Opinion
3:21-cv-00823-SB
05-17-2022
SEAN BOOTHE, on behalf of himself and all similarly situated employees, Plaintiff, v. NIKE, INC., NIKE RETAIL SERVICES, INC., and CONVERSE, INC., Defendants.
FINDINGS AND RECOMMENDATION
HON. STACIE F. BECKERMAN United States Magistrate Judge
Plaintiff Sean Boothe (“Boothe”) filed this putative class action against defendants Nike, Inc. (“Nike”), Nike Retail Services, Inc. (“Nike Retail”), and Converse, Inc. (“Converse”) (together, “Defendants”), alleging claims for breach of contract, unjust enrichment, and violation of Massachusetts wage and hour statutes. Defendants move to dismiss Boothe's first amended complaint (“FAC”) on the grounds that he fails to state a claim for breach of contract and unjust enrichment, fails plausibly to allege that Nike is his joint employer, and violated Local Rule 232. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332. For the reasons explained below, the Court recommends that the district judge grant in part and deny in part Defendants' motion to dismiss (ECF No. 22).
Defendants initially moved to dismiss Boothe's FAC “in its entirety” (Defs.' Mot. Dismiss Am. Compl. (“Defs.' Mot.”) at 2, ECF No. 22), but later acknowledged that they “do not contest that [Boothe] may proceed” with his statutory claims against Nike Retail and Converse. (Defs.' Reply Supp. Mot. Dismiss (“Defs.' Reply”) at 2, ECF No. 28.)
Boothe alleges the following facts in the FAC and the Court accepts them as true for the purpose of evaluating Defendants' motion to dismiss. See Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1024 (9th Cir. 2021) (same).
Nike is an American multinational corporation that primarily sells athletic equipment and clothing. (FAC ¶ 3.) Nike Retail and Converse are subsidiaries of Nike and “[t]ogether, Defendants offer consumers . . . athletic equipment and clothing in hundreds of retail stores across the country[.]” (FAC ¶¶ 4-5.) Boothe was, at different times, an employee (“Associate”) of Nike Retail and Converse in Massachusetts and while working for both, was subject to the same exit inspection policy at issue in this case. (FAC ¶¶ 6-7.)
Nike created and implemented an exit inspection policy that requires Associates, after clocking out of the timekeeping system, to wait for a supervisor to inspect their belongings before leaving the store. (FAC ¶¶ 34, 37, 58.) The time between when the Associate clocks out and when a supervisor permits them to leave is uncompensated. (FAC ¶ 34.) Boothe estimates that Defendants' exit inspection policy caused him to wait between ten and fifteen minutes each time he had to leave the store, resulting in twenty to thirty minutes per shift of uncompensated work time. (FAC ¶¶ 8, 33.) Boothe asserts that this uncompensated time was a violation of Massachusetts wage and hour laws, a breach of his employment agreement, and resulted in Defendants' unjust enrichment. (FAC ¶ 2.) Boothe filed this action individually and on behalf of all similarly situated employees, seeking compensation for the time that Associates are off the clock but required to remain at work pursuant to the exit inspection policy. (FAC ¶ 121(a)-(k).)
LEGAL STANDARDS
To survive a motion to dismiss under FED. R. CIV. P. 12(b)(6), a plaintiff's “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quoting Iqbal, 556 U.S. at 678).
DISCUSSION
Defendants advance four principal arguments in support of their pending motion to dismiss. First, Defendants argue that Boothe fails to state a facially plausible breach of contract claim. (Defs.' Mot. at 12.) Second, Defendants argue that the Court should dismiss Boothe's unjust enrichment claim because of the existence of an adequate remedy at law and the absence of the requisite benefit to Defendants or detriment to Boothe. (Defs.' Mot. at 15.) Third, Defendants argue that Boothe fails sufficiently to plead that Nike had the “right to control” him as an employee of Nike Retail or Converse, which is necessary to establish joint employment. (Defs.' Mot. at 18.) Finally, Defendants argue that Boothe's breach of contract and unjust enrichment claims do not comply with the pleading requirements of Local Rule 23-2. (Defs.' Mot. at 23.)
I. BREACH OF CONTRACT
Defendants challenge the sufficiency of the pleadings relating to three elements of Boothe's breach of contract claim.
