U.S. District Court Case Summaries: January 9, 2014.

Byline: MALW Staff

Editor's note: The full text of these decisions can be found on Lawyers Weekly's website, masslawyersweekly.com. Civil practice Asset freeze - Legal malpractice Where litigants who have brought a crossclaim alleging legal malpractice now move for entry of a temporary restraining order and a preliminary injunction freezing $5 million in assets of two defendant attorneys and a codefendant law firm, the motion must be denied under Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999). "(I]n the instant action (plaintiff Elizabeth] Tamposi has sued (Julie] Shelton for breach of fiduciary duty, legal malpractice and unjust enrichment. ... For their part, the Shelton Claimants (Julie Shelton, Butler Rubin Saltarelli & Boyd and Faegre Baker Daniels] have, inter alia, filed crossclaims against (Michael] Weisman, (Rebecca] McIntyre and (Weisman & McIntyre (W&M) for legal malpractice (#53, Crossclaims, Count II) and indemnification (#53, Crossclaims, Count IV). The legal malpractice crossclaim arises out of the representation Weisman, McIntyre and W&M provided to Shelton in the New Hampshire probate case. With respect to the indemnification crossclaim, the Shelton Claimants allege that if Shelton is found liable to Tamposi on her claims for legal malpractice, breach of fiduciary duty or unjust enrichment, then by operation of law and/or as a result of their wrongful acts and/or consequent to an implied duty, Weisman, McIntyre and W&M must fully indemnify them for any damages. ... "The parties spar on a threshold issue: Does the Court have the authority to issue a preliminary injunction freezing assets in the circumstances of this case? "The Shelton Claimants argue that in a 'mixed' case, as here, where both legal and equitable claims are advanced, the issuance of a freeze order is not foreclosed by the Supreme Court decision in Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999). While agreeing generally with the Shelton Claimants' proposition, Weisman, McIntyre and W&M's position is more finely tuned. They contend that while Grupo Mexicano authorizes a court to issue a freeze order in a mixed case, any equitable relief in the form of a preliminary injunction must be in support of the equitable claims alleged. Because the Shelton Claimants are seeking a preliminary injunction in support of their legal malpractice claim, an action at law pursuant to which they seek only an award of monetary damages, and not their indemnification claim, Weisman, McIntyre and W&M assert that Grupo Mexicano mandates the denial of their motion. ... "In the instant case, because the Shelton Claimants are seeking a preliminary injunction based on their legal crossclaim and not on their equitable crossclaim, there is no 'sufficient nexus between a cognizable claim in equity and the assets of the defendant that are the target of the preliminary injunction claim.' ... Moreover, there has been no showing that an asset freeze would 'be a reasonable measure to preserve the status quo in aid of the ultimate equitable relief claimed.' ... "For all the reasons stated, the Court concludes that, under Grupo Mexicano, it is without authority to issue an injunction freezing the assets of Weisman, McIntyre and W&M in aid of the Shelton Claimants' crossclaim for legal malpractice. This is the case despite the presence of an equitable crossclaim since the asset freeze is not sought in aid of that claim. ..." Tamposi v. Denby, et al. (Lawyers Weekly No. 02-731-13) (16 pages) (Collings, U.S.M.J.) (Civil Action No. 2010-12283-RBC) (Dec. 23, 2013). Employment Misclassification - Independent contractors - Delivery drivers Where plaintiff delivery drivers allege that the defendant employers have misclassified the plaintiffs as independent contractors rather than employees, the plaintiffs are entitled to summary judgment as to liability despite the defendants' arguments (1) that the plaintiff do not qualify as 'individuals' under G.L.c. 149, s.148B, and (2) that the state statute is preempted by the Federal Aviation Administration Authorization Act. Employer liability "The plaintiffs perform work for (defendant Home Delivery America (HAD)] by delivering and installing products that customers have bought through Sears and K-Mart stores. (Codefendant Sears Logistics Services (SLS)] provides logistical services in managing home delivery of retail merchandise, but it has outsourced its delivery service in the Massachusetts area to HDA. HDA works out of SLS's warehouse in Westwood. Plaintiffs (Calvin] Anderson, (Murilo] Silva, and (Johnnie] Funches all contracted with HDA to perform delivery services. Each contracted with HDA not directly in his individual capacity but rather through a business form such as a limited liability company or corporation. The drivers drove trucks bearing a Sears logo, wore uniforms with both Sears and HDA logos, and performed deliveries in accordance with daily manifests provided