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Da Costa v. Vanguard Cleaning Systems, Inc.

Superior Court of Massachusetts, Middlesex

September 29, 2017

Luiz Thomaz Da Costa et al. [1]
v.
Vanguard Cleaning Systems, Inc

          Filed Date October 2, 2017

          MEMORANDUM OF DECISION AND ORDER ON PLAINTIFFS' CROSS MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS MOTION FOR SUMMARY JUDGMENT

          Kenneth J. Fishman, Justice of the Superior Court.

         The plaintiffs, Luiz Thomaz Da Costa and others, and the defendant, Vanguard Cleaning Systems, Inc. (" Vanguard" ), have filed cross motions for summary judgment seeking a ruling on the plaintiffs' employment classification status under the laws of Massachusetts and Connecticut in connection with commercial cleaning work which the plaintiffs claim they performed on behalf of Vanguard. G.L.C. 149, § 148B; Conn. Gen. Stat. § 31-222(a)(1)(B). After hearing, and upon review and consideration, the plaintiffs' cross motion for summary judgment is ALLOWED, and Vanguard's cross motion for summary judgment is DENIED.

         BACKGROUND

         The undisputed facts, and any disputed facts viewed in the light most favorable to the non-moving party, are as follows. Additional facts are reserved for discussion below.[2]

         Vanguard is a corporation headquartered in California that operates a three-tier franchise system selling commercial cleaning services. Vanguard sells licenses to use its name and trademarked Vanguard Cleaning Systems in defined geographic areas to regional master franchisees. Regional master franchisees, in turn, enter into franchise agreements with unit franchisees, which conduct commercial cleaning.[3] Vanguard receives four percent of regional master franchisees' gross revenue, which consists of payments for commercial cleaning and fees levied on unit franchisees.[4] Vanguard solicits business through national sales bids, and offers quotes to prospective customers on its website; Vanguard's website forwards cleaning account leads to regional master franchisees.

         Regional master franchisees implement Vanguard's commercial cleaning framework. Vanguard provides regional master franchisees with extensive operating instructions, forms, and templates. Vanguard authored the franchise agreements that regional master franchisees and unit franchisees execute, but is a non-signatory to these agreements. Vanguard also drafted the franchise disclosure document, operations manual, cleaning safety manual, and commercial cleaning information manual. Additionally, Vanguard supplies regional master franchisees with accounting software and templates, which include franchise agreements and account acceptance forms.

         Unit franchisees must meet current and future standards outlined in Vanguard's operations manual. Vanguard requires that unit franchisees form independent entities to conduct cleaning services. Vanguard prohibits unit franchisees from billing client accounts for cleaning supplies; unit franchisees must purchase their own supplies. Vanguard imposes minimum standard service requirements, along with detailed instructions on how to clean commercial spaces. Vanguard also requires that unit franchisees attend a mandatory training program, and emphasizes that unit franchisees are subject to Vanguard's quality control standards.

         Vanguard outlines a series of inspections and oversight methods in its operations manual. For example, Vanguard representatives routinely conduct room-by-room quality control inspections if the client consents. Unit Franchise Operations Manual, PL000259-000260.[5] The Vanguard representative records the client's concerns, looks for deficiencies on its own, and notifies the unit franchisee of any deficiencies. Id. Vanguard also conducts telephone and written surveys, and communicates deficiencies with unit franchisees. Id. Vanguard states that " good quality control consists of carefully checking our own work (and the work of our franchisee's employees) to be sure it meets OUR STANDARDS." Id.

         Vanguard supplies its account holders with Vanguard-branded logbooks and characterizes them as " [t]he most important communication tool we have." Id. at PL000244. Unit franchisees " must check the logbook every visit to see if the client has written a note" and, if they have, the unit franchisee " must always write a response to acknowledge that you are using the logbook, and you have understood their comment or request." Id.

         Vanguard allows unit franchisees to pursue cleaning work unrelated to current accounts. Unit franchisees must obtain express permission to perform extra work for a current account or else risk termination. Vanguard must grant express approval to any unit franchisee advertisements regarding its cleaning services.

         In 2006 and in 2009, Vanguard executed master franchise agreements with Ztico Inc. d/b/a Vanguard Cleaning Systems of Southern New England (" Ztico" ), allowing Ztico to operate as a regional master franchisee in Massachusetts and Connecticut. The plaintiffs executed franchise agreements with Ztico to receive cleaning work. The Massachusetts plaintiffs, Geraldo Figueiredo and Sebastiao Matos, entered into unit franchise agreements with Ztico on January 15, 2007 and August 21, 2007, respectively. The Connecticut plaintiffs, Dominga Almonte and Rafael Abreu, entered into unit franchise agreements with Ztico on June 13, 2008 and March 5, 2013, respectively.

