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Saleem v. Corporate Transportation Group, Ltd.
United States Court of Appeals, Second Circuit
April 12, 2017
Mazhar Saleem, Individually and on behalf of all others similarly situated, Jagjit Singh, Individually and on behalf of all others similarly situated, Anjum Ali, Malook Singh, Carlota Briones, Jairo Bautista, Jose Cabrera, Marlene Pinedo, Miriam Solorzano, Mohammad Mian, Mohammad Siddiqui, S. Pedro Duman, Rajan Kapoor, Wilman Martinez, Jose Solorzano, Luis A. Perez, Ranjit S. Bhullar, Luis M. Sanchez, Anwar Bhatti, Avneet Koura, Maher Maqsood, Atif Razaq, Bhavesh Shah, Khushwant Singh, Jamshed Choudhry, Aziz Urrehman, Hasan Khalbash, Peter Panzica, Robinson Mata, Hilario A. Sanchez, Mansor Ahmed Rana, Baudwin Kouri, Alexis S. Gacia-Alberto, Muhammad I. Choudhry, Ana M. Herra, Marisol Espinal, Walid Hameho, Alexander Schwallb, Eric Jarmon, Keith Daniel, Rafael Rijo, Babab Hafeez, Norman Levine, Mario Guerrero Batanta, Liang Hua Ma, William Martinez, Mohammed A. Musa, Kerry Bobb, Harjar Rahman, Elpidio Helena, Tamer Rashdan, Mena Michael, Felix L. Caraballo, Mark Shinder, John M. Hidalgo, Odishi, Inc., Kirk Hayden, Bartolome Rosario, Luis Vasquez, Irfan Shafi, Mohammad A. Siddiqui, Wade Quashie, Jimmy Chen, Jeff M. Gravesande, Edisson Barros, Andrzej Olechnowicz, Nick Wijesinghe, (Point to Point Car & Limo Inc.), Jack Golden, Firoz Ahmed, Paul Glibauskas, Felix A. Paulino, Juan De Los Santos, Chowdhury Anowar, Zong Rong Zhu, Mohammed Gazi Ali, Mei Yao Liu, Katelyn Santos, Jose Jaimes, Ibrahim Desooki, Dongsedg Yoo, Jorge Monaks, Malik Hussain, Marcos Mendez, Luis Aucapina, Anderson Gonzalez, Towon Stewart, Feras Issa, Lenkin Pantaleon, Edgar Aucapina, Celstino Montero, Mikhail Gerber, Zydan Elnahar, Dexter Pusey, Rangdeu Multani, Satnam Singh, Xiangbo Li, Huang Xiong Jie, Rafael A. Riso, Ismael Mejia, Kuldip Singh, Jan A. Kalda, Jeewan Sinah, Wilson A. Santos, Sohan Singh Gill, Euclides Pena, Lester C. Mcdonald, Norman Ho, Gennadi Petrovski, Satnam Singh, Zenxin Wang, Noble Young, Francois Fan-Fan, Muhammad I. Choudhry, Fabian Martinez, Konstantin Katz, Rafael Osoria, Nwala Gabriel, Jose M. Solorzano, Ubaldo De Los Santos, Harrikissoon Seejattan, Harjar Rahman, Adel Elkazaz, Pedro M. Piasencia, Khorshed Alam, Garnell Wrighten, Refat Bhuiyan, Leo K. Stewart, Jeff M. Gravesande, Ahmed Nisar, Danjit Singh, Humayun Kabir Hussain, Mohammed A. Musa, Harnek Singh Whar, Shashi Bhatia, Goginder Singh, Abdelilah Elkarhat, Maninder Singh, Jo Ginder-singh, Wilman Martinez, Harvinder Khamra, David A. Sanchez, Syed Firozuddin, Dariusz Rydzewski, Yasar Kahraman, Ali Gazi Mohammed, Ahmed M. Bakier, Onris De La Rosa, Harvinder S. Bhamra, Imtiaz H. Quereshi, Damir, Ahmed Ismail, Munish Kumar, Paul Gladkevitch, Tarlocman Pal Singh, (T.P), Adam Klag, Al Wong Zhang, Mustapha Rahmouwi, Mahammad Ali Siddique, Sheng Zhang Lu, Gustavo Garcia, Ashwin Kumar, Inderjit Singh, Man Cheng, Balwinder Singh, Jawaid