To state a breach of contract claim, a plaintiff must allege facts demonstrating that there was “an agreement between parties; the agreement was supported by consideration; the plaintiff was ready, willing, and able to perform his or her part of the contract; the defendant committed a breach of the contract; and the plaintiff suffered harm as a result.” Wagner v. Fed. Home LoanMortg. Corp., 494 F.Supp.3d 80, 85 (D. Mass. 2020) (quoting Haven Real Est. Grp., LLC v. Bell Atl. Mobile of Mass. Corp. Ltd., 236 F.Supp.3d 454, 462-63 (D. Mass. 2017)). Defendants argue that Boothe has failed adequately to plead that: (1) a contract existed between the parties relating to exit inspections, (2) the contract was supported by consideration, and (3) Defendants breached the contract. (Defs.' Mot. at 12-14.)
A. Agreement Between the Parties
1. Nike Retail and Converse
Defendants argue that the Court should dismiss Boothe's breach of contract claim because it is not facially plausible. (Defs.' Mot. at 12.) Defendants argue Boothe “does not provide even the slightest factual content on how a relevant contract was formed” and that “[Boothe] fails to attach, or even describe, the documentation and communications from which a contract could be implied[.]” (Defs.' Mot. at 12-13.) Further, Defendants note that an Associate's time during exit inspections is not compensable under the Fair Labor Standards Act (“FLSA”), nor suggested by any of Defendants' policies or past practices. (Id.; Defs.' Reply at 9.)
The parties agree that Boothe was directly employed by Nike Retail and Converse at different times within the relevant time period. (See FAC ¶¶ 40-41, alleging that Boothe worked for Nike Retail and Converse during the relevant period; Defs.' Mot. at 2, “[Boothe] worked for N[ike] Retail (from September 2014 to November 2018) and Converse (from March 2020 to present) in Boston.”). Boothe alleges that the offer of employment made by both Nike Retail and Converse contained terms and duties that were “explained in writing (through job descriptions and policies), and, verbally (during the interview and training process),” including “the pay [he] would receive for all compensable hours, if [he] accepted Defendants' offer and performed those duties.” (FAC ¶ 94.) Boothe further alleges that one of the work duties necessarily included in the offer of employment was complying with the exit inspection policy at issue here. (See FAC ¶ 102, “Plaintiff and every other Rule 23 Nationwide Class member accepted the terms of Defendants' contractual promise and performed under the contract by doing their jobs and carrying out the work they performed each shift, including by complying with the Defendants' timekeeping and checkout policies”).
Defendants do not dispute that Boothe had an agreement to work for Nike Retail and Converse, and Boothe alleges that part of his performance required by that agreement was to allow a supervisor to inspect his belongings before he left work, and that by not compensating him for that time, Defendants breached the contract. (FAC ¶¶ 102-03.) Applying Massachusetts law, the Court finds that Boothe has adequately alleged the existence of a contract with Nike Retail and Converse that included compensation for work performed, including exit inspections.
In a similar wage and hour case in the District of Massachusetts, the plaintiff employees alleged that their employer violated both the FLSA and Massachusetts common law through the use of timekeeping policies and employment practices that required employees to, inter alia, put in extra work time before and after their regularly scheduled shifts. SeeManning v. Boston Med.Ctr. Corp., 725 F.3d 34, 38-39 (1st Cir. 2013). On appeal, and applying Massachusetts law, the First Circuit held that the district court “erred in ruling that the amended complaint failed to allege a contract.” Manning, 725 F.3d at 57. In Manning, as here, “the terms of th[e] alleged contract were . . . straightforward-[the plaintiff] . . . would ‘provide their labor and services in a specified role for defendants, in exchange for an agreed upon hourly pay rate for ‘all hours worked' by plaintiffs.'” Id. (citing complaint). The First Circuit acknowledged that “[t]he heart of the state law claims is that, through the timekeeping and payroll policies . . ., defendants breached the agreements and/or promises to pay all of the wages due.” Id. The First Circuit held that although “these factual allegations are relatively simple, so are the elements of a claim sounding in contract” and “[w]e see no need to demand more specificity when the core assertion is obvious enough.” Id. at 57-58. For those reasons, the First Circuit vacated the district court's dismissal of the plaintiffs' contract claims. Id. at 58; see also Gasior v. Mass. Gen. Hosp., 446 Mass. 645, 650 (2006) (“[W]e have had no difficulty in concluding that an at-will employment relationship contains implied terms, the breach of which is actionable” (citing DeRose v. Putnam Mgmt. Co., Inc., 398 Mass. 205, 210 (1986) and Fortune v. Nat'l Cash Reg. Co., 373 Mass. 96, 101 (1977))); Spears v. Miller, No. 1683, 2006 Mass.App. Div. 151, at *3 & n.8 (Mass. App. Sept. 26, 2006) (reversing the dismissal of a breach of contract claim where the plaintiffs' “complaint was silent as to their precise employment arrangements” because “the core of this allegation is the [defendant] agreed to pay overtime; that is, that [defendant] specifically contracted with [plaintiffs] as to that issue,” and noting that proving the terms of the contract may be difficult for the plaintiffs but “the likelihood of the plaintiffs' success . . . is not the standard” when ruling on a 12(b)(6) motion); cf.Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 367 (2008) (reversing entry of summary judgment on a breach of contract claim in part because “the absence of Massachusetts law on work breaks, while relevant to statutory claims, does not resolve the question whether [defendant] contractually or otherwise promised breaks to its hourly employees”).
