On June 1, 2023, the Ninth Circuit Court of Appeals affirmed the district court's decision on behalf of Red Blossom Sales, Inc. (represented by Sheppard Mullin) and Better Produce, Inc. ("Defendants") in a proposed wage and hour class action filed by agricultural labor workers ("Laborers") for unpaid wages and derivative claims. The Laborers were hired by three strawberry growers ("Growers") to pick fruit that was then marketed and sold by Defendants primarily to large retail grocery chains.
Following the Growers' bankruptcy filing, the Laborers sought to hold Defendants liable for their alleged unpaid wages as joint employers with the Growers and as "client employers" under California Labor Code Section 2810.3(a)(1)-(3) arguing that the Laborers work was within the Defendants "usual course of business." A bifurcated bench trial was held in February 2021 on the issues of Defendants liability as joint employers and client employers. On October 15, 2021, the district court issued its ruling in favor of Defendants on all theories asserted by the Laborers. The Laborers appealed only with respect to the Section 2810.3 issue.
The Ninth Circuit agreed with the district court that the Laborers were not performing work within the Defendants' "usual course of business" which is defined by the statute as "the regular and customary work of a business, performed within or upon the premises or worksite of the client employer." California Labor Code Section 2810.3(a)(6). A primary focus of the Ninth Circuit was the fact that the Laborers' work was performed on the farms where the strawberries were grown and not on the premises of Defendants.
In reaching its conclusion to affirm, the Ninth Circuit determined that the legislature by requiring the work take place on the premises of the client employer, such client employer must exercise some element of control over the place where the work is performed. The rationale being that the legislature's intent was to impose liability on those entities who could reasonably be expected to have the ability to prevent California Labor Code violations. Here, the Defendants simply did not engage in harvesting work or exercise sufficient control over the farmlands to be considered the Defendants' premises and impose liability for the Laborers' alleged unpaid wages.
This is an outstanding victory for Defendants and an important decision for all industries in the supply chain for fresh produce.
Originally published by Castle Publications, LLC.
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