Date: 08-28-2014

Case Style: Dean Alexander v. FedEx Ground Package System, Inc.

Case Number: 12-17458

Judge: William A. Fletcher

Court: United States Court of Appeals for the Ninth Circuit on appeal from the Northern District of California (San Francisco County)

Plaintiff's Attorney: Beth A. Ross (argued), Aaron D. Kaufmann, and Elizabeth C.
Morris, Leonard Cardner, LLP, Oakland, California; and
Ellen Lake, Oakland, California, for Plaintiffs-
Appellants/Cross-Appellees.

Defendant's Attorney: Jonathan Hacker (argued), O’Melveny & Myers LLP,
Washington, D.C.; Anton Metlitsky, O’Melveny & Myers
LLP, New York, New York; Chris Hollinger, O’Melveny &
Myers LLP, San Francisco, California; Carolyn Kubota and
Robert Swerdlow, O’Melveny & Myers LLP, Los Angeles,
California, for Defendant-Appellee/Cross-Appellant.

Richard Pianka, Arlington, Virginia, for Amici Curiae
American Trucking Associations, Inc., and California
Trucking Association.

Description: 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
their work, they may do so only with FedEx’s consent.
FedEx contends its drivers are independent contractors
under California law. Plaintiffs, a class of FedEx drivers in
California, contend they are employees. We agree with
plaintiffs.
ALEXANDER V. FEDEX 5
I. Background
A. Factual Background
Named plaintiffs represent a class comprising
approximately 2300 individuals who were full-time delivery
drivers for FedEx in California between 2000 and 2007.
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]
6 ALEXANDER V. FEDEX
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 perday
and per-stop components. Drivers are expected to arrive
ALEXANDER V. FEDEX 7
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
8 ALEXANDER V. FEDEX
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 feedback to
drivers about the quality of their work. FedEx contends
in this litigation that this feedback constitutes mere
recommendations that drivers are free either to follow or
disregard.
Drivers must follow FedEx’s “Safe Driving Standards.”
These standards prohibit many illegal acts, such as “[d]riving
while under the influence of alcohol or drugs” and “[u]sing a
motor vehicle in the commission of a felony.” They also
forbid some legal conduct, including “[d]riving a motor
vehicle in a speed exhibition, contest or drag race” and
“[c]arrying passengers not authorized by FedEx.”
The OA allows drivers to operate more than one vehicle
and route, but only “with the consent of FedEx” and only if
“consistent with the capacity of the [driver’s] terminal.”
Drivers may also hire third parties to help perform their work.
Third-party helpers must be “qualified pursuant to applicable
federal, state and municipal safety standards and
[FedEx’s] Safe Driving Standards.” They must be “fully
trained” and must “conform fully” with the OA. Drivers “in
good standing” under the OA may assign their rights and
obligations to replacement drivers, but any such replacement
must be “acceptable to FedEx.”
Drivers enter into the OA for an initial term of one, two,
or three years. At the end of the initial term, the OA provides
for automatic renewal for successive one-year terms if neither
ALEXANDER V. FEDEX 9
party provides notice of their intent not to renew. The OA
may be terminated (1) by the parties’ mutual agreement;
(2) for cause, including a breach of any provision of the OA;
(3) if FedEx stops doing business or reduces operations in all
or part of the driver’s service area; or (4) upon thirty days’
written notice by the driver. The OA requires drivers to
submit claims for wrongful termination to arbitration.
2. Equipment and Appearance Requirements
FedEx requires its drivers to provide their own vehicles.
Vehicles must not only meet “all applicable federal, state and
municipal laws and regulations,” but also must be specifically
approved by FedEx. The OA allows FedEx to dictate the
“identifying colors, logos, numbers, marks and insignia” of
the vehicles. All vehicles must be painted “FedEx white,” a
specific shade of Sherwin-Williams paint, or its equivalent.
They must be marked with the FedEx logo, and “maintained
in a clean and presentable fashion free of body damage and
extraneous markings.” FedEx requires vehicles to have
specific dimensions, and all vehicles must also contain
shelves with specific dimensions. FedEx requires that a
“typical package van” have
two [shelves] per side, full length of the body.
They should be 24" (-1", +3") deep with a 1"
to 2" pitch and a front lip not to exceed 2"
height. Top shelf to bottom of roof or roof
bow should be 24" minimum. The lower shelf
lip to the bottom of the top shelf should be
24" (+/- 3/4"). Aluminum is the preferred
material, however marine grade plywood is
acceptable.
10 ALEXANDER V. FEDEX
Managers may refuse to let drivers work if their vehicles do
not meet these requirements.
Drivers must provide maintenance at their own expense
and must “bear all costs and expenses incidental to operation”
of the vehicle. Drivers authorize FedEx to pay for vehicle
licensing, taxes, and fees, and to deduct these costs from the
drivers’ pay. The OA gives FedEx
such exclusive possession, use, and control of
the [vehicle as] required by . . . applicable
regulations, but [FedEx] shall have no right or
authority . . . to operate the [vehicle] for any
purpose (except for incidental yard movement
and positioning) unless the [vehicle] is driven
either by [the driver] or by an operator
engaged by [the driver].
The OA requires that while vehicles are “in the service of
FedEx,” they must be used “exclusively for the carriage of
the goods of FedEx . . . and for no other purpose.” Drivers
may use their vehicles “for other commercial or personal
purposes when [they are] not in the service of FedEx,” but
only if all “identifying numbers, marks, logos and insignia”
are removed or covered up.