Consistent with these authorities, and accepting Boothe's alleged facts as true and drawing all reasonable inferences in his favor, the Court concludes that the allegations in the FAC are sufficient to support the existence of a contract between Boothe and Nike Retail, and separately between Boothe and Converse, that included compensation for all hours worked, including exit inspections.
2. Nike
The parties agree that Nike never directly employed Boothe. (See Pl.'s Resp. Defs.' Mot. Dismiss (“Pl.'s Resp.”) at 3, ECF 25, “Plaintiff worked directly for two Nike subsidiaries (Converse and [Nike Retail])”; Defs.' Reply at 16 n. 7, “Plaintiff concedes, N[ike], Inc. never directly employed him.”). The Court finds that Boothe fails to allege sufficient facts to support an employment agreement with Nike.
At oral argument, Boothe argued that Nike is liable for Nike Retail's and Converse's breach of contract because of its joint employer relationship with its subsidiaries' employees.The Court disagrees. Under Massachusetts law, a joint employer relationship does not necessarily establish that Nike is vicariously liable for Nike Retail's or Converse's alleged breach of contract. SeeJinks v. Credico (USA), LLC, No. 17CV02731-BLA, 2020 WL 1989278, at *4 (Mass. Super. Mar. 31, 2020) (“‘Joint employment, where a person under the simultaneous control of two employers simultaneously performs services for both, is a well-recognized phenomenon,' and results in both employers being liable under statutory requirements imposed to protect workers” (quoting Case of Whitman, 80 Mass.App.Ct. 348, 355 (2011))), aff'd, 488 Mass. 691 (2021); see alsoTorres-Negron v. Merck & Co., Inc., 488 F.3d 34, 40 n.6 (1st Cir. 2007) (“[J]oint-employer liability does not by itself implicate vicarious liability ....[A] finding that two companies are an employee's ‘joint employers' only affects each employer's liability to the employee for their own actions, not for each other's action.”) (citation omitted).
The Court notes that Boothe's position at oral argument contradicts arguments he asserted in his response. (See Pl.'s Resp. at 22, “the Joint Employment Allegations are Irrelevant to Counts III [common law breach of contract] and IV [unjust enrichment”) (bold omitted).
Here, Boothe does not plead vicarious liability in the FAC, and the Court finds that his factual allegations are insufficient to support either privity of contract, a third party beneficiary claim, or any other theory under which Nike is liable for its subsidiaries' breach of contract. See Paoluccio v. Wells Fargo, N.A., No. 17-11918-TSH, 2019 WL 181288, at *2 (D. Mass. 2019) (“According to Massachusetts law, a breach of contract claim requires the plaintiff either be in privity of contract or establish that he was an intended third-party beneficiary.” (citing Monahanv. Town of Metheun, 408 Mass. 381, 391 (1990))), appeal filed, No. 22-1346 (1st Cir. Mar. 5, 2022). Accordingly, the district judge should dismiss Boothe's breach of contract claim against Nike.
