Martins v. 3PD, Inc.

CELSO MARTINS, et al. Plaintiffs,

v.3PD, Inc., Defendant.

CIVIL ACTION NO. 11-11313-DPW

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

March 28, 2013

MEMORANDUM AND ORDER

Celso Martins and Alexandre Rocha are federally authorized delivery drivers who worked, directly or indirectly, for 3PD, Inc., a delivery and logistics company. Mr. Martin and Mr. Rocha bring this action against 3PD alleging that it unlawfully shifted various business costs to its employees by classifying them as independent contractors in violation of Massachusetts state law. Mr. Martins and Mr. Rocha also seek to represent a class of similarly situated individuals.

The parties have filed a variety of motions and cross-motions. Plaintiffs seek to amend the Complaint to add a new named plaintiff and two individual defendants; they also seek to certify the class. Both Plaintiffs and Defendants move for summary judgment regarding various aspects of the case.

I. BACKGROUND

A. Massachusetts Wage Law

Massachusetts state wage law includes a presumption of employment status. See Somers v. Converged Access, Inc., 911 N.E.2d 739, 747 (Mass. 2009). Section 148B establishes that a worker performing services is an employee for purposes of various provisions of the Massachusetts wage laws, including M.G.L. §§ 149 and §§ 151, unless three circumstances are met. Specifically, the statute provides that,

an individual performing any service, except as authorized under this Chapter, shall be considered to be an employee . . . unless . . .

1) 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; and

2) The service is performed outside the usual course of the business of the employer; and

3) 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.

M.G.L. 149 § 148B(a). This test is conjunctive; an employer must prove all three elements in order to show that an individual is an independent contractor and not an employee. Somers, 911 N.E.2d at 747. Under Massachusetts wage law, an employer may not deduct certain expenses from its payment to employees, such as expenses for workers' compensation and administrative costs. Seegenerally M.G.L. 149 §§ 148, 150. An employer cannot exempt itself from these prohibitions by contract. M.G.L. 149 § 148 ("No person shall by a special contract with an employee or by any other means exempt himself from this section or from section one hundred and fifty.").

B. Facts

1. The Parties

3PD is a Georgia corporation with its principal place of business in Marietta, Georgia. It provides "last-mile" delivery and logistics services for large merchants such as General Electric, Home Depot, and Lowe's.¹ 3PD began to offer its services in Massachusetts when it acquired General Transportation Services, Inc. ("GTS") in 2006.

Celso Martins and Alexandre Rocha provide truck transportation, delivery, and sometimes installation for 3PD's customers' products. Both are federally authorized to be motor carriers by the Federal Motor Carrier Safety Administration ("FMCSA"). Mr. Martins began working for GTS in 2004, and continued working for 3PD after the acquisition until April 2011. Mr. Rocha began working for GTS in 2003 and continued working for 3PD through AAR Trucking until May 2011. Mr. Rocha incorporated his delivery business in 2006 under the name AAR Trucking, Inc.Both Mr. Martins' business and AAR Trucking operated multiple delivery trucks for 3PD.

Both Mr. Martins and Mr. Rocha worked for 3PD making deliveries full time, five days per week. For 16 months in 2009-2010, Mr. Rocha also worked as a delivery driver for another company, Home Delivery America, during the two days each week that he did not work for 3PD. They arrived at the warehouse or retail store each morning and received the products for delivery along with a set of delivery time periods - "windows" - and were required to make their deliveries within those windows. 3PD required Plaintiffs to check in by phone at the start and completion of each delivery. Sometimes Mr. Martins was also responsible for installing the appliances he delivered and for hauling away the old appliances. 3PD's customers would complete surveys evaluating the delivery drivers, and a 3PD Manager testified that when a driver "did not perform up to expectations . . . disciplinary actions were taken," such as termination or the withdrawal of delivery opportunities for a period of days.

Both Mr. Martins and Mr. Rocha recruited other drivers to operate additional routes under their Delivery Service Agreements ("DSA"s) with 3PD. 3PD paid Mr. Martins and AAR Trucking for these additional routes, and Mr. Martins and AAR Trucking were responsible for paying the other drivers operating under their respective DSAs.