FedEx offers a “Business Support Package,” which
provides drivers with uniforms, scanners, and other necessary
equipment. FedEx deducts the cost of the equipment from
drivers’ pay. Purchase of the package is ostensibly optional,
but more than 99 percent of drivers purchase it. The scanners
that drivers must use to send delivery information to FedEx
are not readily available from any other source.
ALEXANDER V. FEDEX 11
The OA requires drivers to comply with personalappearance
standards and wear a FedEx uniform “maintained
in good condition.” The required uniform includes a uniform
shirt with the FedEx logo, uniform pants or shorts, dark shoes
and socks, and, if the driver chooses to wear a jacket or cap,
a uniform jacket and cap with the FedEx logo. Drivers must
keep their “personal appearance consistent with reasonable
standards of good order as . . . promulgated from time to time
by FedEx.” Drivers must be “clean shaven, hair neat and
trimmed, free of body odor.” Managers may refuse to let
drivers work if they are improperly dressed or groomed.
B. Procedural History
This appeal involves a class action originally filed in the
California Superior Court in December 2005 on behalf of a
class of California FedEx drivers, asserting claims for
employment expenses and unpaid wages under the California
Labor Code on the ground that FedEx had improperly
classified the drivers as independent contractors. Plaintiffs
also brought claims under the federal Family and Medical
Leave Act (“FMLA”), which similarly turned on the drivers’
employment status. FedEx removed to the Northern District
of California based on diversity.
Between 2003 and 2009, similar cases were filed against
FedEx in approximately forty states. The Judicial Panel on
Multidistrict Litigation consolidated these FedEx cases for
multidistrict litigation (“MDL”) proceedings in the District
Court for the Northern District of Indiana (“the MDL Court”).
Plaintiffs moved for class certification. They represented to
the MDL Court that their claims would rely only on
“common proof applicable to members of the class as whole.”
The MDL Court certified a class for plaintiffs’ claims under
12 ALEXANDER V. FEDEX
California law. It declined to certify plaintiffs’ proposed
national FMLA class.
Plaintiffs in all the MDL cases moved for partial
summary judgment, seeking to establish their status as
employees as a matter of law. In most cases, including this
one, FedEx cross-moved for summary judgment. The MDL
Court denied nearly all of the MDL plaintiffs’ motions for
summary judgment and granted nearly all of FedEx’s
motions, holding that plaintiffs were independent contractors
as a matter of law in each state where employment status is
governed by common-law agency principles.
The MDL Court remanded this case to the district court
to resolve the drivers’ claims under the FMLA. Those claims
were settled, and the district court entered final judgment.
Plaintiffs timely appealed, challenging the MDL Court’s
grant of summary judgment to FedEx on the employment
status issue. FedEx conditionally cross-appealed, arguing
that if we reverse the MDL Court’s grant of summary
judgment to FedEx, we should also reverse the MDL Court’s
class certification decision.
II. Standard of Review
We review de novo the district court’s decision whether
to grant summary judgment, viewing the facts in the light
most favorable to the non-moving party. Fichman v. Media
Ctr., 512 F.3d 1157, 1159 (9th Cir. 2008). “A grant of
summary judgment is appropriate when ‘there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.’” Albino v. Baca, 747 F.3d
1162, 1168 (9th Cir. 2014) (en banc) (quoting Fed. R. Civ. P.
56(a)).
ALEXANDER V. FEDEX 13
III. Discussion
A. Summary Judgment on Employment Status
The MDL Court granted summary judgment to FedEx,
holding that plaintiffs are independent contractors as a matter
of law. To reach that conclusion, the MDL Court purported
to apply the common law test from S.G. Borello & Sons, Inc.
v. Department of Industrial Relations, 769 P.2d 399 (Cal.
1989), but ultimately focused on the entrepreneurial
opportunities FedEx afforded to plaintiffs. The MDL Court
explained: “the right to control, though a primary
consideration, isn’t dispositive; what is dispositive here is the
drivers’ class-wide ability to own and operate distinct
businesses, own multiple routes, and profit accordingly.”
Plaintiffs argue that, at a minimum, summary judgment for
FedEx was inappropriate. They argue further that the district
court should have granted their motion for summary
judgment because they are employees as a matter of law. We
agree that plaintiffs are employees as a matter of law.
Accordingly, we reverse the MDL Court and remand to the
district court with instructions to enter summary judgment for
plaintiffs on the question of employment status.
The parties agree that California law controls this dispute.
The parties further agree that determinations of employment
status under California law are governed by the multi-factor
test set forth in Borello. “Even if one or two of the individual
factors might suggest an [independent contractor]
relationship, summary judgment is nevertheless proper when
. . . all the factors weighed and considered as a whole
establish . . . an [employment] and not an [independent
contractor relationship.]” Arnold v. Mut. of Omaha Ins. Co.,
135 Cal. Rptr. 3d 213, 221 (Ct. App. 2011).
14 ALEXANDER V. FEDEX
We conclude that summary judgment for plaintiffs is
appropriate in this case. The facts are largely undisputed.
FedEx and plaintiffs agree that their working relationship is
controlled by the OA and FedEx’s policies and procedures.
They dispute only the extent to which those documents give
FedEx the right to control its drivers. In California, the
meaning of a contract such as the OA is a question of law,
unless it is ambiguous and there is “conflicting extrinsic
evidence” from which a jury could resolve the ambiguity in
favor of either party. Scheenstra v. Cal. Dairies, Inc.,
153 Cal. Rptr. 3d 21, 38–39 (Ct. App. 2013). Here, much of
the OA is not ambiguous. To the extent it is ambiguous, the
extrinsic evidence supports a conclusion that FedEx has the
right to control its drivers. Viewing the evidence in the light
most favorable to FedEx, we conclude that plaintiffs are
employees.