B. Consideration
Defendants argue that even if Boothe has adequately pleaded the formation of a contract, the Court should nevertheless dismiss the contract claim because Boothe fails to plead adequate consideration for Defendants' agreement to compensate exit inspections. (Defs.' Reply at 2-3.) Specifically, Defendants argue that if they have a statutory duty to compensate Boothe for the exit inspections under the Massachusetts Wage Act, as Boothe alleges in the FAC, Defendants' performance of that existing legal duty is not sufficient consideration for a “new promise” to pay for the exit inspections. (Id.)
Boothe alleges in the FAC that exit inspections were compensable under the terms of his employment agreement as part of the “Associate's ‘work' time[,]” and his “continued employment constituted adequate consideration under the contract.” (FAC ¶ 96, citing Bekele v. Lyft, Inc., 199 F.Supp.3d 284, 294 (D. Mass. 2016)). Thus, Boothe argues that compensation for exit inspections was supported by the same consideration as the other work duties he performed, because compliance with the exit inspection policy was a work duty under the contract and, if violated, could be cause for termination. (Pl.'s Resp. at 8); see also Bekele, 199 F.Supp.3d at 294 (“An employee's continued employment may constitute adequate consideration for the contract”) (simplified); Punzak v. McIvor, No. 15-2433-BLS1, 2019 WL 1982273, at *7 (Mass. Super. Apr. 5, 2019) (explaining that “continuing to work after being provided an employment manual ‘provides the consideration necessary to support the contract'” (quoting O'Brien v. New England Tel. & Tel. Co., 422 Mass. 686, 691 (1996))).
Defendants cite no authority suggesting that an employer's statutory duty to pay wages has any impact on the mutual consideration of an employment agreement to pay an employee in exchange for work performed. All employers are obligated to pay wages to employees consistent with their statutory obligations, and that duty does not preexist the employment agreement (i.e., the employer has no duty to pay an individual prior to entering into an employment relationship). Thus, the cases on which Defendants rely for the general rule that performance of an existing legal duty is not sufficient consideration for a new promise do not apply here. (See Defs.' Mot. at 14; Defs.' Reply at 2.) Any employment agreement would fail for lack of consideration if the employer was deemed to have a preexisting statutory duty to pay wages to the employee absent work performed.
Here, Boothe alleges that Defendants agreed to pay him for all work performed, including exit inspections, as part of the original employment agreement. He does not allege that Defendants made any “new promise” to him that would require a finding of additional consideration beyond the mutual consideration of the original agreement. Thus, the Court finds that Boothe has adequately alleged an employment agreement supported by consideration.
C. Alleged Breach
Defendants argue that Boothe has failed sufficiently to plead that Defendants breached the alleged contract. (Defs.' Reply at 3.) Defendants claim that Boothe has failed to plead “what particular contract provisions were allegedly breached, or how each of the three Defendants was involved, if at all, in formation and/or breach of the contract.” (Defs.' Mot. at 13.) Defendants assert that without such allegations, Boothe has not sufficiently pleaded a breach of contract claim. (Id.)
In the FAC, Boothe alleges that “[b]y not paying [Boothe] and every other Rule 23 Nationwide Class member the agreed upon hourly wage for each compensable hour, Defendants systematically breached their contracts with [Boothe] and each member of the Rule 23 Nationwide Class.” (FAC ¶ 103.) Boothe argues that these pleadings are “beyond those recognized as sufficient” to support a breach of contract claim for failure to compensate time spent during the exit inspections. (Pl.'s Resp. at 5.) Boothe submits that Defendants' arguments address the merits of his claims, and are not appropriately considered at the pleading stage. (Pl.'s Resp. at 7.)
