Taylor v. E. Connection Operating, Inc.

• Decision Date: 17 May 2013
• Docket Number: SJC–11222.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Judith Ann TAYLOR & others v. EASTERN CONNECTION OPERATING, INC.

465 Mass. 191

988 N.E.2d 408

Judith Ann TAYLOR & others ¹

v.EASTERN CONNECTION OPERATING, INC.

SJC–11222.

Supreme Judicial Court of Massachusetts,

Middlesex.

Argued Jan. 8, 2013.

Decided May 17, 2013.

Shannon Liss–Riordan (James W. Simpson, Jr., with her) for the plaintiffs.

Robert R. Berluti, Boston, for the defendant.

Danielle Y. Vanderzanden, Boston, for National Federation of Independent Business Small Business Legal Center, amicus curiae, submitted a brief.

Audrey R. Richardson, Roslindale, for Brazilian Immigrant Center & others, amici curiae, submitted a brief.

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

LENK, J.

The question presented in this case is whether, in the circumstances, individuals who live and work outside of Massachusetts for a corporation headquartered in Massachusetts may bring an action in a Massachusetts court to enforce certain Massachusetts independent contractor, wage, and overtime pay statutes. Insofar as the written contract between the parties contains an enforceable clause requiring both that actions be brought in Massachusetts and that the “Contract and all rights and obligations of the parties” be determined under Massachusetts law, and where application of Massachusetts law is not contrary to a fundamental policy of the jurisdiction where the individuals live and work, we conclude that it was error to dismiss the plaintiffs' complaint.²

1. Background. We recite the facts alleged in the complaint, accepting as true such facts, as well as any reasonable inferences drawn therefrom. See Mass. R. Civ. P. 12(b)(1), (6), 365 Mass. 754 (1974); Ginther v. Commissioner of Ins., 427 Mass. 319, 322, 693 N.E.2d 153 (1998).

The plaintiffs, Judith Ann Taylor, Gardner Taylor, and Donald Wellington, are individuals who live in New York and work there as couriers for the defendant, Eastern Connection Operating, Inc., a corporation headquartered in Woburn, Massachusetts. The defendant is in the business of delivering packages in various States along the East Coast, including Massachusetts and New York.

The plaintiffs entered into identical contracts (collectively, the contract) with the defendant to perform package pickup and delivery services exclusively in New York.³ Under the language of the contract, the plaintiffs are classified as “independent contractors” and the defendant is classified as a “broker” arranging transportation services. The contract also includes the following clause: “This Contract and all rights and obligations of the parties shall be construed in accordance with the laws where the Broker is headquartered and any action shall be commenced in that jurisdiction in the closest [S]tate court.” ⁴

In 2010, the plaintiffs brought this action in the Superior Court on behalf of themselves and other similarly situated individuals. They alleged that the defendant had misclassified them as independent contractors rather than as employees, in violation of G.L. c. 149, § 148B, the Massachusetts independent contractor statute. They also alleged that the defendant failed to pay them wages and overtime in violation of G.L. c. 149, § 148, the Massachusetts wage statute, and G.L. c. 151, § 1A, the Massachusetts overtime statute (collectively, the Massachusetts wage statutes).

The defendant moved to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. See Mass. R. Civ. P. 12(b)(1), (6). The judge allowed the motion, concluding that the Massachusetts independent contractor statute does not apply to non-Massachusetts residents working outside Massachusetts, and, therefore, that the plaintiffs cannot be reclassified as employees pursuant to that statute. He determined also that, as independent contractors, the plaintiffs failed to state claims under the Massachusetts wage statutes, since those statutes apply only to employees. See G.L. c. 149, § 148; G.L. c. 151, § 1A.

2. Discussion. a. Forum selection. As an initial matter, we observe that the plaintiffs properly brought their claims against the defendant in the Superior Court. Because the contract states that it is to be construed according to the laws of Massachusetts, we determine the validity of the forum selection clause in accordance with Massachusetts law. See Melia v. Zenhire, Inc., 462 Mass. 164, 168, 967 N.E.2d 580 (2012), citing Jacobson v. Mailboxes Etc.U.S.A., Inc., 419 Mass. 572, 575, 646 N.E.2d 741 (1995). “Massachusetts courts enforce forum selection clauses so long as they are fair and reasonable.” Melia v. Zenhire, Inc., supra at 182, 967 N.E.2d 580, citing Jacobson v. Mailboxes Etc. U.S.A., Inc., supra at 574–575, 646 N.E.2d 741. “The opponent of a forum selection clause bears the ‘substantial burden’ of showing that enforcement of a forum selection clause would be unfair and unreasonable.” Melia v. Zenhire, Inc., supra, quoting Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 133, 740 N.E.2d 195 (2000).

