Misra v. Credico (USA), LLC

Kanika MISRA et al., Individually and on Behalf of All Others Similarly Situated v. CREDICO (USA), LLC et al.

No. 1784CV02731BLS2

Superior Court of Massachusetts, Suffolk, Business Litigation Session

July 24, 2018

MEMORANDUM AND ORDER ON CREDICO’S PARTIAL MOTION TO DISMISS

Kenneth W. Salinger, Justice of the Superior Court

Plaintiffs allege that Credico (USA), LLC, DFW Consultants Inc., and Jason Ward operated as their joint employers. Plaintiffs claim that Defendants violated Massachusetts law by misclassifying employees as independent contractors and by failing to make minimum wage and overtime payments that were required by law.

This action was originally brought by Kanika Misra and Craig Levine, on behalf of themselves and others who worked for Defendants in Massachusetts.

Credico moved to dismiss all claims against it on the ground that Ms Misra and Mr. Levine had opted into a prior federal lawsuit in New York, joining in a collective action asserting similar claims against Credico under the federal Fair Labor Standards Act (the "FLSA"). Credico argues that Misra and Levine could have asserted claims against it under Massachusetts law in the prior action, final judgment in Credico’s favor has now been entered in that case, and this action is therefore barred by the doctrine of res judicata or claim preclusion.

Plaintiffs then filed amended complaints adding four other named plaintiffs. Juan Melo, Jaqueline Sill, and Lee Tremblay never opted into the prior FLSA collective action. Mr. Jackson’s attempt to opt-in was rejected as untimely.

The Court will treat the motion to dismiss as directed only at the claims asserted against Credico by Ms. Misra and Mr. Levine, as the parties agreed during oral argument.

The Court will ALLOW the motion to the extent that it seeks dismissal of the claims by Misra and Levin. Those claims are barred by the doctrine of claim preclusion because they could have been asserted in the prior FLSA lawsuit, it is not clear that the federal court would have declined to exercise supplemental jurisdiction over those claims, and final judgment has now entered in that prior case.^[1] The Court will deny the motion to dismiss with respect to the claims asserted by Mr. Melo Mr. Jackson, Ms. Sill, or Mr. Tremblay, on behalf of themselves and other putative class members who did not opt into the prior action.

1. The Prior Federal Action

In July 2015, four individuals sued Credico and Comex, Inc., in federal court in Illinois. That lawsuit was transferred on plaintiffs’ motion to the Southern District of New York, where it was docketed as Vasto v. Credico (USA) LLC, 15CV9298 (PAE).^[2]

The Vasto plaintiffs alleged that Credico and Comex operated as joint employers and misclassified workers as independent contractors. They brought a putative FLSA collective action, under 29 U.S.C. § 216(b), claiming that Credico and Comex violated the FLSA by not paying required minimum wages and overtime. They also brought putative class actions, under Fed.R.Civ.P. 23, claiming that Credico and Comex violated similar requirements under New York and Arizona law.

In May 2016, the federal court conditionally certified Vasto as an FLSA collective action. Notice of the action was sent to everyone who had done face-to-face marketing work for any subcontractor of Credico in the United States, within the past three years, while classified as independent contractors. The notice informed those workers of their right to opt to participate in the Vasto case as a plaintiff.

The court then approved the form of a notice to be sent to all such workers, informing them of their right to file a form opting in to the Vasto collective action. The federal judge ordered that any further amendments to the complaint by the then-existing plaintiffs be filed by July 10, 2016, and that any additional plaintiff wishing to opt-in to the FLSA collective action had to do so by August 15, 2016.

Plaintiffs represent that more than 1, 700 individuals from 36 different states filed consents requesting to opt-in to the Vasto collective action under the FLSA.

Misra and Levine opted to join in the FLSA collective action in the Vasto case. They both signed forms stating that they "consent and agree to become a ‘party-plaintiff’ in" that case, understand that the lawsuit is brought under the FLSA, and "consent, agree, and opt in to become a plaintiff herein and to be bound by any judgment ... or settlement" in the case.

Neither Misra nor Levine sought leave in Vasto to assert claims against Credico for non-payment of minimum wages and overtime under Massachusetts law.

The Vasto judge ordered in October 2017 that summary judgment be entered in favor of Credico and the other defendants on all claims. The court held that, even assuming that plaintiffs were employees rather than independent contractors, Credico cannot be held liable as plaintiffs’ joint employer either under the FLSA or under New York or Arizona law. See Vasto v. Credico (USA) LLC, 15 Civ. 9298 (PAE), 2017 WL 4877424, *6-*16 (S.D.N.Y. October 27, 2017) (Engelmayer, D.J.)