by SLS and HDA. Drivers, such as plaintiffs Anderson, Silva, and Funches, each drove his own truck and also employed and paid a 'helper' to assist in the deliveries. As a helper, plaintiff (Ralston] Johnson did not have a contract with HDA, and he was paid by the driver whom he helped. When under contract, each driver worked full time and exclusively delivering for HDA. ... "HDA does not contest the relevant facts. It instead makes two legal arguments. First, it says that the plaintiffs fall outside the protection of Section 148B because they contracted with HDA through legal entities, and not personally, so that they are not 'individuals' within the meaning of the statute. Second, HDA argues that Section 148B is preempted by the Federal Aviation Administration Authorization Act, 49 U.S.C. s.14501(c)(1) ('FAAAA'). "HDA's first argument depends on the appropriateness of choosing to honor form over substance, so that when Joe Driver drives his truck without incorporating he is an employee, but if he drives his truck under the aegis of Joe Driver, Inc., then he is an independent contractor. But that formalistic distinction is precisely what Section 148B is intended to preclude. As the Massachusetts Attorney General has noted, a principal objective of the law is to prevent potential employers, who would be otherwise subject to the wage statute, Section 148, from avoiding compliance by requiring the persons they contract with to do so under legal forms 'such as LLCs and S corporations.' ... I agree with those courts that have concluded that a worker can qualify as an employee under s.148B 'even if he has incorporated his business, and the employer's formal relationship is with the entity and not the individual.' ... "The inquiry is whether in substance the worker is an employee or a person (or entity) acting genuinely as an independent contractor. There is no convenient bright line to be used, and each case must be determined on its own facts. Recently, in another case I decided that a plaintiff was not an 'individual' within the meaning of Section 148B. Debnam v. FedEx Home Delivery, 2013 WL 5434142 (Sept. 27, 2013). In that case, the plaintiff claiming to be an employee under Section 148B managed multiple delivery routes out of two locations. He owned multiple vehicles and had hired over sixty employees during the course of his contract with FedEx. ... I concluded that under those circumstances he was engaged in a 'legitimate ... business-to-business relationship' (AG Advisory) with FedEx and was therefore not an 'individual' employee within the meaning of the statute. ... "In contrast, the facts of this case show that the plaintiffs do qualify as employees under Section 148B. They worked as individual truck drivers performing full-time personal services exclusively for HDA. They did not manage any delivery operations beyond their personal (individual) work for HDA. HDA also dictated that the drivers were required to hire a helper, who had to wear the Sears and HDA uniform, and undergo drug and background testing performed by HDA. "Johnson, who was a helper, also qualifies as an employee under Section 148B even though he did not directly contract with HDA. The Supreme Judicial Court has held that 'the lack of a contract for service between the putative employer and putative employee does not itself preclude liability under G.L.c. 149, s.148B.' Depianti v. Jan-Pro Franchising Int'l, Inc., 990 N.E.2d 1054, 1069 (Mass. 2013). In Depianti, the question arose in the context of a two-tier franchising arrangement. Jan-Pro, the franchisor, contracted with a 'master franchisee,' which then contracted with a 'unit franchisee,' the plaintiff. Noting that remedial statutes such as Section 148B are 'entitled to liberal construction,' ... the court held that the unit franchisee was not excluded from being considered an employee simply because of the lack of a direct contractual relationship with the franchisor. A helper stands in essentially the same relationship to HDA as the unit franchisee did to the franchisor. HDA makes no further argument with regard to helpers beyond the simple lack of a direct contractual relationship. "HDA also argues, quite briefly, that Section 148B is preempted by the FAAAA because a ruling in the plaintiffs' favor would interfere with its contracting with third party businesses to perform delivery services for it, arguably impinging improperly on federally regulated activity. This is the same categorical error. It is not a proper interpretation of the statute to think that because an individual who incorporates may still be considered an employee, then any incorporated entity must be considered an employee. Section 148 does not interfere with legitimate business-to-business independent contractor relationships but rather seeks to prevent companies from avoiding the Massachusetts wage law with respect to workers who are in substance employees. ... "The final...

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