2. The Delivery Service Agreements

The DSAs between 3PD and Plaintiffs are materially identical. 3PD has least 66 additional DSAs with other federally licensed motor carriers to deliver merchandise in Massachusetts. As with the DSAs with Mr. Martins and AAR Trucking, some of these 66 other agreements include multiple drivers performing services for 3PD. The DSAs were non-negotiable.

The DSAs state that "3PD provides logistical, transportation and delivery services for a number of substantial retail national accounts" and that "such services often involve delivery of retail merchandise directly into residences." These agreements declare that "both 3PD and Contract Carrier intend that the services provided under this Agreement will be strictly as an independent contractor and not as an employee of 3PD for any purpose." As such, the DSAs require Plaintiffs to represent that they are fully qualified federal motor carriers and that Plaintiffs bear the responsibility to obtain all "certificates, permits, franchise or licenses required in connection with the performance of such services." Plaintiffs, as contract carriers under the DSA, also bear the responsibily for regulatory compliance.

Plaintiffs are responsible for supplying their own trucks, helpers and other drivers, and for paying for insurance, fuel, maintenance, and the other costs of the delivery business.However, Plaintiffs' equipment and services must meet 3PD's standards and requirements. For instance, 3PD requires that Plaintiffs paint their trucks with the 3PD logo.

In 2008, 3PD informed Mr. Martins that his trucks no longer met 3PD's standards and that he must acquire new trucks in accordance with 3PD's standards within three days. Mr. Martins testified that for fear of losing his contract by not being able to find suitable trucks in time, he leased the new trucks from 3PD.

Plaintiffs are also required to wear "an appropriate uniform" and "keep his/her personal appearance consistent with reasonable standards of the consumer delivery industry." Any additional drivers or helpers must pass a background check. The DSAs require Plaintiffs to post a bond or maintain a fund with 3PD so that 3PD can deduct the amount of any damage to products for delivery.

The DSAs do not include a non-competition agreement and Plaintiffs were free to make deliveries for other companies.

II. MOTION TO AMEND THE COMPLAINT

Plaintiffs seek to amend the Complaint in order to add two individual defendants - Bud Workman, President of 3PD, and Karl Meyer, owner and Chief Operating Officer of 3PD - and a new Plaintiff - Calvin Anderson.

A. Standard of Review

A party has the right to amend its complaint "as a matter of course" up to 21 days after service of an answer or motion to dismiss. Fed. R. Civ. P. 15(a)(1). However, after this 21-day period, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Plaintiffs filed their motion to amend on April 23, 2012, approximately nine months after 3PD filed its answer and counterclaims on July 25, 2011. Because 3PD opposes Plaintiffs' motion to amend, Plaintiffs seek the court's leave to amend.

The Federal Rules of Civil Procedure instruct that "[t]he court should freely give leave [to amend] when justice so requires." Id. This reflects a generally permissive amendment policy. See O'Connell v. Hyatt Hotels of P.R., 357 F.3d 152, 154 (1st Cir. 2004). In the early stages of litigation, grounds for denial are generally limited to "undue delay, bad faith or dilatory motive . . . , undue prejudice to the opposing party . . . , [and] futility of amendment." ACA Fin. Guaranty Corp. v. Advest, Inc., 512 F.3d 46, 55-56 (1st Cir. 2008) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). However, the longer a party waits before filing its motion to amend, the more exacting the standard becomes. Certain milestones, such as a scheduling order, close of discovery, or a timely-filed motion for summaryjudgment, may change a court's hospitality toward a motion to amend.

As the deadline for the close of discovery approaches, the possibility of undue prejudice to the opposing party increases, and courts particularly disfavor "motions to amend whose timing prejudices the opposing party by 'requiring a re-opening of discovery with additional costs . . . , and a likely major alteration in trial tactics and strategy . . . .'" Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004) (quoting Acosta-Mestre v. Hilton Int'l of P.R., Inc., 156 F.3d 49, 52 (1st Cir. 1998)).

Once the deadline for amendment set in a scheduling order has passed, "the liberal default rule is replaced by the more demanding 'good cause' standard of Fed. R. Civ. P. 16(b)." Id.

Finally, when a motion to amend comes after a timely filed motion for summary judgment, "a plaintiff is required to show "substantial and convincing evidence" to justify a belated attempt to amend a complaint." Id.

Nevertheless, a district court "enjoys significant latitude in deciding whether to grant leave to...