Flores et al v. Velocity Express, LLC, No. 3:2012cv05790 - Document 156 (N.D. Cal. 2015)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT by Judge Jon S. Tigar granting in part and denying in part 147 Motion for Summary Judgment. (wsn, COURT STAFF) (Filed on 4/16/2015)
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Flores et al v. Velocity Express, LLC Doc. 156 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PHILLIP FLORES, et al., Case No. 12-cv-05790-JST Plaintiffs, 8 v. 9 10 VELOCITY EXPRESS, LLC, et al., Defendants. ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Re: ECF No. 147 United States District Court Northern District of California 11 Before the Court is Plaintiffs’ Motion for Partial Summary Judgment as to Successor 12 13 Liability and Joint Employer Status. ECF No. 147. For the reasons set forth below, the motion is 14 GRANTED IN PART and DENIED IN PART. 15 I. BACKGROUND 16 On November 9, 2012, Plaintiffs brought this case as a collective action under the Fair 17 Labor Standards Act (“FLSA”) and as a class action pursuant to California’s Labor Code and 18 Unfair Competition Law. ECF No. 1, ¶ 1. Plaintiffs allege that Defendant Velocity Express 19 misclassified its delivery drivers as independent contractors when they were, in fact, employees. 20 Id., ¶ 3. Because of the misclassification, Plaintiffs allege that Velocity Express failed to pay 21 Plaintiffs minimum wages and overtime. Id., ¶¶ 2, 4. 22 Velocity is now a defunct company that cannot satisfy a potential judgment. See ECF No. 23 150 at 1. Plaintiffs bring this motion in an attempt to establish that Defendants TransForce and 24 Dynamex should be held responsible for Velocity’s potential liability under the successor liability 25 and joint employer doctrines. Construed in the light most favorable to Defendants, the evidence 26 shows the following: 27 A few years before this litigation commenced, a private equity firm called ComVest 28 Dockets.Justia.com 1 acquired Velocity for $22 million. ECF No. 147 at 4.1 At that time, Velocity was “one of the 2 nation’s leading same-day package and courier delivery companies.” Id. During ComVest’s 3 ownership of Velocity, Velocity’s network grew to comprise 80 locations and 2,600 staff and 4 independent contractors. Id. at 4-5. In 2012, ComVest offered Velocity for sale at the price of $42 million. Id. at 6. 5 6 Defendants TransForce, Inc., and its subsidiary, Dynamex Operations East, LLC, agreed to 7 purchase Velocity for that price. TransForce is a Canadian business that seeks “‘[t]o establish 8 itself as a leader in the North American transportation and logistics industry . . . .’” Id. at 3 (citing 9 TransForce’s mission statement). Dynamex is a “‘transportation services company, competing in Canada and the USA with a specific focus on same-day logistics and outsourced transportations 11 United States District Court Northern District of California 10 services.’” Id. at 5-6. Before purchasing Velocity, TransForce engaged in a four-to-six-week due diligence 12 13 process, the purpose of which was to determine whether Velocity was what it appeared to be and 14 to ensure that it met “TransForce investment criteria.” Id. at 10-11. Specifically, TransForce 15 sought to ascertain “whether there were ‘any situations that would be so harmful that TransForce 16 wouldn’t touch the company’ and ‘to confirm the price.’” Id. at 11 (internal alteration omitted). 17 The due diligence process included the creation of a “data room” that held information regarding 18 Velocity’s business operations and resulted in the creation of a “Due Diligence Study,” which 19 TransForce’s due diligence team reviewed. Id. The Due Diligence Study revealed that there were 20 “several open issues” related to Velocity’s classification of its delivery drivers as independent 21 contractors, rather than as employees. Id. at 13. The Study characterized these “open issues” as 22 “a major risk for the company.” Id. Dynamex and TransForce were aware of the risk, but 23 disagreed with the Study’s characterization of the risk and accepted any potential risk “as a normal 24 course of business.” Id. 25 A merger agreement was prepared in anticipation of the sale, and attached to the agreement 26 was Velocity’s Company Disclosure Statement, which listed its outstanding liabilities and pending 27 Where the Court has cited Plaintiffs’ motion, it relies upon the evidence cited by Plaintiffs for the point at issue. 