LEONARD VISCITO, Plаintiff, Appellant, v. NATIONAL PLANNING CORPORATION, JOHN JOHNSON, MAURA COLLINS, Defendants, Appellees, JOHN DOE, JANE DOE, Defendants.
No. 21-1081
United States Court of Appeals For the First Circuit
May 13, 2022
Before Lynch, Thompson, and Kayatta, Circuit Judges.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Mark G. Mastroianni, U.S. District Judge]
Bart W. Heemskerk, with whom Heemskerk Business Litigation PLLC was on brief, for appellant.
Sean P. Lynch, with whom Mary Grace Patterson and Morgan, Lewis & Bockius LLP were on brief, for appellees.
BACKGROUND
Viscito is a licensed financial advisor who has been doing business as Viscito Financial Serviсes (“VFS“) since 1997. He is registered with the Financial Institution Regulatory Authority (“FINRA“) and the Securities and Exchange Commission (“SEC“) in several states, including Massachusetts and Florida, and has long maintained an office with staff in Springfield, Massachusetts. In 2008, Viscito bought a home in a part of Florida called The Villages. He regularly worked out of his Florida home -- meeting with clients in person or virtually, responding to clients’ questions by phone or email, placing securities’ trade orders, and providing financial services. His staff remained in Massachusetts, working in the Springfield office, and Viscito sometimes met with clients in person in this office as well. To work within the financial advice and securities industry, Viscito had to be affiliated with a registered “Broker-Dealer” which is “a brokerage firm that is subject[] to the supervision of [FINRA].” Throughout his career, Viscito has been affiliated with several such businesses, including one of the defendants in this case, National Planning Corporation (“NPC“).
NPC is both an investment advising firm and a broker-dealer, headquartered in California. A broker-dealer “oversee[s] the sale of securities[ and] commission-bаsed products” whereas an investment advisor charges fees for its advisory services. Each side of the business has a different regulatory structure and agency tasked with ensuring compliance with the industry‘s rules; NPC was a “dual-registrant” -- meaning it was registered with both the SEC and FINRA.
In November 2013, Viscito (in his personal capacity) signed an Independent Contractor‘s Agreement with NPC and thereafter sold securities and investment products exclusively as an NPC investment advisor representative (“IAR“).1 Viscito registered both his Massachusetts VFS office and his Florida home аs NPC branch offices, with the Florida office tagged by NPC (according to Viscito) as an “office of convenience.”2 In December 2014 Viscito personally became a Florida resident, meaning, in addition to living at The Villages and working extensively from his home, he obtained a Florida driver‘s license, registered to vote in Florida, and registered with Florida as a dual resident for securities licensing purposes.3 Thereafter,
At the time Viscito signed his contract with NPC, his existing clients could join NPC as their new broker and continue to be “serviced” by Viscito. That is, his book of business could and did move with him. The bulk of Viscito‘s client rеlationships began with individuals in Massachusetts, and he continued to meet “at various times” (whatever that means) with some of them in person in his Massachusetts office. Using travel records and credit card statements, NPC asserts (and Viscito does not meaningfully refute4) that, while Viscito was affiliated with NPC, he spent more time in Florida than in Massachusetts or any other location.
During Viscito‘s affiliation with NPC, Viscito met with his clients without any NPC representatives also participating in the meetings and he did not report to NPC the number of client meetings he held or how he advised his clients. NPC did not direct or interfere with Viscito‘s management of his clients’ accounts or the advice Viscito provided to his clients, but, on occasion, NPC directed Viscito via email to sell a particular mutual fund in a client‘s account.5 Once a year, NPC conducted an in-person audit of Viscito‘s Massachusetts NPC branch office and sent him a punch list of the ways in which the branch office was out of compliance with NPC policies. NPC conducted at least one in-person audit of Viscito‘s Florida branch officе, in 2015. Based on Viscito‘s client transactions, NPC paid Viscito commissions and “investment advisory fees” that were “tied to the production generated by the accounts that [he] managed,” but not a regular salary. Viscito received no vacation or holiday pay from NPC.
