MEMORANDUM AND ORDER
Patti B. Saris, Chief United States District Judge.
Plaintiffs DaSilva and Ferreira used to work as delivery drivers for Defendant Border Transfer. They claim that Border Transfer improperly treated them as independent contractors when they were, in fact, employees, and that, as a result, Border Transfer unlawfully deducted certain business expenses from their pay under the Massachusetts Wage Act. Plaintiffs now seek certification of a class of similarly situated current and former drivers under Fed. R. Civ. P. 23. For the reasons discussed below, Plaintiffs have met the Rule 23 requirements. Thus, after hearing, the Court
Border Transfer is a broker registered with the Federal Motor Carrier Safety Administration ("FMCSA"). Docket No. 9-2 at 1;
Border Transfer itself does not deliver goods. Instead, Border Transfer contracts with FMCSA-authorized motor carriers to perform the home deliveries. Border Transfer's contracts with each motor carrier, which Border Transfer calls Contract Carrier Agreements ("CCAs"), are all substantially the same. Docket No. 74-3 at 11 ("Matos Dep." at 33:17-18). Each of the CCAs states that the motor carrier is considered to be an independent contractor of Border Transfer.
In some cases, Border Transfer contracts with motor carrier companies that consist solely of a single driver who personally performs the delivery services. That was the case with named plaintiff Marcos DaSilva, who entered into a CCA with Border Transfer through Alpha Logistics Trucking, LLC ("Alpha Logistics"). Docket No. 74-4 at 9. DaSilva applied for a job as a delivery driver with Border Transfer. Docket No. 74-11 ¶ 4. A Border Transfer manager told him that he needed to form a company to sign a contract with Border Transfer, and the manager helped him fill out the necessary forms to create Alpha Logistics. Docket No. 74-11 ¶ 4. Alpha Logistics only ever operated one truck, and DaSilva was the sole driver for that truck. Docket No. 74-9 at 18.
In other cases, Border Transfer contracts with motor carrier companies that employ multiple drivers. That was the case with Matteus Ferreira, the other named plaintiff. Matteus Ferreira was the joint owner of Father & Son Transporting LLC with his father, Marcos Ferreira. Docket No. 74-10 at 9. Father & Son Transporting LLC was formed before the father, Marcos Ferreira, signed a CCA with Border Transfer. Docket No. 9-2 at 12; Docket No. 74-10 at 7. Father & Son Transporting LLC began by operating one truck for Border Transfer but eventually operated three trucks for Border Transfer. Docket No. 74-10 at 12-13. Those three trucks were operated by Matteus Ferreira, Marcos Ferreira, and several other persons hired by Father & Son Transporting LLC. Docket No. 74-10 at 13.
The motor carriers under contract with Border Transfer perform their deliveries from Sears' Westwood, Massachusetts facility. The CCAs require that all drivers who have an assigned route on a particular day attend a morning "stand-up" meeting at the facility. Docket No. 9-2 at 13; Docket No. 74-3 at 13. At the meeting, drivers might receive instructions on new installation processes, be informed of recurrent customer complaints, or receive training on how to communicate with customers. Docket No. 74-3 at 13, 29. The CCAs require drivers to wear a uniform each day, and drivers are not allowed to leave the facility if they do not comply with that mandate. Docket No. 9-2 at 17-18; Docket No. 74-3 at 14.
Delivery procedures are spelled out in the CCAs as well. Docket No. 9-2 at 14. Among the requirements is that the drivers "must run all delivery routes exactly as specified in the manifest." Docket No. 9-2 at 14. Those manifests are provided to drivers by Border Transfer and contain the order of deliveries and time windows for each delivery. Docket No. 74-3 at 22; Docket No. 74-14. Drivers must log deliveries as they happen by recording them on a smartphone app. Docket No. 74-3 at 17.
The plaintiffs filed the proposed class action complaint in this case on June 23, 2016. Docket No. 1. The original complaint named Border Transfer as the sole defendant and contained two counts: violation of the Massachusetts Wage Act and unjust enrichment.
The operative complaint is the amended complaint, which was filed on May 1, 2017. Docket No. 65. The amended complaint names the President of Border Transfer, Patrick McCluskey, as an additional defendant and contains a single count for violation of the Wage Act.
Now pending before the Court is the plaintiffs' motion for class certification, filed on June 19, 2017. Docket No. 73. The proposed class is defined as follows:
Docket No. 73 at 1. This class definition excludes so-called secondary drivers, who provided delivery services for Border Transfer under contracts between Border Transfer and other persons, and so-called absentee contractors, who held contracts with Border Transfer but did not drive a truck themselves. Docket No. 74 at 4 n.6, 23.