2 1 28 1 litigation, including this matter. Id. Dynamex and TransForce knew of “all actions listed on the 2 schedule of outstanding legal matters.” Id. Other than this litigation, the Disclosure Statement 3 also listed regulatory actions in New York and Washington related to Velocity’s classification of 4 its delivery drivers. Id. at 13-14. Dynamex and TransForce knew that these actions “could have 5 material adverse effects on” Velocity’s financial status. Id. at 14. 6 Based on these known risks, TransForce’s lead attorney for U.S. legal matters questioned 7 whether the purchase price would “accommodate costs of resolving the outstanding litigation.” Id. 8 Transforce attempted to negotiate an agreement whereby ComVest would assume liability for 9 outstanding litigation against Velocity, but ComVest demurred. Id. at 14-15. The sale went 10 United States District Court Northern District of California 11 forward and was completed in February 2013. ECF No. 150 at 3 (citing Spurchise Decl.). Immediately after TransForce and Dynamex acquired Velocity, TransForce Executive 12 Vice-President Brian Kohut sent a memorandum to all of Velocity’s employees, informing them 13 that “Velocity [would] continue to conduct it’s [sic] business as usual,” and asking Velocity 14 employees to “continue to do the same fine job for Velocity Express that they always have. Decl. 15 of Timothy J. Becker, ECF No. 148 (“Becker Decl.”), Ex. 27. In his deposition, Kohut agreed that 16 “TransForce had no intention of stripping down the company and selling all its assets.” Id., Ex. 3 17 at 57:11-15. In the initial period, Dynamex and TransForce kept the same management, the same 18 workforce, the same drivers, the same customers, the same equipment, the same terminal 19 managers, and the same warehouses. ECF No. 147 at 15-16. 20 In the meantime, Dynamex and TransForce formulated a formal Transition Plan whereby 21 Velocity would be folded into Dynamex over a nine-to-twelve-month period. Id. at 16. The Plan 22 for reorganization included “integration of both Velocity and Dynamex staff.” Id. (emphasis 23 omitted). During the first months after acquisition, TransForce terminated Velocity’s CEO and its 24 lead sales representative, the latter of whom took Velocity’s largest account with him. Id. n.10. 25 Velocity’s CFO also resigned during this period. Id. By March 2013, TransForce formally 26 decided to transition Velocity into Dynamex and to run both companies under the Dynamex name. 27 Id. at 16. 28 During the initial part of the transition, Velocity continued to operate as it had prior to the 3 1 acquisition, but “[a]s the company transitioned Velocity employees over to Dynamex, the business 2 community began to recognize that Velocity was operating under the ‘Dynamex flag.’” Id. at 17. 3 When Velocity submitted bids for new business, it began to use the Dynamex name. Id. 4 Dynamex and TransForce began to take over day-to-day business operations, including 5 transferring customer accounts to Dynamex’s system; hiring and firing Velocity personnel; and 6 funding Velocity operations, such as paying rent and leases for Velocity warehouses and 7 equipment. Id. at 18. By December 31, 2013, Velocity operations had been folded into Dynamex, 8 with all “the remnants of Velocity . . . within the acquiring company—Dynamex.” Id. at 19. 9 Defendants largely agree with this version of events, but add the following facts: (1) after TransForce and Dynamex acquired Velocity, Velocity failed, and so “Dynamex and TransForce 11 United States District Court Northern District of California 10 were faced with a stark choice: leave the business to crumble, or salvage what they could of the 12 investment”; (2) TransForce is a parent company to Dynamex, and Dynamex is a parent company 13 to Velocity, which in turn is a corporate entity distinct from both Dynamex and TransForce; (3) as 14 of this year, “only 18 of 80 Velocity facilities that existed at the time of Velocity’s acquisition 15 were in use by Dynamex,” and fewer than half of Velocity’s network vice presidents, terminal 16 managers, and Velocity employees were employed by Dynamex; and (4) “[i]n all respects, only a 17 fraction of the ‘old business’ was obtained by Dynamex and TransForce, the alleged successors.” 18 ECF No. 150 at 1-4, 6. 