Debnam v. FedEx Home Delivery , 766 F.3d 93 ( 2014 )

United States Court of Appeals
For the First Circuit
No. 13-2335
DARRELL D. DEBNAM,
Plaintiff, Appellant,
v.
FEDEX HOME DELIVERY,
a division of FEDEX GROUND PACKAGE SYSTEM, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, U.S. District Judge.]
Before
Kayatta, Baldock,* and Selya,
Circuit Judges.
James W. Simpson for appellant.
William M. Jay, with whom James C. Rehnquist, Kate E.
MacLeman, Molly Rhodes, and Goodwin Procter LLP were on brief, for
appellee.
September 8, 2014
*
Of the Tenth Circuit, sitting by designation.
KAYATTA, Circuit Judge. Darrell Debnam filed a complaint
against FedEx asserting wage payment claims that can only be
brought by an employee against an employer, and also asserting an
unfair business practice claim under Massachusetts' so-called
"Chapter 93A," Mass. Gen. Laws Ann. 93A, that cannot be brought by
an employee against his employer as such. The actual facts alleged
in the complaint painted an ambiguous relationship between Debnam
and FedEx. Conclusory allegations of the complaint, however,
forcefully and without reservation staked out the position that
Debnam was a FedEx employee. Reading the complaint through the
prism of the unambiguous conclusory allegations, the district court
dismissed the Chapter 93A claim as incompatible with an
employer/employee relationship. Debnam thereafter made no attempt
to amend his complaint, despite ample opportunity to do so. After
discovery, the district court ruled on summary judgment that Debnam
was not an employee under the wage law, dismissing his remaining
claim. Debnam now appeals the district court's earlier dismissal
of his Chapter 93A claim to the extent that dismissal was
predicated on his being an employee. We affirm, concluding that
regardless of whether Debnam was an employee, the allegations in
his complaint do not plausibly establish that his actions satisfied
Chapter 93A's conception of "trade or commerce," as required to
prevail under the relevant provision of Chapter 93A.
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I. Background
Because this appeal challenges the dismissal of Debnam's
claim on a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), we take as true the facts presented in his
complaint and draw all reasonable inferences in his favor. A.G. ex
rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013).
Debnam began work for FedEx in 2004. Starting as a
driver with a single route, he soon acquired the rights to service
multiple routes, operating nine of them as of June 2009. In this
capacity, Debnam owned or leased eleven delivery vehicles, which he
paid to maintain, repair, and insure. He also oversaw drivers
working under him, paid their federal employment taxes, purchased
their uniforms, and hired temporary replacements when they took
time off.
Debnam signed a form agreement with FedEx classifying him
as an independent contractor.1 Under the agreement, FedEx retained
the right to:
• promulgate mandatory standards regarding the
appearance of vehicles and drivers;
• promulgate mandatory standards regarding the
qualifications of people employed as drivers;
1
Debnam did not attach the actual contract to his complaint,
but FedEx submitted it in briefing the motion to dismiss, and
Debnam has never opposed its consideration. See Maloy v. Ballori-
Lage, 744 F.3d 250, 251 n.1 (1st Cir. 2014).
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• reconfigure the size or layout of the area
serviced by Debnam at the company's sole
discretion (and adjust his pay accordingly),
after giving five days' notice; and,
• terminate the agreement for any reason after
giving thirty days' notice.2
In his complaint, Debnam claimed that "the behavioral and
financial control manifested over the drivers by [FedEx]
demonstrates that the drivers are employees rather than independent
contractors." He therefore pressed two claims under Massachusetts
statutes that apply only to employees, including the state's basic
wage law, Mass. Gen. Laws ch. 149, § 148. He also alleged (in a
separate count) that FedEx engaged in unfair or deceptive business
in violation of Chapter 93A. That claim is the subject of this
appeal. The remainder of Debnam's fourteen counts for relief are
not material here.
FedEx moved to dismiss the complaint. As to Chapter 93A,
the company argued that because Debnam had asserted that he was an
employee of FedEx, he could not press a claim under the statute.
As FedEx's motion explained, the statute applies only to
transactions occurring in "trade or commerce," Mass. Gen. Laws Ann.
93A, § 2, and Massachusetts courts have held that employees and
2
Debnam's complaint also alleges that the contract gave FedEx
various other ways to control his operations, such as the right to
disapprove the hiring of any driver. These mechanisms of control
are not evident from the agreement, but they do not affect our
analysis in any event.