Here, the contract states that “any action shall be commenced in that jurisdiction [where the defendant is headquartered] in the closest [S]tate court.” Since the defendant drafted the forum selection clause presumably for its own convenience, see note 4, supra, there is nothing unfair or unreasonable about enforcing that clause in the present circumstances. Further, Massachusetts courts undoubtedly have personal jurisdiction over the defendant, which is headquartered in the Commonwealth, see G.L. c. 223A, § 2, and the Superior Court has subject matter jurisdiction over disputes of this nature. See G.L. c. 212, §§ 3, 4. The question then becomes which State's law the Superior Court should apply in deciding the plaintiffs' claims.

b. Choice of law. i. Misclassification claim. The plaintiffs' first claim, and the claim on which their other claims are predicated, is that the defendant misclassified them as independent contractors when they are, in fact, employees. Specifically, the plaintiffs invoke the protections of the Massachusetts independent contractor statute.⁵ They argue that the choice-of-law clause in the contract requires the application of Massachusetts law to their claims. The defendant contends that the Massachusetts independent contractor statute does not apply to the plaintiffs, who live and work exclusively in New York. We must consider whether, in the circumstances, the parties' express choice of Massachusetts law is controlling.⁶

In assessing which State's law to apply to the plaintiffs' misclassification claim, “we look to our established ‘functional’ choice of law principles and to the Restatement (Second) of Conflict of Laws [ (1971) ] [ (Restatement) ], with which those principles generally are in accord.” Hodas v. Morin, 442 Mass. 544, 549, 814 N.E.2d 320 (2004), quoting Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass. 622, 631–632, 473 N.E.2d 662 (1985). Where, as here, the parties have expressed a specific intent as to the governing law,⁷ Massachusetts courts generally uphold the parties' choice.⁸ See Steranko v. Inforex, Inc., 5 Mass.App.Ct. 253, 260, 362 N.E.2d 222 (1977).

Under the Restatement, if the particular issue to which the choice-of-law clause is being applied is “one which the parties could have resolved by an explicit provision in [the contract] directed to that issue,” Restatement, supra at § 187(1), the parties' choice of law should be upheld, on the theory that, where permissible, the parties “may incorporate into the contract by reference extrinsic material which may, among other things, be the provisions of some foreign law.” Id. at § 187 comment c.

If, however, the particular issue to which the choice-of-law clause is being applied is “one which the parties could not have resolved by an explicit provision” in the contract, the parties' choice of law should be upheld, unless (1) “the chosen [S]tate has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice,” or (2) “application of the law of the chosen [S]tate would be contrary to a fundamental policy of a [S]tate which has a materially greater interest than the chosen [S]tate in the determination of the particular issue and which ... would be the state of the applicable law in the absence of an effective choice by the parties.” Restatement, supra at § 187(2). See Feeney v. Dell Inc., 454 Mass. 192, 206, 908 N.E.2d 753 (2009), quoting Hodas v. Morin, supra at 550, 814 N.E.2d 320, quoting Restatement, supra. See also L.L. McDougal, III, R.L. Felix, & R.U. Whitten, American Conflicts Law § 137 (5th ed. 2001).

Here, the parties expressed a specific intent that the contract be construed in accordance with Massachusetts law. The particular issue—whether the plaintiffs were independent contractors or employees—is not one the parties could resolve with an explicit provision in the contract, as, under either New York or Massachusetts law, a court could conclude that the plaintiffs were employees regardless of their classification under the language of the contract. See G.L. c. 149, § 148B ( a ); Scott v. Massachusetts Mut. Life Ins. Co., 86 N.Y.2d 429, 433, 633 N.Y.S.2d 754, 657 N.E.2d 769 (1995), quoting Matter of Ted Is Back Corp. (Roberts), 64 N.Y.2d 725, 726, 485 N.Y.S.2d 742, 475 N.E.2d 113 (1984). Therefore, we apply the “two-tiered analysis” of § 187(2). Hodas v. Morin, supra at 550, 814 N.E.2d 320.

First, because the defendant is headquartered in Massachusetts, “we readily conclude that Massachusetts has a ‘substantial relationship’ to the transaction.” Id., quoting Restatement, supra at § 187(2)(a).

Second, even if we were to assume that New York has a greater interest in the determination of the issue, and that New York law would apply in the absence of an effective choice by the parties, application of Massachusetts law would not in any event contravene a fundamental policy of New York. See Restatement, supra at § 187(...