Depianti v. Jan-Pro Franchising Int'l, Inc., Civ. A. No. 08-10663-MLW

CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
Writing for the CourtWOLF, D.J. Mark L. Wolf UNITED STATES DISTRICT JUDGE
PartiesGIOVANI DEPIANTI, et al., Plaintiffs, v. JAN-PRO FRANCHISING INTERNATIONAL, INC., Defendant.
Docket NumberCiv. A. No. 08-10663-MLW
Decision Date22 August 2014

GIOVANI DEPIANTI, et al., Plaintiffs,
v.
JAN-PRO FRANCHISING INTERNATIONAL, INC., Defendant.

Civ. A. No. 08-10663-MLW

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

August 22, 2014


MEMORANDUM AND ORDER CONCERNING SUMMARY JUDGMENT

WOLF, D.J.

I. OVERVIEW..... 2

II. BACKGROUND..... 6

A. Facts................................................ 6

B. Procedural History.... 8

III. MOTIONS TO AMEND AND SUPPLEMENT THE PLEADINGS.............. 13

A. Plaintiffs' Motion to Amend the Complaint......... 13

B. JPI's Motion to File a Supplemental Answer.......... 16

IV. THE SUMMARY JUDGMENT STANDARD........ 19

V. CROSS-MOTIONS FOR SUMMARY JUDGMENT: COUNTS II AND III......... 21

A. Additional Background.......... 21

B. The GCA's Decision Is Preclusive........ 24

C. The GCA's Decision Is Consistent with Massachusetts Law......... 27

VI. JPI'S MOTION FOR SUMMARY JUDGMENT: COUNTS I AND IV.......... 36

A. Additional Background......... 36

B. General Analysis....... 39

C. Misrepresentation....... 41

D. Unfair and Deceptive Business Practices....... 48

E. The Statute of Limitations....... 61

VII. JPI'S MOTION FOR SUMMARY JUDGMENT: COUNTS V AND VI....... 63

A. Additional Background............................... 63

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B. Quantum Meruit...... 64

C. Unjust Enrichment....... 68

VIII. ORDER....... 71

I. OVERVIEW

This is a putative class action against defendant Jan-Pro Franchising International, Inc. ("JPI"). JPI sits at the top of a three-tiered system of cleaning franchises. It sells the rights to use the "Jan-Pro" name to "regional master franchisees." These regional master franchisees sell the rights to use the Jan-Pro name to "unit franchisees," who perform cleaning services for customers. The regional master franchisees also solicit business for the unit franchisees and manage the process of billing the customers.

The named plaintiffs are seven unit franchisees from four states. The six-count Amended Complaint (the "Complaint") claims, in essence, that plaintiffs and others similarly situated were misled into entering into agreements that improperly classified them as independent contractors when, as a matter of law, they were employees. Plaintiffs also allege that the terms of the agreements they signed were inherently unfair, and that these terms were systematically breached. Plaintiffs assert claims of unfair and deceptive business practices (Count I); misclassification as independent contractors (Count II),

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along with related wage-law violations (Count III); misrepresentation (Count IV); quantum meruit (Count V); and unjust enrichment (Count VI).1

The proceedings to date have focused on plaintiff Giovani Depianti of Somerville, Massachusetts. The court certified three questions to be answered by the Massachusetts Supreme Judicial Court (the "SJC"). The SJC has issued its answers to these questions. In addition, concurrent proceedings between the parties in the Georgia state courts have culminated in a decision in JPI's favor.

JPI moves for summary judgment on all counts. Plaintiffs move for summary judgment on Count II only, as to Depianti only. In addition, plaintiffs move to amend their complaint to add new named plaintiffs to the proceedings. JPI also moves to assert preclusion defenses that were not identified in its answer to the Complaint. For the reasons explained in this Memorandum, the court is deciding these motions as follows.

The court is allowing JPI's motion to assert a preclusion defense, in essence because the doctrines concerning preclusion implement important considerations of comity between competent

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courts. Conversely, because plaintiffs' motion to amend the complaint does not implicate the same considerations, and because it is unduly prejudicial at this late stage of the litigation, this motion is being denied.

