King v. Prodea Sys., Inc.

433 F.Supp.3d 7

Tyson KING, Plaintiff,

v.PRODEA SYSTEMS, INC., et al., Defendants.

Civil Action No. 19-10016-NMG

United States District Court, D. Massachusetts.

Signed December 20, 2019

Andrew S. McIlvaine, David E. Belfort, Bennett & Belfort, PC, Cambridge, MA, Plaintiff.

Christopher M. Pardo, Hunton Andrews Kurth LLP, Boston, MA, for Defendants.

MEMORANDUM & ORDER

GORTON, J.

Tyson King ("King" or "plaintiff") brings this action against his employer Prodea Systems, Inc. ("Prodea"), its subsidiary, Arrayent, Inc. ("Arrayent") and the following individuals: Amir Ansari (Chief Technology Officer of Prodea), Anousheh Ansari (Executive Chairwoman of Prodea), Hamid Ansari (Chief Executive Officer and President of Prodea), Shane Dyer (Founder of Arrayent) and Cyril Brignone (Chief Revenue Officer of Prodea and Former Chief Executive Officer of Arrayent) (collectively, "the Individual Defendants"). King seeks, in law and equity, unpaid wages and expense reimbursements pursuant to the Federal Fair Labor Standards Act, the Massachusetts Wage Act and contract law.

I. Background

A. Prodea and Arrayent

Prodea is a Delaware corporation engaged in the digital technology business and specializes in internet-based services. It maintains its principal place of business in Texas and, until mid-2018, had additional offices in California.

In July, 2017, Prodea acquired Arrayent as a wholly owned subsidiary. It is a Delaware corporation with its principal place of business in Texas and a registered address in California.

Prodea and Arrayent (collectively, "the Corporate Defendants") have clients all over the world. No client of the Corporate Defendants is, however, headquartered in Massachusetts.

Plaintiff avers that he was, at all relevant times, employed by both Corporate Defendants. King maintained a Prodea email account and a Prodea business card which listed his business address as Arrayent's California address. His paychecks were issued by Arrayent as his employer and he was paid with funds from a bank account registered to Arrayent.

B. The Individual Defendants

Three of the Individual Defendants (Amir, Anousheh and Hamid) are residents of the State of Texas. Dyer and Brignone are California residents.

C. King's Employment with the Corporate Defendants

From January, 2018, until January, 2019, King was employed by the Corporate Defendants as Vice President of Sales. His duties included soliciting and servicing the customers of the Corporate Defendants globally.

King, a Massachusetts resident, worked for the Corporate Defendants in Massachusetts from him home in Needham and from rented office space in Wellesley. Although King submits that he never planned to move, the Corporate Defendants contend that he indicated an intention to relocate to Texas upon the commencement of his employment. In any event, King was allowed to work remotely from Massachusetts after reporting to the Corporate Defendants that his wife had accepted a new job in the Commonwealth.

The Corporate Defendants secured Workers Compensation Insurance to cover King in Massachusetts but aver that they considered him a "non-Massachusetts employee." Indeed, King's business card bore a California address. Nevertheless, the Corporate Defendants withheld Massachusetts state income taxes from King's salary.

In February, 2018, King requested Prodea's permission to rent office space in Wellesley, Massachusetts and worked out of that office from February through June, 2018. Thereafter, King worked from his home office in Needham, Massachusetts.

King performed the majority of his work-related duties in Massachusetts but traveled on business on at least 18 occasions, including to Texas, California, Nevada, New York, Mexico and Turkey. Nevertheless, King contends that his work in the Commonwealth facilitated substantial sales revenue for the Corporate Defendants. That work included soliciting customers, planning meetings, communicating with customers, preparing sales agreements and proposals and managing a team of salespersons. King emphasizes that, on two occasions, an executive from Prodea and/or Arrayent traveled to Massachusetts to join King on sales networking meetings with potential Massachusetts-based clients.

King resigned his employment with the Corporate Defendants in January, 2019. He avers that the Corporate Defendants owe him approximately $71,000 in unpaid, earned wages and approximately $16,000 in approved but unpaid reimbursable business expenses. According to plaintiff, a human resources agent of the Corporate Defendants has admitted that King is owed approximately $68,000 in unpaid wages in addition to vacation pay.

