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Vargas v. Spirit Delivery & Distribution Services, Inc.

United States District Court, D. Massachusetts

March 24, 2017

RAMONE E. VARGAS, RANDY FLAMBO, and GARRY, individually and on Behalf of a class of similarly Situated individuals, Plaintiffs,




         Ramone E. Vargas (“Vargas”), Randy Flambo (“Flambo”) and Gary Civil (“Civil” or “Plaintiff”) filed suit against Spirit Delivery & Distribution Services, Inc. (“Spirit” or “Defendant”) alleging claims for violation of the independent contractor provision of the Massachusetts Wage Act, Mass.Gen.L. ch. 149, §148 (the “MWA”), unjust enrichment and quantum meruit. More specifically, Plaintiffs, who worked as a delivery drivers, allege that as a result of unlawfully characterizing them as independent contractors rather than employees, Spirit has deprived them of various rights and benefits to which they are entitled. Plaintiffs further alleges that as a result of mischaracterizing the nature of their employment, Spirit has made illegal deductions from their wages and been unjustly enriched. Plaintiffs sue on behalf of themselves and other similarly situated individuals. Spirit filed cross-claims against Vargas, Flambo and Civil for indemnification.[1]

         This Memorandum of Decision and Order addresses Plaintiffs' Motion For Class Certification (Docket No. 59), Defendant's Motion for Summary Judgment (Docket No. 108), and Plaintiffs' Motion for Partial Summary Judgment (Docket No. 112)[2]. For the reasons set forth below, the motion for class certification is granted; Defendants' motion for summary judgment is granted, in part, and denied, in part; and the motion for partial summary judgment filed by the surviving Plaintiff, Civil, is denied.

         The Parties' Cross-Motions For Summary Judgment Standard of Review

         Summary Judgment is appropriate where, “the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Carroll v. Xerox Corp., 294 F.3d 231, 236 (1st Cir. 2002) (citing Fed.R.Civ.P. 56(c)). “ ‘A “genuine” issue is one that could be resolved in favor of either party, and a “material fact” is one that has the potential of affecting the outcome of the case.' ” Sensing v. Outback Steakhouse of Florida, LLC, 575 F.3d 145, 152 (1st Cir. 2009) (quoting Calero-Cerezo v. U.S. Dep't. of Justice, 355 F.3d 6, 19 (1st Cir. 2004)).

         When considering a motion for summary judgment, the Court construes the record in the light most favorable to the nonmoving party and makes all reasonable inferences in favor thereof. Sensing, 575 F.3d at 153. The moving party bears the burden to demonstrate the absence of a genuine issue of material fact within the record. Id., at 152. “ ‘Once the moving party has pointed to the absence of adequate evidence supporting the nonmoving party's case, the nonmoving party must come forward with facts that show a genuine issue for trial.' ” Id. (citation to quoted case omitted). “ ‘[T]he nonmoving party “may not rest upon mere allegations or denials of the [movant's] pleading, but must set forth specific facts showing that there is a genuine issue of material fact as to each issue upon which [s/he] would bear the ultimate burden of proof at trial.” Id. (citation to quoted case omitted). The nonmoving party cannot rely on “conclusory allegations” or “improbable inferences”. Id. (citation to quoted case omitted). “ ‘The test is whether, as to each essential element, there is “sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” ' ” Id. (citation to quoted case omitted). “Cross-motions for summary judgment require the district court to ‘consider each motion separately, drawing all inferences in favor of each non-moving party in turn.' ” Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014)(citation to quoted case omitted).

         Findings of Fact

         Spirit is a property broker authorized by the U.S. Department of Transportation Federal Motor Carrier Safety Administration to perform services in instate commerce. Spirit provides end-to-end supply chain logistics solutions for its customers. Spirit advertises that it specializes in appliance home delivery, furniture home delivery, and electronic home delivery. Spirit employs approximately forty (40) employees in Massachusetts who perform warehouse operations and clerical or managerial functions. However, Spirit does not transport, deliver, or install its customers' products. Instead, it contracts with motor carriers (also referred to herein as “contractors” or “deliverers”) that provide trucks and labor necessary to effectuate endpoint deliveries for its customers.