A. Massachusetts Wage Law
The Massachusetts Wage Act requires prompt and full payment of wages due. It provides that "in no event shall wages remain unpaid by an employer for more than six days from the termination of the pay period in which such wages were earned by the employee." Mass. Gen. Laws ch. 149, § 148. The Massachusetts Supreme Judicial Court has interpreted the statute as banning improper wage deductions, even where the employee has given his or her assent.
The scope of covered employees for the Massachusetts Wage Act is governed by the Massachusetts Independent Contractor Statute:
Mass. Gen. Laws ch. 149, § 148B(a). Under the statute, a worker is an employee and not an independent contractor if any one of the three prongs is not met. In other words, "to rebut the presumption of employment, an employer must satisfy all three of these prongs."
The First Circuit held last year that Prong B is preempted by federal law as applied to motor carriers such as Border Transfer.
B. Class Certification
Federal Rule of Civil Procedure 23(a) imposes four "threshold requirements" applicable to all class actions:
Fed. R. Civ. P. 23(a);
In addition to the requirements of Rule 23(a), the moving party must establish the elements of Rule 23(b)(1), (2), or (3).
Fed. R. Civ. P. 23(b)(3).
The plaintiffs have the burden of an initial showing that the proposed class satisfies the Rule 23 requirements.
Numerosity is a "low threshold."
The plaintiffs claim that the numerosity requirement is met because the defendants utilized fifty-nine contractors from June 1, 2013 to April 8, 2017. Docket No. 74-6 at 2. The defendants do not appear to contest that the plaintiffs meet the numerosity requirement. However, it bears mentioning that not all fifty-nine of Border Transfer's contractors during the time period fall within the plaintiffs' class definition. The plaintiffs' class definition is narrow: drivers who, in the relevant time period, "personally provided delivery services for Border Transfer on a full-time basis in Massachusetts." The record does not make it clear how many of the fifty-nine contractors utilized by Border Transfer during that time period personally delivered for Border Transfer on a full-time basis — but it is certainly not all fifty-nine. The defendants have put evidence in the record that at least three contractors, Humberto Chantre, Jose Pinto, and Naila Brito, did not personally drive full-time for Border Transfer and would be excluded from the class definition. Docket Nos. 81-3 at 2; 81-6 at 2, 4; 81-7 at 1. Rogerio Matos, a Border Transfer assistant manager, remembered two additional contractors who did not drive their own trucks. Docket No. 74-3 at 4-5, 9. Thus, at least five of the fifty-nine contractors would be excluded from the proposed class definition. Regardless, it is likely that more than forty of Border Transfer's contractors fall within the class definition.
Commonality requires the identification of an issue that is by its nature "capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."
Choice of Law
Defendants argue that individualized evidence is required to determine whether Massachusetts law applies to all putative class members' claims.
If different state laws apply to different members of a putative class and there are relevant differences between those state laws, commonality may be defeated.
The first step is to determine whether there is an actual conflict between the laws of the possibly governing jurisdictions. "It is a well-established — and prudential — principle that when the result in a case will not be affected by the choice of law, an inquiring court, in its discretion, may simply bypass the choice."
Having found at least one potentially relevant difference among the state laws, the Court must undertake a choice-of-law analysis. A federal court sitting in diversity, as in this case, must look to the forum state's choice-of-law rules to determine the controlling substantive law.
"Massachusetts state courts apply `a functional choice of law approach that responds to the interests of the parties, the States involved, and the interstate system as a whole.'"
The plaintiffs respond by pointing out that all delivery drivers report to Border Transfer's Westwood facility every morning to receive the products to be delivered and the routes that they would take. Docket No. 81-16 at 12.
The choice-of-law question can be distilled to: whether the Massachusetts Wage Act would apply to a driver who signed a contract with Border Transfer (a Michigan corporation headquartered in Tennessee that operates in Massachusetts) through a Rhode Island corporate entity to deliver goods from a Massachusetts facility to a mix of Massachusetts and out-of-Massachusetts customers. The plaintiffs rely on
Prong A: Control
As described above in the subsection on the statutory framework, the plaintiffs need only prevail on either Prong A or Prong C of the Massachusetts Wage Act. Prong A itself contains a conjunctive test under which the plaintiffs need only prevail on one branch. Under Prong A, an individual is an independent contractor only if "the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact." Mass. Gen. Laws ch. 149, § 148B(a)(1). Due to the conjunctive nature of this test, a company asserting that a worker is an independent contractor must show that the individual was free from its control
The plaintiffs argue that because only a single common issue is necessary to meet the commonality requirement of Rule 23(a), they satisfy the requirement by showing that either contractual control or actual control can be adjudicated on a class-wide basis.
