On January 26, 2016, Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware (the “Court”) issued a Memorandum Opinion and Order in Noble Logistics, Inc. case no. 14-10422 (CSS) denying the Debtors’ objections (the “Objections”) without prejudice to Claim No. 20 filed by Richard Maximo, individually, ( the “Maximo Claim”) and Claim No. 21 filed by Richard Maximo on behalf of himself and others similarly situated (the “Class Claim” and together with the Maximo Claim, the “Claims”). In the Objections, the Debtors had sought either disallowance of, or summary judgment on, the Claims. The Court denied both requests without prejudice because 1) the Debtors declaration had failed to refute the prima facie validity of the Claims; 2) in any event, had the Debtors refuted the validity, the responses filed in support of the Claims refuted the Debtors’ evidence for purposes of a motion to dismiss; and 3) there were genuine issues of material fact that preclude summary judgment for the Debtors.
On April 14, 2014, Richard Maximo filed both of the Claims. The Claims are based on underlying state court litigation in the Superior Court of the State of California for the County of San Bernadino commenced by a class action complaint (later amended) filed by Maximo on his own behalf and on behalf of those similarly situated (the “Maximo Complaint”). The Maximo Complaint alleges that Maximo and other members of the Putative Classes were working or previously worked for Aspen, one of the Debtors, as Delivery Drivers and that Aspen mischaracterized them as ‘independent contractors” thereby depriving them of compensation, protection and benefits to which they would have been entitled as traditional employees under California law. The Claims assert damages, liquated damages and penalties plus pre-judgment interest. The Debtors objected to the Claims (the “Objections”) asserting they should be disallowed for failure to establish prima facie evidence of the validity of the amount of the claims or, in the alternative, for summary judgment on the objections to the Claims. In responding to the Objections, Maximo and Putative Class filed declarations of various class members as well as counsel to Maximo. The declarations contained facts in support of the Maximo Complaint. To refute the allegations in the Claims, the Debtors filed a declaration by their Chief Liquidation Officer with documents attached that include an Independent Contractor Agreement and a Frequently Asked Questions paper describing the drivers as independent contractors.
Based upon this record, the Court denied the Objections without prejudice. First, the Court noted that the filing of a proof of claim constitutes prima facie evidence of the validity of the claims, but once an objecting party submits evidence to place the claimant’s entitlement at issue the prudent of going forward with the evidence to sustain the claim shifts to the claimant. The Court acknowledged that the Debtors has submitted a declaration to refute the allegations in the Claims, but indicated that under California law the existence of an “independent contractor” agreement is simply one factor to consider in deciding a person’s work status. Moreover, the Court indicated that even if it found the Debtors’ declaration refuted one of the allegations in the Claims, the declarations filed by Maximo and other Putative Class members sufficiently refuted the Debtors’ declaration for purposes of a motion to dismiss. In any event, the Court observed that it’s consideration of the Debtors’ declaration converted the matter to a summary judgment motion.
Likewise based upon the record, the Court denied summary judgment on the Objections without prejudice. The Court noted the standard for summary judgment imposes on the moving party the burden of showing that no genuine issue of material fact exists. Relying, in part, on a California case involving a determination that a pizza parlor delivery man was not an independent contractor and on the record before it, the Court found that genuine issues of material fact exist, including whether the class members had the right to control and discretion as the manner of performance of their services, whether the members could complete routes without the Debtors’ direction or supervision, what skills were required, the length of time for which the services were performed and whether the work was part of the Debtors’ regular business. As a result, the Court concluded that summary judgment was not appropriate at this time.
A copy of the Court’s Memorandum Opinion and Order is available here.