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Curtis Johnson and Margaret Johnson, D/B/A Trinstar Enterprises v. Fedex Home Delivery and Fedex

December 12, 2011

CURTIS JOHNSON AND MARGARET JOHNSON, D/B/A TRINSTAR ENTERPRISES, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
FEDEX HOME DELIVERY AND FEDEX GROUND PACKAGE SYSTEM, INC., DEFENDANTS.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

MEMORANDUM AND ORDER

In this action, plaintiffs Curtis Johnson and Margaret Johnson assert various claims against FedEx Home Delivery and FedEx Ground Package System, Inc. (collectively "FedEx"), including claims of racial discrimination in FedEx's employment of drivers, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII") and the New York State Human Rights Law, N.Y. Exec. Law § 290 et seq. (the "NYSHRL"). After a lengthy period of multidistrict proceedings, FedEx has moved for partial summary judgment on the Johnsons' racial discrimination claims, arguing that the Johnsons are independent contractors rather than employees as a matter of law. For the reasons below, the motion is granted.

BACKGROUND A. Factual Background

FedEx*fn1 provides nationwide pick-up and delivery services of small packages from

and to its customers' homes and places of business. To provide these services, FedEx contracts with numerous individuals to cover deliveries in one or more of FedEx's delivery routes, or "work areas."

In May 2001, Curtis formed Trin Star Enterprises ("Trin Star") and purchased a van with the intention of running a delivery business. FedEx 56.1 Stmt. ¶¶ 16(d)--(f), ECF No. 32-2. He registered Trin Star with the State of New York and applied for and received an Employer Identification Number from the Internal Revenue Service. Id. ¶¶ 16(e), 21. Because Curtis did not have a driver's license and Margaret already had a full-time job, the Johnsons intended to hire other individuals to drive the van and perform deliveries. Id. ¶¶ 16(j), 17(a). Trin Star had sought delivery work made at least one delivery for hire before it entered into any business relationship with FedEx. Id. ¶¶ 16(g), 17(g).

Later in 2001, the Johnsons met with FedEx representatives to discuss providing delivery services in Brooklyn. Id. ¶¶ 16(h), 17(c). The Johnsons agreed to provide such services on behalf of FedEx and, in October 2001, Margaret signed the FedEx Home Delivery Standard Contractor Operating Agreement (the "Operating Agreement"). In the Operating Agreement, the Johnsons agreed to provide pick-up and delivery services for FedEx for a work area in Brooklyn, New York, consisting of the area covered by the zip code 11201.*fn2

At the time the Margaret signed the Operating Agreement, the Johnsons understood that they would be independent contractors rather than FedEx employees. Id. ¶ 23. The Operating Agreement memorializes that intention and its terms generally reflect an independent contractor arrangement.

Under the Operating Agreement, the Johnsons were responsible for providing their own vehicle and other equipment. Operating Agreement § 1.1, ECF No. 33-1. However, FedEx had the right to determine whether their vehicle was suitable, id., and it required the Johnsons to make some alterations to their van before they could use it to service FedEx. C. Johnson Dep. 45, ECF No. 33-2. At any time when the Johnsons' van was not being used to service FedEx, the Johnsons were free to use it for other commercial or personal purposes, as long as any FedEx logos or marks were removed or covered. Operating Agreement § 1.5.

The Johnsons were responsible for the van's maintenance, id. § 1.2, although FedEx management told Curtis when repairs should be made, see C. Johnson Dep. 64, 104. The Johnsons were also responsible for fuel costs, Operating Agreement § 1.3, although FedEx would increase their compensation if the price of fuel exceeded $1.25 per gallon, id. Addendum 3, § 1.F; see also C. Johnson Dep. 63--64. The Johnsons could purchase other needed tools and equipment from FedEx as part of a "Business Support Package." Operating Agreement § 7, Addendum 6. This package included decals, a uniform, a scanner and other items. Id. The Johnsons were not required to purchase the Business Support Package, but they chose to do so. See id.

The Operating Agreement expressly bars FedEx from controlling the "manner" and "means" by which the Johnsons fulfilled their responsibilities to pick-up and deliver packages within their work area. Id. § 1.14 ("[The Johnsons] shall be responsible for exercising independent discretion and judgment to achieve the business objectives and results specified above, and no officer, agent or employee of [FedEx] shall have the authority to direct [the Johnsons] as to the manner or means employed to achieve such objectives and results."). Rather than FedEx, the Johnsons themselves were contractually responsible for "determin[ing] the methods, manner and means of performing the obligations specified in th[e Operating] Agreement." Id. § 1.4. FedEx provided some initial training to the Johnsons regarding its "service quality procedures," id. § 1.13, but nothing indicates the Johnsons were required to follow these procedures.