19 Defendants also dispute that Velocity Express and Dynamex have the same business model 20 or operations, or that Velocity was ever “folded into” Dynamex. In particular, Defendants explain 21 that “Velocity’s business model and operations [were] focused on arranging retail store 22 replenishment,” whereas Dynamex is focused on “end-customer delivery.” ECF No. 150 at 3. 23 They also contend that, when it was still operating, Velocity operated as an entity “separate and 24 distinct” from Dynamex. Id. at 3, 12-14, 14-15, 19. 25 Plaintiffs bring this motion, asserting that TransForce or Dynamex should be held liable 26 for Velocity’s actions on two bases. First, Plaintiffs allege that TransForce and Dynamex are 27 successors to Velocity’s business, and second, Plaintiffs contend that TransForce, Dynamex, and 28 Velocity are joint employers of Velocity’s former employees. 4 1 II. LEGAL STANDARD Summary judgment is proper when the “pleadings, depositions, answers to interrogatories, 2 3 and admissions on file, together with the affidavits, show that there is no genuine issue as to any 4 material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 5 56(c). An issue is “genuine” only if there is sufficient evidence from which a reasonable 6 factfinder could find for the moving party, and “material” only if the fact may affect the outcome 7 of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). All reasonable 8 inferences must be drawn in the light most favorable to the non-moving party. Olsen v. Idaho 9 State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). Unsupported conjecture or conclusory statements, however, do not create a genuine dispute of material fact and will not defeat summary 11 United States District Court Northern District of California 10 judgment. Surrell v. Cal. Water Serv. Co., 518 F.3d 1097, 1103 (9th Cir. 2008). The Court may 12 grant summary judgment as to a “part of each claim or defense,” provided no genuine dispute of 13 material fact exists and the movant is entitled to judgment as a matter of law as to that part of the 14 claim or defense. Fed. R. Civ. P. 56(a). 15 III. DISCUSSION 16 A. 17 Under the FLSA, a succeeding employer may be responsible for a predecessor’s liabilities 18 where: (1) the alleged successor was a “bona fide” successor; (2) the alleged successor had notice 19 of the potential FLSA liability; and (3) the predecessor employer is not able to provide complete 20 relief. Steinbach v. Hubbard, 51 F.3d 843, 845-46 (9th Cir. 1995). The roots of the successor 21 liability doctrine lie in equity. Id. at 846. “Consequently, ‘fairness is a prime consideration in 22 [successorship’s] application.’” Id. (citing Criswell v. Delta Airlines, Inc., 868 F.2d 1093, 1094 23 (9th Cir. 1989)). “[C]ourts have recognized that extending liability to successors will sometimes 24 be necessary in order to vindicate important statutory policies favoring employee protection.” 25 Steinbach, 51 F.3d at 845. And “[w]here employee protections are concerned, ‘judicial 26 importation of the concept of successor liability is essential to avoid undercutting Congressional 27 purpose by parsimony in provision of effective remedies.’” Id. (citing Wheeler v. Snyder Buick, 28 Inc., 794 F.2d 1228, 1237 (7th Cir. 1986)). Plaintiffs argue that the undisputed evidence shows Successor Liability 5 1 2 that all three elements of the successor liability test are met here. Defendants oppose Plaintiffs’ motion for summary judgment as to successor liability on 3 two grounds. First, Defendants contend that successor liability does not apply here because 4 corporate law does not permit parent corporations, generally, to be held responsible for the 5 liabilities of their subsidiaries, and Velocity was a subsidiary of Dynamex and TransForce. 6 Second, Defendants assert that Dynamex and TransForce were not bona fide purchasers of 7 Velocity. 8 9 1. Successor Liability as to a Parent Corporation Defendants first argue that successor liability applies only when one company buys the assets of another. For example, Defendants argue that “[s]uccessor liability provides an exception 11 United States District Court Northern District of California 10 to the general rule that, when one company buys the assets of another, the purchaser takes its 12 ownership interest free and clear of the seller’s liabilities,” and “successor liability is an equitable 13 doctrine intended to provide redress where the assets of an enterprise are sold by a distressed or a 14 disappearing firm in an effort to avoid liability,” id. at 1. Because that is not what happened here 15 neither Dynamex nor TransForce bought the assets of Velocity, but rather merged it into a separate 16 entity that became a subsidiary Defendants argue that successor liability cannot apply. Our 17 cases do not support such a cramped definition of this doctrine. 