B. Right-to-Control Test
California’s right-to-control test requires courts to weigh
a number of factors: “The 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.” Borello, 769 P.2d at 404
(quoting Tieberg v. Unemployment Ins. App. Bd., 471 P.2d
975, 977 (Cal. 1970) (alteration and internal quotation marks
omitted)). California courts also consider “several
‘secondary’ indicia of the nature of a service relationship.”
Id. The right to terminate at will, without cause, is “[s]trong
evidence in support of an employment relationship.” Id.
(quoting Tieberg, 471 P.2d at 979 (internal quotation marks
omitted)). Additional factors include:
ALEXANDER V. FEDEX 15
(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 employeremployee.
Id. These factors “[g]enerally . . . cannot be applied
mechanically as separate tests; they are intertwined and their
weight depends often on particular combinations.” Id. at 404
(quoting Germann v. Workers’ Comp. Appeals Bd., 176 Cal.
Rptr. 868, 871 (Ct. App. 1981) (internal quotation marks
omitted)).
1. “Manner and Means”
FedEx argues that the OA creates an independentcontractor
relationship. California law is clear that “[t]he
label placed by the parties on their relationship is not
dispositive, and subterfuges are not countenanced.” Id. at
403. What matters is what the contract, in actual effect,
allows or requires. See, e.g., Empire Star Mines Co. v. Cal.
16 ALEXANDER V. FEDEX
Emp’t Comm’n, 168 P.2d 686, 692 (Cal. 1946) (“If the
employer has the authority to exercise . . . control, whether or
not that right is exercised with respect to all details, an
employer-employee relationship exists.”), overruled on other
grounds by People v. Sims, 651 P.2d 321 (Cal. 1982). The
OA and FedEx’s policies and procedures unambiguously
allow FedEx to exercise a great deal of control over the
manner in which its drivers do their jobs. Therefore, this
factor strongly favors plaintiffs.
First, FedEx can and does control the appearance of its
drivers and their vehicles. FedEx controls its drivers’
clothing from their hats down to their shoes and socks. It
requires drivers to be “clean shaven, hair neat and trimmed,
[and] free of body odor.” FedEx’s detailed appearance
requirements clearly constitute control over its drivers. See
Ruiz v. Affinity Logistics Corp., No. 12-56589, 2014 WL
2695534, at *7 (9th Cir. June 16, 2014) (finding right to
control under California law where a delivery company
controlled “‘every exquisite detail’ of the drivers’
appearance, including the ‘color of their socks’ and ‘the style
of their hair’”); cf. Huggins v. FedEx Ground Package Sys.,
Inc., 592 F.3d 853, 859 (8th Cir. 2010) (holding, under
Missouri law, that FedEx’s appearance requirements “show
the extent of FedEx’s control” over drivers’ work).
FedEx requires drivers to paint their vehicles a specific
shade of white, mark them with the distinctive FedEx logo,
and to keep their vehicles “clean and presentable [and] free of
body damage and extraneous markings.” These requirements
go well beyond those imposed by federal regulations. See 49
C.F.R. § 390.21. FedEx dictates the vehicles’ dimensions,
including the dimensions of their “package shelves” and the
materials from which the shelves are made. Managers may
ALEXANDER V. FEDEX 17
prevent drivers from working if they are improperly dressed
or groomed, or if their vehicles do not meet specifications.
Second, FedEx can and does control the times its drivers
can work. Although the OA does not allow FedEx to set
specific working hours down to the last minute, it is clear
from the OA that FedEx has a great deal of control over
drivers’ hours. FedEx structures drivers’ workloads so that
they have to work 9.5 to 11 hours every working day. FedEx
argues that, because drivers can hire helpers to do their work
for them, they are free to complete a full day’s work in less
than 9.5 hours. But managers may adjust drivers’ workloads
to ensure that they never have more or less work than can be
done in 9.5 to 11 hours. Drivers are not supposed to leave
their terminals in the morning until all of their packages are
available, and they must return to the terminals no later than
a specified time. If drivers want their vehicles loaded, they
must leave them at the terminal overnight. The combined
effect of these requirements is substantially to define and
constrain the hours that FedEx’s drivers can work.
Third, FedEx can and does control aspects of how and
when drivers deliver their packages. It assigns each driver a
specific service area, which it “may, in its sole discretion,
reconfigure.” It tells drivers what packages they must deliver
and when. It negotiates the delivery window for packages
directly with its customers. The OA requires drivers to
comply with “standards of service,” including requirements
to “[f]oster the professional image and good reputation of
FedEx” and to “conduct all business activities with . . . proper
decorum at all times.”
FedEx notes that there are details of its drivers’ work that
it does not control. For instance, it does not require drivers to
18 ALEXANDER V. FEDEX
follow specific routes or to deliver packages in a specific
order. Taking the evidence in the light most favorable to
FedEx, it does not require drivers to follow managers’
recommendations after ride-along evaluations. But the rightto-
control test does not require absolute control. Employee
status may still be found where “[a] certain amount of . . .
freedom is inherent in the work.” Air Couriers Int’l v. Emp’t
Dev. Dep’t, 59 Cal. Rptr. 3d 37, 44 (Ct. App. 2007); see also
id. at 47 (upholding trial court’s finding that there was “no
inconsistency between employee status and the driver’s
discretion on when to take breaks or vacation”). FedEx’s
lack of control over some parts of its drivers’ jobs does not
counteract the extensive control it does exercise.
