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Farah v. Alpha & Omega USA, Inc.

United States District Court, D. Minnesota

November 27, 2017

Hiis Farah, Hiisi Abdi, Aden Fithar, Emily Nyakundi, Dayvid Wekesah, Hassan Mohamud, and Mukhtar Abubakar, Plaintiffs,
Alpha & Omega USA, Inc., d/b/a Travelon Transportation, and Viktor Cernatinskij, Defendants.


          Paul A. Magnuson United States District Judge

         This matter is before the Court on Defendants' Motion for Summary Judgment. For the following reasons, the Motion is denied.


         Defendant Viktor Cernatinskij (“Viktor”)[1] is the majority owner and CEO of Defendant Alpha & Omega USA, Inc., d/b/a Travelon Transportation (“Travelon”). (Viktor Aff. ¶ 1.) For more than 20 years, Travelon has provided “special transportation service” in Minnesota. (Id. ¶ 2.) State law defines “special transportation service” as “motor vehicle transportation provided on a regular basis by a public or private entity . . . that is designed exclusively or primarily to serve individuals who are elderly or disabled and who are unable to use regular means of transportation but do not require ambulance service.” Minn. Stat. § 174.29, subd. 1. “Special transportation service” includes specially equipped buses, vans, and taxis. Id.

         Plaintiffs Hiis Farah, Hirsi Abdi, Aden Fithar, Emily Nyakundi, David Wekesah, Hassan Mohamud, and Mukhtar Abubakar (collectively, “Plaintiffs”) formerly served as drivers for Travelon.[2] When hired, each signed an “Independent Contractor Agreement” purporting to deem him or her an independent contractor, not an employee. (See, e, g., Docket No. 51-1.) The agreement specified that Travelon would pay the driver a “commission” equal to 100% of the amount paid by a customer (or his or her insurance) for transportation services. (Id.) The driver, in turn, agreed to pay Travelon a $400 “weekly dispatch payment, ” plus 40% of all commissions earned over $2, 100, in exchange for Travelon's “dispatch services.” (Id.) Travelon leased each driver a vehicle and equipment to use in connection with the transportation services, for which the driver agreed to pay certain additional fees. (Id.)

         When they first agreed to work for Travelon, Plaintiffs were informed they could choose the dates and times they wanted to work. (See, e.g., Abdi Aff. ¶ 25.) In reality, however, Travelon did not ask about their preferred working times and dispatched them (using an electronic application called “Driver Mate”) to pick up or drop off customers on a rolling basis throughout each day, from early in the morning until late in the evening, including on weekends. (E.g., id. ¶¶ 17-18, 20-21.) Typically there were no pauses between the trips to which Plaintiffs were dispatched. (E.g., Nyakundi Aff. ¶ 24; see also Blades Decl. Ex. 67-73.) They were afforded no control over their schedules and were required to obtain permission from Maria, the dispatcher, before taking breaks, ending their days early, or taking time off. (See, e.g., Mohamud Aff. ¶ 16; Farah Aff. ¶ 20; Blades Decl. Ex. 31 (“If you need to be off, take breaks, log off early, etc., please make sure to COORDINATE everything with the dispatcher. The dispatcher will check to make sure it is possible to cover your trips without you and will grant you permission. If the dispatcher cannot cover your trips you will not be granted permission.”) (emphasis in original).) Plaintiffs believed that their employment would be terminated if they refused to take trips or went on breaks. (See, e.g., Abubakar Aff. ¶ 23.)

         Each day, Plaintiffs tracked the customers they transported using “trip logs.” (Viktor Aff. ¶ 4; Blades Decl. Exs. 67-73.) Both Minnesota and insurance companies required these logs to document the trips and allow Travelon to be paid for them. (Viktor Aff. ¶ 5.) The logs indicated the time a Plaintiff began driving for the day and the time the last customer was dropped off, along with all trips handled in between; the mileage traveled; the customers' names; and the addresses of each customer's embarkation and disembarkation points. (See, e.g., Blades Decl. Ex. 67.) Plaintiffs submitted the logs to Defendants on a weekly basis. (Viktor Aff. ¶ 4.)

         Only rarely did customers directly pay Plaintiffs. (See, e.g., Abubakar Aff. ¶ 24.) Instead, Travelon billed either the customers' insurance or the state, if the customer received government assistance, for the transportation services. Travelon then paid Plaintiffs, after withholding its various fees. (Id. ¶ 25.) Plaintiffs were not consulted about the amounts they were paid, which often did not make sense to them. When questioned about it, Viktor did not take Plaintiffs' questions seriously. (Id. ¶¶ 24-25; Abdi Aff. ¶¶ 26-29.) At times, Plaintiffs went weeks without receiving any money from Travelon. (Abubakar Aff. ¶ 26; Abdi Aff. ¶ 28.)

         Plaintiffs commenced this action in the Hennepin County District Court in March 2016. Defendants removed the action to this Court, and Plaintiffs then filed an Amended Complaint asserting five claims against Travelon and Viktor: failure to pay overtime and minimum wage, in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. (Count I); failure to pay overtime and minimum wage, failure to provide rest and meal breaks, and making unauthorized pay deductions, in violation of the Minnesota Fair Labor Standards Act (“MFLSA”), Minn. Stat. § 177.21 et seq. (Count II); unlawful pay deductions and failure to provide a statement of the hours Plaintiffs worked, in violation of the Minnesota Payment of Wages Act, Minn. Stat. § 181.01 et seq. (Counts III and IV); and, in the alternative, breach of the Independent Contractor Agreements (Count V). In June 2016, the Court stayed the breach-of-contract claim, pending resolution of the remaining claims. (Docket No. 22.) Defendants now move for summary judgment on each of those claims.[3]


         The crux of this case is whether Plaintiffs were Defendants' employees, rather than independent contractors. Indeed, both sides acknowledged at oral argument that this case “lives or dies” on the employee/independent-contractor distinction, because absent an employment relationship, none of Plaintiffs' statutory claims is viable. But Defendants do not argue that each Plaintiff was, in fact, an independent contractor, choosing instead to reserve that issue for trial. (See Defs.' Reply Mem. at 1 (“Defendants contend that Plaintiffs were not their employees, but Defendants have chosen not to argue this essential element of Plaintiffs' claims in their motion for summary judgment.”).) Because the independent contractor issue is dispositive of the case, the Court believes that it should be addressed before trial, if possible. Thus, the Court invites the parties to submit the issue in a subsequent motion.

         Rather than arguing the dispositive independent-contractor issue, Defendants Defendants argue that even if Plaintiffs were their employees, they are still entitled to summary judgment. The Court does not agree.

         I. Knowledge

         Defendants' primary argument concerns Plaintiffs' claims for unpaid overtime. They argue that Plaintiffs have failed to point to evidence in the record demonstrating they were aware Plaintiffs were working overtime hours. They deny knowing the actual hours Plaintiffs worked, because Plaintiffs were paid by the job and thus “the number of hours a particular Plaintiff worked during a particular workday or a particular workweek was of no relevance.” (Viktor Aff. ¶ 3.) And, they contend that no Plaintiff ever alerted them that he or she worked more than 40 hours in a particular week. (Id.) Without knowledge that Plaintiffs were working overtime, Defendants argue that they cannot be liable. See, e.g., Hertz v. Woodbury Cty., 566 F.3d 775, 781 (8th Cir. 2009) (“[I]n order to prevail on ...

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