18 First, the distinction that Defendants attempt to draw regarding the form of their 19 acquisition of Velocity is not supported in the law. As the court explained in Steinbach, “the form 20 of transfer from one business to another [is] of no consequence in the successorship inquiry.” 51 21 F.3d at 847. That is because the relevant question in determining whether to extend successor 22 liability is whether “the policies underlying the FLSA” are “better served,” and “the relevant 23 policy analysis [is] unaffected by the type of transfer.” Id. This analysis counsels against 24 Defendants’ proposed distinction, not in favor. To draw successor liability as narrowly as 25 Defendants suggest would defeat the FLSA’s remedial purposes by encouraging corporate 26 employers to structure acquisitions so as to avoid responsibility for known potential liabilities to 27 employees. The FLSA is a remedial statute that is to be interpreted broadly, see Lambert v. 28 Ackerley, 180 F.3d 997, 1012 (9th Cir. 1999), and Defendants’ construction of the successor 6 1 2 liability doctrine would not further its purposes. Defendants next cite Steinbach, Sullivan v. Dollar Tree Stores, 623 F.3d 770 (9th Cir. 3 2010), Teed v. Thomas & Betts Power Solutions, L.L.C., 711 F.3d 763, 766 (7th Cir. 2013), and 4 Resilient Floor Covering Pension Fund v. Michael’s Floor Covering, Inc., No. 11-5200 JSC, 2012 5 WL 8750444 (N.D. Cal. Nov. 1, 2012), as persuasive cases in which courts have declined to find 6 successor liability. But these cases are not helpful to Defendants. 7 In Steinbach, an entity called Care Ambulance began negotiations with Hubbard 8 Ambulance about acquiring the latter company. 51 F.3d at 844. The parties were never able to 9 reach a deal, however. Id. Instead, they agreed to a one-year lease of assets at $600 per month, an employment contract for owner Steven Hubbard, and an agreement to buy the company 11 United States District Court Northern District of California 10 conditioned on the bankruptcy court’s approval. Id. While the lease agreement was in effect, 12 Care used the same offices, employees, and equipment that Hubbard had used. Id. When the 13 bankruptcy court failed to approve the sale, Care moved its offices, terminated its lease, and 14 returned all equipment to Hubbard. Id. at 845. Not surprisingly, the Steinbach court found that 15 successor liability could not apply, because “no permanent transfer occurred.” Id. at 846. The 16 court found that the temporary nature of the transaction not its corporate form meant that 17 “FLSA’s policies would best be promoted by finding no liability.” Id. 18 Likewise, Resilient, 2012 WL 8750444, did not involve the acquisition of one company 19 by another. Rather, in that case, the dissolution of a firm called Studer’s was followed by a former 20 employee’s incorporation of a separate entity called Michael’s. Id. at *1. Michael’s purchased 21 some of Studer’s equipment, opened in the same location, used the same phone number, and had 22 some of the same employees and clients as Studer’s. Id. at *3. Nonetheless, the court found that 23 Michael’s was not Studer’s successor for the purposes of ERISA liability, because “Michael’s did 24 not purchase Studer’s business and did not hold itself out to Studer’s customers as a successor to 25 Studer’s.” Id. at *4-*7. Despite the factors weighing in favor of finding successor liability, the 26 court could not conclude there was a “continuity of business operations” between Michael’s and 27 Studer’s because the individual who opened Michael’s did not purchase Studer’s. Id. at *7-8. 