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In 2008, a putative class action was filed in the District of Massachusetts by a Massachusetts plaintiff, Giovani Depianti, and two Pennsylvania plaintiffs, against Jan-Pro Franchising International Inc. By the end of that year, there was an additional plaintiff from Massachusetts plus seven more from other states, including three who are California residents.

They all had a common cause to pursue: that Jan-Pro, a major international janitorial cleaning business, had developed a sophisticated “three-tier” franchising model to avoid paying its janitors minimum wages and overtime compensation by misclassifying them as independent contractors.

The Massachusetts district court severed the California plaintiffs’ claims and sent them to the Northern District of California, the plaintiffs’ place of residence. Over the years, the cases progressed in several jurisdictions, including California and Georgia, as well as the original case in Massachusetts. The First Circuit’s Depianti opinion, characterizing “the nearly decade long life-cycle” of the Depianti litigations as a “Whirlwind Procedural Tour,” 873 F.3d at 24, aptly traces that tour.

Ultimately all of them were dismissed including the one in California. The California case was appealed to the 9th Circuit Court of Appeals. Because the California Supreme Court decision in Dynamex Ops. W. Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018), adopted the “ABC test” for determining whether workers are employees under California wage order laws.postdated the district court’s decision, the 9th Circuit Court of Appeals issued an order directing the parties to brief its effect of Dnyamex on the merits of this case.

The Ninth Circuit Court of Appeals held in the published case of Vazquez v Jan-Pro Franchising International Inc., that Dynamex applied retroactively, and that the case must be remanded to the district court to consider the merits in light of Dynamex.

As the Supreme Court of California has explained, it “is basic in our legal tradition” that “judicial decisions are given retroactive effect.” Newman v. Emerson Radio Corp., 772 P.2d 1059, 1062 (Cal. 1989). This is true even for decisions that overrule precedent. As in the federal system, appellate courts in California apply intervening state supreme court rules retroactively when reviewing cases, even if the judgment in the trial court was entered prior to the ruling from the California Supreme Court. See, e.g., Penn v. Prestige Stations, Inc., 83 Cal. App. 4th 336, 339 (2000).

The California Supreme Court has repeatedly quoted then-Justice Rehnquist in explaining that “[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student.” Evangelatos v. Superior Court, 753 P.2d 585, 596 (Cal. 1988) (emphasis omitted) (quoting United States v. Sec. Indus. Bank, 459 U.S. 70, 79 (1982)).

The opinion has major implications for California employers that rely on independent contractors, including gig economy companies like Uber Technologies and Postmates, and could even compel some businesses to simply reclassify contractors as employees and change pay and benefits.