The Operating Agreement did set some parameters for the Johnsons' work. For instance, they were required to provide pickup and delivery of all packages in their work area on days and times compatible with customers' schedules. Id. § 1.10(a). They might also be asked to service other work areas. Id. They were also required to make reasonable efforts to increase FedEx's customer base and package volume; handle and transport packages so as to avoid theft, loss or damage; help achieve FedEx's goals of efficiency; foster FedEx's "professional image and good reputation"; follow applicable law; operate their van safely; and conduct their business "with integrity and honesty, in a professional manner, and with proper decorum at all times." Id. § 1.10(b)--(h). All drivers were required to wear a FedEx uniform and to keep their personal appearance "consistent with reasonable standards of good order as maintained by competitors and promulgated from time to time by [FedEx]." Id. § 1.12. Delivery vehicles also had to be kept "in a clean and presentable fashion . . . in accordance with the standards of the industry." Id. FedEx managers were entitled to ride along with the drivers up to four times annually to monitor their performance. Id. § 1.13.

Neither of the Johnsons ever delivered or picked up packages themselves. Instead, they hired drivers to do so, as was permissible under the Operating Agreement. Id. § 2.2. Over the course of their relationship with FedEx, the Johnsons employed nine drivers. FedEx 56.1 Stmt. ¶ 25. These drivers were considered the Johnsons' employees, not FedEx's. See Operating Agreement § 2.2. The Johnsons were responsible for paying for their drivers' training, id., although FedEx provided the actual training content, C. Johnson Dep. 122. The Johnsons had discretion in hiring drivers, subject to the requirement that the drivers were qualified under applicable law as well as FedEx's safety standards. Operating Agreement § 2.2. The Johnsons, not FedEx, paid the drivers they hired. See id. § 2.2(b).

The Johnsons decided whether to hire additional help on a particular day to handle the volume for their work area. C. Johnson Dep. 90--91. However, sometimes a FedEx manager would tell Curtis he needed to do so. See id.

The Johnsons were paid for their work on a weekly basis. See Operating Agreement §§ 4.1--4.2 Their pay was determined pursuant to a formula that took into account the number of packages handled and stops made, the number of days worked, and a subsidy in the event they were given a low-density work area. Id. § 4.1. They were also eligible for bonuses tied to their length of service and performance. See id. Addendum 3 § IV, Addendum 8. The Johnsons received a statement of their income from FedEx on a 1099 form and "filed taxes as self-employed truck drivers while performing services" for FedEx. FedEx 56.1 Stmt. ¶ 24 (internal quotation marks and citation omitted).

FedEx could alter the Johnsons' work area on five work days' written notice. Operating Agreement § 6.2. However, FedEx recognized that the Johnsons had a proprietary interest in their work area. See id. § 6.3. Thus, in the event the Johnsons' reconfigured work area resulted in a reduction in their work volume, they would be entitled to compensation from either FedEx or other drivers who had taken on the Johnsons' former customers. See id. §§ 6.3-- 6.4.

The Operating Agreement was for an initial two-year term, which would automatically renew for successive one-year terms absent 30-days' prior notice of non-renewal from either party. Id. §§ 8.1--8.2. FedEx could terminate the contract only if (a) the Johnsons' consented; (b) FedEx ceased or scaled back its operations in the area; or (c) the Johnsons breached the contract. See id. § 9.1. The Johnsons also had the right to assign their contract to anyone "acceptable to [FedEx] as being qualified to provide the services of [the Johnsons] under th[e Operating] Agreement." Id. § 15.

In 2004, the relationship between FedEx and the Johnsons began to deteriorate. On September 24, 2004, FedEx notified the Johnsons that their work area was being changed from the 11201 zip code to the 11205 zip code. FedEx 56.1 Stmt. ¶ 19. The stated reason for this change was that the Johnsons were providing an insufficient level of service. Id. On November 3, 2004, FedEx notified the Johnsons that they had failed to meet FedEx's safety standards and, as a result, FedEx's indemnity coverage for the Johnsons' drivers would be terminated within 30 days unless the Johnsons submitted proof of insurance. Id. ¶ 22. After the Johnsons failed to provide proof of insurance, FedEx terminated the Operating Agreement on December 14, 2004. See id. ¶ 20.