Viscito‘s affiliation with NPC came to an end in the fall of 2017 when Viscito got an email from NPC‘s CEO telling him that his registration with NPC would terminate that November and spelling out the actions Viscito needed to take in order to complete their separation.6 This included finding a new firm with which tо register and affiliate.7
In July 2020, Viscito and the defendants filed cross-motions for summary judgment, with Viscito seeking judgment as a matter of law in his favor on his two Massachusetts statutory wage claims and the defendants moving for summary judgment on all of Viscito‘s claims.9 The district court conсluded the defendants were entitled to judgment as a matter of law on Viscito‘s Massachusetts statutory wage claims because the “application of Massachusetts[‘] choice-of-law principles leads . . . [to the conclusion] that the MWA is inapplicable” to the relationship between Viscito and NPC. In addition, the district court concluded Viscito‘s other claims weren‘t going anywhere (the FLSA claim because “misclassification” is not an act prohibited by this federal law, the breach of the implied covenant of good faith and fair dealing claim because Viscito hadn‘t alleged a breach of contract or bad faith conduct on NPC‘s part, and the unjust enrichment and quantum meruit claims because the parties’ relationship was indisputably governed by a contract -- the Independent Contractor‘s Agreement -- which knocked out these alternative theories of recovery).
Given this reasoning, the district court denied Viscito‘s motion, granted the defendants’ motion in its entirety, and entered final judgment in the defendants’ favor. Viscito timely appеaled, challenging the judgment as to the state statutory counts only and arguing that the district court erred by concluding the MWA doesn‘t apply to his employment relationship with NPC.
STANDARD OF REVIEW
Choice-of-law determinations are questions of law, see Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir. 2004); Crellin Techs., Inc. v. Equipmentlease Corp., 18 F.3d 1, 4 (1st Cir. 1994), as such they are reviewed anew, Waithaka v. Amazon.com, Inc., 966 F.3d 10, 16 (1st Cir. 2020), (citing Robidoux v. Muholland, 642 F.3d 20, 22 (1st Cir. 2011)), cert. denied, 141 S. Ct. 2794 (2021). “We [also] review the entry of summary judgment de novo.” Garcia-Garcia v. Costco Wholesale Corp., 878 F.3d 411, 417 (1st Cir. 2017) (quoting Echevarría v. AstraZeneca Pharm. LP, 856 F.3d 119, 126 (1st Cir. 2017)). “A grant of summary judgment is appropriate when ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.‘” Id. (quoting Ameen v. Amphenol Printed Circuits, Inc., 777 F.3d 63, 68 (1st Cir. 2015)). “A genuine issue of fact exists where the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. (quoting Taylor v. Am. Chemistry Council, 576 F.3d 16, 24 (1st Cir. 2009)). “The court must examine ‘thе record in the light most favorable to the nonmovant’ and must make ‘all reasonable inferences in that party‘s favor.‘” Id. (quoting Ameen, 777 F.3d at 68). “Where, as here, the parties cross-move for summary judgment, the court must [examine] each motion ‘separately, drawing inferences against each movant in turn.‘” Lawless v. Steward Health Care Sys., LLC, 894 F.3d 9, 20-21 (1st Cir. 2018) (quoting EEOC v. Steamship Clerks Union, Loc. 1066, 48 F.3d 594, 603 n.8 (1st Cir. 1995)). “While we resolve all reasonable inferences in favor of the nonmoving party, we must ignore conclusory allegations, improbable inferences, and unsupported speculation.” Garcia-Garcia, 878 F.3d at 417 (quoting Taylor, 576 F.3d at 24).
DISCUSSION
The issue in this appeal is, as the parties agree, a narrow one: whether Viscito can properly invoke Massachusetts statutory law to govern his employment claims against NPC. The answer turns on the application of Massachusetts’ choice-of-law principles, which we set forth in the context of MWA claims before turning our attention to Viscito‘s arguments about why he thinks the district court got it wrong.