Kayani, Sukhdev Singh, Fernando Avendano, Xiong Wei Mi, Mohammad Islam, Dongseog You, Taojochan Sihgh, Ratic Shivionov, Jagdish Kal, Gabriel Pizha, Anomwar I. Chowdhury, Samson Liau, Nestor Teran, Rajan Dodeja, Socrates Gregoriadis, Saad Attia, Anthony Khan, Ramon A. Almonte, Badlani Prakash, Juan A. Soto, Munjed Shabaneh, Jose Solore, Jose M.S., Roxana A. Zetino, Irfan Shafi, Arcelia Barros, Cheung Yeung, Point to Point Car & Limo, Inc., Vishamber Tukrel, Ying Tian Lei, Mikhail Zemko, Tahir Aziz, Wen Zhong Li, Ke Geng Shi, N. Wesesinghe, Christina Sanchez Montero, Kulyk Oleg, Ariel Restituyo, Shuhrat Khakberdiyer, Angel M. Gaya, Bayram Onbasi, Jorge Contreras, Juan C. Mogrovejo, Xun Li Fan, Sameh S. Basily, Jose Pinto, Ramadan S. Kenawi, Donavan James, Ibrahim Onbasi, Amanda Singh, Suleyman Issi, Wazir Mughal, Etienne Tchitchui, Diogenes Pion, Ijaz Mahboob, Pedro Pazmino, Jing Jing Wang, Azid Riaz, Gurmail Singh, Asand Fara, Lawrence Calliste, Guo Bao Xuam, Jeetu Multani, King Wah Yiu, Anjum Ali, Gurmail Singh, Ahmed Aljahmi, Buo Xuan Guo, American Car Limo Tours, Inc., Mohamed Abdelaal, Khemlhand Kalika, Munish Kumar, Shahidullah Dulal, Plaintiffs-Appellants,
Corporate Transportation Group, Ltd., Corporate Transportation Group International, Corporate Transportation Group Worldwide, Inc., NYC 2- Way International, Ltd., Allstate Car & Limousine, Inc., Arista Car & Limousine, Ltd., TWR Car & Limousine Service, Ltd., Excelsior Car and Limousine, Inc., Hybrid Limo Express, Inc., Eduard Slinin, Galina Slinin, Defendants-Appellees.[*]
Argued: February 5, 2016
black-car drivers in the greater New York City area
affiliated with Defendants-Appellees, owners of black-car
"base licenses" and related entities, appeal from
the September 24, 2014 judgment of the United States District
Court for the Southern District of New York (Furman,
J.) granting Defendants' motion for summary
judgment, rejecting Plaintiffs' claim that they are
"employees, " rather than "independent
contractors, " within the meaning of the Fair Labor
Standards Act ("FLSA"), 29 U.S.C. § 201 et
seq. For the reasons stated below, we AFFIRM the
judgment of the district court.
M. Bien, Outten & Golden LLP, New York, N.Y. (Michael N.
Litrownik, Michael J. Scimone, Outten & Golden LLP, New
York, N.Y.; Stephen H. Kahn, Kahn Opton LLP, Fort Lee, N.J.,
on the brief), for Plaintiffs-Appellants.
J. Spelfogel, Epstein Becker & Green, P.C., New York,
N.Y., (Samuel Estreicher, New York, N.Y., on the brief), for
Zvi Grauman (M. Patricia Smith, Jennifer S. Brand, Paul L.
Frieden, on the brief), U.S. Department of Labor, Office of
the Solicitor, Washington, D.C., for Amicus Curiae the
Secretary of Labor.
Shannon Liss-Riordan, Lichten & Liss-Riordan, P.C.;
Catherine K. Ruckelshaus, National Employment Law Project,
New York, NY, for Amici Curiae The National Employment Law
Project, National Employment Lawyers' Association, Legal
Aid Society of New York, The Urban Justice Center, and Make
the Road New York.
