FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GERARDO VAZQUEZ, GLORIA No. 17-16096
ROMAN, and JUAN AGUILAR,
on behalf of themselves and D.C. No.
all other similarly situated, 3:16-cv-05961-WHA
Plaintiffs-Appellants,
v. ORDER
CERTIFYING
JAN-PRO FRANCHISING QUESTION TO THE
INTERNATIONAL, INC., CALIFORNIA
Defendant-Appellee. SUPREME COURT
Appeal from the United States District Court
for the Northern District of California
William Alsup, District Judge, Presiding
Argued and Submitted December 18, 2018
San Francisco, California
Filed September 24, 2019
Before: Ronald M. Gould and Marsha S. Berzon, Circuit
Judges, and Frederic Block, District Judge. *
Order
*
The Honorable Frederic Block, United States District Judge for the
Eastern District of New York, sitting by designation.
2 VAZQUEZ V. JAN-PRO FRANCHISING INT’L
SUMMARY **
Certified Question to the California Supreme Court
The panel certified the following question of state law
to the California Supreme Court:
Does Dynamex Operations West Inc. v.
Superior Court, 416 P.3d 1 (Cal. 2018), apply
retroactively?
ORDER
We ask the California Supreme Court to resolve an open
question of California state law and certify the following
question: Does the Court’s decision in Dynamex Operations
West Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018), apply
retroactively? Our phrasing of the question should not
restrict the Court’s consideration of the issues involved. The
Court may rephrase the questions as it sees fit in order to
address the contentions of the parties. If the Court agrees to
decide this question, we agree to accept its decision. We
recognize that the Court has a substantial caseload, but we
submit this question in the interests of comity and because
of its significance for California labor law and California
businesses.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
VAZQUEZ V. JAN-PRO FRANCHISING INT’L 3
I
This case dates back more than a decade. We provide
background on the parties, their dispute, the procedural
history of the case, and their contentions on appeal to frame
the question we are certifying.
A
Defendant-Appellee, Jan-Pro International Franchising,
Inc. (“Jan-Pro”) is a company headquartered in Georgia. It
licenses a system for marketing cleaning services to
“regional master franchisees,” in multiple countries,
including the United States. Regional master franchisees
purchase franchises for exclusive operations in a given
regional area.
Regional master franchisees, in turn, are franchisors to
“unit franchisees.” Regional master franchisors 1 advertise
cleaning services within the geographic region covered by
the franchise, provide bids to potential customers, and
process payments. Unit franchisees are given the option to
accept or reject these bids; for any bids they accept, they
perform the actual cleaning under the “Jan-Pro” name. Unit
franchisees are also allowed to solicit their own accounts.
After royalties and other fees are deducted for Jan-Pro and
the regional master franchisor, the balance is remitted to the
unit franchisee. Regional master franchisors also offer
“business and management services” to unit franchisees,
including training, “assistance with customer relations”
(which includes finding a substitute unit franchisee if a
scheduled unit franchisee is unable to fulfill a contract), and
1
We refer to the intermediate entities as either “regional master
franchisees” or “regional master franchisors” depending on whether the
focus is on their relationships with Jan-Pro or with the unit franchisees.
4 VAZQUEZ V. JAN-PRO FRANCHISING INT’L
invoicing. Some regional master franchisors provide
cleaning supplies to their unit franchisees.
Jan-Pro is not party to any contract with unit franchisees.
Jan-Pro contracts with the master franchisors, who then
contract with unit franchisees. Unit franchisees may hire
their own employees and may act in individual or corporate
capacities.
Plaintiffs-Appellants (“Plaintiffs”) are former unit
franchisees who purchased their franchises from two
different regional master franchisors. Gerardo Vazquez
purchased his franchise from master franchisor New Venture
of San Bernardino, LLC for $2,800; Gloria Roman bought
hers from Connor-Nolan, Inc. for $2,800; and Juan Aguilar,
with a business partner, acquired his from Connor-Nolan,
Inc. for $9,000. See Roman v. Jan-Pro Franchising Int’l,
Inc., No. 16-cv-05961, 2017 WL 2265447, at *1 (N.D. Cal.
May 24, 2017).
B
This case began in 2008 when three other former Jan-Pro
unit franchisees (not Plaintiffs) filed a putative class action
in the District Court for the District of Massachusetts. By
the end of the year, there were eight additional plaintiffs,
including the Plaintiffs here, who are California residents.
Together, they alleged that Jan-Pro had developed a
sophisticated “three-tier” franchising model to misclassify
its janitors as independent contractors and avoid paying
minimum wages and overtime compensation.
Because of the variety of state laws involved, the
Massachusetts district court chose a test case and, over Jan-
Pro’s objection, severed Plaintiffs’ cases and sent them to
VAZQUEZ V. JAN-PRO FRANCHISING INT’L 5
the Northern District of California, Plaintiffs’ place of
residence.