The Court finds that Boothe has plausibly alleged that Nike Retail and Converse breached the alleged employment contracts with Boothe by failing to compensate him for time spent in exit inspections. Defendants' arguments focus on whether there was a meeting of the minds with respect to an implied contract term to compensate Boothe for exit inspections, but that is not a questions for the pleading stage. See Martin v. Lowe's Cos., Inc., No. 5:20-CV-00015-KDB-DCK, 2020 WL 5369074, at *4 (W.D. N.C. Sept. 8, 2020) (denying motion to dismiss breach of contract claim relating to pre-shift uncompensated time, and holding that “whatever the ultimate merits of [the defendant's] characterization of the terms of the parties' contract might be, it is not a basis to find that Plaintiff has not sufficiently alleged a breach of her version of the contract”). In light of the Court's finding that Boothe has adequately alleged the existence of a contract with Nike Retail and Converse that included compensation for exit inspections, his allegations that Defendants failed to pay him for that time is sufficient at the pleading stage to allege a breach of the contract. See Manning, 725 F.3d at 57-58 (“The heart of the state law claims is that, through the timekeeping and payroll policies . . . defendants breached the agreements and/or promises to pay all of the wages due.... We see no need to demand more specificity when the core assertion is obvious enough.”); Roche v. Morgan Collection, Inc., 882 F.Supp.2d 247, 258-59 (D. Mass. 2012) (applying Massachusetts law and finding that the plaintiff adequately pleaded a breach of contract claim because “Plaintiff has alleged that she had an employment agreement with Defendants and, . . . has adequately outlined the nature of the agreement as it regards payments for which she believes she is entitled[,]” and “[s]he also claims that she performed her job, did not receive these payments . . . and was damaged as a result”); see also Salvas, 452 Mass. at 374 (finding that the issue of whether a contract existed and the terms of that contract between at-will employees and the employer were for the fact finder, and that “if [defendant] was, in fact, obligated by contract to provide meal breaks to the plaintiff class and [defendant] committed a breach of its contract by failing to provide such meal breaks, then the class members were harmed and may be awarded damages”).
II. UNJUST ENRICHMENT
Defendants seek dismissal of Boothe's unjust enrichment claim on the ground that he cannot “establish either an inadequate remedy at law or the requisite benefit to Defendants and detriment to himself.” (Defs.' Mot. at 17.)
To state a claim for unjust enrichment, Boothe must adequately allege “(1) a benefit conferred upon the defendant by the plaintiff, (2) an appreciation or knowledge by the defendant of the benefit, and (3) acceptance or retention by the defendant of the benefit under the circumstances would be inequitable without payment for its value.” Star Serv. Corp v. ABM Janitorial Servs.-Ne., Inc., No. 14-13665-JGD, 2017 WL 1147442, at *11 (D. Mass. Mar. 27, 2017) (quoting Koufos v. U.S. Bank, N.A., 939 F.Supp.2d 40, 52 (D. Mass. 2013)). “Significantly, however, ‘[a]n equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law.'” Id. (quoting Santagate v. Tower, 64 Mass.App.Ct. 324, 329 (2005)).
Defendants argue that Boothe's common law claim for unjust enrichment is barred here because state statutory wage law provides an “adequate remedy at law.” (Defs.' Mot. at 17; Defs.' Reply at 14.) Boothe responds that his statutory remedy is inadequate because the statute of limitations for his state wage claims is shorter than the limitations period for his common law claims. (Pl.'s Resp. at 2.) At oral argument, Boothe further argued that if his statutory claims fail, he would be without any available remedy.
At oral argument, Boothe's counsel clarified that Boothe is asserting the unjust enrichment claim only for the purpose of recovering for the years beyond the limitations period for his statutory wage claims.
Boothe also argues that statutory wage claims preempt common law wage claims only if the statute “creates a new right or duty” not previously recognized in the common law (Pl.'s Resp. at 12-13, citing Lipsitt v. Plaud, 466 Mass. 240 (2013)), but whether a statute preempts a common law claim is a distinct issue from whether an adequate remedy at law bars an equitable claim.
The Court finds that under Massachusetts law, Boothe's unjust enrichment claim is barred here because he has an available and adequate remedy at law. See Andrews v.Weatherproofing Techs., Inc., 277 F.Supp.3d 141, 150-54 (D. Mass. 2017) (dismissing claim of unjust enrichment based on an employee's allegations of “completing required paperwork at home for which [plaintiffs] were not compensated” because plaintiffs “have a statutory remedy at law, i.e. their state and federal wage act claims”); DaSilva v. Border Transfer of MA, Inc., 227 F.Supp.3d 154, 160 (D. Mass. 2017) (dismissing unjust enrichment claim because the Massachusetts Wage Act provided an adequate statutory remedy).