28 Sullivan, 623 F.3d 770, involved Dollar Tree’s purchase of the lease of a facility where the 7 1 alleged predecessor store formerly operated, but had gone out of business. As in Resilient, the 2 alleged successor in Sullivan never purchased the alleged predecessor. Id. at 784 (“Dollar Tree 3 purchased the lease on the building, but absolutely nothing else.”). Defendants also cite a sentence from Teed in support of their position that successor 5 liability does not apply to parent-subsidiary relationships, but the sentence does not support 6 Defendants’ argument. See ECF No. 150 at 10 (citing Teed, 711 F.3d at 764 (“a parent 7 corporation is not liable for violations of the Fair Labor Standards Act by its subsidiary . . . .”)). 8 Defendants omit the tail end of the quoted sentence, however, the relevant portion of which reads: 9 “a parent corporation is not liable for violations of the Fair Labor Standards Act by its subsidiary 10 unless it exercises significant authority over the subsidiary’s employment practices.” Teed, 711 11 United States District Court Northern District of California 4 F.3d at 764 (emphasis added). There is ample evidence here to show that TransForce and 12 Dynamex did exercise significant authority over Velocity’s employment practices. 13 Finally, Defendants argue that courts should not impose successor liability in a way that 14 impedes the free flow of capital. ECF No. 150 at 11-12 (citing Steinbach, 51 F.3d at 846-47). It is 15 true that the Ninth Circuit has acknowledged that extending successor liability too far might have 16 this effect, by forcing an already distressed enterprise to spend capital on parasitic claims, or by 17 making the target unattractive to potential purchasers. Steinbach, 51 F.3d at 846-47. But these 18 considerations are not present here. TransForce and Dynamex were fully apprised of the lawsuit 19 against Velocity, which was not at that time a struggling enterprise. The claims against 20 Velocity were filed long before the acquisition. TransForce and Dynamex were so well aware of 21 Velocity’s employees’ claims that they unsuccessfully attempted to negotiate a discount on those 22 claims, and then decided to consummate the transaction anyway, presumably based on their 23 evaluation of the merits of the lawsuit. Defendants do not explain in their briefs, and the Court is 24 unable to see, how applying successor liability here would impede the free flow of capital between 25 other parties in other transactions. 26 Because Defendants have not shown that, as a matter of law, the successor liability 27 doctrine does not apply to cases like the present one, the Court now examines whether the test for 28 successor liability is met. 8 2. 1 Application of Successor Liability a. 2 Notice and ability to provide relief, factors two and three The Court first notes that Plaintiffs are entitled to summary adjudication of the second and 3 4 third factors in the successor liability analysis—whether the alleged successor had notice of 5 potential FLSA liability, and whether the alleged predecessor is able to provide relief. Steinbach, 6 51 F.3d at 845-46. Defendants do not contest the adequacy of notice to them of Velocity’s potential liabilities, 7 8 and the evidence conclusively establishes this factor. This evidence includes: (1) the Due 9 Diligence Study TransForce prepared in anticipation of acquiring Velocity identified potential FLSA liability as a major risk; (2) TransForce’s lead attorney for U.S. matters asked whether the 11 United States District Court Northern District of California 10 purchase price could be reduced as a result of those liabilities; (3) the merger agreement contained 12 a schedule of all of Velocity’s assets and liabilities, including this matter; and (4) TransForce 13 negotiated with ComVest seeking to have ComVest bear the cost of any liability in this case, but 14 ComVest declined to take on that liability, and TransForce purchased Velocity anyway. 15 Defendants also do not dispute that Velocity cannot provide adequate relief. Plaintiffs 16 have submitted admissions by Defendants’ employees that Velocity, as an individual entity, is 17 defunct—it no longer has any clients, revenue, or employees—and therefore would be unable to 18 satisfy any judgment in this case. ECF No. 147 at 9. Defendants agree that Velocity is now 19 “defunct.” See ECF No. 150 at 1. Thus, the Court finds that Plaintiffs have carried their burden to show that they are entitled 20 21 to summary adjudication of these two issues. b. 22 Bona fide purchaser2 In assessing whether an alleged successor was a bona fide purchaser, courts in the Ninth 23 24 As to the first successor liability factor—whether the alleged successor was a “bona fide purchaser”—Plaintiffs argue that the Court should grant summary judgment without considering this issue at all, given that the two most important factors, which Plaintiffs have prevailed upon, are all that is necessary to resolve the question. ECF No. 154 at 13 (citing Criswell, 868 F.2d at 1094). While it is true that, in successor liability cases, “[t]he emphasis . . . is on the second and third factors listed above,” Criswell, 868 F.2d at 1094, the Court will also consider the parties’ arguments as to the first factor. 