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employers do not act in trade or commerce when they interact with
each other as such, see Manning v. Zuckerman, 388 Mass. 8, 13
(1983). As to the wage claims, FedEx made only a procedural
objection, claiming that Debnam failed to submit a complaint to the
attorney general as required to file suit under the statute, but
the company later dropped this argument.
The district court dismissed Debnam's Chapter 93A claim,
citing the rule that the statute generally does not apply to
employer/employee relationships. See Debnam v. FedEx Home
Delivery, 2011 WL 1188437, *2 (D. Mass. Mar. 31, 2011). The court
held that "it is inconsistent with the overall gist of [Debnam's]
complaint, especially the claims under the Massachusetts statutes
[applying only to employees], for him to assert that he is within
the scope of Chapter 93A because he is an independent contractor."
Id. The court added that the "subsidiary factual pleadings of the
complaint" did not support a conclusion that Debnam was an
independent contractor. Id.
FedEx eventually sought summary judgment on Debnam's
remaining claims. The company argued that Debnam could not recover
under the wage law because the statute applies only to
"'individuals' and not to business entities," citing Mass. Gen.
Laws ch. 149, § 148B. Debnam, the company pointed out, had
operated his delivery business at "first as a partnership and then
as limited liability company." The district court rejected the
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notion that "a person acting under the legal form of a partnership
or limited liability company" is automatically ineligible to sue as
an "individual" under the wage law. It nevertheless found that, in
the circumstances of this case, "the plaintiff's relationship with
FedEx Ground was that of . . . a 'legitimate independent
contractor' in a 'business-to-business relationship," precluding
Debnam from recovering under the wage statute. Debnam v. FedEx
Home Delivery, 2013 WL 5434142, *1 (D. Mass. Sept. 27, 2013)
(quoting an advisory from the Massachusetts Attorney General). The
district court therefore granted summary judgment to FedEx on
Debnam's remaining claims.
Debnam appeals only the district court's decision to
dismiss his Chapter 93A claim.
II. Standard of Review
We review de novo the district court's dismissal of a
claim under Federal Rule of Civil Procedure 12(b)(6). A.G. ex rel.
Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013). In
deciding whether the district court properly dismissed a claim, we
ask whether the complaint "state[s] a claim to relief that is
plausible on its face," accepting the plaintiff's factual
allegations and drawing all reasonable inferences in the
plaintiff's favor. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). Moreover, "we may affirm on any basis apparent in the
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record." Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 237 n.11
(1st Cir. 2013).
III. Analysis
Chapter 93A prohibits "unfair or deceptive acts or
practices in the conduct of any trade or commerce." Mass. Gen.
Laws Ann. 93A, § 2(a). The statute contains one section pertaining
to consumer transactions and another pertaining to transactions
between businesses or people engaging in business. See Mass. Gen.
Laws Ann. 93A, §§ 9, 11. We assume that Debnam is proceeding under
the latter section, section 11, rather than the former.3
The relevant statutory provision creates a cause of
action only if both parties were engaged in "trade or commerce"
when they took part in the transactions giving rise to the suit.
Mass. Gen. Laws Ann. 93A, § 11 (creating liability when "[a]ny
person who engages in the conduct of any trade or commerce . . .
suffers any loss of money or property, real or personal, as a
result of the use or employment by another person who engages in
any trade or commerce of an unfair method of competition or an
unfair or deceptive act or practice"); Linkage Corp. v. Trustees of
Boston Univ., 425 Mass. 1, 23 & n.33 (1997). Massachusetts courts
have narrowed the scope of the statute by interpreting "trade or
3
If Debnam were pursuing a claim under section 9, his claim
would fail because, among other things, Debnam did not plead that
he sent a demand letter to FedEx thirty days before filing his
complaint, a prerequisite for such a consumer suit. See Mass. Gen.
Laws Ann. 93A, § 9(3).
