Patel v. 7-Eleven, Inc.

322 F.Supp.3d 244

Dhananjay PATEL, Safdar Hussain, Vatsal Chokshi, Dhaval Patel and Niral Patel, and all others similarly situated, Plaintiffs,

v.7-ELEVEN, INC., Mary Cadigan and Andrew Brothers, Defendants.

Civil Action No. 17-11414-NMG

United States District Court, D. Massachusetts.

Signed July 20, 2018

Adelaide H. Pagano, Shannon E. Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs.

Matthew J. Iverson, Jennifer Brown, DLA Piper US LLP, Boston, MA, Miles D. Norton, DLA Piper US LLP, New York, NY, Norman M. Leon, Pro Hac Vice, DLA Piper LLP, Chicago, IL, for Defendants.

MEMORANDUM & ORDER

GORTON, United States District Judge

This is a putative class action brought by Dhananjay Patel, Safdar Hussain, Vatsal Chokshi, Dhaval Patel and Niral Patel (collectively "plaintiffs") on behalf of individuals who have acquired franchises from 7-Eleven, Inc. ("7-Eleven") in the Commonwealth of Massachusetts. Plaintiffs allege that 7-Eleven and two 7-Eleven market managers, Mary Cadigan and Andrew Brothers (collectively "the individual defendants"), 1) misclassified its franchisee convenience store workers in Massachusetts as independent contractors instead of employees in violation of the Massachusetts Independent Contractor Law, M.G.L. c. 149 § 148B, 2 ) violated the Massachusetts Wage Act, M.G.L. c. 149 § 148 and 3) violated the Massachusetts Minimum Wage Law, M.G.L. c. 151 §§ 1, 7.¹

Pending before the Court are plaintiffs' motion to remand, 7-Eleven's motion to dismiss, the individual defendants' motion to dismiss and plaintiffs' emergency motion to enjoin defendant from obtaining releases from putative class members.

I. Background

The named plaintiffs are residents of Massachusetts who acquired 7-Eleven franchises and work as store managers and convenience store clerks in Massachusetts. They also bring claims on behalf of all other individuals who have acquired 7-Eleven franchises and performed services as store managers and convenience store clerks in Massachusetts.

7-Eleven is a Texas corporation with its principal place of business in Texas. The company is a convenience store chain that utilizes a franchise model. Plaintiffs allege that 7-Eleven dictates how franchisees do their jobs, including requirements with respect to uniforms, specific training and monitoring the workplace remotely through the use of in-store cameras. 7-Eleven also determines store hours, controls the payroll system and requires that franchisees make daily monetary deposits into an account that it controls.

According to plaintiffs, they perform services exclusively for 7-Eleven, are misclassified as independent contractors instead of employees and therefore have been deprived of benefits to which employees are entitled under Massachusetts law, including a minimum wage and protection from improper wage deductions. Plaintiffs allege that Mary Cadigan and Andrew Brothers, two 7-Eleven market managers who reside in Massachusetts, "exercised extensive control over the plaintiffs' work."

Plaintiffs filed their statutory claims with the Office of the Attorney General and received a right to sue letter, as required by M.G.L. c. 149 § 50. Thereafter they filed this action in Massachusetts Superior Court for Middlesex County and Defendants promptly removed the case to this Court.

On June 15, 2018, 7-Eleven distributed 2019 franchise renewal contracts to all Massachusetts franchisees, including franchisees who do not have agreements expiring in 2019. On page 208 of that 641-page document, the contract contains a "Release of claims and termination" section that requires renewing franchisees to release their claims in this case. On June 29, 2018, plaintiffs filed an emergency motion seeking to enjoin 7-Eleven from soliciting those releases.

II. Motion to remand

Plaintiffs assert that removal was improper because the individual defendants defeat diversity jurisdiction and the "local controversy" exception to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d)(4), applies such that no federal question jurisdiction exists. Defendants respond that the individual plaintiffs are "nothing more than middle managers" who were fraudulently joined to destroy diversity jurisdiction and that the conduct of the individual defendants is too insignificant to evoke CAFA's local controversy exception.

Any case removed from state court shall be remanded if at "any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). The removal statute is to be strictly construed and defendants have the burden of demonstrating the existence of federal jurisdiction. Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999).