Courts applying Massachusetts law have sometimes allowed both legal and equitable claims to proceed together, but only in scenarios where it was unclear if there was an adequate remedy at law available to the plaintiff. See, e.g., Lass v. Bank of Am., N.A., 695 F.3d 129, 14041 (1st Cir. 2012) (reinstating both unjust enrichment and breach of contract claims because it was unclear if the plaintiff had an adequate remedy at law); see also Tomasella v. Nestle USA,Inc., 962 F.3d 60, 84 (1st Cir. 2020) (dismissing unjust enrichment claim under Massachusetts law based on finding that breach of contract and unjust enrichment could only proceed simultaneously in Lass because “the ambiguity in the mortgage contract casts doubt on whether a breach of contract claim was indeed available as a legal remedy”); Costa v. FCA U.S. LLC, 542 F.Supp.3d 83, 105 (D. Mass. 2021) (finding that the plaintiff's unjust enrichment claim was precluded because “there is no ambiguity as to whether . . . legal remedies are actually available to him”).
Courts applying Massachusetts law have long rejected Boothe's argument that a shorter limitations period deems an available legal remedy inadequate. See Silsbee v. Ingalls, 27 Mass. 526, 537 (1830) (“Held, that the case was not within the equity jurisdiction of the Court, for no trust was shown, and the plaintiff had once, and but for the statute of limitations, would still have, a plain and adequate remedy at law.”). For example, in Crews v. Memorex Corp., 588 F.Supp. 27, 28-29 (D. Mass. 1984), the court dismissed the plaintiff's claim for an equitable remedy for employment age discrimination, finding that “Massachusetts law does not look with favor on the creation of duplicative remedies[,]” the plaintiff had a statutory remedy available, and an equitable remedy “would interfere with the comprehensive remedial scheme” designed to protect employees from discharge and to protect employers “from unnecessary litigation by a relatively short statute of limitations[.]” Id.; see also Ware v. U.S. Dep't of Interior, No. Civ. 05-3033-CO, 2006 WL 1005091, at *2 (D. Or. Apr. 14, 2006) (“To the extent that plaintiff is arguing that a remedy under the [statute] is not adequate because the remedy would be barred by the statute of limitations, the court rejects that contention. The statute of limitations is a matter of defense and does not go to whether a remedy is an adequate remedy.” (citing Mittleman v. U.S. Treasury, 773 F.Supp. 442, 449-51 (D.D.C. 1991) and Brem-Air Disposal v. Cohen, 156 F.3d 1002, 1005 (9th Cir. 1998))).
Further, courts applying Massachusetts law have also rejected Boothe's argument that he must succeed on his alternative legal remedy for it to be an adequate remedy. See, e.g., Reed v. Zipcar, Inc., 883 F.Supp.2d 329, 324 (D. Mass. 2012) (dismissing unjust enrichment claim under Massachusetts law because “[t]he viability of [plaintiff's statutory] claim . . . is beside the point; its ‘mere availability' bars [the plaintiff's] claims for unjust enrichment” (quoting Fernandes v. Havkin, 731 F.Supp.2d 103, 114 (D. Mass. 2010))); Fernandes, 731 F.Supp.2d at 114 (“Plaintiff's negligence and [statutory] claims thus preclude a claim for unjust enrichment. The disposition of those claims is irrelevant. Their mere availability is a bar to a claim for unjust enrichment.” (citing Adrion v. Knight, No. 07-11277-RGS, 2009 WL 3152885, at *1 n.1 (D. Mass. Sept. 28, 2009))).
For these reasons, the Court recommends that the district judge grant Defendants' motion to dismiss Boothe's unjust enrichment claim.
III. JOINT EMPLOYMENT
Defendants next argue that the Court should dismiss Boothe's statutory claims against Nike because he fails properly to allege that Nike had the “right to control” Boothe, which is necessary to establish a joint employer relationship. (Defs.' Mot. at 19.)
The Massachusetts Supreme Judicial Court recently affirmed that when evaluating a joint employer relationship, courts should analyze the “totality of the circumstances.” Jinks, 488 Mass. at 692. “[W]hether an entity is a joint employer of an individual is determined by considering the totality of the circumstances of the relationship . . . guided by a framework of four factors: whether the entity (1) had the power to hire and fire the individual, (2) supervised and controlled the individual's work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Id.; see also Gonzalez v. XPO Last Mile, Inc., No. 1:19-10290-TSH, 2022 WL 95930, at *4 (D. Mass. Jan. 10, 2022) (citing Jinks and applying the common law test to evaluate a joint employer relationship). Therefore, the Court applies the common law “totality of the circumstances” test guided by the four-factor framework discussed in Jinks.
The parties presented arguments on whether the common law “totality of circumstances” test or the statutory “ABC” test applied before the Supreme Judicial Court resolved the issue in Jinks.