Richard H. Dolan (Wayne I. Baden and Elizabeth Wolstein, on
the brief), Schlam Stone & Dolan LLP, New York, N.Y., for
Amicus Curiae Black Car Assistance Corporation.
G. Mintz, Jeffrey D. Pollack, Mintz & Gold LLP, New York,
N.Y., for Amici Curiae Mark Malchikov, Pavel Borisov, Anton
Sirouka, Alex Borden, Vleriy Vishin, Michael Baier, and Josef
Postman, U.S. Chamber Litigation Center, Inc., Washington,
D.C., (Michael J. Gray, Brent D. Knight, Jones Day, Chicago,
Ill., on the brief), for Amicus Curiae the Chamber of
Commerce of the United States of America.
Before: Leval, Livingston, and Carney, Circuit Judges.
Ann Livingston, Circuit Judge.
("Plaintiffs"), black-car drivers in the greater
New York City area, brought this action in the United States
District Court for the Southern District of New York,
asserting claims against Defendants-Appellees
("Defendants"), owners of black-car "base
licenses" and affiliated entities, pursuant to the Fair
Labor Standards Act ("FLSA"), 29 U.S.C. § 201
et seq., and the New York State Labor Law
("NYLL"), N.Y. Lab. Law § 650 et
seq., for, inter alia, unpaid overtime. The
district court (Furman, Judge), after conditionally
certifying a collective action under the FLSA, granted
Defendants' motion for summary judgment on both the FLSA
and NYLL claims as to both the named and opt-in Plaintiffs,
concluding that "as a matter of law, Plaintiffs are
properly classified as independent contractors rather than
employees" for purposes of both statutes. Saleem v.
Corp. Transp. Grp., Ltd., 52 F.Supp.3d 526, 543, 545
(S.D.N.Y. 2014). We agree with the district court that,
"even when the historical facts and the relevant factors
are viewed in the light most favorable" to Plaintiffs,
they constitute independent contractors for FLSA purposes as
a matter of law. Barfield v. N.Y.C. Health & Hosps.
Corp., 537 F.3d 132, 144 (2d Cir. 2008). Accordingly, we
affirm the judgment of the district court.
are black-car drivers in the tri-state area who owned or
operated black-car franchises and were affiliated with
Defendants. Six Defendants (collectively,
"Franchisor Defendants") each own a "base
license" that allows them to operate a black-car
dispatch base in New York City, and to sell franchises to
individual drivers. See 35 R.C.N.Y. § 59A-03(c).
The remaining three Defendants are various incarnations of
the "Corporate Transportation Group" (collectively,
"CTG"), which provides administrative support for
the operation of the Franchisor Defendants' dispatch
bases (as well as for 126 other for-hire vehicle enterprises)
by handling, inter alia, billing, referral, payment,
bookkeeping, accounting, voucher processing, and
dispatching. The Franchisor Defendants and CTG operate
out of a single facility in Brooklyn and constitute "a
single integrated enterprise and/or joint employer for the
purposes of the [FLSA]." Joint Appendix
["J.A."] 1317. Among the approximately 70 people
employed in CTG's dispatch unit at the time relevant
here, 40 were in billing, six or seven were in customer
service, five were in driver relations, and at least two were
in sales. There were roughly 700 black cars
affiliated with the Franchisor Defendants' dispatch bases
and operating under the CTG umbrella. CTG's clients were
primarily corporate entities, such as Deutsche Bank and Bank
named Plaintiffs rented or purchased their franchises
directly from the Franchisor Defendants or, in some cases,
from other franchisees. Plaintiffs who rented franchises paid
$130 to $150 per week, while Plaintiffs who purchased their
franchises directly from a Franchisor Defendant did so
pursuant to franchise agreements, which required them to pay
franchise fees ranging from a nominal amount (or even
nothing) to as much as $60, 000. The franchise agreements
also required franchisees to pay additional fees, some
upfront and some recurring, which varied from agreement to
agreement. (For example, in exchange for a high upfront fee,
"Platinum" franchises offered by certain Franchisor
Defendants provided for a significantly lower voucher
processing fee - the percentage of a fare charged to a driver
for payment processing - than their free "Gold"
franchises. See J.A. 743, 752.) Franchisees also had
to obtain a New York City Taxi & Limousine Commission
("TLC") license, insurance, and a vehicle which
they were responsible for maintaining.
franchise agreements describe the nature of the relationship
between franchisor and franchisee as follows:
Franchisee is not an employee or agent of Franchisor, but
merely a subscriber to the services offered by Franchisor.