C
Eventually, Jan-Pro moved for summary judgment in
this case. Jan-Pro contended that the California Supreme
Court’s decision in Patterson v. Domino’s Pizza, LLC—a
case concerning the vicarious liability of a franchisor for a
sexual assault against an employee of its franchisee,
333 P.3d 723 (Cal. 2014)—provided the relevant standard
for determining whether Plaintiffs should be considered
employees of Jan-Pro. See Roman, 2017 WL 2265447,
at *2. Plaintiffs, in turn, contended that Martinez v. Combs,
231 P.3d 259 (Cal. 2010), provided the standard because this
is a wage and hour case. Roman, 2017 WL 2265447, at *2.
In Martinez, the California Supreme Court held that “to
employ,” as used in California wage orders, means “(a) to
exercise control over the wages, hours or working
conditions, or (b) to suffer or permit to work, or (c) to
engage, thereby creating a common law employment
relationship.” Martinez, 231 P.3d at 278.
The district court recognized that “no binding decision
ha[d] addressed the standard applicable to determining
whether a franchisor is an employer of a franchisee,” and “in
the absence of controlling authority” it applied “the Martinez
standard, with the gloss of Patterson.” Roman, 2017 WL
2265447, at *3. Analyzing Martinez’s three prongs, the
district court held that Plaintiffs had not established a
genuine issue of material fact as to whether they were
employees under any of the three prongs, and the court
granted summary judgment to Jan-Pro. Id. at *5–6.
Plaintiffs filed a timely notice of appeal.
6 VAZQUEZ V. JAN-PRO FRANCHISING INT’L
D
While this appeal was pending and after briefing was
completed, the California Supreme Court decided Dynamex.
Dynamex turned on the definition of “suffer or permit”—i.e.,
Martinez’s second prong—for California wage order cases.
Specifically, Dynamex held that a “hiring entity” (a putative
employer) “suffers or permits” a putative employee to work
if it cannot overcome the “ABC test.” 416 P.3d at 35. A
hiring entity must establish three elements to disprove
employment status: (A) that the worker is free from the
control and direction of the hiring entity in connection with
the performance of the work, both under the contract for the
performance of the work and in fact; (B) that the worker
performs work that is outside the usual course of the hiring
entity’s business; and (C) that the worker is customarily
engaged in an independently established trade, occupation,
or business of the same nature as the work performed. Id.
at 35.
E
Because Dynamex postdated the district court’s decision,
we issued an order directing the parties to brief its effect on
the merits of this case. Among other contentions, the parties
disputed whether the decision applies retroactively.
On May 2, 2019, we issued a published opinion holding,
inter alia, that Dynamex applies retroactively. See 923 F.3d
575. On petition for panel rehearing, however, we decided
to certify the retroactivity question to the California Supreme
Court. We therefore issued an order withdrawing our prior
opinion. See Vazquez v. Jan-Pro Int’l, Inc., __ F.3d __, 2019
WL 3271969 (9th Cir. July 22, 2019).
VAZQUEZ V. JAN-PRO FRANCHISING INT’L 7
II
“We invoke the certification process only after careful
consideration and do not do so lightly.” Kremen v. Cohen,
325 F.3d 1035, 1037 (9th Cir. 2003). “In deciding whether
to exercise our discretion, we consider: (1) whether the
question presents ‘important public policy ramifications’ yet
unresolved by the state court; (2) whether the issue is new,
substantial, and of broad application; (3) the state court’s
caseload; and (4) ‘the spirit of comity and federalism.’”
Murray v. BEJ Minerals, LLC, 924 F.3d 1070, 1072 (9th Cir.
2019) (en banc) (quoting Kremen, 325 F.3d at 1037–38).
Here, we conclude that it is prudent to certify the question of
Dynamex’s retroactivity to the California Supreme Court.
We do so for two reasons.
First, in our now-withdrawn opinion, we rejected Jan-
Pro’s argument that the doctrines of res judicata and law of
the case bar Plaintiffs from contending that they are
employees under the ABC test. See 923 F.3d at 583–86. We
likewise rejected their contention that a retroactive
application would violate its federal due process rights. See
id. at 588–90. Finally, we held that if Dynamex does apply,
the district court’s reliance on Patterson and the “special
features of the franchise relationship” was misplaced. See
id. at 594–95. We continue to adhere to those conclusions
and incorporate them here by reference. See Vazquez v. Jan-
Pro Int’l, Inc., __ F.3d __ (9th Cir. 2019). Accordingly, the
question of whether Dynamex applies retroactively “could
determine the outcome” of this appeal. Cal. R. Ct. 8.548(a).