“A federal district court exercising its diversity jurisdiction must apply the choice-of-law rules of the state in which it sits.” Hendricks & Assocs., Inc. v. Daewoo Corp., 923 F.2d 209, 213 n.3 (1st Cir. 1991) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) and Bi-Rite Enters. v. Bruce Miner Co., 757 F.2d 440, 442 (1st Cir. 1985)). “Massachusetts follows ‘a functional choice-of-law approaсh that responds to the interests of the parties, the States involved, and the interstate system as a whole.‘” UBS Fin. Servs., Inc. v. Aliberti, 133 N.E.3d 277, 288 n.12 (Mass. 2019) (quoting Bushkin Assocs., Inc. v. Raytheon Co., 473 N.E.2d 662, 668-70 (Mass. 1985)); see also Hisert v. Haschen, 980 F.3d 6, 8 (1st Cir. 2020) (acknowledging functional approach). “Under the functional approach, the forum applies the substantive law of the state which has the more significant relationship to the transaction in litigation.” Hendricks, 923 F.2d at 213 n.3. This approach in Massachusetts “is explicitly guided by the Restatement (Second) of Conflict of Laws (1971) [(‘Restatement‘)],” Aliberti, 133 N.E.3d at 288 n.12 (quoting Clarendon Nat‘l Ins. Co. v. Arbella Mut. Ins. Co., 803 N.E.2d 750, 752 (Mass. App. Ct. 2004)) (alteration in original), which provides that “[a] court may not apply the local law of its own stаte to determine a particular issue unless such application of this law would be reasonable in the light of the relationship of the state and of other states to the person, thing or occurrence involved,” Restatement § 9 cmt. g.
In their arguments to the district court, both parties relied heavily on a Massachusetts
In rendering its decision, the district court contrasted these details with the characteristics of Viscito‘s and NPC‘s working relationship, highlighting that NPC had a more significant relationship with California than Massachusetts because it is headquartered in California, had no employees in Massachusetts, and registered in Massachusetts as a broker-dealer for regulatоry purposes only. In addition, other than the annual in-person audit of Viscito‘s Massachusetts branch office, NPC provided all of its services to Viscito at his Florida address (e.g., tax forms, commission statements, online trainings) and all of the income Viscito generated for NPC benefited NPC at its home base in California. Moreover, the Independent Contractors Agreement provided that it would be subject to California law.11 The district court also pointed out that Viscito spent more than half of his time working from Florida and that his tie to Massachusetts was his business interest in VFS but that neither VFS nor its employees had a direct relationship with NPC. Ultimately, the district court concluded that “Massachusetts had a tenuous connection to the relationship between NPC and [Viscito, and] California and Florida had more significant ties“; the application of Massachusetts’ choice-of-law principles meant the MWA is inapplicable.
For its part, NPC says the district court got it right when it applied the Massachusetts functional choice-of-law standard to the undisputеd material facts and, in consequence, concluded Massachusetts does not have the most significant relationship to Viscito‘s employment affiliation with NPC. NPC contends Viscito has not shown why the details he wants emphasized should be viewed as dispositive in his favor and that each of the employment characteristics considered in Dow (the state where the employer‘s headquarters is located, the place(s) the worker performed the work, the frequency of interactions between the worker and the employer in Massachusetts, whether another state has a significant connection to the worker and work performance, and whether the contract between the worker and employer has a choice-of-law provision, see 989 N.E.2d at 914) weigh against the application of Massachusetts law here.
We believe NPC has the better argument. The undisputed summary judgment record as we have reviewed it afresh indicates the district court was not wrong to conclude Viscito had spent more than half of his time in Florida while he was affiliated with NPC.13 Viscito clearly managed his relationships with his clients more оften from Florida than in person in Massachusetts. Moreover, when Viscito was in Massachusetts, all of his contacts were
But not so fast, says Viscito. Had the district court properly applied the most significant relationship standard to the facts here, it would have weighed them differently and concluded Massachusetts has the most significant relationship to the employment connection between Viscito and NPC. What Viscito focused on below (and does again here) was on details of his work with NPC such as keeping his clients’ physical files at the Massachusetts branch office, displaying the Massachusetts VFS address on all of his NPC-approved marketing materials, initially providing services to many of his clients in Massachusetts, and maintaining the greatest share оf his assets under management with Massachusetts resident account holders. The district court, says Viscito, was also wrong because it did not give any weight to Massachusetts as the place where Viscito generated fees and commissions for NPC as part of the “core of the employment relationship” factor. Dow, 989 N.E.2d at 914 & n.12 (quoting Cormier v. Pezrow New England, Inc., 771 N.E.2d 158, 163 (Mass. 2002)). But again, he is incorrect. That the district court did not explicitly identify the fees and commissions generated from the clients and documented in files located in Massachusetts as deserving more weight than the other undisputеd details of the working relationship was not error. The district court did
Therefore, for the reasons discussed herein, we conclude, like the district court, that Massachusetts is not the state with the most significant connection to the employment relationship between NPC and Viscito, and NPC is entitled to summary judgment on Viscito‘s Massachusetts statutory claims.14
WRAP UP
All that‘s left to say is the district court‘s judgment is affirmed and each party shall bear its own costs.