         In June 2011, prior to entering into a business relationship with Spirit, Civil formed Civil Delivery LLC (“Civil Delivery”). Civil is a fifty percent (50%) owner of Civil Delivery and a manager/member of the company. Civil's wife, Maria Civil, owns the other fifty percent (50%) of the company. Civil and/or his company performed work for Spirit from August 2012 to October 2012, five to six days per week, delivering and installing Macy's products. Spirit required Civil's company, Civil Delivery, to sign a Settlement Carrier Contract (“Carrier Contract”), which classified him as independent contractor, and mandated that he incorporate. In June 2012, Maria Civil signed a Carrier Contract with Spirit on behalf of Civil Delivery. Civil operated multiple trucks, one of which he drove; he recruited and hired others to drive the other trucks operated by Civil Delivery. Prior to contracting with Spirit, Civil Delivery contracted with Home Delivery Link, a competitor of Spirt, to provide transportation and delivery services. Prior to 2012, Home Delivery Link had a contract with Macy's to provide home delivery service. In 2012, Macy's changed service providers from Home Delivery Link to Spirit and at that time, Civil/Civil Delivery entered into a relationship with Spirit. During the time period that he worked for Spirit, Civil did not receive any wages, earnings, or other income from any entity other than Spirit. Civil did not advertise his company, he had no website, and no business cards. Through 2014, Civil Delivery contracted with various companies to provide delivery services.

         Those companies included Eletto Trucking, 3PD, New England Retailers Express, and Bob's Furniture. Civil hire seven individual drivers or helpers and leased or purchased three trucks, which Civil Delivery operated simultaneously.

         Delivery vehicles were either leased or owned by the contractors. Delivery vehicles were leased through agreements with third parties such as Penske, Ryder and Enterprise. Spirit would, at times, facilitate payment of the lease obligations to the third parties and deduct that amount from the contractors' checks. If the drivers used trucks that they own, Spirit inspected each truck and enforced specifications such as size, color, and the age of the truck. Many of the specifications were imposed by Spirit's customers who required the trucks used by the contractors to have a certain appearance, frequently requiring the drivers to stencil their logo (e.g., Macy's or General Electric) on the truck trailer. Civil's truck only had a Macy' logo; he could not put the logo of his own “company” on the truck. Spirit informed Civil that the truck that he owned did not meet its standards and prohibited him from using it. Specifically, Civil was told he could not use the truck because it was not in compliance with U.S. Department of Transportation regulatory standards.

         Spirit's drivers regularly made deliveries five or six days per week. However, under the terms of the Carrier Contract, it was the drivers' companies, not the drivers themselves that were obligated to make the deliveries. The Carrier Contract prohibited Spirit's drivers from using any vehicles identified therein to do delivery work for non-Spirit customers during the term of the agreement without obtaining Spirit's prior written consent. Drivers could use vehicles not identified in the Carrier Contract to do other work. Additionally, Drivers could not use equipment identified in the Carrier Contract which they purchased or leased to make deliveries for Spirit customers, when making deliveries for non-Spirit customers without Spirit's prior written consent.

         The terms of the Carrier Contract allowed Spirit to terminate contractors and cease assigning them deliveries if they failed to comply with “performance metrics” imposed by it, or if they utilized the services of any brokers or subcontracted delivery of any freight without its prior written consent. Moreover, the Carriers Contract required the contractors to: (1) transport all shipments without delay-- any occurrence which caused a delay, or was likely to cause a delay had to be immediately communicated to Spirit; (2) obtain a receipt showing the kind and quantity of product delivered to customer at its intended destination (the receipt was required to be signed by the customer); (3) notify Spirit “immediately of any exception made on the bill of lading, cargo manifest or delivery receipt”; and (4) retain all documents relevant to the delivery of product for three years. The Carrier Contract gave Spirit the right to disqualify any helper or driver provided by the contractor for a variety of specified reasons, including in the event Spirit found such driver/helper to be unsafe, disqualified, or unfit. The Carrier Contract also gave Spirit the right to determine all rates and handle all billing of freight charges to the customer and the right to charge contractors for such things as freight damage or delay.[3]

         Spirit undertook various obligations in its customer contracts, and imposed these requirements on the contractors. For example, Spirit had the right to require contractors to wear and purchase uniforms bearing the logo of Spirit's retailer clients, such as Macy's or General Electric when required by Spirit's contract with such customers. Spirit's contract with Macy's required drivers/contractors to wear “booties” over their feet, take time to impress the customer, and vacuum under all furniture and bedding.

