must use an electronic scanner to send data about the delivery to FedEx. FedEx does not require drivers to follow specific delivery routes. However, FedEx tells its managers to design and recommend to its drivers routes that will " reduce travel time" and " minimize expenses and maximize earnings and service."
FedEx does not expressly dictate working hours, but it structures drivers' workloads to ensure that they work between 9.5 and 11 hours every working day. If a driver's manager determines that the driver has more work than he or she " can reasonably be expected to handle" in a 9.5- to 11-hour day, the manager may reassign part of the driver's workload to other drivers. Drivers are compensated according to a somewhat complex formula that includes per-day and per-stop components. Drivers are expected to arrive at their delivery terminals each morning, and they are not supposed to leave the terminal until all of their packages are available for pick-up. FedEx instructs managers to make sure that drivers properly fill out their paperwork and prepare their packages for delivery. Each terminal sets a time by which all drivers must return at the end of the day. If drivers want their trucks loaded by FedEx's package-handlers, they must leave their trucks at the terminal overnight.
The OA gives FedEx the authority to " reconfigure" a driver's service area upon five days' written notice. Drivers have the right to propose a plan to avoid reconfiguration, " using means satisfactory to FedEx." FedEx " may, in its sole discretion," reject a plan that does not " provide reasonable means to continue" the driver's service area. Should a driver's service area be reconfigured in such a way that the driver gains customers, FedEx may reduce that driver's pay to compensate other drivers who lost customers in the reconfiguration.
FedEx trains its drivers on how best to perform their job and to interact with customers. The OA provides that, during the first 30 days of the contract term, FedEx " shall . . . familiarize [drivers] with various quality service procedures developed by FedEx." The OA requires drivers to conduct themselves " with integrity and honesty, in a professional manner, and with proper decorum at all times." They must " [f]oster the professional image and good reputation of FedEx."
A driver's managers may conduct up to four ride-along performance evaluations each year, " to verify that [the driver] is meeting the standards of customer service" required by the OA. Managers are supposed to observe and record small details about each step of a delivery, including whether a driver uses a " dolly or cart" to move packages, demonstrates a " sense of urgency," and " [p]laces [his or her] keys on [the] pinky finger of [his or her] non-writing hand" after locking the delivery vehicle. After finishing a ride-along evaluation, managers are supposed to give immediate ...