Serge Haitayan; v. 7-ELEVEN, INC., a Texas corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SERGE HAITAYAN; et al.,
Plaintiffs-Appellants,
v.
7-ELEVEN, INC., a Texas corporation,
Defendant-Appellee.
No. 21-56144
D.C. No.
2:17-cv-07454-DSF-AS
MEMORANDUM*
SERGE HAITAYAN; et al.,
Plaintiffs-Appellants,
v.
7-ELEVEN, INC., a Texas corporation,
Defendant-Appellee.
No. 21-56145
D.C. No.
2:18-cv-05465-DSF-AS
Appeal from the United States District Court
for the Central District of California
Dale S. Fischer, District Judge, Presiding
Submitted December 7, 2022**
San Francisco, California
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
FILED
DEC 9 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Before: GRABER, WATFORD, and WALLACH,*** Circuit Judges.
Four 7-Eleven franchisees brought this putative diversity class action,
contending that they should be classified as employees rather than as independent
contractors under California law. After a bench trial, the district court entered a
final judgment in favor of 7-Eleven, and Plaintiffs have timely appealed. On
appeal, Plaintiffs argue that the district court erred by applying the test enunciated
in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399
(Cal. 1989), rather than the “ABC” test adopted for California wage order
violations in Dynamex Operations West, Inc. v. Superior Court, 416 P.3d 1 (Cal.
2018). We have jurisdiction under 28 U.S.C. § 1291 and affirm.
We review legal issues de novo and factual findings for clear error.
Saltarelli v. Bob Baker Grp. Med. Tr., 35 F.3d 382, 384–85 (9th Cir. 1994).
Our recent decision in Bowerman v. Field Asset Services, Inc., 39 F.4th 652
(9th Cir. 2022), controls most of the legal issues. The expenses at issue here,
including employee compensation and advertising, are just as distinct from Wage
Order 9’s concept of “tools and equipment” as were the Bowerman plaintiffs’ fuel
and insurance costs. Bowerman, 39 F.4th at 665. Bowerman also holds that
Assembly Bill (“A.B.”) 5, which extends the ABC test to govern all Labor Code
*** The Honorable Evan J. Wallach, United States Circuit Judge for the
U.S. Court of Appeals for the Federal Circuit, sitting by designation.

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claims, Cal. Lab. Code § 2775(b), does not apply retroactively to claims not rooted
in a wage order. Id. at 665 n.11; see also Cal. Lab. Code § 2785.
The district court erred by refusing to consider Plaintiffs’ claims that accrued
after 2020, which are governed by A.B. 5 and, therefore, are subject to the ABC
test. But that error is harmless. McDonough Power Equip., Inc. v. Greenwood,
464 U.S. 548, 553–54 (1984). The district court made extensive factual findings
that all three parts of the ABC test are met. The three prongs of the ABC test are
included within the Borello test. See Vazquez v. Jan-Pro Franchising Int’l, Inc.,
478 P.3d 1207, 1214 (Cal. 2021) (“[T]he three elements of the ABC test are
prominent factors already listed in Borello.”). In particular, the district court
properly found that Plaintiffs are engaged in a different course of business than 7-
Eleven and that Plaintiffs engaged in a distinct business and held themselves out to
be business owners. See Curry v. Equilon Enters., LLC, 233 Cal. Rptr. 3d 295,
314 (Ct. App. 2018) (holding that franchisor Shell Oil engaged in a different
business than its franchisees).
AFFIRMED.

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