Cossart v. United Excel Corp.

• Decision Date: 30 September 2015
• Docket Number: No. 14–2144.,14–2144.
• Parties: William COSSART, Plaintiff, Appellant, v. UNITED EXCEL CORPORATION and Ky Hornbaker, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

804 F.3d 13

William COSSART, Plaintiff, Appellant

v.UNITED EXCEL CORPORATION and Ky Hornbaker, Defendants, Appellees.

No. 14–2144.

United States Court of Appeals, First Circuit.

Sept. 30, 2015.

Kevin T. Smith, with whom Law Office of Kevin T. Smith LLC was on brief, for appellant.

Marissa I. Delinks, with whom Hinshaw & Culbertson LLP was on brief, for appellees.

Before THOMPSON, KAYATTA, and BARRON, Circuit Judges.

Opinion

BARRON, Circuit Judge.

This case presents a question about the limits of personal jurisdiction. The issue arises in connection with a lawsuit brought in Massachusetts concerning an alleged breach of an employment contract. The contract contemplated that the employee would work from Massachusetts for a Kansas company, which then facilitated the employee's work from Massachusetts by, among other things, providing him with equipment and officially registering a sales office with the Commonwealth. The employee sued after the company failed to pay him a commission that he alleges he was due. Under the facts presented, we conclude that the assertion of jurisdiction over the company and its president is consistent with both the Massachusetts long-arm statute and the Due Process Clause. We therefore reverse the District Court's dismissal for lack of personal jurisdiction and remand for further proceedings.

I.

United Excel Corporation, the employer and one of the two defendant-appellees, is a so-called “design/build” company that provides architectural and construction management services to hospitals.¹ It is incorporated and headquartered in Kansas. William Cossart, the plaintiff-appellant, worked for the company as a salesman. He resides in Wayland, Massachusetts.

United Excel recruited Cossart in 2010. At that time, Cossart traveled from his home in Massachusetts to United Excel's offices in Kansas. There, he negotiated an employment contract with, among others, Ky Hornbaker, United Excel's president and the other defendant in this case.

That first employment contract assumed that Cossart would continue to work out of his home in Wayland, Massachusetts. United Excel memorialized the contract in a letter addressed to Cossart in Wayland. The letter stated that United Excel would provide Cossart with the business equipment that he would need to work from Wayland, such as a computer, a printer, a cell phone, and video conference equipment. United Excel also provided Cossart with a business telephone number with a Kansas exchange and redirected calls made to that number to Cossart's phone in Wayland. And United Excel, acting through Hornbaker, registered with Massachusetts to establish a “[g]eneral contracting sales office” in the state just a day after Cossart started his new job with United Excel in Wayland.

In 2012, United Excel and Cossart changed Cossart's employment contract to make him a “commission only employee,” while leaving the other terms of his employment unaltered. United Excel once again memorialized the employment contract in a letter sent to Cossart at his Wayland address. And the new agreement, like the old, allowed Cossart to use home office equipment provided by United Excel to facilitate his remote employment. United Excel also continued to keep its registration up to date in Massachusetts.

Over the course of his employment, Cossart made hundreds of telephone calls and sent hundreds of e-mails on behalf of United Excel from his Wayland office. He had numerous meetings and made cold calls in an effort to solicit business from various hospitals in Massachusetts, but he did not successfully secure business with a Massachusetts client.

An attempt to secure an out-of-state client, however, led to the present action. In October 2013, Cossart, working from Massachusetts and under the second employment contract, identified a potential deal in which United Excel would be retained by a hospital in California. Cossart then contacted the California hospital from his home in Wayland “numerous” times by phone and e-mail in the course of trying to secure that deal. Cossart also traveled from Massachusetts to California for “several” in-person meetings.

When execution of the contract for the work for the California hospital was “imminent,” Cossart contacted Hornbaker to discuss Cossart's belief that United Excel would owe him a $219,000 commission under the second employment contract for his work in securing the deal with the California hospital. Hornbaker responded by phone and e-mail that he would not consummate the California deal unless Cossart agreed to accept a commission of only $62,000.

