Depianti v. Jan-Pro Franchising Int'l, Inc.

• Decision Date: 17 June 2013
• Docket Number: SJC–11282.
• Citation: 465 Mass. 607,990 N.E.2d 1054
• Parties: Giovani DEPIANTI & others v. JAN–PRO FRANCHISING INTERNATIONAL, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

465 Mass. 607

990 N.E.2d 1054

Giovani DEPIANTI & others ¹

v.JAN–PRO FRANCHISING INTERNATIONAL, INC.

SJC–11282.

Supreme Judicial Court of Massachusetts,

Suffolk.

Submitted Feb. 5, 2013.

Decided June 17, 2013.

Shannon Liss–Riordan (Stephen S. Churchill with her) for the plaintiffs.

Jeffrey M. Rosin (Christopher M. Pardo with him), Boston, for the defendant.

Benjamin B. Reed & James C. Rubinger, of Virginia, for International Franchise Association, amicus curiae, submitted a brief.

Catherine Ruckelshaus, of New York, Eunice Hyunhye Cho, of California, & Audrey Richardson for Brazilian Immigrant Center & others, amici curiae, submitted a brief.

Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, GANTS, DUFFLY, & LENK, JJ.

LENK, J.

Giovani Depianti, a janitorial cleaning services franchisee, along with franchisees from other States, filed this putative class action in the United States District Court for the District of Massachusetts against the defendant, Jan–Pro Franchising International, Inc. (Jan–Pro). Depianti alleges, inter alia, that Jan–Pro misclassified him as an independent contractor, see G.L. c. 149, § 148B, and committed various wage law violations. A judge of the United States District Court for the District of Massachusetts certified the following questions to this court, pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981):

“[1.] Whether a plaintiff's failure to exhaust administrative remedies pursuant to [G.L. c. 149, § 150,] by filing a complaint with the Attorney General deprives a court of jurisdiction to consider the plaintiff's claims under [G.L. c. 149, §§ 148, 148B, and 150,] and under [G.L. c. 151, §§ 1 and 1A].

“[2.] Whether and how to apply the ‘right to control test’ for vicarious liability to the franchisor-franchisee relationship....

“[3.] Whether a defendant may be liable for employee misclassification under [G.L. c. 149, § 148B,] where there was no contract for service between the plaintiff and defendant.”

We answer the first question, “No.” We answer the second question, “Yes,” with further discussion concerning the application of the “right to control test” to the franchisor-franchisee relationship. We answer the third question, “Yes.” ²

1. Background. Jan–Pro is a Massachusetts corporation “in the business of operating and franchising comprehensive cleaning and maintenance businesses.” It sells regional rights to use the Jan–Pro brand to so-called “regional master franchisees.” Upon purchasing these rights, regional master franchisees become the exclusive franchisors of the Jan–Pro brand within defined geographic areas. Regional master franchisees, in turn, sell the right to use the Jan–Pro brand to so-called “unit franchisees,” who perform cleaning services for customers. Unit franchisees are provided with customer accounts by regional master franchisees, though unit franchisees may solicit additional business on their own. All customer accounts so obtained become the property of regional master franchisees.

Regional master franchisees invoice customers directly and receive payment for cleaning services rendered by unit franchisees.They deduct certain fees from the gross revenue collected and remit the balance to unit franchisees. They pay a portion of the fees deducted from the gross revenue to Jan–Pro, in the form of royalties.³

Depianti contracted with BradleyMktg Enterprises, Inc. (Bradley), a Jan–Pro regional master franchisee operating in Massachusetts, to purchase a Jan–Pro unit franchise.⁴ He performed cleaning services under the Jan–Pro name from approximately June, 2003, through December, 2006. In 2008, he filed a putative class action against Jan–Pro in the United States District Court for the District of Massachusetts, alleging unfair and deceptive business practices in violation of G.L. c. 93A; misclassification as an independent contractor in violation of G.L. c. 149, § 148B; various wage law violations pursuant to G.L. c. 149, §§ 148 and 150, and G.L. c. 151, §§ 1 and 1A; intentional or negligent misrepresentation; quantum meruit; and unjust enrichment.⁵ Depianti's claims of unfair and deceptive business practices and misrepresentation are based in part on alleged conduct of Bradley, not Jan–Pro, and therefore depend on Jan–Pro being held vicariously liable for the conduct of Bradley, its franchisee.⁶ By contrast, Depianti's misclassification and wage claims allege direct, rather than vicarious, liability.

Jan–Pro sought summary judgment as to all claims, and Depianti moved for partial summary judgment on the misclassification claim. After a hearing on the parties' motions, the United States District Court judge stated his intention to certify the second and third questions, set forth supra, to this court, and invited comment by the parties.