i. Control as a Matter of Contract
The plaintiffs argue that whether an individual is free from control under the terms of his or her contract can be resolved through common evidence such as the uniform provisions of the CCAs. The plaintiffs are correct. The defendants do not appear to contest the plaintiffs' characterization that the CCAs contain standard terms for all of Border Transfer's drivers. Docket No. 74-3 at 11. Examining the standard terms to determine the extent of Border Transfer's contractual control is an exercise that appears to lead to common answers. As such, the Third Circuit decided that the extent of a company's right to control its workers could be resolved by examination of the franchise agreement, policies manual, and training manual that
The defendants' argument in response seems to be that, for various reasons, the contract does not contain as much right of control as the plaintiffs claim. Docket No. 80 at 19. But that is a merits question. The only question at this point is whether the extent of Border Transfer's contractual right of control over its delivery drivers is determinable on the basis of common evidence. The answer is yes.
ii. Control as a Matter of Fact
The defendants argue that determining the extent of Border Transfer's actual control over its delivery drivers requires an individualized factual inquiry. The plaintiffs respond that evidence of common practices can establish common answers as to control as a matter of fact.
As common evidence of actual control, the plaintiffs argue that Border Transfer had a policy that required all of its drivers to attend morning meetings to receive delivery instructions, that all of the drivers were subject to a customer rating system that could influence route assignment, that all drivers were required to wear uniforms, and that Border Transfer issued manifests to each driver containing a mandated order of delivery and delivery timeframes.
The defendants' response wades too often into the merits. The defendants expend significant effort arguing that, as a practical matter, Border Transfer's control over its drivers was less than the plaintiffs make it seem: that drivers' amount of communication with Border Transfer throughout a delivery day was not so significant; that the morning meeting requirement was not strictly enforced; that the customer rating system had little impact on drivers' routes; that drivers did not have to make deliveries in the order listed in the manifest; and that contractors could work when they wanted and that there were no limitations on the amount of time they could take off. But the question at this stage is whether the level of actual control can be determined by common evidence on how Border Transfer dealt with its drivers, or whether different putative class members were treated differently. The defendants have put forward some "happy camper" affidavits presenting that some drivers have some flexibility, but this does not defeat commonality or predominance.
The defendants argue that even if Massachusetts law applies to all of the members of the putative class, and even if there is common evidence regarding control under Prong A, commonality does not exist because individual adjudication is necessary to determine whether the Massachusetts Wage Act even applies to each proposed class member. Border Transfer did not contract with drivers directly but instead contracted with drivers through the corporate entities owned by the drivers. The Massachusetts Wage Act does not "expressly exclude individuals who provide services through a corporation."
The defendants point to the named plaintiff DaSilva, who testified at his deposition that he formed "Alpha Logistics Trucking, LLC" at the request of Border Transfer in October 2014 and that the company remained in business for six months. Docket No. 81-16 at 6. However, the defendants claim that Alpha Logistics Trucking's business records show otherwise: that Alpha Logistics Trucking operated well past that date transporting products brokered by companies other than Border Transfer. Defendants argue that the other named plaintiff, Ferreira, presents different potential issues regarding application of the Wage Act. Ferreira's corporate entity (Father & Son Trucking) existed two to three months prior to the CCA with Border Transfer, and it employed multiple drivers to complete Border Transfer's jobs in a third truck Father & Son Trucking owned. There is also evidence in the record of at least four other contractors who formed corporations before contracting with Border Transfer and for reasons other than Border Transfer's alleged requirement of incorporation. Docket No. 81-1 at 2 (Rosa declaration: "Prior to [Border Transfer], Antonio Rosa Transportation LLC provided delivery services to Spirit Delivery."); Docket No. 81-2 at 1 (Martins declaration: "I own Martins Trucking LLC, a company I formed for tax reasons."); Docket No. 81-6 at 2 (Pinto declaration: "I formed my company in 2009" and began contracting with Border Transfer in 2011); Docket No. 81-5 at 1 (Medina declaration: "I formed Medina Trucking LLC because I wanted increased protection for my company."). For these drivers, defendants make a colorable argument that incorporation is not a sham to permit misclassification.
However, incorporation cannot be a shield to prevent liability under the Wage Act. The plaintiffs point to evidence in the record that Border Transfer required all drivers to form corporations as a prerequisite to signing a contract. Docket No. 74-3 at 10-11; Docket No. 74-11 at 2; Docket No. 74-13 at 2. Thus, regardless of whether a full-time driver formed a corporation prior to his engagement with Border Transfer, the class only involves full-time drivers for Border Transfer. Thus, the analysis for Wage Act purposes is whether the individual driver was an employee with Border Transfer.