When Cossart refused to accept the lower commission, United Excel rescinded its offer on the California contract, and Hornbaker fired Cossart. Cossart then brought this action in a Massachusetts state court against United Excel and Hornbaker. The complaint alleged that the defendants violated the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148,² by refusing to pay Cossart the compensation owed to him under the second employment contract for his efforts to secure the deal with the California hospital.

The defendants removed the case to federal district court on the basis of diversity jurisdiction and then moved to dismiss for lack of personal jurisdiction over both United Excel and Hornbaker. The District Court granted the motion, and Cossart now appeals.

II.

“Where, as here, a district court dismisses a case for lack of personal jurisdiction based on the prima facie record, rather than after an evidentiary hearing or factual findings, our review is de novo.” C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir.2014). In undertaking that review, “we take the plaintiff's evidentiary proffers as true and construe them in the light most favorable to the plaintiff's claim, and we also consider uncontradicted facts proffered by the defendant.” Id. As the plaintiff, Cossart “bears the burden of establishing that the district court has personal jurisdiction over [the defendants].” Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir.2007).

III.

“In determining whether a non-resident defendant is subject to its jurisdiction, a federal court exercising diversity jurisdiction is the functional equivalent of a state court sitting in the forum state.” Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.1995). Thus, in order to establish personal jurisdiction over the defendants, Cossart must meet the requirements of both the Massachusetts long-arm statute and the Due Process Clause of the Fourteenth Amendment. The requirements of the Massachusetts long-arm statute are similar to—although not necessarily the same as—those imposed by the Due Process Clause. See Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 389 N.E.2d 76, 80 (1979) (“Although presented with jurisdictional facts sufficient to survive due process scrutiny, a judge would be required to decline to exercise jurisdiction if the plaintiff was unable to satisfy at least one of the statutory prerequisites.”); Burtner v. Burnham, 13 Mass.App.Ct. 158, 430 N.E.2d 1233, 1235–36 (1982) (“It now appears to be recognized that application of [the Massachusetts long-arm statute] requires that (even if the fact pattern of the case is constitutionally acceptable) the circumstances of the particular case come within one of the specific subsections of [the Massachusetts long-arm statute].”). We start by considering whether that statute reaches the two defendants, United Excel and Hornbaker.

A.

Section 3(a) of the Massachusetts long-arm statute provides that “[a] court may exercise personal jurisdiction over a person ... as to a cause of action in law or equity arising from the person's ... transacting any business in this commonwealth.” Mass. Gen. Laws ch. 223A, § 3(a). We must “construe[ ] the ‘transacting any business' language of the statute in a generous manner,” and, in applying the clause to these facts, we must focus on “whether the defendant[s] attempted to participate in the commonwealth's economic life.” United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1087 (1st Cir.1992). In deciding whether a claim “aris[es] from” a defendant's “transacting business,” moreover, we look to see whether the transacted business was a “but for” cause of the harm alleged in the claim. See Tatro v. Manor Care, Inc., 416 Mass. 763, 625 N.E.2d 549, 551 (1994).

Here, United Excel recruited and hired Cossart, a Massachusetts resident, as an employee; registered a sales office with the Commonwealth in order to facilitate his work for the company; and retained him as a Massachusetts-based employee for a period of years. Moreover, Hornbaker personally negotiated the employment contract that contemplated that this employee would work out of Massachusetts and signed the certificate of registration that established the United Excel sales office in Massachusetts.

Those facts would seem to show—in straightforward fashion—that each defendant “attempted to participate in the commonwealth's economic life.” United Elec., Radio & Mach. Workers of Am., 960 F.2d at 1087. But the District Court concluded otherwise, and thus held that the “transacting any business” requirement of Section 3(a) was not met.

With respect to United Excel, the District Court based its conclusion on Tatro, 625 N.E.2d at 551–52, and its reading of the statement in that case that “[g]enerally the purposeful and successful solicitation of business from residents of the Commonwealth ... will suffice to satisfy” the “transacting any business” requirement of Section 3(a). See Cossart v. United Excel Corp., No. 14–10307–GAO, 2014 WL 4927041, at *1 (D.Mass. Sept. 30, 2014). The District Court concluded that because Cossart never secured business from a Massachusetts client, and thus “[could not] show that any of [United Excel]'s attempts to transact business in the Commonwealth were successful,” Section 3(a) provided no basis for jurisdiction over United Excel. Id.

But Tatro does not hold that...