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Recent Appellate Decisions: July 13 – July 19, 2012

Selected summaries prepared by Commissioner James Verellen (ret.)

Washington State Supreme Court

July 19, 2012

Anfinson v Fed Ex Ground Package Systems, No. 85949-3

Washington Minimum Wage Act  – Washington Industrial Welfare Act – independent contractor – right to control –economic dependence test – judicial estoppel – class action – representative evidence

Varying tests are used to distinguish employees from independent contractor in numerous settings from vicarious liability to workers compensation to tax law.  For purposes of minimum wage statutes, courts applying the federal Fair Labor Standards Act use an economic-dependence test rather than the common law agency “right-to-control” standard.

Fed Ex Ground Package Systems contracts with drivers to deliver packages.  The contracts expressly provide that the drivers are independent contractors.  In this class action, drivers assert they are employees subject to the Washington Minimum Wage Act (MWA) and entitled to reimbursement for uniform expenses under the Washington Industrial Welfare Act (IWA).  In the motion for class certification, the drivers relied exclusively on the common law right-to-control test to establish commonality required under CR23(a)(2).  The trial court accepted that rationale in granting certification.  Just before the trial, the drivers first suggested the possibility of using the economic-dependence test.  The trial court rejected FedEx’s argument that judicial estoppel limits the drivers to the right-to-control standard.

At the trial on liability, the drivers proposed a right-to-control instruction and an alternative economic-dependence instruction.  The trial court gave a hybrid instruction (No. 9) introduced with the direction that the independent contractor question “requires you to determine whether FedEx Ground controlled or had the right to control, the details of the class members’ performance of the work.”  The instruction then lists eight permissive, non-determinative factors, six from the FSLA economic-dependence test (including “[t]he degree of FedEx Ground’s right to control the manner in which the work is to be performed”).  The drivers objected to the instruction.

The trial court also gave instruction No. 8 that the drivers had the burden of proving “that ‘employee’ status was common to the class members…”  In closing argument, FedEx argued that the drivers “have to show you that all 320 of those people are employees” and if they only showed that 319 are employees they have not met their burden.

The jury returned a defense verdict.  The drivers appealed.

Division I reversed the trial court holding that: the economic-dependence test applies; judicial estoppel did not limit the drivers to the right-to-control standard; and it was error to instruct the jury that employee status must be “common” to all members of the class.

The Washington Supreme Court (5-2 with 2 justices not participating) agreed with Division I and remanded for a new trial:

  • Judicial estoppel does not limit the drivers to the right-to-control test.  The economic-dependence test was clearly inconsistent with the drivers’ right-to-control arguments earlier in the lawsuit, but the trial court was not confused by the change of position and the change did not create an unfair advantage.
  • Contrary to the observation by Division I, judicial estoppel can apply to questions of law.
  • The term “employee” in the MWA is ambiguous.
  • “Employee’ in the MWA incorporates the FSLA economic-dependence test:  “Under the MWA, the correct inquiry into whether a worker is an employee covered by the act or an independent contractor not covered by the act is ‘whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.’”
  • Instruction No. 9 misstated the economic-dependence test by directing that the right to control was dispositive.
  • Instruction No. 9 applied to both the MWA and IWA claims, but even if the right-to-control test applies to the IWA, the instruction was a misstatement of the law as to the MWA and prejudicial error is presumed.
  • Instruction No. 8 that the drivers had the burden of proving that employee status was “common” to all class members was misleading because “common” is ambiguous; representative evidence may be used in a class action lawsuit; “common” in the sense of being shared by all members would allow the jury to infer that representative evidence was inadequate; the error was prejudicial because in closing argument FedEx encouraged the jury to apply the wrong legal standard.

Division I  Washington State Court of Appeals

July 16, 2012

Hundtofte and Alexander v. Encarnacion and Farias,  No. 66428-0-I

open courts – court’s electronic records index – GR 15 – unlawful detainer – replacement of tenant names with initials

Article I, section 10 of the Washington Constitution provides for open judicial proceedings and records.  The presumption of openness may be limited only by significant countervailing interests determined on a case-specific basis.

The landlord filed an unlawful detainer action against tenants E and F.  The litigation was resolved by a stipulation and agreed order of dismissal.  E and F were not evicted.  They agreed to leave the building in exchange for retaining three months of rent and for receiving a favorable rental reference from the landlord.   When they sought other rental housing, the prospective landlord turned E and F down because the court records revealed that the unlawful detainer action had been filed against them.

E and F filed a motion to redact the court index of the unlawful detainer action to substitute their initials for their names.  A superior court commissioner granted the unopposed motion.  In an effort to compel the superior court clerk (Office of Judicial Administration) to make the redaction, E and F filed a “motion to affirm” the commissioner’s ruling.  Ultimately, a superior court judge heard E and F’s motion to redact the record.  The superior court clerk opposed the request arguing that the redaction would constitute the destruction of a court record.

