MAXWELL MCCATTY, Plaintiff, v. STALLION EXPRESS, LLC and PHARMSCRIPT LLC, Defendants.
CIVIL ACTION NO. 24-10224-MRG
UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS
March 14, 2025
Hennessy, M.J.
Case 1:24-cv-10224-MRG Document 48 Filed 03/14/25
REPORT AND RECOMMENDATION
March 14, 2025
Hennessy, M.J.
By Order of Reference dated November 5, 2024, pursuant to
I. BACKGROUND
On October 19, 2020, Pharmscript and Stallion entered into a Transportation Services Agreement (the “Services Agreement“) pursuant to which Pharmscript engaged Stallion to provide
The Services Agreement specified that Stallion was an independent contractor, stating:
This Agreement does not constitute the employment of Stallion by Customer [Pharmscript]. It is the Parties’ intention that Stallion is a contract carrier and that the parties to this Agreement are independent contractors and neither shall be deemed to be the agent, representative, partner, joint venture or employer/employee of the other. Stallion shall be responsible for full payment of all wages, salaries, or other compensation to its employees, as well as for the payment of any applicable payroll taxes, worker‘s compensation, unemployment, or other taxes, fees or governmental charges related to providing Services. The Parties understand that the Customer has not [sic] control, right of supervision or termination over Stallion‘s personnel providing Services under this Agreement.
(Docket #26-2 at 8).
On January 29, 2024, McCatty, who worked as a courier for Stallion until August 2022, (Docket #18 at ¶ 7), filed a putative collective and class action complaint alleging that he was improperly classified as an independent contractor and should have been classified as an employee
II. STANDARD OF REVIEW
On a motion to dismiss under
To survive a motion to dismiss, a plaintiff must “state a claim that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). That is, “[f]actual allegations must be
Although the complaint need not provide “detailed factual allegations,” Twombly, 550 U.S. at 555, it must “amplify a claim with some factual allegations . . . to render the claim plausible,” Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.‘” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
Though most motions to dismiss pursuant to
III. ANALYSIS
The FLSA provides broad and comprehensive coverage of employees; indeed, the Supreme Court has suggested that “[a] broader or more comprehensive coverage of employees . . . would be difficult to frame.” United States v. Rosenwasser, 323 U.S. 360, 362 (1945). However, the statute‘s reach is not without limits. The FLSA applies only to those “employees” who are “employed” by an “employer.”
“[T]he remedial purposes of the FLSA require courts to define ‘employer’ more broadly than the term would be interpreted in traditional common law applications.” Baystate Alt. Staffing v. Herman, 163 F.3d 668, 675 (1st Cir. 1998) (quoting Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir. 1991). An “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”
“[T]o determine whether an employment relationship exists for the purposes of [the FLSA], courts look not to the common law conceptions of that relationship, but rather to the ‘economic reality’ of the totality of the circumstances bearing on whether the putative employee is
A. The Power to Hire and Fire
McCatty acknowledges that he and the other couriers were hired directly by Stallion. (Docket #18 at ¶ 21). However, he argues that Pharmscript indirectly dictated which applicants would or would not be hired by setting the reqiurements couriers must meet to be hired, namely that the couriers must be appropriately licensed, drug tested, background checked, and have a suitable driving history. (Docket #18 at ¶ 27(j); Docket #31 at 9).
In Sigui v. M+M Communications, Inc., 310 F. Supp. 3d 313, 319 (D.R.I. 2018) (Almond, M.J.), Cox contracted with M+M to perform installation and maintenance services on cable television, internet, telephone lines, and equipment for Cox customers throughout Rhode Island. M+M provided these installation and maintenance services through M+M‘s Field Service Technicians. Id. While M+M directly hired the Technicians, the contract between Cox and M+M
This court sees no substantive difference between the hiring requirements Cox set for M+M hires and the Pharmscript hiring parameters for couriers. Clearly it is good business sense for a
In support of his argument that Pharmscript was a joint employer of the couriers, McCatty alleges the following in his amended complaint:
37. Stallion has terminated Couriers for failing to comply with its and/or Pharmscript‘s instructions, requirements and specifications.
