Quantcast
Home / News / ‘Misclassified’ worker can file third-party suit

‘Misclassified’ worker can file third-party suit

Under aiding, abetting theory

A truck driver who brought a purported class action alleging that companies he worked for had violated state and federal wage laws by misclassifying drivers as independent contractors could also sue a management-services firm for providing the companies with independent contractor forms, a U.S. District Court judge in Boston has ruled.

The plaintiff driver filed the third-party complaint under a common-law “aiding and abetting” theory.

The defendant firm argued that because the federal and state wage statutes do not explicitly provide for aiding and abetting liability, the plaintiff had no claim against it.

But Judge Denise J. Casper disagreed, denying the defendant’s motion to dismiss.

“Although [the defendant] is correct that the statutory language in question is silent as to aiding and abetting liability, Massachusetts has long recognized the principle that a party may be liable under the common law if it ‘knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself,’” Casper wrote, quoting the Restatement (Second) of Torts.

“[The defendant] has not pointed to … any statutory language or caselaw suggesting that any of the statutes underlying [the plaintiff’s claim] preclude aiding and abetting liability,” Casper continued. “Thus, at this stage of the litigation, it would be inappropriate to dismiss [that claim].”

The 11-page decision is Green v. Parts Distribution Xpress, Inc., et al.

No new law?

Plaintiff’s counsel Michael E. Aleo of Northampton, Mass., handled the case on behalf of the Lawyers Committee for Civil Rights.

“The judge only confirmed … that aiding and abetting is available under common law and is not only limited to situations involving an underlying violation of common law,” Aleo said, noting that, according to the defendant, a common-law aiding and abetting theory is not available when an underlying statutory violation is alleged and that statute does not provide for aiding and abetting liability.

“Had the judge accepted that theory, then it would have been new law,” he said.

At the same time, however, Aleo said the ruling underscores for employers the importance of being careful in how they classify their workers.

“They should lean toward assuming the person is an employee, especially where, as here, the person is engaged in an activity that’s core to the business,” he said. “The defendant is a national outfit that purports to be an expert in these matters, but by going along with this scheme of borderline rubber-stamping the classification of drivers as independent contractors, it gave — intentionally or not — false promise to a lot of small businesses [like the other defendants in the case] that they were acting within the confines of the law.”

David C. Casey of Boston, who represented the defendant, could not be reached for comment prior to deadline.

But business and employment litigator Robert R. Berluti of Boston said the plaintiff seemed to be testing the “frontier” of how far wage and hour violations reach.

“Given the financial consequences of violating the wage and hour laws and misclassifying employees, plaintiffs are searching for more pockets from whom they may recover,” Berluti said.

He added that if the plaintiff’s claim ultimately succeeds, it will create broad questions as to how far the aiding and abetting theory might extend.

“It could lead to a slippery slope,” he said. “Are accountants and attorneys who advise businesses exposed? For example, are the attorneys who draft independent contractor agreements exposed? How about bankers who lend to businesses?”

Aleo downplayed such concerns.

“You’d still have to have some credible allegation of an intent or reasonable awareness of the fact that your conduct was furthering some wrongful activity,” he said. “Simply giving advice or mistaken advice won’t necessarily expose you to an aiding and abetting action.”

Misclassification?

Plaintiff Stanley Green worked as a delivery driver for defendant Parts Distribution Xpress, Inc. — as well as defendant Dealer Tire, LLC, a tire wholesaler to whom PDX supplied drivers — for three stints of roughly one year each between 2005 and 2009.

As a condition of employment, the plaintiff and other delivery drivers were required to sign an independent contractor agreement form supplied by defendant Contractor Management Services, a Nevada company that assists delivery service companies like PDX in contractual relations with truck drivers.

The form contained language under which drivers agreed that they were independent contractors, promised not to assert that they were employees, authorized that payment for their invoices would go to CMS as the “collection agent,” and agreed that any disputes with CMS would be arbitrated in Las Vegas.

The plaintiff signed the form and was classified as an independent contractor while working for Dealer Tire and PDX.

His responsibilities, and those of other similarly situated drivers, were identical to drivers classified as employees, but unlike employees, he was not paid overtime, did not have required withholdings applied to his paychecks, and did not receive Social Security contributions or other benefits.

On Nov. 15, 2010, the plaintiff sued Dealer Tire and PDX in U.S. District Court, alleging misclassification in violation of both the Massachusetts Wage Act and Chapter 93A. He also sued CMS under a common-law aiding and abetting theory. He later amended the complaint to add federal wage law claims as well.

CMS subsequently filed a motion to dismiss, arguing that the claim failed to allege aiding and abetting liability, and that even if it did, it must still fail because the state and federal wage laws do not provide for such liability.

Common law remedy

Casper rejected CMS’s argument that the plaintiff failed to allege aiding and abetting liability in his complaint.

The judge observed that the plaintiff asserted CMS aids and abets delivery companies all over the country in misclassifying employees through the use of its independent contractor form.

Additionally, Casper noted, the plaintiff claimed the use of CMS’s form was a “substantial factor” in depriving he and other similarly situated drivers of their rights as employees of the delivery companies, and that CMS “knowingly and willingly” acted in concert with the companies in accomplishing such deprivation.

“Contrary to CMS’s argument, Green’s amended complaint does specifically allege that CMS is liable under an aiding and abetting theory,” the judge said.

Casper also found that the plaintiff could indeed bring a common-law aiding and abetting claim even though the underlying allegations of misclassification were statutory in nature.

“Green is relying on a common law theory of aiding and abetting, not on a statutory provision prohibiting a party from aiding and abetting any specific conduct,” she said.

As such, the issue was not whether those statutes allow aiding and abetting liability, but whether they expressly prohibit it in such a context, Casper continued.

Because neither she nor CMS could point to any statutory language or caselaw suggesting that the state or federal wage law claims preclude such liability, the defendant’s motion to dismiss should be denied, she said.

Casper also denied the defendant’s motion to dismiss the Chapter 93A claim against it.

Leave a Reply

Your email address will not be published. Required fields are marked *

*