A. Power to Fire
Boothe has alleged that Nike retained the authority to fire Boothe while he was employed by Nike Retail and Converse under Nike's Anti-Harassment and Anti-Discrimination Policy (FAC Ex. 5) and its Electronic Communications Policy. (See FAC Ex. 5 at 2, stating that “a finding of harassment or discrimination may result in termination of employment”; see also FAC Ex. 6 at 2, “[i]mproper use of the electronic communication systems may result in . . . corrective action, up to and including termination”). Defendants acknowledged at oral argument that Nike created the Anti-Harassment and Anti-Discrimination Policy (FAC Ex. 5) and the Electronic Communications Policy (FAC Ex. 6), and has the power to enforce those policies against Nike Retail and Converse employees. The Court finds that Boothe has adequately alleged that Nike had the power to fire him, at least for a violation of these two policies, while employed by Nike Retail and Converse.
B. Supervised and Controlled Conditions of Employment
Boothe also alleges that Nike supervised and controlled his conditions of employment while employed by Nike Retail and Converse. (FAC ¶ 43.) Boothe alleges that Nike “requires all of the employees of its subsidiaries to comply with and conform to its ‘Retail Attendance Expectations' policies . . . and conform with its ‘Retail Conduct Standards,' which control the day-to-day conduct of [Boothe] and all other Associates.” (FAC ¶¶ 49-50.) The Court finds that these allegations, paired with the acknowledgment of control over other policies cited above, are sufficient at the pleading stage to support Boothe's claim that Nike supervised and controlled at least certain aspects of his conditions of employment. See Bah v. Enter. Rent-A-Car Co. of Bos., LLC, No. 17-12542-MLW, 2020 WL 6701324, at *10-11 (D. Mass. Nov. 12, 2020) (finding allegations that employer imposed “a variety of employment policies and practices on [its] regional subsidiaries” including timekeeping procedures and professional conduct standards sufficient to support a finding that the employer “supervised and controlled” the employee); see also Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 676 (1st Cir. 1998) (holding that direct, on-site supervision is unnecessary and that an employer exercising indirect supervisory oversight over employees' conduct and retaining authority to intervene when problems arise sufficient to support a finding of joint employment).
C. Rate and Method of Payment
Boothe fails plausibly to allege that Nike determined the rate and method of his compensation. Boothe alleges that Nike “determined the rate and method of payment” but does not accompany this allegation with any facts to support this conclusion. (FAC ¶ 59.) The Court finds Boothe's allegations insufficient because they lack any factual matter to support a claim to which relief is plausible on its face. See Iqbal, 556 U.S. at 678.
D. Employment Records
Boothe alleges that Nike maintains employment records by pointing to its Electronic Communications Policy which states that Nike “will retain business records and information” for all Associates. (FAC ¶¶ 53-54.) Boothe also alleges that Nike maintains “employment and payroll data for current and former” employees of its subsidiaries. (FAC ¶ 46, citing Decl. of Steve Nelson (“Nelson Decl”), ECF 18, Ex. 2.)
Defendants argue that it is unclear from the language in the communications policy whether the term “Nike” refers to Nike or Nike Retail, and that even if Boothe's allegations are accepted as true, “a parent company's development of policies for its subsidiaries falls short of establishing joint employment” as a matter of law. (Defs.' Mot. at 20, citing Cavallaro v. Umass Mem'l Health Care, Inc., 971 F.Supp.2d 139, 146 (D. Mass. 2013)). Defendants also argue that Boothe misconstrues the Nelson Declaration by conflating the term “access” with “maintenance.” (Defs.' Mot. at 22.) The Court agrees with Defendants that Nelson admitted having “access to employment and payroll data” (Nelson Decl. at 1) (emphasis added), and access alone is not sufficient to establish maintenance or control of employment and payroll data. See Cavallaro, 971 F.Supp.2d at 150 (finding allegations of employer's access to employment records insufficient to support a finding that the employer had maintained employment records).
Absent any other factual allegations to support Boothe's claim that Nike maintains employment records for its subsidiaries' employees, the Court finds that Boothe's allegations are not sufficient to support a reasonable inference that Nike maintained or controlled Boothe's employment records.
