Lockley v. Studentcity.com, Inc.

          File Date: December 5, 2018

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION TO DISMISS AMENDED CLASS ACTION COMPLAINT

          Janet L. Sanders Justice

         This is a putative class action alleging that Studentcity.com, Inc. (Student City) has violated the Massachusetts Wage Act, G.L.c. 149, §§ 148 150, and the Massachusetts independent contractor statute, G.L.c. 149 148B, ^[1] as well as the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (the FLSA). The case is now before this Court on the defendants’ Motion to Dismiss pursuant to Mass.R.Civ.P. 12(b)(6). Specifically, defendants contend that the FLSA by its terms applies only to employment in the United States and thus cannot apply here, where all members of the putative class worked abroad. The defendants also argue that the Wage Act cannot, as a matter of law, apply extraterritorially to govern the terms of services rendered by plaintiffs and others similarly situated. After careful review of the parties’ submissions, this Court concludes that the defendants’ Motion must be Allowed.

         BACKGROUND

         The First Amended Class Action Complaint (the Complaint) contains the following allegations, assumed as true for purposes of this motion. Student City is a "foreign corporation" with a principal place of business in Peabody, Massachusetts. Defendant Sam Cox is, "on information and belief," a resident of Massachusetts and is the President of Student City. Defendant Alison Skoglund is also, "on information and belief," a Massachusetts resident and is Treasurer of Student City.

         Student City targets college students throughout the United States, offering them spring break travel packages whereby they travel to and stay in resorts outside of the country. For some of these students, Student City offers to pay all of their expenses in return for their agreement to work as Student City "on site" staff members at these resort locations. These students also receive a daily stipend. Students taking advantage of these packages sign an "On-Site Representative Agreement" with Student City that describes them as independent contractors. Student City nevertheless retains considerable control over the students, supporting the Complaint’s assertion that they have been misclassified in violation of the Wage Act. Complaint, ¶ 25. However, none of the indicia of control set forth in the Complaint require that the students come to Massachusetts. The On-Site Representative Agreement also has a choice of law provision which states that the "interpretation and application of the terms of this Agreement shall be governed and constructed [sic] in accordance with the laws of the United States."

         The Complaint contains no specific allegations about the individual plaintiff Neffie Lockley other than to state that she resides in Colorado and that she worked as a Student City "on site staff" representative for its 2018 spring break trip to the Bahamas. However, based on other materials submitted by the parties (including exhibits attached to plaintiff’s opposition), plaintiff does not dispute the following. Before Lockley went to the Bahamas, all communications between Student City and Lockley occurred while Lockley was outside of Massachusetts. She signed an On-Site Representative Agreement with Student City after exchanging emails with Student City representatives located in Massachusetts. Student City provided her, via email, with an airlines ticket from Fort Lauderdale, Florida to Nassau, arriving February 28, 2018. In the Bahamas, Lockley performed services as an "on-site representative" of Student City at a resort there for approximately three weeks, with a return trip scheduled for March 19, 2018. Her round trip ticket was paid for by Student City; her room, meals, and beverages at the "Superclub Breezes Resort and Spa" were also included. Lockley received a stipend from Student City totaling $200 a week, but otherwise was not paid minimum wage or overtime payments which would be due to her as an employee. At no time did she ever come to Massachusetts. Lockley brings this lawsuit on behalf of herself and "all other similarly situated individuals"-presumably a nationwide class.

         DISCUSSION

         Plaintiff essentially concedes that her claim under the FLSA must be dismissed. By its terms, the FLSA cannot be applied to services performed abroad. 29 U.S.C. § 213(f). Thus, the issue before the Court is whether the Wage Act can be applied to regulate the terms of work wholly performed in a foreign country. This Court concludes that, under the circumstances presented here, the Wage Act does not apply.

