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Patel v. 7-Eleven, Inc.

United States District Court, D. Massachusetts

September 6, 2019

DHANANJAY PATEL, SAFDAR HUSSAIN, VATSAL CHOKSHI, DHAVAL PATEL AND NIRAL PATEL, AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
7-ELEVEN, INC., DEFENDANT AND THIRD-PARTY PLAINTIFF.
v.
DPNEWT01, DP TREMONT STREET INC., DP MILK STREET INC., DP JERSEY INC., THIRD-PARTY DEFENDANTS.

          MEMORANDUM & ORDER

          NATHANIEL M. GORTON, UNITED STATES DISTRICT JUDGE

         This is a putative class action brought by Dhananjay Patel, Safdar Hussain, Vatsal Chokshi, Dhaval Patel and Niral Patel (collectively "named plaintiffs" or ``franchisees") on behalf of individuals who have acquired franchises from 7-Eleven, Inc. (``7-Eleven" or "defendant") in the Commonwealth of Massachusetts.

         Plaintiffs initially alleged that 7-Eleven and two 7-Eleven market managers, Mary Cadigan and Andrew Brothers (collectively ``the individual defendants"), 1) misclassified its franchisee convenience store workers in Massachusetts as independent contractors instead of employees in violation of the Massachusetts Independent Contractor Law, M.G.L. c. 149, § 148B, 2) violated the Massachusetts Wage Act (``the Wage Act"), M.G.L. c. 149, § 148 and 3) violated the Massachusetts Minimum Wage Law, M.G.L. c. 151, §§ 1, 7.

         This Court dismissed the claims against the individual defendants but allowed plaintiffs' claims against 7-Eleven to proceed (Docket No. 49). Subsequently, 7-Eleven filed counterclaims against the named plaintiffs (Docket No. 52) and a third-party complaint against DPNEWT01, DP Tremont Street Inc., DP Milk Street Inc. and DP Jersey Inc. (collectively ``the third-party defendant corporations") (Docket No. 53). The third-party defendant corporations are limited liability companies through which three named plaintiffs (Vatsal Choksi, Dhaval Patel and Niral Patel) contracted to perform work for 7-Eleven.

         The third-party defendant corporations are subject to franchise agreements with 7-Eleven. Those franchise agreements contain, in relevant part, identical language with respect to independent contractor status and indemnification. With respect to independent contractor status, the franchise agreements provide that

You and we agree that this Agreement creates an arm's-length business relationship and does not create any fiduciary, special or other similar relationship. You agree: (a) to hold yourself out to the public as an independent contractor; (b) to control the matter and means of the operation of the Store; and (c) to exercise complete control over and responsibility for all labor relations and the conduct of your agents and employees, including the day-to-day operations of the Store and all Store employees. You and your agents and employees may not: (i) be considered or held out to be our agents or employees or (ii) negotiate or enter any agreement or incur any liability in our name, or our behalf, or purporting to bind us or any of our or your successors-in-interest. Without in any way limiting the preceding statements, we do not exercise any discretion or control over your employment policies or employment decisions. All employees of the Store are solely your employees and you will control the manner and means of the operation of the Store. No actions you, your agents or employees take will be attributable to us or be considered to be actions obligating us.

         With respect to indemnification, the franchise agreements provide that

You agree to be responsible for and indemnify us, our Affiliates, and our and their respective officers, directors, agents, representatives, employees, successors and assigns (collectively, the ``7-Eleven Indemnified Parties") from all losses arising out of or relating to your Store and its operation, except those specifically the responsibility of or indemnified by us. This indemnification will survive the expiration, termination, or transfer of this Agreement or any interest in this Agreement. You may obtain insurance to cover your indemnification obligation. Your total indemnification obligation to us will not exceed $500, 000.

         In their counterclaims and third-party complaint, 7-Eleven moves for declaratory relief to void the franchise agreements and makes claims for breach of contract and indemnification. Pending before this Court are plaintiffs/third-party defendants' motion to dismiss and motion for leave to file an answer.

         I. Legal Analysis

         A. Plaintiffs' Motion to Dismiss Defendant's Counterclaims and Third-Party Complaint

         1. Standard of Review

         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint (or a counterclaim) must contain sufficient factual matter, accepted as true, to ``state a claim to relief that is plausible on its face". Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In considering the merits of a motion to dismiss, the Court may look only to the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the complaint and matters of which judicial notice can be taken. Nollet v. Justices of Trial Court of Mass., 83 F.Supp.2d 204, 208 (D. Mass. 2000), aff'd, 248 F.3d 1127 (1st Cir. 2000).

         Furthermore, the Court must accept all factual allegations in the complaint (or counterclaim) as true and draw all reasonable inferences in the claimant's favor. Langadinos v. Airu Airlines, Inc.,199 F.3d 68, 69 (1st Cir. 2000). If the facts in the complaint are sufficient to state a cause of action, a motion to dismiss the complaint must be denied. See Nollet, 83 F.Supp.2d at 208. Although a court must accept as true all the factual allegations contained in a complaint, that doctrine is not applicable to legal conclusions. Ashcroftv.Iqbal, 556 U.S. 662 (2009). Threadbare recitals of legal elements which are supported by mere conclusory statements do not suffice to state a cause of action. Id. Accordingly, ...


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