Litigator of the Week: Reframing the Independent Contractor Fight
In a battle over classifying workers as employees or independent contractors, Gibson Dunn partner Jason Schwartz figured out how to reframe the fight.
November 02, 2017 at 09:15 PM
4 minute read
Battling over whether workers should be classified as employees or independent contractors, you might say, is in vogue in the labor law scene these days. It's an issue that has certainly captured the attention of lawyers in Silicon Valley, home of the gig-economy.
But if you can reframe the fight, that might just be the better defense strategy.
Jason Schwartz, a litigation partner in Gibson, Dunn & Crutcher's Washington, D.C. office, led a team that successfully defeated a nationwide class action against marketing company Credico LLC by taking an alternate route to defeating claims that workers had been misclassified.
Instead, Schwartz convinced U.S. District Judge Paul Engelmayer of the Southern District of New York last week that Credico wasn't an employer to the plaintiffs at all—and that even if it were, their status as outside salespeople meant they couldn't pursue minimum wage claims.
“These rulings collectively preclude liability for all defendants on all counts,” Engelmayer wrote in an Oct. 27 order granting summary judgement in favor of Credico. Though related cases will go on in other venues, the ruling lands Schwartz the title of Litigator of the Week for extricating his client from this particular legal quagmire.
The company functions as something of a middle-man in a program operated by the government to help give low-income people access to mobile phones. It contracts on one side with Sprint, which receives a subsidy for participating in the program, and on the other with local sales offices that hire people to go out and actually sign up people to buy phones.
In the Vasto case, several salespeople who worked for a subcontractor to Credico in New York called Cromex Inc. sued Credico, alleging that they had been misclassified and were owed minimum wage, and that they had been fired as retaliation for complaining about their working conditions. Both Credico and Cromex were sued under the “joint employer” theory.
But rather than try tackle the independent contractor issue, Schwartz instead found evidence that the workers barely knew what Credico was. According to Engelmayer's ruling, some didn't even know how to contact the company.
The approached worked. Engelmayer summed up that “even assuming plaintiffs were employees, they were employees only of Cromex, and therefore only Cromex can be held liable” under federal and New York state labor laws. The ruling was critical to undoing a conditionally certified national class action against Credico.
The other point that Gibson Dunn won on was an argument over the “outside sales exception.” In a nutshell, it holds that even employees—if they are salespeople in the field who can't be monitored—aren't subject to minimum wage and overtime requirements, and can instead be paid on commission under New York and federal labor laws.
Schwartz successfully argued that plaintiffs fell under that exception, pointing directly to pleadings that characterized their jobs. “When we came into the case and saw that, we thought, 'This is fantastic,” he said in an interview Thursday.
Schwartz said oral arguments were intense and lasted several hours, and praised Judge Engelmayer for his thoroughness. It was the second time the judge had heard a case on the issue, after a hearing on a New York-only class action against Credico involving different plaintiffs (which was also defeated on summary judgement by Schwartz and his team in a ruling the month before).
The newer ruling is a “significant decision that takes apart a [Fair Labor Standards Act] class action, which is really hard to do because the standard for employment is very liberal,” he added.
His opposing counsel in Vasto was Harold Lichten of the Boston plaintiffs firm Lichten & Liss-Riordan, which has made a name for itself in California for going after companies like Uber and GrubHub. Lichten is pursuing other cases against Credico in both California and Massachusetts, but said he hasn't made a decision on whether to appeal the Vasto case.
“While it's true that Gibson Dunn litigates a case to the Nth degree … Mr. Schwartz himself is a very honorable guy and we had no animosity during the litigation,” Lichten said by phone. “I think both California and Massachusetts are more favorable on this issue, but we will see.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllShould It Be Left to the Plaintiffs Bar to Enforce Judicial Privacy Laws?
7 minute readA Reporter and a Mayor: Behind the Scenes During the Eric Adams Indictment News Cycle
Of Predictive Analytics and Robots: A First-Year Federal Judge's Thoughts on AI
Trending Stories
- 1Social Media Celebrities Clash in $100M Lawsuit
- 2Federal Judge Sets 2026 Admiralty Bench Trial in Baltimore Bridge Collapse Litigation
- 3Trump Media Accuses Purchaser Rep of Extortion, Harassment After Merger
- 4Judge Slashes $2M in Punitive Damages in Sober-Living Harassment Case
- 5Georgia Supreme Court Honoring Troutman Pepper Partner, Former Chief Justice
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250