The superior court judge applied GR 15 and the Ishikawa factors.  The trial court concluded that prospective future landlords commonly deny rental housing to applicants who have been named in an unlawful detainer action, and there is a significant risk that E and F will be denied housing in the future.  The trial court determined that E and F’s need to obtain housing was a “compelling privacy interest” as required by GR 15 for redaction of a court record.  The trial court reasoned that the electronic record index presented a “serious and imminent threat” to E and F’s ability to obtain housing and their interest outweighed the public interest because i) they were not culpable and did nothing improper to cause their removal from the property, ii) they raised a meritorious defense to unlawful detainer, iii) redaction would not materially impair the public from utilizing the records of the unlawful detainer action for other public purposes,  iv) no one other than the clerk had objected, and v) redaction of their names from the electronic court record was the least restrictive effective means to preserve their housing prospects.  Because consumer reporting agencies, such as tenant screening agencies, can only lawfully report the unlawful detainer action for seven years under the Fair Credit Reporting Act, the court ordered that the redaction would expire in seven years.  The superior court clerk appealed.

Division I reversed the trial court:

  • The determination whether a sufficiently particularized interest outweighs the public’s constitutional right to the open administration of justice must be made on a case-by-case basis.
  • The trial court applied the correct legal standard engaging in the five-step Ishikawa analysis and following the procedural requirements of GR 15.
  • But E and F’s purported privacy interest is not sufficient to overcome the presumption of openness.
  • A stipulated dismissal does not necessarily support a lack of culpability.
  • The circumstances here would apply to any defendant in an unlawful detainer who ultimately was not evicted.
  • Neither the legislature nor the Washington Supreme Court has deemed the interest asserted by E and F to be protected.
  • The Fair Credit Reporting Act does not make it unlawful to report an unlawful detainer action within seven years of the lawsuit, so legislative policy does not support redaction of the electronic court index.
  • Redaction here would create a de facto “automatic limitation” inconsistent with the case-by-case analysis required by article I, section 10:  “Were redaction appropriate in these circumstances, this same relief would be properly granted whenever a defendant in an unlawful detainer action is not evicted and thereafter seeks to redact the court record of that action.  Absent constitutional, statutory or court rule protection for unlawful detainer defendants, such extraordinary relief is inappropriate where that relief would thereafter be warranted for all.”

Division II Washington State Court of Appeals

July 17, 2012

Goldsmith v DSHS,  No. 42070-8

Abuse of Vulnerable Adults Act – jurisdiction after death of victim – yelling and harassing 98-year-old

The Abuse of Vulnerable Adults Act creates a cause of action for damages for abandonment, abuse, financial exploitation, or neglect of a vulnerable adult.  The statute expressly provides that the cause of action for damages survives the death of the victim.  The statute includes other provisions authorizing an investigation into allegations of abuse.

The 98-year-old father suffered from physical ailments and had a recent steep decline in cognitive ability.  He required 24-hour home care.  During periodic visits, the adult son frequently yelled at his father during heated discussions about finances.  The arguments left the father upset and noncompliant.

The father’s guardian filed a declaration in support of a vulnerable adult protective order asserting that the father’s well being was in danger due to the stress and tension caused by the son.   A protective order was issued limiting contact by the son.  The Department of Social and Health Services Adult Protective Services Program investigated and made a finding that the son had mentally abused a vulnerable adult.  The son requested an administrative hearing. Three months before the hearing, the father died.  After the hearing, the administrative law judge concluded that by bombarding his father with predictions of financial doom, the son had harassed and verbally assaulted a vulnerable adult. The DSHS Board of Appeals affirmed the administrative law judge.  The son’s appeal to superior court was unsuccessful.

Division II  affirmed the Board’s conclusion that the son mentally abused his father, a vulnerable adult:

  • This investigation of alleged mental abuse of a vulnerable adult was not an action for damages.
  • The purpose of the proceeding was not limited to the protection of the victim.
  • The Board is required to maintain a registry of those who have abused a vulnerable adult (for use when issuing licenses and authorizing individuals to work with vulnerable adults) and to report potential criminal conduct.
  • The victim was not a party to the proceedings and the Board’s statutory obligations did not expire when the father died.
  • The Board did not lose jurisdiction when the father died.
  • Sufficient evidence supported the finding of mental abuse: “A reasonable person would know that lengthy and repeated yelling matches with a 98-year-old in declining health amounted to mental abuse that could cause harm or injury.”
  • Expert medical testimony is not required to prove injury.

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