38. Upon information and belief, Pharmscript has directly caused/instructed Stallion to terminate Couriers.
(Docket #18 at ¶¶ 37-38). The court, reading the complaint as a whole, understands McCatty to be alleging that Pharmscript instructed Stallion to terminate couriers who did not meet its quality control standards. This allegation is not sufficient to find that Pharmscript had such an ability to fire couriers as to be a joint employer. Stallion had full authority to maintain the employment of couriers who met Pharmscript‘s standards; conversely, Stallion had the authority to fire any courier it believed should be fired even if that courier met Pharmscript‘s standards. See Jacobson v. Comcast Corp., 740 F. Supp. 2d 683, 689 (D. Md. 2010) (finding that cable company‘s ability to advise installation company with which it contracted that installation company‘s technicians who were not meeting cable company‘s standards were no longer authorized to perform installation work on behalf of cable company – in effect a “firing” – was done only in the context of quality control and did not weigh in favor of finding cable company an employer of technician for purposes of the FLSA).
Hence, the court finds that McCatty‘s allegations concerning Pharmscript‘s ability to hire and fire couriers weighs against finding Pharmscript is his joint employer.
B. Employee Work Schedules and Conditions of Employment
In his amended complaint, McCatty alleges that Pharmscript developed and dictated the following requirements which Pharmscript and Stallion worked together to impose and enforce upon couriers:
- Requiring Couriers to obtain signed electronic receipts which include the signature of the consignee, signature time and date.
- Requiring Couriers to provide same day delivery of any return item to its origin or other location determined by Pharmscript.
- Requiring real-time tracking of Couriers.
- Requiring real-time reporting of pick-up and delivery of each product delivery.
- Dictating the types of vehicles Couriers were and were not permitted to use to make deliveries.
- Prohibiting Couriers from transferring any of the products being delivered to another individual to perform or complete the delivery.
- Prohibiting Couriers from simultaneously transporting property or persons for any other entity without Pharmscript‘s authorization.
- Requiring Couriers to comply with all delivery instructions, including any special handling, temperature and timing requirements.
- Requiring Couriers to report any delays and estimated extent of the delay.3
- Requiring Couriers to be appropriately licensed, drug tested, background checked, and have a suitable driving history.
- Dictating terms of agreements that Couriers entered into with Stallion at the time of the Courier‘s hire.
- Requiring Couriers to wear standardized uniforms with visible photo ID.
- Requiring Couriers to receive education and training related to HIPAA compliance and the handling and storage of medications and controlled substances.
“[S]upervision and control is probative of an employment relationship only when the oversight demonstrates effective control over the schedule and conditions of employment.” Jacobson, 740 F. Supp. 2d at 690. “A high level of supervision and control is not an automatic trigger for joint employment.” Id. Instead, it is “[t]he nature of the control [that] distinguishes employment and contractor relationships.” Id. at 690-91.