FedEx argues that it controls its drivers only with respect
to the results it seeks, not the manner and means in which
drivers achieve those results. See Millsap v. Fed. Express
Corp., 277 Cal. Rptr. 807, 811 (Ct. App. 1991) (“If control
may be exercised only as to the result of the work and not the
means by which it is accomplished, an independent contractor
relationship is established.”). We agree with FedEx that
“results,” reasonably understood, refers in this context to
timely and professional delivery of packages. Some but not
all of FedEx’s requirements go to the “results” of its drivers’
work so understood. Most obviously, no reasonable jury
could find that the “results” sought by FedEx includes
detailed specifications as to the delivery driver’s fashion
choices and grooming. See Ruiz, 2014 WL 2695534, at *7 &
n.5. And no reasonable jury could find that the “results”
FedEx seeks include having all of its vehicles containing
shelves built to exactly the same specifications. Other
aspects of FedEx’s control—such as limiting drivers to a
specific service area with specific delivery locations—also
are not merely control of results under California law.
ALEXANDER V. FEDEX 19
Notably, in Estrada v. FedEx Ground Package System,
Inc., 64 Cal. Rptr. 3d 327 (Ct. App. 2007), the California
Court of Appeal affirmed a trial court’s determination,
following a bench trial, that a class of FedEx drivers, working
under the same OA as plaintiffs in this case during an
overlapping time period, were employees based on “FedEx’s
control over every exquisite detail of the drivers’
performance.” Id. at 336. FedEx attempts to distinguish
Estrada on two grounds. First, the trial court in Estrada
specifically excluded multiple-route drivers from the class,
deciding the question of employment status only with respect
to single-route drivers, whereas here, while limited to drivers
who personally drive full time for FedEx, the class includes
a number of drivers who operate more than one route.
Second, FedEx contends that “Estrada involved a
fundamentally different evidentiary record.” However, the
OA grants FedEx identical rights to control both single-route
and multiple-route drivers. And while Estrada’s reliance on
specific factual findings by the trial court means that Estrada
is not dispositive here, the Estrada court’s reasoning is
nonetheless apposite.
FedEx argues that the OA gives drivers “flexibility and
entrepreneurial opportunities that no ‘employee’ has.”
However, in Borello, the California Supreme Court reasoned
that “[a] business entity may not avoid its statutory
obligations by carving up its production process into minute
steps, then asserting that it lacks ‘control’ over the exact
means by which one such step is performed by the
responsible workers.” 769 P.2d at 408. There, S.G. Borello
& Sons, a commercial produce grower, hired agricultural
laborers under written “sharefarmer” agreements. The
agreements recited that the parties deemed themselves
20 ALEXANDER V. FEDEX
“principal and independent contractor rather than employer
and employee.” Id. at 401.
The sharefarmers agreed to harvest the crop, assisted by
members of their families. They could “contract for the
amount of land they wish[ed] to harvest on a first-come, firstserved
basis.” Id. at 402. The sharefarmers were “totally
responsible for the care of the plants in their assigned plots
during the harvest period.” Id. (internal quotation marks
omitted). They were required to furnish their own tools and
their own transportation to and from the field. “The method
and manner of accomplishing” the harvest was left solely to
the sharefarmers, though they agreed to “utilize accepted
agricultural practices in order to provide for the maximum
harvest.” Id. (internal quotation marks omitted).
The sharefarmers set their own hours. They were free to
decide when to pick the crop in order to maximize the profit.
“Profit incentive [was] the only guaranty of performance and
quality control.” Id. Borello had “no right to discharge a
sharefarmer or his workers during the harvest, and no
recourse if the harvesters abandon[ed] the field.” Id.
Although the sharefarmers had significant autonomy over the
harvest itself, the California Supreme Court reasoned that
Borello retained “all necessary control over the harvest
portion of its operations,” and held that the sharefarmers were
employees as a matter of law. Id. at 408, 410 (emphasis in
original).
California courts have since applied Borello’s “all
necessary control” test and found employee status in several
cases involving delivery drivers. For example, in JKH
Enterprises, Inc. v. Department of Industrial Relations,
48 Cal. Rptr. 3d 563, 568 (Ct. App. 2006), drivers, who had
ALEXANDER V. FEDEX 21
acknowledged their independent contractor status in writing
prior to their engagement with JKH, performed courier work,
using their own vehicles to pick up items from JKH’s
customers and delivering the packages to designated
locations.
Other than to satisfy the general
assurances given by JKH to its customers that
their packages w[ould] reach the appropriate
local destination within two to four hours
from pick-up, the . . . drivers [were] not
governed by particular rules and they d[id] not
receive direction from JKH about how to
perform the delivery task or what driving
routes to take.
Id. at 569. The California Court of Appeal found that,
because “JKH retained all necessary control” over the
drivers, substantial evidence supported a finding of an
employee relationship. Id. at 579. Similarly, in Air Couriers,
the Court of Appeal affirmed a trial court’s finding of
employee status based on its conclusion that an employer
retained all necessary control over courier drivers. 59 Cal.
Rptr. 3d at 41–42.
FedEx argues that JKH Enterprises and Air Couriers are
distinguishable on the ground that those cases involved
California’s workers’ compensation laws and thus involved
a statutory presumption of employee status that does not
apply here. But California courts have recognized that “the
burden of proof is on the party attacking the employment
relationship,” Bemis v. People, 240 P.2d 638, 644 (Cal. Dist.