E. Additional Factors
Other factors that Massachusetts courts have considered when evaluating joint employment support a finding that Nike may qualify as a joint employer here. See, e.g., Malebrache v. Colonial Auto. Grp., SUCV20163479BLS2, 2017 WL 5907557, at *3 (Mass. Super. Oct. 20, 2017) (finding joint employment allegations sufficient to withstand a motion to dismiss, and noting that automotive dealerships and parent company held themselves out as a single dealership and maintained a common website). Nike and Nike Retail do business under the same name, and all three companies utilize the same website and employ many of the same work policies. (See FAC Exs. 5-6, attaching uniform policies and using the term Nike to refer to “NIKE Inc. and its subsidiaries and affiliates”; see also FAC ¶ 21, alleging that Nike “lists Nike and Converse job postings on the same website”).
F. Conclusion
Although the Court notes that it is a close question, the Court finds that if it accepts Boothe's alleged facts as true and draws all reasonable inferences in his favor, Boothe has plausibly alleged under Massachusetts' totality of the circumstances test that Nike was his joint employer while he was employed by Nike Retail and Converse.
IV. LOCAL RULE 23-2
Defendants also seek dismissal of the FAC because Boothe failed to comply with the pleading requirements of Local Rule 23-2. (Defs.' Mot. at 23, citing LR 23-2(4)). Specifically, Defendants claim that “[Boothe] fails to allege a single common question of fact pertaining to the formation, consideration, performance, and breach of the alleged promise supporting Count 3 [breach of contract], or the alleged benefit or detriment supporting Count 4 [unjust enrichment].” (Defs.' Mot. at 23.)
The Court addresses only Defendants' argument relating to Count 3 because, as discussed above, the Court recommends dismissal of Count 4.
Local Rule 23-2 governs class actions in the District of Oregon and incorporates the requirements of FED. R. CIV. P. 23. See Canales-Robles v. Peters, No. 6:16-cv-01395-AC, 2018 WL 4762899, at *6 (D. Or. July 2, 2018), findings and recommendation adopted by 2018 WL 4762120, at *1 (D. Or. Oct. 1, 2018). Local Rule 23-2(4) requires the filing party to explain “[t]he question(s) of law and fact alleged to be common to the class.” LR 23-2. “[T]he district court's application and interpretation of its Local Rules is entitled to ‘a large measure of discretion[.]'” ABS Ent., Inc. v. CBS Corp., 908 F.3d 405, 427 (9th Cir. 2018) (quoting Lance,Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970)).
With respect to his breach of contract claim, Boothe alleges that “common legal and factual questions include, but are not limited to”:
[w]hether Defendants' failure to pay . . . for the checkout time at their agreed upon rate constitutes a breach of contract; . . . [t]he job duties and requirements of the Rule 23 Class members; . . . [t]he requirement that the Rule 23 Class members comply with Defendants' bag check and exit policies and the disciplinary actions imposed for non-compliance with the policy; and [t]he timekeeping policies, practices, and requirements imposed on the Rule 23 Class relative to the bag check and exit policies.(FAC ¶ 72.)
Contrary to Defendants' argument, Boothe has alleged common questions of law and fact relating to the duties of the parties under the contract, the enforcement of those duties against the Rule 23 class members, and Defendants' alleged breach. The Court finds these allegations sufficient at the pleading stage to satisfy the requirements of Local Rule 23. See Canales-Robles, 2018 WL 4762899, at *6 (“[V]iolation of a local class action rule alone rarely warrants dismissal.” (citing Misra v. Decision One Mortg. Co., LLC, 673 F.Supp.2d 987, 993-94 (C.D. Cal. 2008))). Accordingly, the Court recommends that the district judge deny Defendants' motion to dismiss Boothe's breach of contract claim under Local Rule 23.
CONCLUSION
For the reasons stated, the Court recommends that the district judge GRANT IN PART and DENY IN PART Defendants' motion to dismiss (ECF No. 22), and grant Boothe leave to amend his complaint if he is able to cure any of the pleading deficiencies discussed herein. If the district judge adopts this Court's recommendation and Boothe does not amend his complaint, Boothe's state statutory wage claims (Counts 1 and 2) will proceed against Nike, Nike Retail, and Converse, and his breach of contract claim (Count 3) will proceed against Nike Retail and Converse only.
SCHEDULING ORDER
The Court will refer its Findings and Recommendation to a district judge. Objections, if any, are due within fourteen (14) days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen (14) days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.