B. Procedural Background

1. Removal and Transfer

The Johnsons commenced this action in the Supreme Court of the State of New York, Kings County on October 12, 2004. The Johnsons asserted nine causes of action, many of which relate to specific incidents over the course of their relationship with FedEx. In their eighth cause of action, they claim that FedEx discriminates against its delivery workers on the basis of race in violation of unspecified federal and state law. The latter claim was brought on behalf of a class consisting of FedEx's current and former minority contractors.

FedEx removed the case to this Court, relying for subject matter jurisdiction on both diversity of citizenship and the federal question raised by the Johnsons' claims. On January 21, 2005, FedEx moved before the United States Judicial Panel for Multidistrict Litigation (the "JPMDL") for a transfer of this action and several others to a single district court for coordinated pretrial proceedings. Although the JPMDL initially denied that motion, on August 10, 2005, it ordered that this action and others be transferred to the United States District Court for the Northern District of Indiana. All of the actions transferred to that court involved claims against FedEx that turned on the issue of whether delivery personnel such as the Johnsons were independent contractors or FedEx employees.

2. Multidistrict Proceedings

The multidistrict litigation was assigned to Judge Robert L. Miller, Jr. After extensive coordinated discovery, Judge Miller resolved numerous summary judgment motions that disposed of many of the individual actions. First, Judge Miller held that FedEx drivers were independent contractors as a matter of Kansas law. See In re FedEx Ground Package Sys., Inc., Emp't Practices Litig., 734 F. Supp. 2d 557, 559--60 (N.D. Ind. 2010) ("FedEx I"). A few months later, applying much of his reasoning and analysis from FedEx I, Judge Miller granted summary judgment in FedEx's favor in a number of the remaining cases, which involved claims under various states' laws. See In re FedEx Ground Package Sys., Inc., Emp't Practices Litig., 758 F. Supp. 2d 638, 653--55 (N.D. Ind. 2010) ("FedEx II").

Among the cases resolved in FedEx II was a putative class action, captioned Louzau v. FedEx Ground Package System, Inc., No. 3:05-cv-538, alleging that FedEx had violated provisions of New York's Labor Law governing wages. Judge Miller granted FedEx's summary judgment motion, holding that FedEx drivers were independent contractors as a matter of New York law, based on the record before him. See FedEx II, 758 F. Supp. 2d at 703--06. The Johnsons were not members of the Louzau class. See id. at 706.

FedEx had also moved for partial summary judgment in the Johnsons' case. Judge Miller denied that motion as premature, given the procedural posture of the cases before him. See id. In resolving summary judgment motions, he had considered only "evidence common to the drivers' relationships with FedEx on a nationwide basis: the Operating Agreement and generally applicable Policies and Procedures." Id. at 655. He deemed that "FedEx managers might exercise more control than what is retained in the Operating Agreement and commonly applicable policies and procedures," but concluded that he was procedurally constrained from considering FedEx's actual control. Id. at 656 (quoting FedEx I, 734 F. Supp. 2d at 560) (internal quotation marks omitted).

Judge Miller concluded that this constraint need not apply to the Johnsons' claims: "Because the Johnsons aren't members of the Louzau class, the procedural posture of their case is distinct, particularly regarding the scope of evidence available to the court, and nothing justifies keeping their case in this centralized docket any longer." Id. at 706. He further noted that it was for this Court to "decide how much weight to give today's decision in Louzau to the Johnsons' claims in light of the differing procedural and evidentiary postures of the two New York cases." Id.

3. Proceedings on Remand to this Court

Approximately six years after it was transferred, this action was remanded back to

this Court. FedEx promptly sought to renew its motion for partial summary judgment on the ground that the Johnsons were not its employees. On August 10, 2011, the Court issued a revised briefing schedule for FedEx's motion for partial summary judgment. Pursuant to that schedule, the Johnsons' opposition papers were due on or before September 9, 2011. Although FedEx timely filed its moving papers, the Johnsons did not file any opposition on or before September 9, 2011. On September 23, 2011, the Court issued an order to the Johnsons to show cause why FedEx's motion should not be granted as unopposed. In response, the Johnsons submitted a seven-page affirmation from their attorney opposing summary judgment. They did not submit any affidavits from persons with personal knowledge of the facts at issue nor did they submit a counter-statement of material facts pursuant to Local Civil Rule 56.1(b).

DISCUSSION

A. Standard of ...


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