Ct. App. 1952), in a range of cases outside of the workers’
compensation context. See, e.g., Robinson v. George,
22 ALEXANDER V. FEDEX
105 P.2d 914, 916 (Cal. 1940); Faigin v. Signature Grp.
Holdings, Inc., 150 Cal. Rptr. 3d 123, 133 n.4 (Ct. App.
2012); Lujan v. Minagar, 21 Cal. Rptr. 3d 861, 868 (Ct. App.
2004); see also Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th
Cir. 2010) (holding that once drivers had established a prima
facie case of employment status by coming forward with
evidence that they provided services for the company, the
burden shifted to the company to establish by a
preponderance of the evidence that the drivers were
independent contractors).
The Borello court noted that the “‘control-of-workdetails’
test for determining [employee status] must be
applied with deference to the purposes of the protective
legislation.” 769 P.2d at 406. But the California Supreme
Court does not read Borello to apply only in the context of
workers’ compensation claims. In fact, in Borello itself, the
court stated that its ruling in that case had implications
beyond workers’ compensation laws. Id. at 400. Recently,
in Ayala v. Antelope Valley Newspapers, Inc., 327 P.3d 165
(Cal. 2014), the California Supreme Court recognized the
applicability of Borello’s “all necessary control” test in a
determination of employment status in a suit for wage and
hour protections. Id. at 171. And in Ruiz, we applied
Borello’s “all necessary control” test where a plaintiff raised
a number of claims unrelated to workers’ compensation,
including claims for failure to pay sick leave, vacation,
holiday, and severance wages. 2014 WL 2695534, at *1.
In contrast to the facts in JKH Enterprises and Air
Couriers, in Arnold an insurance company’s nonexclusive
insurance agent “used her own judgment in determining
whom she would solicit for applications for [the company]’s
products, the time, place, and manner in which she would
ALEXANDER V. FEDEX 23
solicit, and the amount of time she spent soliciting for [the
company]’s products.” 135 Cal. Rptr. 3d at 220 The
California Court of Appeal held on these facts that the agent
was an independent contractor. Id. at 220–21. Similarly, the
California Court of Appeal held in State Compensation
Insurance Fund v. Brown, 38 Cal. Rptr. 2d 98 (Ct. App.
1995), that truck drivers were independent contractors where
they had “complete control over their working conditions and
the manner in which a load is transported (including whether
or not to hire assistants), and [were] entirely free to accept or
reject an assignment without reprisal.” Id. at 105; see also
Millsap, 277 Cal. Rptr. at 811 (holding that a driver was an
independent contractor where he used his own car to deliver
packages, was paid on a “per route” basis, and “[o]ther than
to say ‘be careful’ or to give him directions to a particular
location, . . . [the company] did not instruct [the driver] as to
how to make the deliveries or how to drive his car.”).
FedEx treats its drivers more like the drivers in JKH
Enterprises and Air Couriers than like the insurance agent in
Arnold and the drivers in Brown and Millsap. Indeed, in
many respects FedEx exercises greater control over its drivers
than was exercised over the drivers in JKH Enterprises and
Air Couriers. FedEx requires its drivers to load and unload
packages at FedEx terminals every working day. “Such
regular schedules are consistent with employee status and
reflect employer control.” Air Couriers, 59 Cal. Rptr. 3d at
47. FedEx assigns each driver a specified service area and
tells drivers where in their service area to deliver packages.
FedEx drivers have no control over which packages they
deliver. FedEx “obtain[s] the clients in need of the service
and provid[es] the workers to conduct it,” JKH Enters.,
48 Cal. Rptr. 3d at 579. “Drivers deliver[] packages to
[FedEx]’s customers, not to their own customers. [FedEx]
24 ALEXANDER V. FEDEX
set[s] the rates charged to customers, bill[s] the customers,
and collect[s] payment.” Air Couriers, 59 Cal. Rptr. 3d at 47;
see also Toyota Motor Sales U.S.A., Inc. v. Superior Ct.,
269 Cal. Rptr. 647, 653 (Ct. App. 1990) (finding a driver to
be an employee where the company “determined what would
be delivered, when and to whom and what price would be
charged”). FedEx pays the drivers on a regular schedule. See
Air Couriers, 59 Cal. Rptr. 3d at 47; JKH Enters., 48 Cal.
Rptr. 3d at 580.
According to FedEx, its drivers’ “entrepreneurial
opportunities”—the ability to take on multiple routes and
vehicles and to hire third-party helpers—are inconsistent with
employee status. FedEx relies not on California law for this
argument, but on the D.C. Circuit’s decision in FedEx Home
Delivery v. National Labor Relations Board, 563 F.3d 492
(D.C. Cir. 2009). In FedEx Home Delivery, a divided panel
of the D.C. Circuit reversed an agency decision that FedEx
drivers were employees. Id. at 495. The majority “shift[ed
the] emphasis away from the unwieldy control inquiry,”
asking instead “whether the putative independent contractors
have significant entrepreneurial opportunity for gain or loss.”
Id. at 497 (alteration in original) (internal quotation marks
omitted). It held that the evidence “favoring a finding the
[drivers] are employees [was] clearly outweighed by evidence
of entrepreneurial opportunity.” Id. at 504.