D. Procedural History

Plaintiff filed a complaint against defendants in Massachusetts Superior Court in November, 2018. Defendants removed the case to this Court on diversity and federal question grounds in January, 2019. Defendants thereafter moved to dismiss the Complaint for lack of personal jurisdiction and failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(6). Before the Court ruled on that motion, plaintiff filed his first Amended Complaint, resulting in the Court denying the motion as moot. Defendants' subsequently filed the pending motion to dismiss plaintiff's Amended Complaint.

II. Motion to Dismiss For Lack of Personal Jurisdiction

A. Legal Standard

On a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), the plaintiff bears the burden of showing that the Court has authority to exercise jurisdiction over defendants. Cossart v. United Excel Corp., 804 F.3d 13, 18 (1st Cir. 2015). Where, as here, the Court will decide a motion to dismiss for lack of personal jurisdiction without first holding an evidentiary hearing, the Court applies the "prima facie" standard of review and takes the plaintiff's

properly documented evidentiary proffers as true and construe[s] them in the light most favorable to [plaintiff's] jurisdictional claim.

A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016). A plaintiff cannot, however, rely on "unsupported allegations" and "must put forward evidence of specific facts to demonstrate jurisdiction exists." Id. (internal citations omitted).

Plaintiff's claims invoke both the Court's federal question and diversity jurisdiction. 28 U.S.C. §§ 1331 and 1332.

1. Personal Jurisdiction in Diversity Cases

In a diversity suit, this Court acts as "the functional equivalent of a state court sitting in the forum state." See Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1, 8 (1st Cir. 2009). As such, to make a prima facie showing of personal jurisdiction in diversity cases, the plaintiff must demonstrate that the exercise of jurisdiction 1) is permitted by the Massachusetts long-arm statute, M.G.L. c. 223A § 3, and 2 ) coheres with the Due Process Clause of the Fourteenth Amendment of the United States Constitution by showing that each defendant has "minimum contacts" with Massachusetts. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir. 2002).

The Court's jurisdiction may be either "specific" or "general."

United States v. Swiss Am. Bank, 274 F.3d 610, 618 (1st Cir. 2001). Specific jurisdiction requires a "demonstrable nexus" between the claims of the plaintiff and the defendant's contacts in the forum state. Id. Such contacts must demonstrate that the defendant "purposeful[ly] avail[ed] [itself] of the privilege of conducting activities in the forum state." Noonan v. Winston Co., 135 F.3d 85, 90 (1st Cir. 1998). General jurisdiction, on the other hand, exists when the defendant has engaged in "continuous and systematic activity, unrelated to the suit, in the forum state." Swiss Am. Bank, 274 F. 3d at 618.

2. Personal Jurisdiction in Federal Question Cases

In federal question cases, the Due Process Clause of the Fifth Amendment of the United States Constitution requires only that a defendant maintain "minimum contacts" with the United States as a whole rather than with the forum state. Swiss Am. Bank, 274 F. 3d at 618. Plaintiff must, however, ground its service of process in a federal statute or rule. Id.

An out-of-state defendant in federal-question cases may be properly served if the federal statute pursuant to which the claim is brought provides for nationwide service of process. Fed. R. Civ. P. 4(k)(1)(C). Where, as here, the federal statute is silent on the availability of nationwide service of process, such service is governed by the forum state's long-arm statute. Fed. R. Civ. P. 4(k)(1)(A). Accordingly, this Court must conduct the same personal jurisdiction inquiry as in a diversity case under the Massachusetts long-arm statute. See Johnson Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947, 950 (1st Cir. 1984).

3. Massachusetts Long-Arm Statute

The Massachusetts long-arm statute provides, in relevant part, that a court may exercise personal jurisdiction

over a person, who acts ... as to a cause of action in law or equity arising from the person's (a) transacting any business in this commonwealth [or] (b) contracting to supply services or things in this commonwealth....

M.G.L. c. 223A, § 3.

The requirements of the Massachusetts long-arm statute are substantially similar to (although potentially more restrictive than) those imposed by the Due Process Clause of the Fourteenth Amendment. See Copia Commc'ns, LLC v. AMResorts, L.P., 812 F.3d 1, 4 (1st Cir. 2016) (noting that "[r]ecently, however, we have suggested that Massachusetts's long-arm statute might impose more restrictive limits on the exercise of personal jurisdiction than does the Constitution"). See also Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016).

B. Application to the Corporate Defendants

1. Massachusetts Long-Arm Statute

A court may exercise personal jurisdiction over a defendant under the Massachusetts long-arm statute when a claim arises from the defendant "transacting any business in [the] commonwealt...