Plaintiffs' motion for summary judgment is being denied, and JPI's motion for summary judgment is being allowed in part and denied in part, as follows.

First, the court is entering summary judgment for JPI on Counts II and III of the Complaint, which allege misclassification as independent contractors and related wage-law violations. The Georgia Court of Appeals (the "GCA") has determined that, as a matter of Massachusetts law, JPI is not Depianti's employer. Under the applicable federal doctrines concerning preclusion, the GCA's decision is binding on this court. Moreover, the court concludes that the GCA's decision is consistent with Massachusetts law, as explicated by the SJC.

Counts I and IV of the complaint allege unfair and deceptive business practices under Massachusetts General Laws Chapter 93A ("Chapter 93A") and misrepresentation. JPI is entitled to summary judgment as to some, but not all, of the allegations made in these counts. These counts rely on a theory of vicarious liability, according to which JPI is liable for the conduct of its regional master franchisee in eastern

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Massachusetts, BradleyMktg Enterprises, Inc. ("BME"). Under Massachusetts law, as developed by the SJC, JPI is liable for BME's conduct if: (a) that conduct was actionable, and (b) JPI controlled, or had a right to control, the specific actionable policy or practice. A reasonable fact finder could find that JPI has the right to control one practice alleged in the Complaint -- the contracts that BME makes with its unit franchisees. Count IV of the Complaint alleges, among other things, that the terms of these contracts are inherently unfair in a manner actionable under Chapter 93A. This part of Count IV is, therefore, surviving summary judgment. JPI will, however, be permitted to argue at a later date that Depianti's surviving 93A claim is barred by the applicable statute of limitations, as this issue has not yet been developed sufficiently. Summary judgment is entering in JPI's favor on the other parts of Count IV and on all of Count I.

JPI is also entitled to summary judgment on Count V of the Complaint, which asserts a claim in quantum meruit. As a matter of law, this claim can only succeed if Depianti expected to be remunerated by JPI, and plaintiffs have conceded that Depianti did not have such an expectation.

This element of expectation to be remunerated is not required under the cause of action asserted in Count VI of the

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Complaint, unjust enrichment. JPI's argument for summary judgment on this count is, therefore, not meritorious. However, since unjust enrichment is an equitable doctrine, JPI will be permitted to argue at a later date that Depianti is not entitled to recover under this doctrine because an adequate remedy is available to him at law.

II. BACKGROUND

A. Facts

The following facts are generally not disputed. Factual disputes are discussed separately below.

JPI is a Massachusetts corporation with headquarters in Alpharetta, Georgia. JPI has trademarked the "Jan-Pro" name, and it sells the rights to used this name in specified geographic areas to regional master franchisees.

The regional master franchisees, which are separate corporate entities from JPI, acquire the exclusive rights to sell unit franchises in their respective territories. JPI provides each new regional master franchisee with several days of training. Each regional master franchisee is then provided with sample marketing materials and with electronic templates that may be used for various managerial purposes. Regional master franchisees pay JPI a fee for each unit franchise they sell. They also remit to JPI a percentage of the revenue that

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they collect for the cleaning work performed by their unit franchisees.

Regional master franchisees provide their unit franchisees with some initial training. Thereafter, they perform three basic services for the unit franchisees: they solicit cleaning accounts and offer them to the unit franchisees; they bill the customers for work performed by the unit franchisees and collect payment from the customers; and they distribute the revenue to unit franchisees. JPI does not perform these services.

The agreements between JPI and the regional master franchisees provide that the regional master franchisees are independent contractors, not agents or fiduciaries of JPI. JPI visits its regional master franchisees' offices no more than annually. Regional master franchisees are responsible for their own accounting, which JPI does not monitor. They may choose whether or not to advertise and, except for the requirement that they use the Jan-Pro logo, the content of any such advertising.

Unit franchisees may be individuals or corporations. The agreements between the regional master franchisees and each unit franchisee, like the agreements between JPI and each regional master franchisee, state that the unit franchisee is an independent contractor, not an agent or employee of the regional master franchisee. Unit franchisees control their own marketing

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and bookkeeping. They are permitted to hire employees, and some do so.

Every new unit franchisee is guaranteed, in its agreement with the regional master franchisee, a volume of cleaning...

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