The D.C. Circuit’s decision in FedEx Home Delivery,
even if correct, has no bearing on this case. There is no
indication that California has replaced its longstanding rightto-
control test with the new entrepreneurial-opportunities test
developed by the D.C. Circuit. Instead, California cases
indicate that entrepreneurial opportunities do not undermine
a finding of employee status. In Arzate v. Bridge Terminal
ALEXANDER V. FEDEX 25
Transport, Inc., 121 Cal. Rptr. 3d 400 (Cal. App. 2011), the
California Court of Appeal reversed a trial court’s grant of
summary judgment to the defendant where, as here, the
“plaintiffs drove their own trucks and paid the related
expenses, [and] could have leased more than one truck to
defendant and hired other drivers.” Id. at 405–06. The court
found that these opportunities did not override other factors
in California’s multi-factor analysis such that the drivers were
independent contractors as a matter of law. Id. In Narayan,
we concluded that, where drivers “retained the right to
employ others to assist in performing their contractual
obligations,” but the company had to approve all helpers, this
was indicative of control of the details of the drivers’
performance under California law. 616 F.3d at 902. And in
Ruiz, we found that drivers were employees where the
company “retained ultimate discretion to approve or
disapprove of those helpers and additional drivers.” 2014
WL 2695534, at *8. “[A]pproval was largely based upon
neutral factors, such as background checks required under
federal regulations,” but the drivers nonetheless “did not have
an unrestricted right to choose these persons, which is an
“important right[] [that] would normally inure to a
self-employed contractor.” Id. (alterations in original)
(quoting Borello, 769 P.2d at 408 n.9). Further, “any
additional drivers were subject to the same degree of control
exerted by Affinity over the drivers generally.” Id.
The entrepreneurial opportunities available to FedEx’s
drivers are equivalent to those in Narayan and Ruiz. The OA
allows drivers to operate more than one vehicle or route only
if FedEx consents, and only if doing so is “consistent with the
capacity of the [driver’s] terminal.” Drivers must be “in good
standing” in order to assign their contractual rights, and any
replacement driver must be “acceptable to FedEx.” Nothing
26 ALEXANDER V. FEDEX
in the OA limits FedEx’s discretion to withhold consent to
additional vehicles or routes, or to decide whether a
replacement driver is “acceptable.” Daniel Sullivan, FedEx’s
founder and CEO until January 2007, testified in his
deposition that FedEx may refuse to let a driver take on
additional routes or sell his route to a third party. He further
testified that FedEx’s senior managers have the authority to
reject proposed replacement drivers based on failure to meet
FedEx standards such as grooming requirements. “The
existence of the right of control and supervision establishes
the existence of an agency relationship.” Ayala, 327 P.3d at
173 (quoting Malloy v. Fong, 232 P.2d 241, 249 (Cal. 1951)
(internal quotation marks omitted)). Whether FedEx ever
exercises its right of refusal is irrelevant; what matters is that
the right exists. See id. (“It is not essential that the right of
control be exercised or that there be actual supervision of the
work of the agent.” (quoting Malloy, 232 P.2d at 249)
(internal quotation marks omitted)).
2. Secondary Factors
In light of the powerful evidence of FedEx’s right to
control the manner in which drivers perform their work, none
of the remaining right-to-control factors sufficiently favors
FedEx to allow a holding that plaintiffs are independent
contractors. See Borello, 769 P.2d at 404 (identifying
evidence of the right to control as the “principal” factor); JKH
Enters., 48 Cal. Rptr. 3d at 579–80 (holding, where JKH’s
retention of “all necessary control over the operation as a
whole” was, under Borello, “enough to find an employment
relationship,” that no “single factor, either alone or in
combination, mandate[d] a different result”).
ALEXANDER V. FEDEX 27
The first factor, the right to terminate at will, slightly
favors FedEx. The OA contains an arbitration clause and
does not give FedEx an unqualified right to terminate. Under
California law, the right to discharge at will is “[s]trong
evidence in support of an employment relationship,” Tieberg,
471 P.2d at 979, even though termination for cause is
consistent with both employee and independent contractor
status, see Ruiz, 2014 WL 2695534, at *11 (“[T]he parties’
mutual termination provision is consistent with either an
employer-employee or independent contractor relationship.”);
cf. Foley v. Interactive Data Corp., 765 P.2d 373, 376 (Cal.
1988) (noting that, while California Labor Code § 2922
provides a presumption of at-will employment when
employment is for no specified term, “[t]his presumption may
be superseded by a contract, express or implied, limiting the
employer’s right to discharge the employee”).
FedEx’s right under the OA to terminate its drivers, while
broad, is somewhat constrained. FedEx may fire a driver for
any “breach[] or fail[ure] to perform . . . contractual
obligations,” which would cover, for example, any failure to
act “with proper decorum at all times,” or to “foster the
professional image and good reputation of FedEx.” We
conclude that this factor does not favor FedEx enough to
allow a finding that its drivers are independent contractors.
See Toyota Motor Sales, 269 Cal. Rptr. at 653 (“The real test
[for ascertaining whether the right to control exists] has been
said to be whether the employee was subject to the
employer’s orders and control and was liable to be discharged
for disobedience or misconduct.” (internal quotation marks
omitted)).
The second factor, distinct occupation or business, favors
plaintiffs. As the California Court of Appeal reasoned in
28 ALEXANDER V. FEDEX
Estrada, “the work performed by the drivers is wholly
integrated into FedEx’s operation. The drivers look like
FedEx employees, act like FedEx employees, [and] are paid
like FedEx employees.” 64 Cal. Rptr. 3d at 334. “The
customers are FedEx’s customers, not the drivers’
customers.” Id. at 336–37. While the drivers have
opportunities to expand their businesses by taking on
additional routes and hiring helpers, these opportunities
themselves are only available subject to FedEx’s business
needs.
The third factor, whether the work is performed under the
principal’s direction, slightly favors plaintiffs. As explained
above, although drivers retain freedom to determine several
aspects of their day-to-day work, FedEx also closely
supervises their work through various methods.