Franchisee shall at all times be free from the control or
direction of Franchisor in the operation of Franchisee's
business, and Franchisor shall not control, supervise or
direct the services to be performed by Franchisee.
J.A. 732. Each franchise agreement also contains a
"non-compete" provision which prohibited
CTG-affiliated drivers from driving CTG customers
"without processing payment for such services through
CTG." J.A. 3477-79. Failure to comply with this and
other terms was grounds for termination of the franchise.
Significantly, however, the franchise agreements did not
prohibit drivers from transporting non-CTG customers for a
competitor black-car company, or independently, during their
affiliation with CTG.
franchise agreements also required that drivers comply with
"Rulebooks" - manuals setting out certain standards
of conduct - specific to each Franchisor
Defendant. The Rulebooks forbid, for instance,
harassing customers or other drivers and submitting
fraudulent vouchers. The Rulebooks also include a dress code,
which required drivers to dress neatly in specified business
attire, as well as guidelines for keeping vehicles clean.
Drivers were not required to wear a uniform, however, or to
mark their cars with insignia denoting an affiliation with
Rulebooks were enforced by each Franchisor Defendant's
Security Committee, each of which was composed entirely of
drivers who served elected terms. Security Committees could
hold hearings on complaints and suspected violations. If a
Security Committee determined that a driver had broken a
rule, it could impose a monetary penalty on the driver,
temporarily suspend the driver, or even terminate the
driver's franchise agreement. Although it is undisputed
that drivers elected the members of the Security Committees,
the parties dispute whether CTG exercised influence over the
their affiliation with the Defendants, Plaintiffs, like other
drivers in the CTG network, possessed considerable autonomy
in their day-to-day affairs. Drivers could, for example,
choose among three principal ways of securing fares for
driving CTG customers. First, they could wait in a physical
queue of cars outside certain high-volume CTG clients'
businesses. Second, they could elect to drive under a CTG
contract with the New York City Metropolitan Transport
Authority ("MTA"), transporting by prearrangement
clients who were unable to travel via public
transportation. Third, drivers could access CTG's
proprietary black-car dispatch system, through which CTG
transmitted requests for service from servers in a dispatch
room to an application ("app") on drivers'
smart phones. In all three cases, clients provided
vouchers to the driver transporting them in lieu of cash
payment, and these vouchers were thereafter processed by CTG.
also determined when and how often to drive, and the record
reflects that they worked vastly different amounts of time,
without providing any notice to Defendants. Plaintiffs
likewise chose which area in which to work, and they were at
liberty to - and did - accept or decline jobs that were
offered. Significantly, Plaintiffs also could -
and did - drive for dispatch bases other than the one with
which they were affiliated, and they were thus free to shift
as they chose during the workday from one dispatch service to
another. Most of the named Plaintiffs drove for other
black-car companies regularly, and some earned substantial
sums as a result. Some drivers also transported - and were
paid directly by - customers with whom they had made
individual arrangements, and others, though it was contrary
to TLC regulations, see 35 R.C.N.Y. §
59B-25(a), picked up street hails.
CTG negotiated rates with its clients, supplied the
proprietary dispatch technology, and operated the dispatch
system, the record suggests that Plaintiffs took home the
majority - in some cases up to 85% - of each CTG fare, less
some small additional fees. On this basis, Plaintiffs
classified themselves as independent contractors on their tax
returns and took substantial business deductions.