This court finds the opinion in Herman v. Mid-Atlantic Installations Services, 164 F. Supp. 2d 667 (D. Md. 2000), instructive. There, Comcast, a cable company, entered a contract with MAT for installation service. Id. at 669. The contract between Comcast and MAT had strict specifications regarding technical standards and quality control, the fitness of installers, and the timeliness of delivery of services. Id. at 669-70. MAT in turn hired individual installers to do the actual installation work. Id. at 669. The contract that the installers signed unambiguously stated that the relationship between MAT and the installer was that of independent contractor/client. Id. at 669-70. The installers received job orders from MAT to install or repair the Comcast cable equipment in the homes of Comcast customers. Id. at 670. MAT assigned routes to the installers
The court initially addressed whether the installers were employees of MAT, as Comcast could only be considered a joint employer if MAT was also one. Id. at 671. While the court noted that, on their face, the facts of the case appeared to demonstrate substantial control by MAT, upon careful review it was apparent that MAT did not exercise that type of control necessary to label the installers employees. Id. at 672. In so holding, the court determined that “requiring the [i]nstallers to meet MAT‘s and Comcast‘s installation specifications [was] entirely consistent with the standard role of a contractor hired to perform highly technical duties” as “[i]t is in the nature of a contract that the contractor promises to deliver the performance bargained for by the client.” Id. “In short, requiring a contractor to meet the client‘s technical specifications is not the type of ‘control’ which bestows ‘employee’ status on the contractor.” Id. at 673. The requirement to wear uniforms and badges identifying their affiliation with MAT also did not transform the installers into employees because the requirement did not affect the installer‘s “economic dependence on or independence from MAT in any way, but merely allows consumers to be assured of their bona fides.” Id. at 673. The fact that MAT established procedures to ensure that installers would service customers within a four-hour window stemmed from the nature of the business and the need to
The putative employer cable company in Jacobson v. Comcast Corp. monitored the technicians of the installation company with which they had contracted at a higher level than MAT did of the installers in Herman. In Jacobson, the cable company utilized a program which permitted it to exercise real time monitoring of a technician‘s work. Jacobson, 740 F. Supp. 2d at 687. The cable company regularly monitored the location of the technicians to determine where they were, how long they were on a site, and what equipment was utilized; specified the times at which they were supposed to arrive at appointments; and regularly evaluated their completed work to ensure that it met standards. Id. at 687, 691. Though typically the cable company would forward batches of service calls to the installation company, at times the cable company would contact technicians directly to point them to particular jobs. Id. at 687. The court concluded that “[w]hile [the cable company‘s] supervision and control may appear substantial in degree, it is qualitatively
With these cases as a guide, the court concludes that McCatty has failed to allege that Pharmscript exercised the type of control over the courier‘s work schedules and conditions of employment indicative of the employer/employee relationship. McCatty does not allege that Pharmscript assigned specific couriers to certain routes or required specific carriers to work certain shifts. See Moreau v. Air France, 356 F.3d 942, 950 n.5 (9th Cir. 2004) (finding for purposes of joint employment analysis that airline did not control schedules of contract personnel servicing planes on the tarmac where airline scheduled its flights into and out of the airport, “which necessarily indicated when the services were to be performed,” but contractor “remained responsible for designating which employees would report to service the aircraft“). While Pharmscript may have increased courier work hours by adding stops, requiring a certain order of delivery, or requiring couriers to remain on Pharmscript‘s premises until a product was ready for pickup, such incidental impact on the couriers’ work schedule is not the type of control exercised by an employer over an employee. See Layton v. DHL Express (USA), Inc., 686 F.3d 1172, 1178 (11th Cir. 2012) (finding that putative employer‘s occasional erratic pick-up orders which resulted in drivers working longer hours was not the type of control over work schedule exercised by employer).
“Quality control and compliance-monitoring that stem from the ‘nature of the business’ – that is, from the nature of the goods or services being delivered – are ‘qualitatively different’ from control that stems from the nature of the relationship between the employees and the putative
C. Rate and Method of Payment
Per the Services Agreement, Pharmscript contracted to pay Stallion per delivery and/or mile. (Docket #26-2 at 3). The Services Agreement is silent as to the rate that couriers are to be compensated. In his amended complaint McCatty makes the following allegations with respect to Pharmscript‘s control of the rate of payment of himself and other couriers:
39. Upon information and belief, Pharmscript has developed the payment structure utilized by Stallion to compensate the Couriers.
40. More specifically and upon information and belief, Pharmscript developed a compensation structure pursuant to which all Couriers were paid a certain amount per mile plus an additional amount per delivery.
41. In practice, Couriers are offered delivery routes that they have no meaningful opportunity to negotiate with compensation ultimately [determined] by Stallion based on the parameters established by Pharmscript.
. . .
43. Couriers are also subject to the same deductions that Stallion deducts from their compensation, including a tech fee, motor carrier authority fee, and IC program fee, which upon information and belief are costs for Stallion to comply with Pharmscript‘s requirements, that Stallion passes on to the Couriers.