9 2 25 26 27 28 1 Circuit evaluate several factors: (1) whether there was substantial continuity of business 2 operations between the predecessor and successor; (2) the extent to which the alleged successor 3 used the same plant and/or facilities that the predecessor used; (3) the extent of the successor’s use 4 of the same or substantially the same workforce; (4) the existence of the same jobs under the same 5 conditions; (5) whether the supervisors in the predecessor carried over to the successor; (6) the 6 successor’s use of the same machinery, equipment, and methods of production; and (7) whether 7 the alleged successor provided the same product or service to its customers. See Steinbach, 51 8 F.3d at 846; Sullivan, 623 F.3d at 783-86; Resilient, 2012 WL 8750444, at *5. As to the first factor—continuity of business operations—“Defendants do not dispute that 10 Dynamex purchased Velocity with the intent of having Velocity operate independently, largely in 11 United States District Court Northern District of California 9 the same way Velocity had operated prior to the acquisition.” ECF No. 150 at 4. And Defendants 12 explain that “[i]mmediately following the acquisition, Velocity operated on its own, largely as it 13 had before the acquisition.” Id. Further, Defendants describe the series of events that led to 14 Velocity’s becoming part of Dynamex, rather than continuing to operate “as usual,” as 15 “unexpected.” Id. at 4-5. In particular, these events included the loss of several large business 16 contracts, several executives, and many employees. Id. Thus, it appears that Defendants intended 17 Velocity’s business operations to continue “as usual” after the purchase, and the reasons it did not 18 do so were outside of its control. Despite its arguments to the contrary, see ECF No. 150 at 12-14, 19 substantial evidence and Defendants’ own admissions support Plaintiffs’ argument that Velocity 20 continued its operations immediately after being purchased, asDefendants intended. Finally, while 21 Velocity, as a separate entity, has since become “defunct,” there is no question that at least some 22 of Velocity’s operations now continue under Dynamex’s aegis. This factor weighs in favor of 23 successor liability. 24 Defendants also argue that Dynamex and Velocity do not use all the same plants or 25 facilities (factor two); that they do not use the same or substantially the same workforce or 26 supervisors (factors three and five); and that the jobs at Dynamex do not exist in the same 27 condition as they existed at Velocity (factor four). ECF No. 150 at 14-17. 28 As to the use of the same facilities and plants, Defendants point out that, as of March 2014, 10 1 Dynamex is only using eighteen of eighty former Velocity facilities. Defendants argue that, 2 because “only about 20% of Velocity’s facilities are now Dynamex facilities,” this factor does not 3 weigh in favor of successor liability. ECF No. 150 at 15. At least until June 1, 2013, however, 4 most Velocity sites remained “in activity.” ECF No. 148-41 at 2 (chart showing that, as of June 1, 5 2013, fifty-five of seventy-seven Velocity sites were “in activity”). At best, this factor weighs 6 only somewhat against a finding of successor liability. 7 With respect to the use of the same workforce and supervisors, Defendants point out that 8 under half of Velocity’s workforce and supervisors continued to be employed by Dynamex in 9 March 2014. ECF No. 150 at 16. Defendants also concede, however, that “in the months following the acquisition, Velocity operated as it had done before the acquisition.” Id. at 15-16. 11 United States District Court Northern District of California 10 Given the mix of evidence on this point, the Court finds that these two factors are neutral. 