November 19, 2012, Plaintiffs Mazhar Saleem and Jagjit Singh
filed a complaint in district court, seeking to recover
unpaid overtime and other wages under the FLSA and the NYLL
on behalf of a class of similarly situated drivers. On June
17, 2013, the district court conditionally certified a
collective action pursuant to Section 216(b) of the FLSA, 29
U.S.C. § 216(b), and approved a notice to be sent to
potential opt-in plaintiffs. The court subsequently denied
class certification of their NYLL claims, a determination not
before us on appeal. Saleem v. Corp. Transp. Grp.,
Ltd., No. 12 Civ. 8450(JMF), 2013 WL 6061340, at *7
(S.D.N.Y. Nov. 15, 2013).
September 16, 2014, Judge Furman granted Defendants'
motion for summary judgment and denied Plaintiffs' motion
for partial summary judgment as to both the named Plaintiffs
and those Plaintiffs who had opted into the collective
action. Saleem, 52 F.Supp.3d at 545. In concluding
that Defendants were entitled to summary judgment because
Plaintiffs were not, as a matter of law, employees of
Defendants for FLSA purposes, the district court applied the
five factors enumerated by this Court in Brock v.
Superior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir.
1988), analyzing each factor individually and considering
whether the "totality of the circumstances"
suggested that Plaintiffs were "employees" or
"independent contractors, " Saleem, 52
F.Supp.3d at 535-36, 544. The district court concluded that
"[n]otwithstanding that the final [Superior
Care] factor, " the degree to which employees are
integral to a business, "favors employment status,
" "[w]eighing all of the [Superior Care]
factors and considering the totality of the circumstances,
" "the drivers here fall into the [independent
contractor] category as a matter of law." Id.
January 6, 2015, Plaintiffs timely appealed.
review the district court's grant of summary judgment
de novo, and we will affirm only if the evidence,
when viewed in the light most favorable to the party against
whom it was entered, demonstrates that there is no genuine
issue as to any material fact and that judgment was warranted
as a matter of law. Barfield, 537 F.3d at 140;
see also Delaney v. Bank of Am. Corp., 766 F.3d 163,
167 (2d Cir. 2014). Here, we examine the district court's
conclusion that, "as a matter of law, Plaintiffs are
properly classified as independent contractors rather than
employees for purposes of the FLSA." Saleem, 52
F.Supp.3d at 543. We begin, then, with a brief explication of
our case law, as is relevant to this distinction.
FLSA defines an "employee" as "any individual
employed by an employer." 29 U.S.C. § 203(e)(1).
"An entity 'employs' an individual under the
FLSA" if it "'suffer[s] or permit[s] that
individual to work.'" Zheng v. Liberty Apparel
Co., 355 F.3d 61, 66 (2d Cir. 2003) (alterations in
original) (quoting 29 U.S.C. § 203(g)); see
also 29 U.S.C. § 203(d) (defining
"employer" as "any person acting directly or
indirectly in the interest of any employer in relation to an
employee"). In light of the definition's
circularity, courts have endeavored to distinguish between
employees and independent contractors based on factors
crafted to shed light on the underlying economic reality of
the relationship. As the district court recognized, this
Court has focused on "the totality of the
circumstances" in addressing our "ultimate concern
. . . whether, as a matter of economic reality, the workers
depend upon someone else's business for the opportunity
to render service or are in business for themselves."
Superior Care, 840 F.2d at 1059; see also
Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33
(1961) ("'[E]conomic reality' rather than
'technical concepts' is to be the test of
employment." (quoting United States v. Silk,
331 U.S. 704, 713 (1947))); Bartels v. Birmingham,
332 U.S. 126, 130 (1947) ("[E]mployees are those who as
a matter of economic reality are dependent upon the business
to which they render service.").
