Date: Nov 05, 2021
Category:

On October 15, 2021, the U.S. District Court for Los Angeles, issued a substantial (79-page decision) case brought by the CRLA Foundation against two Santa Maria based Growers and Marketer Defendants who sold their strawberry products on a non-exclusive basis. 

By way of historical background, the CRLA Foundation filed a class action civil lawsuit against two Santa Maria strawberry growers, Higuera Farms, Inc., Cuesta Farming Company, Inc. and Big F Company, Inc. alleging wage and hour violations.  The three farmers filed for bankruptcy and went out of business.  Not to be undone, the CRLA filed a third amended complaint adding the two Marketing Defendants, Better Produce, Inc. and Red Blossom Sales, Inc.  The Court granted the Motion and held a bifurcated bench trial on the issue of the Marketer Defendant’s liability as joint employers under Federal and State laws, and as client employers as defined by Labor Code Section 2810.3.  All remaining issues were to be tried at a later date. 

Representing the interests of Red Blossom Sales was Effie Anastassiou, a well-known litigation and contract law attorney in California who has represented many packing houses, processors, farmers and marketing organizations.  Rob Roy, VCAA’s General Counsel, served as the consultant on the issues of the application of Federal and State laws on joint employment, as well as the expert witness on Labor Code Section 2810.3. 

Following briefing by all of the parties, the Court issued the extensive 79-page decision finding in favor of both Red Blossom and Better Produce on all of the issues raised by the CRLA with regard to “joint employment” and “Labor Code Section 2810.3.”  It was the first case in California to decide the application of Section 2810.3 within the agricultural industry.

The Court went through an exhaustive analysis of the history of joint employment under the Fair Labor Standards Act and the Migrant and Seasonal Protection Act with regard to the relationship between the Marketing Defendants and the Grower Defendants.  With respect to Red Blossom, Red Blossom leased out land to one of the Grower Defendants and was paid back out of the profits from the sales of the strawberries.  Grower Defendants performed all of the usual functions as agricultural employers including the hiring of the workers, payment of wages, providing wage and employment conditions and benefits, planting, tending cultivation, irrigations, weeding, fertilizing and growing the strawberry crop. 

Red Blossom would take a certain percent commission on the selling of the berries.  It would pay for the packaging and shipping and cooling of strawberries but then deducted them from the Grower Defendant’s sale proceeds.  Red Blossom which maintained a major lease of agricultural lands, subleased 91 acres in subleases to Big F and 90 acres to Higuera Farms.  Red Blossom maintained some limited control such as ensuring that the Grower Defendants adhered to stringent food safety requirements which required strict compliance with all laws relating to food safety.  Red Blossom also required its food safety policy to be posted in the fields; required Higuera and Big F crew leaders to complete daily logs indicating the blocks harvested, which would then be crossed referenced with pesticide and fertilizer application records; conducted internal audits of the growers which required inquiry into potential flooding, contamination and worker hygiene, hired a third-party to conduct auditing the operations to complete an annual audit for which Red Blossom paid, including a number of other safety regulated food safety related issues. 

With regard to the “joint employer” analysis under the Migrant Seasonal Worker Protection Act, Plaintiffs argued that the Marketer Defendants were “agricultural employers who failed to pay wages owed to Plaintiffs (agricultural workers) and failed to abide by the terms of the working arrangement under the H-2A regulations.  After an extensive analysis of the case law, as well as regulatory and non-regulatory factors under MSPA, the Court concluded that neither Better Produce nor Red Blossom were joint employers with the Grower Defendants.

Of importance to the agricultural industry is the Court’s analysis of each and every regulatory and non-regulatory factor supported by numerous facts in the Court record.  This clearly demonstrates that the decision was based upon a “preponderance of the evidence taken”.  This may have positive impact should the Plaintiffs decide to appeal the case to the 9th Circuit Court of Appeals. 

Next, the Court analyzed the plaintiff’s legal arguments under California laws.  This included analysis under the case of Martinez v. Combs and related cases.  The Court concluded that the Plaintiffs had not met their burden to establish joint employment liability under California law.  The Court noted that there was no evidence shown of even an indirect power to discipline workers, and enforce working conditions or alter wages, hours or working conditions.  The Marketer Defendants did not “suffer or permit” Plaintiffs to work, because they had no direct or indirect authority to hire, fire or otherwise prevent Plaintiffs from working.

Lastly, the Court addressed the novel issue of Labor Code Section 2810.3 which requires that a “labor contractor” and “client employer” share civil liability for a labor contractor’s failure to pay wages.  According to the Court, the Plaintiffs must demonstrate (1) the Grower Defendants were “labor contractors” and (2) that the Marketer Defendants were “client employers”.

It should be noted that in its motion to include the marketing organizations in the Plaintiffs’ third amended complaint, CRLA Foundation [claimed] that the Grower Defendants were acting like “labor contractors” even though they were aware of the fact that the Department of Labor had issued H-2A certifications to each Grower Defendant as “single site employers”, not as farm labor contractors.

In evaluating the application of Section 2810.3, the Court noted that there was no evidence of a traditional or formal labor contractor relationship whereby the Marketer Defendants paid the Grower Defendants a fee in return for the Grower Defendants providing labor.  Nevertheless, the Plaintiffs contended that the Grower Defendants were labor contractors, irrespective of any formal or traditional relationship.  The Grower Defendants responded that they were not labor contractors because they were neither licensed nor paid to “supply” workers. 

None of the parties before the Court could cite to any case law to shed light on the definition’s scope as this was the first time a Court had addressed this issue.  However, after an exhaustive analysis of the history of this law and the facts of the relationships between the parties, the Court concluded that the Grower Defendants were not “labor contractors” for purposes of Section 2810.3. 

Nevertheless, given the ambiguity in the legislature’s definition of the term and lack of authority on the matter, the Court proceeded with an additional analysis.  Once again, the Court analyzed the requirements of the term “client employer” in Section 2810.3, as well as the definition of “regular and customary work.”  After an additional analysis of the wording, as well as the legislative history, the Court concluded that neither of the Marketing Defendants were deemed to be a “client employer” in that the Marketing Defendants had not been provided workers to perform labor within their usual course of business from a labor contractor.  

The “usual course of business” means the regular and customary work of a business performed within or upon the premises or worksite of the client employer.  Here, such work was performed by the Grower Defendants on the subleased fields from the Marketing Defendants.  With regard to Red Blossom, the Court noted that the Plaintiffs failed to demonstrate how the “regular and customary” work occurred on Red Blossom’s premises or worksite.  Although the Plaintiffs did introduce some minor evidence that Red Blossom accessed and monitored the subleased land under the circumstances set forth above, the Plaintiffs’ evidence was insufficient to characterize the farmland as Red Blossom’s “premises” or “worksite”.  That was the extent of the evidence in Plaintiff’s favor.  Thus, the Court found that Red Blossom was not a “client employer” under Labor Code Section 2810.3.

Article courtesy of VCAA's President/General Counsel Rob Roy

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