12 As to whether the same jobs existed in the same condition post-acquisition, Defendants 13 point to changes in two former Velocity employees’ positions to suggest that this factor has not 14 been met. Id. at 17. Plaintiffs counter that, initially, all of the same jobs existed in the same 15 conditions as they had prior to the acquisition. ECF No. 147 at 27-28. Later, say Plaintiffs, 16 though operating under Dynamex’s name, many of the same delivery driver positions existed at 17 Dynamex as they did at Velocity. Id. Thus, even considering the cited facts in the light most 18 favorable to Defendants, this factor weighs only slightly against successor liability. 19 The remaining factors, which Defendants do not directly address, are the successor’s use of 20 the same machinery, equipment, and methods of production, and whether the alleged successor 21 provided the same product or service to its customers that the predecessor did. In general, the 22 parties agree that, at least immediately post-acquisition, Velocity’s operations remained “as 23 usual.” Plaintiffs also point out that Dynamex, and in particular the portion of Dynamex that 24 represents Velocity’s former business, continues to provide the same general services—i.e., same- 25 delivery services—that Velocity did prior to acquisition. Defendants have not provided evidence 26 to the contrary on these points, and so these factors weigh in favor of successor liability. 27 28 In sum, three factors (including the first, most comprehensive factor) weigh in favor of finding that TransForce and Dynamex were “bona fide purchasers” of Velocity; two factors weigh 11 1 at least somewhat against; and two factors are neutral. Overall, Plaintiffs have established that the 2 bona fide successor factor in the successor-liability analysis weighs in favor of finding that 3 TransForce and Dynamex are successors to Velocity’s liability. 4 In sum, all three Steinbach factors weigh in favor of a finding of successor liability, some 5 substantially so. On these facts, and viewing the facts in the light most favorable to Defendants, 6 the Court finds that Plaintiffs have carried their burden to show that TransForce and Dynamex are 7 successors to Velocity’s potential FLSA liability in this case. B. 9 Plaintiffs also contend that Defendants should be considered joint employers for the 10 purposes of the FLSA. In the Ninth Circuit, joint-employer status exists where “(1) the employers 11 United States District Court Northern District of California 8 are not ‘completely disassociated’ with respect to the employment of the individuals; and (2) 12 where one employer is controlled by another or the employers are under common control.” Chao 13 v. A-One Med. Servs., Inc., 346 F.3d 908, 918 (9th Cir. 2003). In order to assess whether a joint- 14 employer relationship exists, the Court evaluates four factors bearing on the economic relationship 15 between the alleged employers and employees: whether the alleged employer (1) had the power to 16 hire and fire employees; (2) supervised and controlled employee work schedules or employment 17 conditions; (3) determined the rate and method of payment; and (4) maintained employment 18 records. Bonnette v. Cal. Health & Welf. Agency, 704 F.2d 1465, 1470 (9th Cir. 1983), 19 disapproved of on other grounds by Garcia v. San Antonio Metr. Transit Auth., 469 U.S. 528, 539 20 (1985). 21 Joint Employer Status Plaintiffs make only a half-hearted joint-employer argument. They point to little joint- 22 employer evidence in the motion, and in their reply brief relegate the argument to a footnote. See 23 ECF No. 147 at 29-30; ECF No. 154 at 18 n.12. They provide no evidence at all regarding the 24 second and fourth Bonnette factors. And at the hearing on the motion, they presented no 25 substantive argument to support their joint-employer claim. See ECF No. 26 27 28 The Court will DENY Plaintiffs’ motion for partial summary judgment as to Defendants’ joint-employer status. CONCLUSION 12 1 For the foregoing reasons, the Court hereby GRANTS Plaintiffs’ motion for summary 2 judgment as to successor liability. The Court also hereby DENIES Plaintiffs’ motion as to 3 Defendants’ joint employer status. 4 5 IT IS SO ORDERED. Dated: April 16, 2015 6 7 8 ______________________________________ JON S. TIGAR United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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