The Vasto plaintiffs have appealed the judgment in favor of Credico and the other defendants. That appeal is still pending.

It is undisputed that plaintiffs Melo, Sill, and Tremblay never opted into the Vasto case. Plaintiffs’ counsel has represented, and Credico does not dispute, that Jackson submitted a consent form in Vasto but was dismissed from the action because his form was filed after the opt-in deadline. Jackson then opted into a different case pending against Credico in the Southern District of New York, Huffman v. Credico (USA) LLC, 17-cv-04242. Plaintiffs’ counsel represents that Huffman is currently stayed pending the appeal of Vasto.

2. Analysis

2.1. Federal Action’s Preclusive Effect on Unasserted State Law Claims

Since Vasto was decided by a federal court exercising federal question jurisdiction over an FLSA claim, the federal rules of res judicata determine whether the Vasto judgment bars Misra and Levine from asserting new claims against Credico under Massachusetts law. See Alicea v. Commonwealth, 466 Mass. 228, 235 & n.11 (2013); Anderson v. Phoenix Investment Counsel of Boston, Inc., 387 Mass. 444, 449 (1982).

"Under the federal law of claim preclusion," which is part of the doctrine of res judicata, "final judgment on the merits of an action bars the parties and their privies from relitigating claims that were or could have been raised in that action" (emphasis added). Mancuso v. Kinchla, 60 Mass.App.Ct. 558, 567 (2004); accord, e.g., Hatch v. Trail King Industries, Inc., 699 F.3d 38, 45 (1st Cir. 2012). This doctrine reflects a strong policy against claim splitting; it bars a subsequent lawsuit even where the plaintiff "is prepared in a second action to present different evidence or legal theories to support his claim, or seeks different remedies." Mancuso, supra, quoting Heacock v. Heacock, 402 Mass. 21, 23 (1988); accord, e.g., Nalco Co. v. Chen, 843 F.3d 670, 674 (7th Cir. 2016).

Claim preclusion applies under federal law where: (i) final judgment on the merits was entered by a court of competent jurisdiction; (ii) a second suit involves the same parties or those in privity with them; (iii) the claims in the second action "were or could have been raised" in the prior action; and (iv) the claims in both cases arise from the same transaction or series of transactions or from "a common nucleus of operative facts." Massachusetts School of Law at Andover, Inc. v. American Bar Ass’n, 142 F.3d 26, 38 (1st Cir. 1998); accord, e.g., Monhan v. New York City Dept. of Corrections, 214 F.3d 275, 284-85 (2d Cir. 2000); Ohio Valley Envtl. Coalition v. Aracoma Coal Co., 556 F.3d 177, 210 (4th Cir. 2009); Czarniecki v. City of Chicago, 633 F.3d 545, 548 (7th Cir. 2011); Magee v. Hamline Univ., 775 F.3d 1057, 1059 (8th Cir. 2015); Lobo v. Celebrity Cruises, Inc., 704 F.3d 882, 892-93 (11th Cir. 2013).

Where these requirements are satisfied, final judgment in federal court on a federal claim can bar a state court action asserting a state law claim. See Anderson, 387 Mass. at 450. Res judicata will bar the state action if the federal court could have exercised supplemental jurisdiction (previously known as pendent jurisdiction) over the state law claim, unless the federal court "clearly would have declined to exercise" such jurisdiction "as a matter of discretion." Id.

The requirements of claim preclusion are satisfied here. Final judgment has entered in the Vasto case. That judgment can have preclusive effect under federal law even though it is on appeal. See O’Brien v. Hanover Ins. Co., 427 Mass. 194, 201 (1998). And the same parties are involved; Misra and Levine asserted very similar claims against Credico in both actions.

The Court concludes that the jurisdictional and relatedness requirements for claim preclusion are satisfied as well. Misra and Levine could have asserted their claims for minimum wage and overtime payment under Massachusetts law against Credico in the Vasto case because they arise from the same operative facts as their FLSA claims. Indeed, they could have sought to assert putative class claims under Massachusetts law in that action. Where a federal district court has original jurisdiction over at least one claim, for example because it arises under federal law, the court may exercise supplemental jurisdiction over any other claims that "form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). As a result, if workers bring an FLSA collective action and a state law individual or class action seeking minimum wage or overtime payments from the same alleged employer, based on the same compensation policies or...