Second, in resolving the parties’ competing contentions,
our task, as a federal court sitting in diversity, is “to
approximate state law as closely as possible in order to make
sure that the vindication of the state right is without
discrimination because of the federal forum.” Murray,
8 VAZQUEZ V. JAN-PRO FRANCHISING INT’L
924 F.3d at 1071 (quoting Ticknor v. Choice Hotels Int’l,
Inc., 265 F.3d 931, 939 (9th Cir. 2001)). If a state’s highest
court has not spoken on an issue, “then we must predict how
the state’s highest court would decide” the issue. Id. Or, “if
state law permits it, we may exercise our discretion to certify
a question to the state’s highest court.” Id. The question of
Dynamex’s retroactive application has potentially broad
ramifications for those who have been doing business in
California, but the question has not been answered by the
California Supreme Court. See Cal. R. Ct. 8.548(a)(2). 2 As
discussed, Dynamex enunciated anew a test for analyzing
whether a worker is an employee under California wage
orders. According to Jan-Pro and amici, that test, if it applies
retroactively, could lead to substantially greater liability for
California businesses, for conduct that occurred before
Dynamex, than the pre-Dynamex legal regime. In particular,
the decision could lead to greater liability in economic
sectors that rely more heavily on independent contractors.
Franchising is one such sector, and it is large. There are
more than 77,000 franchise establishments employing over
755,000 people in California. IHS Markit Economics,
Franchise Business Economic Outlook for 2018 at 28
(2018), https://www.franchise.org/sites/default/files/Franch
ise_Business_Outlook_Jan_2018.pdf. Others potentially
affected are small businesses and their employees, as well as
workers in the gig economy. Given the potential importance
of the retroactivity issue to California businesses and
workers, and because the question is unsettled, “‘[c]omity
and federalism counsel that the California Supreme Court,
rather than this court, should answer’ the certified question.”
2
We note, however, that the Court did deny without comment a
petition by the California Employment Law Council, an amicus, to
modify the Dynamex decision to apply prospectively-only. The ABC
test will thus be applied retrospectively in Dynamex itself.
VAZQUEZ V. JAN-PRO FRANCHISING INT’L 9
Robinson v. Lewis, 795 F.3d 926, 928 (9th Cir. 2015)
(quoting Munson v. Del Taco, Inc., 522 F.3d 997, 999 (9th
Cir. 2008)); see also Murray, 924 F.3d at 1072.
In asking the California Supreme Court to resolve this
question, we respectfully direct it to our own analysis in the
withdrawn opinion to the extent that the Court may find it
helpful. See 923 F.3d at 586–88. We also respectfully direct
it to the voluminous briefs of the parties and amici. To that
end, we GRANT Plaintiffs’ motion to take judicial notice of
a hearing transcript in Juarez v. Jani-King of Cal., Inc., No.
4:09-cv-03495, Dkt. No. 240 (N.D. Cal. Dec. 14, 2018), in
which Judge Yvonne Gonzalez-Rodgers reasoned that
Dynamex applies retroactively (Dkt. No. 111). We likewise
GRANT the California Employment Law Council’s motion
to file an amicus brief (Dkt. No. 97).
***
In light of the foregoing, we ask the California Supreme
Court to answer the following question: Does Dynamex
Operations West Inc. v. Superior Court, 416 P.3d 1 (Cal.
2018), apply retroactively?
III
We provide the following information as required by
California Rule of Court 8.548(b)(1).
The title of this case is GERARDO VAZQUEZ,
GLORIA ROMAN, and JUAN AGUILAR, Plaintiffs-
Appellants v. JAN-PRO FRANCHISING
INTERNATIONAL, INC., Defendant-Appellee.
The case number in our court is 17-16096.
10 VAZQUEZ V. JAN-PRO FRANCHISING INT’L
Plaintiffs-Appellants Gerardo Vazquez, Gloria Roman,
and Juan Aguilar are represented by the following counsel:
Shannon Liss-Riordan
Lichten & Liss-Riordan, P.C.
729 Boylston Street, Suite 2000
Boston, MA 02116
Defendant-Appellee Jan-Pro Franchising International,
Inc. is represented by the following counsel:
Theodore J. Boutrous, Jr., Samuel Eckman, and Theane
Evangelis
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
Jeffrey Mark Rosin
O’Hagan Meyer, PLLC
111 Huntington Avenue, Suite 2860
Boston, MA 02199
We designate Gerardo Vazquez, Gloria Roman, and Juan
Aguilar as the petitioners if our request for a decision is
granted, as they are the appellants before our court.
The Clerk of Court is hereby directed to transmit
forthwith to the California Supreme Court, under official
seal of the Ninth Circuit, a copy of this order and request for
certification and all relevant briefs and excerpts of record
pursuant to California Rule of Court 8.548. Submission of
this case is withdrawn, and the case will be resubmitted
following receipt of the California Supreme Court’s opinion
on the certified question or notification that it declines to
answer the certified question. The Clerk shall
administratively close this docket pending a ruling by the
VAZQUEZ V. JAN-PRO FRANCHISING INT’L 11
California Supreme Court regarding the certified question.
The panel shall retain jurisdiction over further proceedings
in this court. The parties shall notify the Clerk of this court
within one week after the California Supreme Court accepts
or rejects certification. In the event the California Supreme
Court grants certification, the parties shall notify the Clerk
within one week after the Court renders its opinion.
CERTIFICATION REQUESTED; SUBMISSION
VACATED.