case law has identified certain factors, first set out in
Silk, 331 U.S. at 716, as relevant to separating
employees from independent contractors in the context of the
FLSA,  see Superior Care, 840 F.2d at
1058-59. Nevertheless, "[t]hese factors are merely aids
to analysis, " Thibault v. Bellsouth Telecomms.,
Inc., 612 F.3d 843, 846 (5th Cir. 2010), and are helpful
only insofar as they elucidate the "economic
reality" of the arrangement at issue, Superior
Care, 840 F.2d at 1059. Relevant FLSA precedent, despite
endorsing the Silk factors, cautions against their
"mechanical application." Id. As we stated
in Barfield v. New York City Health & Hospitals
Corp., 537 F.3d at 141, "[t]he determination of
whether an employer-employee relationship exists for purposes
of the FLSA should be grounded in 'economic reality
rather than technical concepts, ' . . . determined by
reference not to 'isolated factors but rather upon the
circumstances of the whole activity, '" (citation
omitted) (first quoting Goldberg, 366 U.S. at 33,
and then quoting Rutherford Food Corp. v. McComb,
331 U.S. 722, 730 (1947)). Thus, while the following
discussion draws upon and discusses the Silk factors
where relevant, it trains on the "ultimate
question": the economic reality of Plaintiffs'
relationship with CTG.
de novo review, "even when the historical facts
and the relevant factors are viewed in the light most
favorable" to Plaintiffs, id. at 144, and
despite the broad sweep of the FLSA's definition of
"employee, " Darden, 503 U.S. at 326, the
record here does not permit the conclusion that Plaintiffs
were employees, but instead establishes that they were in
business for themselves. As discussed below, Plaintiffs
independently determined (1) the manner and extent of their
affiliation with CTG; (2) whether to work exclusively for CTG
accounts or provide rides for CTG's rivals' clients
and/or develop business of their own; (3) the degree to which
they would invest in their driving businesses; and (4) when,
where, and how regularly to provide rides for CTG clients.
While none of these facts is determinative on its own,
considered as a whole with the goal of discerning the
underlying economic reality of the relationship here, the
district court correctly determined that Plaintiffs are, as a
matter of law, "properly classified as independent
contractors rather than employees for purposes of the
FLSA." Saleem, 52 F.Supp.3d at 543. As a
result, Defendants were properly granted summary judgment.
Affiliation with CTG
the start, Plaintiffs were "driver-owners" who made
significant decisions regarding the operation of their small
businesses. Silk, 331 U.S. at 719. Plaintiffs chose
not only to enter into a franchise agreement with a CTG
Franchisor Defendant instead of seeking more conventional
employment, but also exercised considerable discretion in
choosing the nature and parameters of that affiliation. Some
Plaintiffs elected to purchase a franchise, either directly
from a Franchisor Defendant or on the secondary market, while
others opted to rent one. Further, because the franchise
agreements contained different terms, and particularly
because there was wide variation in both the price of the
franchises and the fees associated with using them,
Plaintiffs had to strike a balance between a franchise's
upfront cost and the favorability of its terms, a choice
which ultimately affected its profitability.
franchise agreements' termination provisions also are
indicative of Plaintiffs' independence. While Plaintiffs
could reassess their choice to affiliate with CTG (not to
mention the nature of that affiliation) and "terminate
the [franchise] agreements" as they pleased,
Saleem, 52 F.Supp.3d at 542, the terms of the
agreements committed the Franchisor Defendants to maintaining
them for substantial durations, or even indefinitely, absent
Plaintiffs' breach of those terms. Because Plaintiffs
were free to drive for competitors, for personal clients, or
not at all without violating their franchise agreements, the
termination provisions constituted a significant restriction
on the ability of Franchisor Defendants to exercise control.
addition, each of Plaintiffs' agreements also designated
them as independent contractors, and some Plaintiffs formed
corporations to operate their franchises. "Though an
employer's self-serving label of workers as independent
contractors is not controlling, " Superior
Care, 840 F.2d at 1059; see also Thibault, 612
F.3d at 845-46 (noting that "contractual designation of
the worker as an independent contractor is not
necessarily controlling" (emphasis added)),
such a designation in the franchise agreement is pertinent to
"the parties' beliefs about the nature of the
relationship, " Estate of Suskovich v. Anthem Health
Plans of Va., Inc., 553 F.3d 559, 564 (7th Cir. 2009);
see also Johnson v. City of Saline, 151 F.3d 564,
568-69 (6th Cir. 1998) (observing, in ADA case, that
"the contractual relationship reads unmistakably as one
with an independent contractor as opposed to one with an
employee"). Thus, in the language of the
Silk factors, Plaintiffs demonstrated independence
and initiative in selecting franchise agreements that best
fit their business ...