         The defendants make a number of arguments in support of their motion. These arguments include their contention that, if this Court were to construe the Wage Act to apply to employment in a foreign country, this would violate the United States Constitution. Where possible, however, a court should avoid reaching the constitutional issue unless it has to in order to resolve the matter. SCVNGR, Inc. v. Punch, Inc., 478 Mass. 324, 330 (2017); Commonwealth v. Guzman, 469 Mass. 492, 500 (2014); Beeler v. Downey, 387 Mass. 609, 613 n.4 (1982). More persuasive is the defendant’s position that the Wage Act must be construed in light of the general presumption against the international extraterritorial application of domestic laws where there is no clearly expressed legislative intent to regulate conduct abroad.

         This presumption has been applied repeatedly by federal courts in construing federal statutes. See, e.g., Carnero v. Boston Scientific Corp., 433 F.3d 1, 7 (1st Cir. 2006) (recognizing that where a statute is silent as to its territorial reach, and no contrary congressional intent clearly appears, there is a general presumption against its extraterritorial application); Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949) (same); Small v. United States, 544 U.S. 385, 388-89 (2005) (discussing presumption). This presumption is grounded on the assumption that, if Congress wished for a federal statute to apply extraterritorially, it would say so explicitly, since such an application would intrude on the "delicate field of international relations." McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 21-22 (1963), quoting Benz v. Compania Naviera Hidalgo, 353 U.S. 138, 147 (1957). See Equal Employment Opportunity Comm’n v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (presumption "serves to protect against unintended clashes between our laws and those of other nations which could result in international discord").

         The Wage Act does not expressly state that it applies extraterritorially, so under the reasoning and presumption applied in these federal cases, it would not apply to work in the Bahamas. However, it is not entirely clear that this presumption against the international extraterritorial application of federal law applies to a state statute like the Wage Act. At least one Superior Court judge has applied the presumption and concluded that, with no express statement from the legislature to rebut that presumption, the Wage Act could not apply to govern the plaintiff’s terms of employment because the plaintiff worked in Africa. Hadfield v. A.W. Chesterson Co., MICV2008-04382, 26 Mass.L.Rptr. 101, 2009 WL 3085921, *2 (Sept. 15, 2009) (Fremont-Smith, J.) (Hadfield). Nevertheless, because it is a Superior Court decision, Hadfield has no precedential value, nor is there any Massachusetts appellate court decision directly on point. But see May v. Breed, 61 Mass. 15, 16 (1851) ("It is admitted, that foreign laws have no authority, as laws, out of the jurisdiction which enacts them"); compare O’Connell v. Chasdi, 400 Mass. 686, 689 n.3 (1987) (applying state Civil Rights Act to conduct that occurred in South America but noting that no party had raised the issue of whether statute should be applied extraterritorially); cf. Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191, 198 & n.9 (2013) (assuming that presumption would prevent Massachusetts independent contractor statute from applying outside United States but not deciding the issue, since employment at issue was within the country).

         In the absence of state appellate court cases deciding this issue, this Court does not feel comfortable with relying entirely on this presumption. Moreover, when faced with the question of whether the Massachusetts independent contractor statute or the Wage Act applies to employment in another state within the United States (that is, in an interstate context), both the Supreme Judicial Court and Appeals Court have made it clear that there is no such presumption. See Taylor v. Eastern Connection Operating, Inc., 465 Mass. at 198; Dow v. Casale, 83 Mass.App.Ct. 751, 755 (2013). In other words, that the employee performs work outside of Massachusetts is not determinative. Dow v. Casale, 83 Mass.App.Ct. at 755-56. Rather, the question is whether, under choice of law principles, there is a sufficient relationship between the parties, the conduct at issue, and Massachusetts such that Massachusetts law applies. Using a choice of law analysis, this Court concludes that Massachusetts has an insufficient connection with either party or the conduct at issue to warrant the application of the Wage Act.

         Significantly, there is no choice of law provision in the On-Site Representative Agreement that directs this Court to apply Massachusetts law.^[2] Instead, the Agreement states only that it shall be construed "in accordance with the laws of the United States." To the extent that this could be read to refer to federal law, the FLSA by its terms cannot apply to this case. In the absence of a choice of law provision that directs this Court to apply the law of any particular state, this Court applies the conflict of laws rules of Massachusetts, ...