         There is a dispute between the parties as to the control Spirit maintained over contractors' daily activities and delivery schedules. Spirit's customers had various requirements related to the delivery times for their merchandise, including restrictions on how early in the morning a delivery could occur. Among the disputed issues are whether Spirit dictated the specific routes contractors followed to make their deliveries each day (Civil's version), or whether the contractors advised Spirit in advance of the time they wish to begin their routes. For example, according to Spirit a driver, like Civil, would advise it on Tuesday morning of his desired start time and sequence of deliveries for the following Wednesday-- it did not require Civil to report to the requisite facility at a specific time. However, drivers generally reported to their assigned warehouses by 5:00 or 5:30 a.m. to complete a daily delivery schedule that often took them into the evening hours.

         All drivers were assigned I.D. numbers and required to undergo background checks before working with Spirit. There are occasions when Spirit refused to hire drivers based on the result of the background check. Spirit held meetings with drivers at which Spirit informed them: “ ‘Make sure you take care of the customer. Make sure you're in on time. Make sure you call the customer in advance before you arrive to the house.' Just make sure you did what you're supposed to do to take care of the customer.” Spirit management had daily telephone discussions with upper management in New Jersey about transportation of the clients' goods. A typical conversation would discuss, for instance, the: “load-out, how the contractors loaded, how were they gone, was there any stuff left on the dock, you know, any what we call overloads, and if we had any complaints from the day before, that I address them, from customers complaining about any contractor who might have, you know, had a bad experience with a customer.” At the same time, Spirit alleges that the contractors determined how their trucks were loaded.

         Spirit would receive daily reports from some of its customers about late deliveries from the day before which it would then address with the drivers. They would get a report every morning of what trucks ran late, how many late stops they had to customers. Drivers were reminded every morning that if they were going to run late, they had to call dispatch so that dispatch could call the customer and let them know the delivery would be late. Some of Spirit's customers required drivers to use tablets on which they could input different information required by the customer, such as, their arrival at each stop, and the time that each job is completed. Such information permitted the driver's activities to be tracked in “real time” and allowed Spirit to notify the customer of any problems. A Spirit Manager, Robert Dionne (“Dionne”), explained as follows:

They had Galaxy tablets. I think they're 10 inches. That's all they are. And it will have the drivers manifest in the morning on it. That's the manifest, Stop 1 to maybe, you know, Stop 14, customer's name, address, phone number, merchandise they're going to receive. And once the driver gets to their residence, he hits it, it will say ‘Arrive, ' he hits ‘Arrive.' ... [And] when they were done with the delivery, they would hit ‘Submit, ' and it would tell the time they left the house....GPS is built into the tablet, and that would take them only from stop to stop. The driver never had to put a stop in there; the stop was already in there. So if he hit Stop 1 and he hit Stop No. 2, there's a little map at the bottom. You hit the map, and that would automatically take him from Stop 1 to Stop 2....We have a screen on the computer [at the office in Dedham], and it's called the service desk, and you can bring up every route that's out for the day, and every driver has a route number every day. You hit that route number, it tells you all the customers' names, the sales check number, the time the delivery should be there within a two-hour window, like 7:00 to 9:00, 9:00 to 11:00.... [When the driver] hits ‘Arrive, ' it will put the time that he arrived at that stop. When he hits ‘Depart, ' it will say departed. Then it will show his next stop; ETA to next stop will be so and so....So we could track that just in case the driver's running late. We could be proactive, we could call dispatch and call the customer and let them know the driver could be running late.