A. Diversity Jurisdiction

United States district courts possess jurisdiction over all civil actions between "citizens of different States" where the matter in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). Unless expressly prohibited by federal statute, defendants may remove

any civil action brought in a State court of which the district courts of the United States have original jurisdiction,

28 U.S.C. § 1441(a), so long as no properly joined defendant "is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b)(2).

Under the doctrine of fraudulent joinder, a plaintiff is precluded from destroying diversity by joining a makeweight, non-diverse defendant. See Universal Truck & Equip. Co. v. Southworth-Milton, Inc., 765 F.3d 103, 108 (1st Cir. 2014). A party has been fraudulently joined if there is

no reasonable possibility that the state's highest court would find the complaint states a cause of action upon which relief may be granted against the non-diverse defendant.

Id.

The complaint is evaluated "on the basis of the allegations in the complaint at the time of removal." Moniz v. Bayer A.G., 447 F.Supp.2d 31, 36 (D. Mass. 2006) (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537, 59 S.Ct. 347, 83 L.Ed. 334 (1939) ).

Plaintiffs' complaint contains insufficient factual allegations against defendants Cadigan and Brothers to state a claim for relief. The complaint states that "7-Eleven imposes a litany of rules" and that "7-Eleven controls the entire payroll system at the stores." Plaintiffs allege that they have been injured "[b]ecause of their misclassification by 7-Eleven as independent contractors." The entirety of the allegations against the individual defendants, on the other hand, are as follows:

Defendant Marry Carrigan (sic) is a resident Scituate, Massachusetts, where she has worked as a market manager for 7-Eleven. She has exercised extensive control over the plaintiffs' work.

Defendant Andrew Brothers is a resident of Plainville, Massachusetts, where he has worked as a market manager for 7-Eleven. He has exercised extensive control over the plaintiffs' work.

The individual defendants are not mentioned elsewhere in the complaint. When stating their causes of action, plaintiffs state that "Defendant has misclassified" its workers (Count I), "Defendant has violated the Massachusetts Wage Act" (Count II) and "Defendant has violated the Massachusetts Minimum Wage Law" (Count III). They request that this Court enter relief against 7-Eleven but make no such request against Brothers or Cadigan.

Only officers or agents "having the management of the corporation" may be held individually liable under the Massachusetts Independent Contractor Law or Wage Act. Segal v. Genitrix, LLC, 478 Mass. 551, 559, 87 N.E.3d 560 (2017). The Massachusetts Supreme Judicial Court has recently clarified that individuals are liable only if they have accepted responsibilities over a corporation "similar to those performed by a corporate president or treasurer."

Id. That Cardigan and Brothers were market managers and exercised extensive control is not enough to state a claim upon which relief can be granted under those statutes.

Plaintiffs declare that this Court cannot hold that there is "no possibility" of establishing a cause of action because the ultimate determination of liability "depends upon contested facts." The proper inquiry, however, is whether there is a "reasonable probability" the Massachusetts Supreme Judicial Court ("SJC) would find that the complaint states a cause of action upon which relief against the individual defendants can be granted. See Universal Truck, 765 F.3d at 108. The SJC replaced the "no set of facts" standard of Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) with the "plausibility" standard of Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), for determining whether a complaint is sufficiently pled. Iannacchino v. Ford Motor Co., 451 Mass. 623, 635-36, 888 N.E.2d 879 (2008). Under the Twombley standard, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Id. at 636, 888 N.E.2d 879. Plaintiffs' threadbare assertions against Cadigan and Brothers fall short. See Edwards v. Commonwealth, 477 Mass. 254, 265, 76 N.E.3d 248 (2017) (remarking that the "inquiring court need not give weight to bare conclusions, unembellished by pertinent facts") (citation omitted).

The complaint alleges only that the individual defendants "exercised extensive control over the plaintiffs' work." That allegation is insufficient to state a claim under any statute and does not satisfy the pleading requirements of Massachusetts Courts. Because there is no "reasonable probability" that the SJC would find that plaintiffs' barebones complaint states a cause of action against the individual defendants, this Court finds that they were fraudulently joined. Diversity jurisdiction exists and plaintiff's motion to remand will be denied.

B. Federal Question Jurisdiction

Because the Court has found that it possesses jurisdiction under the diversity statute, 28 U.S.C. § 1332(a)(1), it declines to address defendant's argument that the Court has federal question jurisdiction under the "local...