(Docket #18 at ¶¶ 39-41, 43).
In evaluating the allegations in the amended complaint, the court “must draw on [its] judicial experience and common sense and read the complaint as a whole.” Webb v. Injured Workers Pharm., LLC, 72 F.4th 365, 373-74 (1st Cir. 2023) (alterations omitted); accord Wiener v. MIB Grp., Inc., 86 F.4th 76, 85 (1st Cir. 2023). Reading the amended complaint as a whole and taking into account the Services Agreement, the court finds that McCatty has alleged that Pharmscript developed a payment structure, memorialized in the Services Agreement, by which it would compensate Stallion; Stallion ultimately determined the courier‘s compensation based on the parameters established by Pharmscript in the Services Agreement; the couriers’ compensation was based on mileage plus an additional amount per delivery; and Stallion subjected the couriers to compensation deductions to cover the costs of Stallion‘s compliance with Pharmscript‘s requirements. Distilled, McCatty alleges that Pharmscript controlled the rate of the courier‘s payments because it paid Stallion on a per mile plus delivery basis and Stallion, in turn, paid the couriers on a per mile plus delivery basis and because Stallion passed on to the couriers, in the
In Jacobson v. Comcast Corp., discussed supra, a cable company contracted with an installation company which, in turn, hired technicians to perform installations. 740 F. Supp. 2d at 686. The plaintiff technicians argued that the cable company exercised control over the installation company‘s pay structure because the cable company paid the installation company on a per service basis and the installation company, in turn, paid their technicians on a per service basis. Id. at 692. The court rejected this argument and instead found that the cable company‘s involvement in the pay structure of the installation company was typical of any client/independent contractor relationship and that to find otherwise “would dramatically expand the FLSA to subsume traditional independent contractor relationships.” Id.. The court noted that “[a]n employee‘s income, received from its direct employer, will always be determined and influenced by what a contractor decides to pay the direct employer for services rendered by the employee.” Id. (quotation and alterations omitted). That any costs incurred by the direct employer in complying with the contractor‘s requirements would also influence an employee‘s income flows logically from this maxim.
This court finds the reasoning in Jacobson persuasive and thus determines that the rate and method of payment weighs against a finding of joint employment.
D. Employment Records
McCatty alleges that Pharmscript maintained “records showing the miles driven by Couriers, and, in part, records showing hours worked by Couriers, which includes stop level detail in an excel file[] for all Couriers.”4 (Docket #18 at ¶ 48). He asserts that the only inference that
Hence, having applied the four Baystate factors, the court determines that McCatty has failed to allege an employment relationship between himself and Pharmscript.
IV. CONCLUSION
For the foregoing reasons, I hereby RECOMMEND that the motion to dismiss (Docket #25) be ALLOWED. In light of this recommendation and the court‘s separate ruling on Stallion‘s motion to dismiss and compel individual arbitration, I further RECOMMEND that the motion to certify class (Docket #15) be DENIED AS MOOT.5
/S/ David H. Hennessy
David H. Hennessy
UNITED STATES MAGISTRATE JUDGE
Notes
Upon request by Customer [Pharmscript], Stallion will facilitate pick-up from each location designated by Customer Shipping Containers (including Return Items), with accompanying delivery receipts, and make delivery to Customer‘s consignees or Customer location specified on the shipping label at the date and time in accordance with the terms of this agreement. The delivery services will be provided in a reasonable, efficient, and timely basis in accordance with the instructions, requirements and specifications of the Customer. Stallion will obtain a signed electronic receipt which shall include the signature of consignee, signature time, and date, and provide same day, delivery of each Return Item to its origin or other Customer location. Copies of delivery documentation shall be electronically provided to Customer and retained by Stallion. Stallion shall provide real-time tracking and reporting of pick-up and delivery of each Shipping Container as further provided herein. Stallion will make standard deliveries by automobile, i.e. vans, cars, and SUVs, and not utilize pick-up trucks or box trucks unless specifically authorized by Customer.(Docket #26-2 at 3).