The fourth factor, the skill required in the occupation, also
favors plaintiffs. FedEx drivers “need no experience to get
the job in the first place and [the] only required skill is the
ability to drive.” Id. at 337; see JKH Enters., 48 Cal. Rptr. 3d
at 579 (“[T]he functions performed by the drivers, pick-up
and delivery of papers or packages and driving in between,
did not require a high degree of skill.”).
The fifth factor, the provision of tools and equipment,
slightly favors FedEx. The drivers provide their own vehicles
and are not required to get other equipment from FedEx. On
the other hand, “FedEx is involved in the purchasing process,
providing funds and recommending vendors.” Estrada,
64 Cal. Rptr. 3d at 334. Indeed, the drivers’ scanners are not
readily available anywhere else. Ultimately, the vast majority
of drivers get their other equipment from FedEx. See Ruiz,
2014 WL 2695534, at *10 (holding that, where “Affinity
ALEXANDER V. FEDEX 29
supplied the drivers with the major tools of the job by
encouraging or requiring that the drivers obtain the tools from
them through paid leasing arrangements,” this factor favored
employee status). Moreover, numerous California cases find
employee status even though the employee provides his own
vehicle or tools. See, e.g., Borello, 769 P.2d at 409; Estrada,
64 Cal. Rptr. 3d at 331; Air Couriers, 59 Cal. Rptr. 3d at 47;
JKH Enters., 48 Cal. Rptr. 3d at 569; Toyota Motor Sales,
269 Cal. Rptr. at 654.
The sixth factor, length of time for performance of
services, favors plaintiffs. Drivers enter into the OA for a
term of one to three years. At the end of the initial term, the
OA provides for automatic renewal for successive one-year
terms if there is no notice of non-renewal by either party.
[T]he length and indefinite nature of the
plaintiff [d]rivers’ tenure with [FedEx] . . .
point toward an employment relationship. . . .
This was not a circumstance where a
contractor was hired to perform a specific task
for a defined period of time. There was no
contemplated end to the service relationship at
the time that the plaintiff [d]rivers began
working for [FedEx].
Narayan, 616 F.3d at 903; see also Antelope Valley Press v.
Poizner, 75 Cal. Rptr. 3d 887, 900 (2008) (“[T]he notion that
an independent contractor is someone hired to achieve a
specific result that is attainable within a finite period of time
. . . is at odds with carriers who are engaged in prolonged
service to [an employer].”); Air Couriers, 59 Cal. Rptr. 3d at
47 (holding that, where many drivers had worked for “years,”
30 ALEXANDER V. FEDEX
these “lengthy tenures” were “inconsistent with independent
contractor status”).
The seventh factor, method of payment, is neutral. FedEx
pays its drivers according to a complicated scheme that
includes fixed and variable components and ties payment to,
among other things, packages, stops, and the ratio of driving
time to deliveries. This payment method cannot easily be
compared to either hourly payment (which favors employee
status) or per-job payment (which favors independent
contractor status). However, “[w]here, as here, there is ample
independent evidence that the employer has the right to
control the actual details of the [employee’s] work . . . , the
fact that . . . the employee is paid by the job rather than by the
hour appears to be of minute consequence.” Tieberg,
471 P.2d at 982; see also Varisco v. Gateway Sci. & Eng’g,
Inc., 83 Cal. Rptr. 3d 393, 398 (Ct. App. 2008) (“An hourly
rate traditionally indicated an employment relationship but
independent contractors are now commonly paid on that
basis.” (citation omitted)); Germann, 176 Cal. Rptr. at 874
(“[P]ayment may be measured by time, by the piece, or by
successful completion of the service, instead of a fixed salary,
and still constitute employee wages if other factors indicate
an employer-employee relationship.” (internal quotation
marks omitted)).
The eighth factor, whether the work is part of the
principal’s regular business, favors plaintiffs. The work that
the drivers perform, the pickup and delivery of packages, is
“essential to FedEx’s core business.” Estrada, 64 Cal. Rptr.
3d at 334; see also Huggins, 592 F.3d at 859 (noting that
drivers “performed work that was the essence of FedEx’s
business, namely, ‘transportation and delivery service’”).
ALEXANDER V. FEDEX 31
The final factor, the parties’ beliefs, slightly favors
FedEx. The OA expressly identifies the relationship as one
of an independent contractor, and disclaims any authority on
FedEx’s part to direct drivers as to the manner or means of
their work. This disclaimer is belied by provisions of the OA
and FedEx’s policies and procedures, which in fact allow
FedEx to control significant aspects of the drivers’ day-to-day
jobs, and it therefore provides only limited insight into the
drivers’ state of mind. However, when all justifiable
inferences are drawn in FedEx’s favor, see Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), the OA’s
statement of independent contractor status is evidence that the
drivers believed that they were entering such a relationship.
Ultimately, though, “neither [FedEx]’s nor the drivers’ own
perception of their relationship as one of independent
contracting” is dispositive. See JKH Enters., 48 Cal. Rptr. 3d
at 580; Grant v. Woods, 139 Cal. Rptr. 533, 537 (Ct. App.
1977) (“[T]he belief of the parties as to the legal effect of
their relationship is not controlling if as a matter of law a
different relationship exists.”).
3. Summary
Viewing the evidence in the light most favorable to
FedEx, the OA grants FedEx a broad right to control the
manner in which its drivers’ perform their work. The most
important factor of the right-to-control test thus strongly
favors employee status. The other factors do not strongly
favor either employee status or independent contractor status.
