CWS 3.0: January 29, 2014

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$10 Million Judgment in IC Misclassification Suit

A San Diego County Superior Court judge ruled last month that the San Diego Union Tribune had misclassified its newspaper carriers as independent contractors in a nearly $10 million judgment.

A group of newspaper carriers filed a class action lawsuit against the Union Tribune in January 2009, claiming that they should have been classified as employees rather than independent contractors and are entitled to reimbursement of their mileage and other expenses. The class action was certified in September 2011.

Superior Court Judge John S. Meyer adjudicated the case and ultimately found that the 1,235 class members were in fact employees of the Union Tribune and not independent contractors as the Union Tribune had asserted. The court awarded $4.95 million to the class for their unreimbursed expenses, such as for car insurance and mileage. The court awarded $6.16 million to the attorneys on Jan. 21, $1.25 million of which is to be paid out of the award to the class.

Central to the court’s decision was control: The court noted that the Union Tribune’s contract with the carriers actually gave the paper extensive control over the manner and means in which the carriers performed their service. For example, the paper instructed the carriers on how to perform their service on a daily basis. To avoid subscriber complaints, the Union Tribune provided intensive training and coaching of the carriers, which is indicative of employee status. And if subscribers did complain, the paper would reduce the carriers’ compensation. Further, the carriers could not trade routes, and the amount of each carrier’s compensation was the same and non-negotiable.

The court also noted other factors that indicated employee status, such as how the paper would call to wake up carriers who did not arrive on time, monitored the carriers within the distribution center and instructed them how they should pick up, assemble and pack the newspapers. Such a level of supervision is indicative of employee status.

The court further found that the Union Tribune itself knew that their attempt to treat the carriers as independent contractors as opposed to employees was at best questionable and more than likely an express admission that the Union Tribune knew it was misclassifying these carriers as independent contractors. The reason the Union Tribune attempted to misclassify the carrier as independent contractors was to avoid taxes and potential liability for carriers’ accidents on the road.

The attorneys in the case, Callahan & Blaine, brought a similar lawsuit against the Orange County Register, which resulted in a $38 million settlement in 2009, and has similar class actions in process in Sacramento against the Sacramento Bee and the Fresno Bee.

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