433 F.Supp.3d 7
D. Mass.2019Background
- Plaintiff Tyson King, a Massachusetts resident, worked remotely in Massachusetts as VP of Sales for Prodea Systems, Inc. and its subsidiary Arrayent from Jan 2018–Jan 2019. He was paid by Arrayent and used Prodea accounts and business cards.
- King performed most duties from Massachusetts, solicited clients, managed sales staff, and alleges his work generated substantial revenue; Prodea/Arrayent sent executives to Massachusetts to assist him on at least two occasions.
- Corporate defendants withheld Massachusetts income tax and procured Massachusetts workers’ compensation coverage for King. King alleges roughly $71,000 in unpaid wages and ~$16,000 in reimbursable expenses.
- King sued in Massachusetts Superior Court; defendants removed to federal court and moved to dismiss for lack of personal jurisdiction and failure to state a claim. Plaintiff amended; the motion was renewed.
- The court found personal jurisdiction over the corporate defendants (Prodea and Arrayent) under Massachusetts’ long-arm statute and the Due Process Clause, but dismissed the Individual Defendants for lack of jurisdiction.
- The court applied Massachusetts choice-of-law principles and held Massachusetts law governs King’s wage claims, denying defendants’ Rule 12(b)(6) dismissal as to corporate defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over corporate defendants | King argued Prodea/Arrayent purposefully availed themselves of MA by recruiting, contracting with, employing him in MA, withholding MA taxes, and soliciting MA business with his help | Defendants argued contacts were isolated, King was a non-MA employee allowed to work remotely, and exercising jurisdiction would be improper | Court: Specific jurisdiction exists — corporate defendants transacted business in MA, purposefully availed, and jurisdiction is reasonable under gestalt factors |
| Personal jurisdiction over individual officers | King alleged officers were responsible for wage withholding and thus subject to jurisdiction | Defendants said officer status alone is insufficient; no allegations of personal benefit or primary participation | Court: Dismissed individual defendants for lack of personal jurisdiction — plaintiff failed to show officers personally benefited or were primary participants |
| Choice of law for wage claims | King: Massachusetts law should apply because he lived and worked in MA, taxes withheld, and protections sought are MA-centered | Defendants: Texas law governs (company HQ in Texas; offer letter references Texas law) | Court: Massachusetts law governs under the Restatement “most significant relationship” test; 12(b)(6) dismissal denied |
| Sufficiency of wage claims (Rule 12(b)(6)) | King pleaded factual allegations of unpaid wages and expenses under FLSA and MA Wage Act | Defendants contended claims fail because Texas law governs or claims are otherwise deficient | Court: Because MA law governs and allegations are plausible, claims against corporate defendants survive 12(b)(6) |
Key Cases Cited
- Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310 (1945) (establishes minimum contacts standard for due process jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (sets out "gestalt" reasonableness factors for specific jurisdiction)
- Calder v. Jones, 465 U.S. 783 (1984) (individual defendant must be a primary participant to be haled into forum based on effects contacts)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to assumption of truth on Rule 12(b)(6))
- Cossart v. United Excel Corp., 804 F.3d 13 (1st Cir. 2015) (prima facie standard for personal jurisdiction and sufficiency of in-state contacts)
- Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1 (1st Cir. 2009) (relatedness and purposeful availment analysis for specific jurisdiction)
- United States v. Swiss Am. Bank, 274 F.3d 610 (1st Cir. 2001) (federal-question contacts and nationwide service issues)
- Tatro v. Manor Care, Inc., 625 N.E.2d 549 (Mass. 1994) (Massachusetts long-arm: "transacting any business" and "but-for" causation)