Chebotnikov v. Limolink, Inc.

MOTION for Summary Judgment

D. Mass.November 1, 2016

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS ___________________________________ ) VLADIMIR CHEBOTNIKOV, ) EUGENE PANTYUKHIN, YOGESH ) SHARMA, on behalf of themselves ) and others similarly situated, ) ) Plaintiffs, ) ) v. ) Civ. A. No. 1:14-cv-13475-FDS ) LIMOLINK, INC., ) ) Defendant. ) ___________________________________ ) PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT AND MEMORANDUM IN SUPPORT THEREOF Plaintiffs Vladimir Chebotnikov, Eugene Pantyukhin, and Yogesh Sharma (“Plaintiffs”) are limousine chauffeurs who drove for Defendant LimoLink, Inc. (“LimoLink”) in Massachusetts. LimoLink is a corporation headquartered in Marion, Iowa, that describes its business as the management of ground transportation reservations globally. LimoLink markets itself as “having the world’s largest personally vetted chauffeur network,” but disclaims an employer-employee relationship with its drivers. LimoLink retains exclusive control over all aspects of the customer relationship with its passengers, which it refers to as “LimoLink passengers” or “LimoLink customers.” LimoLink charges an automatic gratuity to LimoLink customers, which is clearly labeled as a gratuity on customer communications such as receipts and invoices, but does not pay the total proceeds of that gratuity to drivers performing the service. Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 1 of 22 2 Plaintiffs, on behalf of themselves and others similarly situated, as defined in their Motion for Class Certification, filed concurrently, move for partial summary judgment on two distinct issues: 1) LimoLink’s liability for violating the Massachusetts Tips Law by retaining portions of the automatic gratuities paid by its passengers, and 2) LimoLink’s misclassification of Plaintiffs as independent contractors in violation of the Massachusetts Independent Contractor Statute. Plaintiffs seek summary judgment on liability only, reserving the question of damages for trial. With respect to the first issue, Plaintiffs seek to represent all drivers in Massachusetts subject to LimoLink’s gratuity policy, i.e., all drivers who have not received the total proceeds of gratuities paid by customers. Summary judgment is appropriate because LimoLink’s undisputed policy and practice of retaining gratuities paid by LimoLink passengers violates the Massachusetts Tips Law, a strict liability statute, as a matter of law. With respect to the second issue, Plaintiffs seek to represent a narrower class of drivers who have been characterized by LimoLink as “independent operators” (as opposed to drivers for LimoLink’s “fleet vendors”). Plaintiffs seek summary judgment under prong two and/or prong one of the three-prong Independent Contractor Statute because the undisputed facts demonstrate that: 1) Plaintiffs performed services in the usual course of LimoLink’s business; 2) LimoLink retained the right to control Plaintiffs’ performance of services for LimoLink through its standard Service Provider Agreements; and 3) LimoLink exercised control in fact over Plaintiffs through its elaborate system of system of preferentially assigning reservations to drivers that Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 2 of 22 3 comply with more of LimoLink’s policies and preferences and its robust quality control mechanisms. Under M.G.L. c. 149, § 148B, this Court must award summary judgment to Plaintiffs if it finds no material dispute of fact as to any of these three issues. STANDARD OF REVIEW 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.” Fed. R. Civ. P. 56(a). This test is “steeped in reality,” meaning that “conjectural or problematic” factual disputes do not preclude summary judgment. Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990); Mack v. Great Atlantic and Pacific Tea Co., 871 F.2d 179, 181 (1st Cir. 1989). Either party may move for summary judgment on any part of a claim or defense, including seeking partial summary judgment on liability while leaving the matter of damages open for later proceedings. In re Vazquez Laboy, 647 F.3d 367, 375 (1st Cir. 2011) (“The opportunity for a plaintiff to present evidence on damages after winning partial summary judgment on liability is a right so fundamental in civil proceedings that it normally goes without saying”). ARGUMENT I. LimoLink Violated the Massachusetts Tips Law as a Matter of Law by Retaining Portions of Gratuities Paid by Limousine Customers. The Massachusetts Tips Law (“Tips Law”), M.G.L. c. 149, § 152A, is unequivocal that employers and other entities may not keep any portion of gratuities paid for services provided by service employees. A service employee is defined by the statute as a person who 1) “works in an occupation in which employees customarily receive tips or gratuities” and 2) “provides service directly to customers or consumers.” M.G.L. c. Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 3 of 22 4 149, § 152A(a). The Massachusetts Attorney General has specifically identified taxicab drivers, along with hairdressers, baggage handlers, and bellhops, as examples of service employees (in a non-exclusive list). Advisory 2004/3, An Advisory from the Attorney General's Fair Labor and Business Practices Division on an Act Protecting the Wages and Tips of Certain Employees.1 The Tips Law is a strict liability statute. Matamoros v. Starbucks Corp., 699 F.3d 129, 137 (1st Cir. 2012) (citing Cooney v. Compass Grp. Foodservice, 69 Mass. App. Ct. 632, 639 (2007)). It establishes that any charge labeled a gratuity “must be remitted to protected employees . . . regardless of the employer's, employee's, or patron's [actual] intent or expectation.” Bednark v. Catania Hosp. Grp., Inc., 78 Mass. App. Ct. 806, 814 (2011); DiFiore, 454 Mass. at 492. Notably, the statute imposes liability on any “entity that submitted bills or invoices,” not just employers. Cooney, 69 Mass. App. Ct. at 641. Here, there is no material dispute of fact that LimoLink’s drivers 1) “work[] in an occupation in which employees customarily receive tips or gratuities” and 2) “provide[] service directly to customers or consumers,” M.G.L. c. 152A(a), because limousine drivers are quintessential service employees, like taxicab drivers. There is no material dispute of fact that LimoLink charged its customers a gratuity and labeled it as such, both at the time of booking and paying for the trip. Statement of Facts (“SOF”), ¶ 14. There is no material dispute of fact that LimoLink retained a substantial portion of the gratuity paid by its customers, because the total amount was treated by LimoLink as 1 “The Attorney General is charged with enforcing the Tips Act, see Mass. Gen. Laws ch. 149, § 152A(f), and her interpretation is entitled to ‘substantial deference.’” Matamoros v. Starbucks Corp., 699 F.3d 129, 135 (1st Cir. 2012) (citation omitted). Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 4 of 22 5 general revenue to the company. SOF, ¶ 15. LimoLink paid a portion of the gratuity to the driver (also labeled a “gratuity”), but the amount was significantly less than it received from the customer. SOF, ¶¶ 16-17. For example, on September 28, 2011, LimoLink charged its customer $80 as a gratuity, but only paid Plaintiff Sharma $50. SOF, ¶ 17(c). LimoLink cannot dispute that it retained significant shares of gratuities. LimoLink’s expected argument that its drivers are not service employees because they allegedly exercise managerial responsibility is a red herring. The established intent of the Legislature in defining service employees to exclude those with managerial responsibility was to “bar employees who possess any managerial responsibilities from participating in tips pools with ‘wait staff’ employees.” Matamoros, 699 F.3d at 134 (“[T]he issue is which employees may receive distributions from the communal tips pools. It is this issue that the Tips Act resolves. In doing so, the Act prohibits a system in which wait staff and employees who have managerial responsibilities share in the same reservoir of tips.” (emphasis added)). Here, the facts are inapposite from that contemplated by the Legislature. LimoLink does not operate a tip pool. The tips are charged and paid per trip, each of which are performed by one driver. Moreover, none of LimoLink’s drivers are designated by LimoLink as being LimoLink employees with managerial responsibilities, a fact that LimoLink cannot dispute. See SOF, ¶ 20.2 2 The managerial responsibility at issue must be endowed by an employer on an employee. See Matamoros, 699 F.3d at 139 (“At the risk of belaboring the obvious, we add that even if some baristas occasionally render the same sort of assistance to co-workers as shift supervisors are required to do, they are not responsible for rendering that assistance. A barista's job description does not contain any managerial responsibilities.” (emphasis added)). The only logical entity to which the tip-sharing employee could have a “responsibility” is an employer. Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 5 of 22 6 The question here is simple: is the driver entitled to retain the entire gratuity paid to LimoLink for that driver’s services or is LimoLink entitled to retain a portion of that gratuity? The answer cannot be answered in favor of LimoLink. The Legislature “made clear in § 152A(a) that it wished the definitions it enacted to serve its legislative purpose, not thwart it, and invited courts to revise the definitions if they interfered with that legislative purpose” by stating that the definitions were to apply “‘unless a different meaning is required by the context or is specifically prescribed.’” DiFiore, 454 Mass. at 493-4 (quoting M.G.L. c. 149 § 152A(g)). An interpretation of the Tips Law that would allow LimoLink to retain some portion of customer tips would amount to “an ‘end run’ around the Act [that] would contravene the express purpose of the Act, namely to protect gratuity payments given to, or intended for, service employees such as [chauffeurs], and would nullify § 152A(g) of the Act, which specifically forbids this type of a maneuver ‘by special contract . . . [or] any other means.’” Id. at 496. II. Limolink Misclassified its Limousine