Ninth Circuit Denies Petition to Review Class Certification Order in Misclassification Suit

On November 10, 2022, the Ninth Circuit denied the request of Jan-Pro Franchising International Inc. (“Jan-Pro”) to review the United States District Court for the Northern District of California’s August 2, 2022 order granting a group of janitors class action certification in a lawsuit alleging Jan-Pro misclassified its janitors as independent contractors.

The action began in 2008 when a group of janitors sued Jan-Pro in Massachusetts federal court. After the case was severed, a group of California-based janitors brought their claims forward in the Northern District of California. In 2017, U.S. District Judge William Alsup determined that the workers were independent contractors and thus not entitled to legal protections and benefits such as minimum wage, overtime pay, and paid sick time. The workers then appealed the finding to the Ninth Circuit, which remanded the District Court ruling on the ground that the ABC test can be applied retroactively.

Earlier this year, Judge Alsup issued a tentative order signaling that upon applying the ABC Test, he was going to rule that the janitors were employees instead of independent contractors. The parties were allowed to file response briefs to the tentative order. On August 2, the district court granted class certification and rejected Jan-Pro’s argument that it did not waive its right to arbitration. In his decision, Judge Alsup also granted summary judgement on the janitors’ claims that Jan-Pro failed to pay for mandatory training, did not reimburse workers for uniforms and cleaning supplies, and made improper deductions.

Following the entry of the order in the janitors’ favor, Jan-Pro asked the Court of Appeals for permission to appeal on August 16, 2022, arguing that they could not have moved to arbitrate the claims at issue earlier because the purported class members were not parties to the suit until the court granted certification on August 2.

In its brief in support of its petition to appeal, Jan-Pro cited the U.S. Supreme Court’s decision in Robyn Morgan v. Sundance Inc., a May 2022 case holding that a party waives its right to arbitration if it knew of or acted inconsistently with that right. The Supreme Court clarified in Sundance that a party’s right to attempt arbitration after first litigating the case does not hinge on whether the delay prejudiced the other party.

The janitors countered this argument in their response brief, claiming that Jan-Pro waived its right to arbitration by engaging in class wide discovery, litigating the case for over a decade, and failing to mention arbitration despite being aware that the company was facing a class action. The janitors further argued that the district court correctly found their unlawful deductions claims were governed by the ABC test and not the Borello test.

The ABC test was introduced by the 2018 California Supreme Court Decision in Dynamex Operations West Inc. v. Superior Court of Los Angeles County. Under the test, a worker is presumed to be an employee unless the company can prove the worker is free from the company’s control, performs work outside the line of the company’s business, and operates as an independent firm. The ABC is generally more employee-friendly than the Borello test, which was established under S.G. Borello & Sons Inc. v. Department of Industrial Relations and weighs 11 factors and focuses on employers’ control over their workers.

On November 10, a two-judge panel consisting of U.S. Circuit Judges M. Margaret McKeown and Kim McLane Wardlaw denied Jan-Pro’s bid for an interlocutory appeal of the lower court’s August class certification decision. The panel did not give an explanation for its decision.

The case is Roman et al. v. Jan-Pro Franchising International Inc., case number 22-80081, in the U.S. Court of Appeals for the Ninth Circuit, and Depianti et al v. Jan-Pro Franchising Int’l, Inc., No. 3:16-cv-05961-WHA, in the United States District Court for the Northern District of California.

The legal team at Miller Shah LLP has extensive experience with employment misclassification and class actions. If you have any questions regarding this subject or this post, please contact Casey Yamasaki (ctyamasaki@millershah.com) or Chiharu Sekino (cgsekino@millershah.com). The Firm can also be reached toll-free at (866) 540-5505.