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commerce" to exclude various kinds of activities. For example, the
offering of services for sale qualifies as "trade or commerce" only
when the services are "offered generally by a person for sale to
the public in a business transaction." Manning v. Zuckerman, 388
Mass. 8, 13 (1983). Consequently, the statute "is not available
to parties in a strictly private transaction," such as someone
seeking to sue his or her business partner. Linkage Corp., 425
Mass. at 23 n.33. For the same reason, an employee cannot bring a
suit against his or her employer under Chapter 93A. Id.; Manning,
388 Mass. at 13-14.
The parties therefore focus on whether Debnam's complaint
precluded him from arguing that he was an independent contractor
rather than employee. The complaint was inartfully drawn, inviting
a narrow reading as staking out only the position that Debnam was
an employee. It repeatedly alleged expressly that he was not an
independent contractor. And it contained neither the structure nor
the express language of a pleading asserting claims in the
alternative. On the other hand, the factual allegations in the
complaint could support a claim that Debnam was (as the court
eventually held) an independent contractor. As for the conclusory
allegations that Debnam was not an independent contractor, we
ordinarily do not heed a complaint's assertion of "legal
conclusions couched as fact," relying only on its "[n]on-conclusory
factual allegations." Ocasio-Hernández v. Fortuño-Burset, 640 F.3d
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1, 12 (1st Cir. 2011) (internal quotation marks, alterations
omitted).4 That being said, it is remarkable that, once the
district court announced how it read the complaint, Debnam never
sought to amend it to make clear his intention to plead alternative
characterizations of his relationship with FedEx.
Ultimately, we need not decide whether the district court
properly read the complaint as necessarily incompatible with an
alternative claim that Debnam was an independent contractor.
Rather, we affirm because, even if the facts in the complaint can
be read as preserving such a claim in the alternative, the
complaint still fails to plead a violation of Chapter 93A. As
FedEx points out, the Chapter 93A claim depends in large but not
sufficient part on establishing that Debnam and FedEx were
interacting in "trade or commerce," within the meaning of
Chapter 93A. As we have previously suggested, the relevant inquiry
"hinge[s] not on the label of 'independent contractor,' but on a
fact-specific, case-by-case analysis into the type of relationship
that the independent contractor has with the company at issue."
McAdams v. Massachusetts Mut. Life Ins. Co., 391 F.3d 287, 303 (1st
4
While one might argue that the conclusory statements
nevertheless amounted to a judicial admission, FedEx does not take
that position, perhaps aware of precedent indicating that "legal
conclusions are rarely considered to be binding judicial
admissions.” Harrington v. City of Nashua, 610 F.3d 24, 31 (1st
Cir. 2010) (quoting parenthetically Commercial Money Ctr., Inc. v.
Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007)).
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Cir. 2004).5 Specifically, under Massachusetts precedent, we must
determine whether Debnam's allegations plausibly support a
conclusion that he was offering his delivery services "generally
. . . for sale to the public in a business transaction." Manning,
388 Mass. at 13. If not, Debnam's claim is barred whether or not
he was an independent contractor. See id.; Benoit v. Landry, Lyons
& Whyte Co., Inc., 31 Mass. App. Ct. 948, 948-49 (1991) (holding
that a real estate salesman, even if an independent contractor of
the defendant, was not engaged in "trade or commerce" because his
relationship with the defendant was exclusive); Speakman v.
Allmerica Fin. Life Ins., 367 F. Supp. 2d 122, 140 (D. Mass. 2005)
(reaching the same result on similar facts).
As described in the complaint, Debnam's business was
devoted entirely to providing delivery services to FedEx alone.
Consequently, the complaint does not plausibly support a conclusion
that Debnam engaged in trade or commerce by offering services for
sale to the public. Because Debnam has thus failed to allege facts
that would plausibly support a conclusion that his interactions
5
We noted in McAdams that it was not entirely clear
"[w]hether an independent contractor can recover for a 93A
violation . . . under Massachusetts law." 391 F.3d at 303. We
therefore resolved the case on other grounds. Here, we ask not
whether independent contractors are categorically ineligible to sue
under Chapter 93A but rather whether Debnam was eligible under the
facts alleged in his complaint. We think that Massachusetts law
clearly resolves that question.
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with FedEx occurred in trade or commerce within the meaning of
Chapter 93A, his claim was properly dismissed.
Having reached this conclusion, we need not devote
significant attention to Debnam's argument that some of FedEx's
conduct occurred immediately after his contract was terminated,
thereby post-dating any employment relationship that may have
existed. As we have explained, our conclusion does not depend on
whether Debnam was employed by FedEx at any time. Rather, Debnam
cannot prevail because his complaint fails to allege facts that his
relevant conduct was undertaken in trade or commerce, either while
he worked for FedEx, immediately afterwards, or at any other time.
IV. Conclusion
For the foregoing reasons, we affirm the dismissal of
Debnam's complaint.
So ordered.
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