         Spirit also tracked “real time” GPS data to see where the driver is located. Dionne explained the reason for doing so:

...GPS data, it gives you where the driver's driving his truck. So if he's going from Point A to Point B, you can see that the tablet is on. And if he goes off-route, you can see if he went off-route. Because every morning we'll ask the driver, ‘What time do you think you could be at your first stop?' They tell us what time they would be at their first stop. So we would look at the GPS in the morning, and you look and Truck 204 wasn't at his first stop at 8:00 to 10:00. You look at the GPS, and you see him at the Dedham location, and he went down the wrong way, he sat there for, like, 20 minutes, then you know he was down there having breakfast, then he went to the customer's home. You know, the thing with delivering furniture is you just want to, you know, make the customer happy every time. If you're running late, they'll go shop somewhere else....The requirement is that the tablet once you came into the location in Dedham, the tablet should be on, and once you finish your last stop, you can turn that tablet off.

         The tablets and GPS information data referred to by Dionne were required by Macy's. Spirit would notify Macy's of any problems and Macy's would notify its customers. Macy's, not Spirit, owned the system which was used to view contractors' progress on their routes. Pursuant to Spirit's contract with Macy's, drivers had to call Spirit's dispatch if they were running late for a delivery. A Spirit manager estimated that Spirit drivers performing Macy's deliveries contact dispatch approximately thirty times per day. Spirit's customer Best Buy required drivers to call an 800 number to update the retailer and Spirit every two or three stops throughout the day in order to keep track of the driver's progress. General Electric operated an application that contractors accessed via smart phone to update delivery information.

         Spirit's customers maintained and operated their own customer satisfaction surveys. For example, Macy's conducted customer satisfaction surveys which required drivers to ask customers to take a phone survey about the driver's performance. Macy's also sent e-mails to customers asking the customers to grade the drivers' performances. Spirit did not communicate the response from any such surveys to the drivers. Using the information provided by customers, Spirit's retailer client(s) maintained and accessed performance matrices for all drivers. Macy's used the performance matrices to determine whether the drivers would receive a bonus. Macy's, not Spirit, determined which drivers were eligible for a bonus. The applicable performance standards were set in the Carrier Contract. If a driver's performance fell below the standards set by one of Spirit's customers, a Spirit manager would meet with the contractor to address the driver's poor performance. Spirit had the power to terminate the driver if his performance did not improve.

         Spirit compensated drivers on a per-stop basis, without regard to the content or quantity of the goods the driver delivered, with a minimum flat-rate paid on days where a driver has few stops scheduled. Contractor compensation varied from customer to customer and by area. Compensation was agreed to in the Carrier Contract and could not be negotiated by drivers. Spirit made deductions from the contractors' checks for “customer disappoints” such as a driver's failing to make a delivery within the window of time that the customer was expecting delivery. In addition, if customers claimed that the drivers had caused damage to their merchandise or residences, Spirit communicated with the customer and determined whether the drivers were responsible for the damage. The contractor had an opportunity to explain the circumstances surrounding the incidents of property damage. Spirit deducted money from the contractor's compensation to pay for the damages where it was shown that the contractor was responsible for the damage.


         Defendant's Motion For Summary Judgment: Whether Federal Law Preempts Civil's Claims; Whether Civil's Equitable Claims are barred because he has an Adequate Remedy at Law

         In Count I of the Amended Complaint, Civil asserts claims against Spirit under the independent contractor provision[4] on the grounds that Spirit mischaracterized him as an independent contractor rather than employee and in doing so, failed to pay him all wages and grant him employment benefits to which he is entitled. The independent contractor provision of the MWA “ ‘ establishes a standard to determine whether an individual performing services for another shall be deemed an employee or independent contractor for purposes of [Massachusetts]

         wage statutes.' … ‘The purpose of the independent contractor statute is to protect workers by classifying them as employees, and thereby grant them the benefits and rights of employment, where the circumstances indicate they are, in fact, employees' ” Chambers v. RDI Logistics, Inc., 476 Mass. 95, 100, 65 N.E.3d 1 (2016)(internal citations and citations to quoted cases omitted).

         Under the MWA, workers are presumed to be employees unless the entity making use of those workers' services (the putative employer) proves that they are independent contractors. Id. In order to overcome the presumption, the employer must establish each and every prong of the following three-prong test set forth in the independent contractor provision of the MWA:

(1) The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
(2) the service is performed outside of the usual course of business of the employer; and,
(3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as ...

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