         The plaintiffs are immigrants who do not speak English well,[6] and believed their agreements were with Vanguard; they were unaware Vanguard and Ztico were separate entities, or that Ztico existed. The plaintiffs created independent entities under which they operated while cleaning for Vanguard. Other than Matos, who operated a cleaning business prior to executing his franchise agreement, the plaintiffs were instructed by a perceived Vanguard representative to form independent entities.

         The plaintiffs filed this four-count class action complaint, alleging misclassification as independent contractors under Massachusetts law, G.L.C. 149, § 148B (Count I); violations of the Wage Act, G.L.C. 149, § 148 (Count II); misclassification as independent contractors under Connecticut law, Conn. Gen. Stat. § 31-222(a)(1)(B) (Count III); and illegal refund of wages for furnishing employment under Connecticut law, Conn. Gen. Stat. § 31-71e and Conn. Gen. Stat. § 31-73 (Count IV). The parties have agreed to defer class certification, and to limit summary judgment to the four named plaintiffs who are " test cases." [7] The parties filed cross motions for summary judgment, seeking a ruling on the plaintiffs' employment classification under the laws of Massachusetts and Connecticut.

         DISCUSSION

         I. Summary Judgment Standard

          Summary judgment shall be granted when all material facts have been established and the moving party is entitled to judgment as a matter of law. Mass.R.Civ.P. 56(c); Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716, 575 N.E.2d 734 (1991). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue. Pederson v. Time, Inc., 404 Mass. 14, 16-17, 532 N.E.2d 1211 (1989). The moving party may satisfy this burden either by submitting affirmative evidence that negates an essential element of the opposing party's case, or by demonstrating that the opposing party has no reasonable expectation of proving an essential element of his case at trial. Flesner v. Technical Commc'ns Corp., 410 Mass. 805, 809, 575 N.E.2d 1107 (1991). Once the moving party establishes the absence of a triable issue, the party opposing the motion must respond with evidence of specific facts establishing the existence of a genuine dispute of material fact. Pederson, 404 Mass. at 17.

         II. Misclassification under Massachusetts and Connecticut Law (Counts I and III)

         In Count I and Count III of the First Amended Class Action Complaint, the plaintiffs allege that Vanguard misclassified them as independent contractors, rather than employees, in violation of G.L.C. 149, § 148B, and Conn. Gen. Stat. § 31-222(a)(1)(B) (collectively " Independent Contractor Statutes" ).

          The Independent Contractor Statutes establish " a standard to determine whether an individual performing services for another shall be deemed an employee or an independent contractor for purposes of our wage statutes." Somers v. Converged Access, Inc., 454 Mass. 582, 588-589, 911 N.E.2d 739 (2009); accord, Standard Oil of Conn., Inc. v. Adm'r, Unemployment. Comp. Act, 320 Conn. 611, 623, 134 A.3d 581 (2016). The Independent Contractor Statutes were enacted " to protect workers by classifying them as employees, and thereby grant them the benefits and rights of employment, where the circumstances indicate that they are, in fact, employees." Depianti v. Jan-Pro Franchising Int'l, Inc., 465 Mass. 607, 620, 990 N.E.2d 1054 (2013) (citations omitted); accord, Standard Oil, 320 Conn. at 616-17.

          Generally, remedial statutes like the Independent Contractor Statutes are entitled to liberal construction. Monell v. Boston Pads, LLC, 471 Mass. 566, 575, 31 N.E.3d 60 (2015) (independent contractor statute is a remedial statute); see Terra Nova Ins. Co. v. Fray-Witzer, 449 Mass. 406, 420, 869 N.E.2d 565 (2007) (statutes are remedial where they address " misdeeds suffered by individuals," rather than punish public wrongs); accord, Sw. Appraisal Grp., LLC v. Adm'r, Unemployment Comp. Act, 324 Conn. 822, 833, 155 A.3d 738 (2017). The Independent Contractor Statutes presume that individuals performing services are employees. G.L.C. 149, § 148B(a); Conn. Gen. Stat. § 31-222(a)(1)(B); Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321, 327, 28 N.E.3d 1139 (2015); Sw. Appraisal Grp., 324 Conn. at 833. An employer may overcome this presumption and establish that its presumptive employee is an independent contractor, if it can establish that:[8]

(1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the ...

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