Accordingly, we hold that plaintiffs are employees as a matter
of law under California’s right-to-control test.
32 ALEXANDER V. FEDEX
C. FedEx’s Conditional Cross-Appeal
FedEx argues that we should decertify the class if—but
only if—we rely on individualized evidence in reversing the
MDL Court’s grant of summary judgment to FedEx. Our
decision does not rely on any individualized evidence.
FedEx’s argument is therefore unavailing.
Conclusion
We hold that plaintiffs are employees as a matter of law
under California’s right-to-control test. Accordingly, we
reverse both the MDL Court’s grant of summary judgment to
FedEx and its denial of plaintiffs’ motion for partial summary
judgment. We remand to the district court with instructions
to enter summary judgment for plaintiffs on the question of
employment status.
REVERSED and REMANDED.
TROTT, Circuit Judge, with whom GOODWIN, Circuit
Judge, joins, concurring:
The resolution of this case as a matter of granting
summary judgment to the drivers is far from simple, as the
length and complexity of Judge Fletcher’s meticulous opinion
demonstrates. It has not been made easier by FedEx’s brief,
which, by quoting part of a sentence from an admission —
but not all of it — creates a rosier picture of the drivers’ state
of mind than the record supports.
ALEXANDER V. FEDEX 33
FedEx represents in its brief, and I quote, that each of the
drivers personally “intended to enter an independent
contractor relationship with [FedEx].” What the brief omits
are the important words that precede this language and the
final sentence in the drivers’ response. This is what the
drivers admitted:
Named plaintiffs admit that on the day
they signed their original Operating
Agreement, in reliance on Defendants’
statements that they would be an independent
contractor, they intended to enter into an
independent contractor relationship with
Defendants. Named Plaintiffs deny, however,
that an independent contractor relationship
ever, in fact, existed between them and
Defendants.
Response to Request for Admission No. 1 (emphasis
supplied). The meaning of this response read as a whole is
that the drivers believed they were becoming true
independent contractors, but the reality they encountered was
different.
We also find the actual meaning of the drivers’
“admission” in this case in a companion case, Slayman v.
FedEx Ground Package System, Inc., Nos. 12-35525 and 12-
35559. In that case, drivers pursued a personal claim in
Oregon district court for rescission, claiming fraud. In
denying summary judgment to both parties on the sole ground
that the claim was not timely, the district court noted that
“[d]eposition testimony indicate[d] that soon after becoming
a driver, each plaintiff believed that the [Operating
Agreement], despite its express terms, did not give the driver
34 ALEXANDER V. FEDEX
the control he expected as an independent contractor.”
Slayman v. FedEx Ground Package Sys., Inc.,
3:05-cv-1127-HZ, 2012 WL 1902601, at *7 (D. Or. May 25,
2012). All that glittered turned out not to be gold.
Once again, we learn the regrettable lesson that the basic
information we require to resolve a controversy is not always
found in the parties’ briefs, but in the ungilded record itself.
A good rule in this business is to verify before you trust.
Lawyers would be well advised not to elide the truth, the
whole truth, and nothing but the truth.
Judge Fletcher’s analysis of the demands of California
law is correct. Although Estrada went to the Court of Appeal
after a contested trial — not on a grant of summary judgment
to the drivers — we would be misguided to ignore what the
California Court of Appeal said in that case, as well as the
particulars of the test set out by the California Supreme Court
in Borello, which does not embrace the “entrepreneurial
opportunities” test, as a gloss or otherwise.
Abraham Lincoln reportedly asked, “If you call a dog’s
tail a leg, how many legs does a dog have?” His answer was,
“Four. Calling a dog’s tail a leg does not make it a leg.”
Justice Cardozo made the same point in W.B. Worthen Co. v.
Kavanaugh, 295 U.S. 56, 62 (1935), counseling us, when
called upon to characterize a written enactment, to look to the
“underlying reality rather than the form or label.” The
California Supreme Court echoed this wisdom in Borello,
saying that the “label placed by the parties on their
relationship is not dispositive, and subterfuges are not
countenanced.” 769 P.2d at 403. As noted by Judge Fletcher,
“[N]either [FedEx’s] nor the drivers’ own perception of their
ALEXANDER V. FEDEX 35
relationship as one of independent contracting” is dispositive.
JKH Enters., Inc., 48 Cal. Rptr. at 580.
Bottom line? Labeling the drivers “independent
contractors” in FedEx’s Operating Agreement does not
conclusively make them so when viewed in the light of
(1) the entire agreement, (2) the rest of the relevant “common
policies and procedures” evidence, and (3) California law.
As Judge Fletcher points out, the MDL decision to the
contrary relied on an inappropriate consideration: the
entrepreneurial opportunities factor.
Although our decision substantially unravels FedEx’s
business model, FedEx was not entitled to “write around” the
principles and mandates of California Labor Law by
constructing a contract which, after a contested trial, the
California trial court in Estrada called:
[A] brilliantly drafted contract creating the
constraints of an employment arrangement
with [the drivers] in the guise of an
independent contractor model — because
FedEx not only has the right to control, but
has close to absolute control over [the drivers]
based upon interpretation and obfuscation.
Estrada, 64 Cal. Rptr. 3d at 334 (brackets in original)
(internal quotations marks omitted). The Court of Appeal in
that case appropriately called the trial court’s observation an
application of the looks like, walks like, swims like, and
quacks like a duck test. See id. at 335.
Accordingly, I concur in Judge Fletcher’s persuasive
opinion.

Outcome: Reversed and Remanded

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