Judge rules Fresno Bee carriers are independent contractors

A group of newspaper carriers who delivered The Fresno Bee between late 2004 and mid-2009 worked as independent contractors, not as employees of the company, and are not entitled to automobile mileage reimbursements potentially adding up to millions of dollars, a Fresno County Superior Court judge has decided.

A lawsuit filed in 2008 on behalf of the carriers alleged that under the state’s Business & Professions Code, The Bee and its parent company, The McClatchy Co., improperly characterized the carriers as independent contractors rather than employees. The lawsuit listed six carriers as plaintiffs, but their attorneys said that as many as 3,800 carriers were represented in the class-action case.

In a tentative decision issued Thursday, Judge Kristi Culver-Kapetan ruled that under common law and state employment regulations, “the carriers were properly classified as independent contractors.”

Carriers signed contracts to deliver The Bee and other publications to homes and businesses on their routes. Culver-Kapetan ruled that the contracts were legally sufficient for the carriers to be considered as independent contractors instead of employees.

In court records and in a trial that began in December 2014, attorneys with the Santa Ana law firm of Callahan & Blaine, representing the carriers, argued that “classification of the carriers as independent contractors was simply a subterfuge” by the company because of the level of control exercised by The Bee over their work – including penalties for missed deliveries or customer complaints.

It would be unfair for The Bee to be penalized for relying upon the regulations and following them.

Fresno County Superior Court Judge Kristi Culver-Kapetan

But Culver-Kapetan rejected that argument. “The contracts were not a subterfuge,” she wrote. The judge agreed with The Bee’s attorney, John Poulos of Sacramento, that the company relied on rules contained in the California Code of Regulations in crafting the contracts and in its treatment of the carriers.

“The Fresno Bee complied with and relied upon California’s  regulations regarding which factors are not to be taken as evidence of employment in the context of newspaper carriers,” the judge wrote. “It would be unfair for The Bee to be penalized for relying upon the regulations and following them.”

“Given their close adherence to the EDD regulations, The Bee believed that the carriers who contracted with it were independent contractors,” the judge added. “This belief was validated by the EDD’s audit of The Bee in 2000.” She continued that the plaintiff’s attorneys “submitted nothing to refute The Bee’s bona fide belief in the independent contractor status of the carriers.”

Poulos contended on behalf of The Bee that the contracts were “an absolute safe-harbor defense” against the carriers’ legal claims. The independent contractor agreements gave carriers “the legal right to control the manner and means of their delivery business” to maximize their profit and to deliver competing publications while also delivering The Bee.

“We are gratified by the court’s ruling,” Fresno Bee president/publisher Tom Cullinan said. “We have always been very proud of our business practices at The Bee and this decision confirms the integrity of our operation.”

The distinction between employee and contractor was a crucial one because, the carriers’ attorneys said, employees would be entitled to reimbursements for their on-the-job mileage and other expenses.

Had Culver-Kapetan ruled against The Bee, it would have set the stage for a second phase of the case in which attorneys would battle over the amount of mileage and other expenses for which The Bee and McClatchy would be liable to pay the carriers – an amount that the carriers’ attorneys said could have run into the millions of dollars.

The lawsuit against The Bee is one of a string of multimillion-dollar cases filed by Callahan & Blaine against newspaper companies across the state on behalf of carriers over their employment status.

A 2003 lawsuit against the Orange County Register ultimately ended in a $38 million settlement to cover compensation for carriers as well as attorney fees. A 2009 lawsuit against the San Diego Union-Tribune LLC resulted in a $10 million judgment in 2013, but that case is being appealed in the state’s Fourth District Court of Appeal.