Other courts in this District have similarly found that individual questions of incorporation did not defeat commonality or predominance for a class of drivers.
The defendant relies on two cases from this District for the proposition that the individualized
Prong C: Independently Established Business
Under Prong C, a worker is not an independent contractor unless "the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed." Mass. Gen. Laws ch. 149, § 148B(a)(3).
The defendants suggest that this prong requires individualized evidence about each putative class member's history and custom of work for other brokers. Indeed, that is what the statutory text would seem to require. But there is Massachusetts case law suggesting that the statutory inquiry is not into whether putative employees actually engaged in an independent business, but whether they had the opportunity to do so. In
786 N.E.2d at 373. The SJC held that newspaper carriers were customarily engaged in an independently established trade because they were "free to deliver newspapers (or other publications, such as advertising flyers) for anyone who wishes to contract with them" and that "several of the carriers
Whether contractors with Border Transfer had the opportunity to engage in an independently established business is, as the plaintiffs argue, susceptible to common proof. The plaintiffs argue that Border Transfer assigned its drivers full-time work four to six days a week,
Establishing Violation of the Wage Act
Although the class definition avoids the individualized
Summing up Commonality
Commonality is met for a class of drivers who personally drove for Border Transfer on a full-time basis.
Typicality requires that the named plaintiffs' claims "arise from the same event or practice or course of conduct that gives rise to the claims of other class members, and ... are based on the same legal theory."
The plaintiffs argue that typicality is met because their claims and the putative class members' claims arose from the same CCAs and class-wide treatment, and the plaintiffs and the class members assert the same legal theory of Wage Act misclassification.
The defendants respond that typicality is defeated for several reasons. They point out that Ferreira did not sign the CCA himself (his father did); his testimony about his company's operations is contradicted by others; his company existed before it signed the CCA with Border Transfer; and his business grew to operate three trucks for Border Transfer. They also point out that DaSilva's business only operated one truck, that his business was formed when he signed the CCA with Border Transfer, and that some of his testimony is contradicted by testimony of others (thus casting doubt on his credibility).
None of these problems defeats typicality. DaSilva and Ferreira's experiences, although different in some ways from each other's, are reasonably coextensive with those of other motor carriers who contracted with Border Transfer. All of the motor carriers are pursuing the same Wage Act theory.
To meet the adequacy requirement, the "moving party must show first that the interests of the representative party will not conflict with the interests of any of the class members, and second, that counsel chosen by the representative party is qualified, experienced and able to vigorously conduct the proposed litigation."
Both prongs are met. There is no conflict because the named plaintiffs and the putative class members share an interest in recovering wages lost as a result of misclassification. There is no conflict from the fact that some of the contractors are content with the status quo, since any such contractor has the right to opt out of the class. "The availability of this option is an important factor in weighing the effect of a largely hypothetical conflict on a class-certification decision."
The plaintiffs' attorneys are highly experienced in class-action employment litigation and specifically in Wage Act misclassification claims. The defendants do not contest their qualifications.
"The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation."
The plaintiffs must take the following steps to prevail: (1) show that Massachusetts is the correct choice of law; (2) show that while they signed CCAs with Border Transfer through their corporate entities, they are still entitled to protection as "individuals" under the Wage Act; (3) prove misclassification by showing that one of the two control tests in Prong A is not met or that the independently established business test in Prong C is not met; (4) show that deductions were taken that were unlawful for employees under the Wage Act; and (5) show a measure of damages. Steps 1, 2, 3, and 4 in that chain appear to be provable by common evidence which predominates over any individualized issues identified by the defendants. Step 5 will require individual inquiry into each class member's alleged deductions. The question is whether that inquiry defeats predominance.
The need for individual damage determinations in step 5 does not alone defeat predominance.
The plaintiffs argue that the class action vehicle is superior to individual adjudication because it provides efficiency by avoiding duplicative discovery and inconsistent results; individual claims may only result in small damages; and the fear of employer retaliation may have a chilling effect on employees bringing claims on an individual basis,
While the defendants quibble about the amount of recovery that each putative class member might achieve in individual litigation, they do not seriously contest the superiority prong. The plaintiffs are correct that efficiency and the policy considerations unique to the employment context make class adjudication superior.
The defendants raise an argument that is best understood under the label of ascertainability: that it is not clear how to determine who worked on a "full-time basis" during the relevant time period. The First Circuit (and most other circuits) adds an ascertainability requirement to the class certification analysis. "[T]he definition
Plaintiffs' motion for class certification (Docket No. 73) is
The Court appoints Marcos DaSilva and Matteus Ferreira as class representatives, and Lichten & Liss-Riordan, P.C. as class counsel.