Jan–Pro thereafter argued that the misclassification claim should be dismissed, because Depianti neglected to file a complaint with the Attorney General pursuant to G.L. c. 149, § 150 (§ 150),⁷ before initiating his action, thereby failing to exhaust his administrative remedies. ⁸ The United States District Court judge determined that Jan–Pro had waived this argument by not raising it earlier in the litigation. However, pursuant to his independent obligation to ensure the United States District Court's jurisdiction, see FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990), the judge added the first question, set forth supra, to his certification order, to determine whether Depianti's failure to file a complaint with the Attorney General before bringing suit deprived the United States District Court of jurisdiction over his misclassification and wage claims.⁹

[465 Mass. 611]2. Discussion. a. Failure to file with the Attorney General. The first reported question asks, “Whether a plaintiff's failure to exhaust administrative remedies pursuant to [§ 150] by filing a complaint with the Attorney General deprives a court of jurisdiction to consider the plaintiff's claims under [G.L. c. 149, §§ 148, 148B, and 150,] and under [G.L. c. 151, §§ 1 and 1A].” To this question, we answer, “No.”

Pursuant to § 150, an individual alleging a violation of G.L. c. 149, § 148 or 148B, may bring a private civil action ninety days after filing a complaint with the Attorney General, or sooner if the Attorney General assents to such suit.¹⁰ Here, Depianti neglected to submit a complaint to the Attorney General before commencing his private action against Jan–Pro. As stated, however, the United States District Court judge ruled that Jan–Pro waived its objection to this procedural defect. Therefore, Depianti's failure first to file with the Attorney General is fatal to his misclassification and wage claims only if such failure deprives the United States District Court of jurisdiction. See FW/PBS, Inc. v. Dallas, supra (Federal court has independent duty to ensure its own jurisdiction).

In determining whether a procedural defect deprives a court of jurisdiction to hear a claim, we consider (1) to what extent the defect interferes with the “accomplishment of the purposes implicit in the statutory scheme,” and (2) to what extent the opposing party can “justifiably claim prejudice.” Schulte v. Director of the Div. of Employment Sec., 369 Mass. 74, 79–80, 337 N.E.2d 677 (1975). Here, Depianti's failure to file a complaint with the Attorney General before initiating his action neither interfered with the accomplishment of the purposes implicit in § 150 nor prejudiced Jan–Pro.

The purposes implicit in § 150 are twofold. The first paragraph of § 150 authorizes, but does not require, the Attorney General to bring criminal charges for alleged violations of G.L. c. 149, § 148, the wage statute. G.L. c. 149, § 150. The second paragraph permits an individual alleging violations of certain employment statutes to bring a private suit for damages, but requires that such individual first file a complaint with the Attorney General. Id. Thus, § 150 establishes a permissive, two-tiered framework for enforcement: it permits both criminal enforcement of wage violations and private civil enforcement of wage and other employment violations. See id. See also G.L. c. 149, § 27C (authorizing Attorney General to enforce various employment statutes, including G.L. c. 149, §§ 148 and 148B, and G.L. c. 151, §§ 1A and 1B, either civilly or criminally).

The Attorney General's right to enforce G.L. c. 149 and the right of private citizens to enforce provisions of that chapter represent parallel and distinct enforcement mechanisms. See Melia v. Zenhire, Inc., 462 Mass. 164, 172, 967 N.E.2d 580 (2012). The requirement that a plaintiff file a complaint with the Attorney General before bringing a private suit is intended simply to ensure that the Attorney General receives notice of the alleged violations, so that she may investigate and prosecute such violations at her discretion. See Nahigian v. Leonard, 233 F.Supp.2d 151, 164 (D.Mass.2002) ( “the purpose of Section 150's administrative requirement, rather than giving potential defendants notice and an opportunity to conciliate, seems to be to give the Attorney General notice that a crime [failure to pay wages] may be occurring”). In this way, the statute ensures that private actions for wage violations do not come and go without the Attorney General ever being made aware of the alleged unlawful conduct.

The Massachusetts antidiscrimination statute, G.L. c. 151B, offers a helpful contrast. That statute includes a similarly worded procedural requirement, permitting aggrieved individuals to bring private actions “at the expiration of ninety days after the filing of a complaint with the [Massachusetts Commission Against Discrimination (MCAD) ], or sooner if a commissioner assents in writing.” G.L. c. 151B, § 9. However, the filing of a complaint with MCAD triggers mandatory “prompt investigation” by that agency. G.L. c. 151B, § 5. After such investigation, if MCAD determines that there is...