Drivers as “Independent Contractors” Massachusetts law establishes a strong presumption that those who perform services for an entity are employees of that entity. Martins v. 3PD, Inc., 2013 WL 1320454, at *1 (D. Mass. Mar. 28, 2013) (Woodlock, J.) (granting summary judgment to delivery drivers for a delivery company). The Massachusetts Independent Contractor Statute, M.G.L. c. 149, § 148B, sets forth the only means by which a putative employer may overcome this presumption of employee status: by proving that its workers can satisfy all three parts of a three-part test. The putative employer bears the burden of proof under this statutory regime. Scalli v. Citizens Fin. Group, Inc., 2006 WL 1581625, Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 6 of 22 7 at *14 (D. Mass. 2006). Specifically, Section 148B requires putative employers to prove: (1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and (2) the service is performed outside the usual course of the business of the employer; and (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. M.G.L. c. 149, § 148B(a) (emphasis added). The test is conjunctive, meaning that the “failure of [an] employer to prove all three criteria . . . suffices to establish that the individual in question is an employee.” Somers, 454 Mass. at 589 (emphasis added). Accordingly, failure by a putative employer to satisfy even one of the three prongs will result in a finding of employee status. See, e.g., Awuah v. Coverall North America, Inc., 707 F. Supp. 2d 80, 82 (D. Mass. 2010). Section 148B is a “strict liability statute.” Somers, 454 Mass. at 590-91. Therefore, intention and motive are irrelevant in evaluating the three criteria. See id. (“Regardless of the agreement between the plaintiff and [employer], and regardless of the parties’ intentions that his work be performed as an independent contractor, unless [the employer] successfully satisfies the requirements of [section] 148B, the plaintiff was [the employer’s] employee”). See also Awuah, 707 F. Supp. 2d at 83-84. Like the Tips Law discussed above, section 148B is a remedial statute “entitled to liberal construction.” Depianti v. Jan-Pro Internat’l, Inc., 465 Mass. 607, 620 (2013). As such, courts must interpret its provisions broadly to favor employees in order to accomplish its ameliorative purpose. Psy-Ed Corp. v. Klein, 459 Mass. 697, 708 (2011) (it Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 7 of 22 8 is “an error,” when construing remedial statutes, to “imply [any limitations] where the statutory language does not require it”); Crocker v. Townsend Oil Co., 464 Mass. 1, 13 (2012) (“We [the Massachusetts Supreme Judicial Court] have consistently held that the legislative purpose behind the Wage Act (and especially the ‘special contract’ language) is to provide strong statutory protection for employees and their right to wages.”). The question of employee status is a matter of law, see Somers, 454 Mass. at 584, and therefore is ripe for summary judgment. Courts have granted summary judgment for plaintiffs on section 148B violations in industries as varied as cleaning, delivery driving, and exotic dancing.3 Moreover, the status of Plaintiffs as employees of LimoLink may be determined by this Court separate from the question of damages. See Somers, 454 Mass. at 584. Plaintiffs here request only that this Court determine as a matter of law that LimoLink misclassified them as independent contractors; they agree that the issue of damages should be reserved for trial. A. LimoLink cannot prove that chauffeuring limousine passengers from one location to another is outside the usual course of its business. There is no genuine dispute of fact as to the nature of services performed by Plaintiffs, chauffeuring LimoLink passengers from one location to another, or the usual course of business of LimoLink, which during this litigation has characterized its 3 See, e.g., De Giovanni v. Jani-King Int'l, Inc., 968 F. Supp. 2d 447 (D. Mass. 2013) (janitors); Sandoval v. M.J.F. Bowery Corp., Civil Action No. 09-1835 (Mass. Super. Ct. July 22, 2011) (exotic dancing); Oliveira v. Advanced Delivery Sys., Inc., 2010 WL 4071360 (Mass. Super. Ct. Jul. 16, 2010) (delivery drivers); Fucci v. Eastern Connection Operating, Inc., C.A. No. 2008-2659 (Mass. Super. Ct. Sep. 21, 2009) (delivery drivers); Chaves v. King Arthur’s Lounge, Inc., Civil Action No. 07-2505 (Mass. Super. Ct. July 30, 2009) (exotic dancing). Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 8 of 22 9 business as the management of ground transportation reservations. SOF, ¶ 2. It is a matter of law, therefore, which may be decided by summary judgment, whether the services performed by Plaintiffs were in the usual course of LimoLink’s business. Indeed, multiple courts have granted summary judgment to plaintiff-employees under prong two of the Independent Contractor Statute. See, e.g., Schwann v. FedEx Ground Package System, Inc., 2013 WL 3353776, at *4-*6 (D. Mass. July 3, 2013) (awarding summary judgment for plaintiffs under second prong); Martins v. 3PD, 2013 WL 1320454, 13-17 (D. Mass. Mar. 28, 2013) (same); Awuah, 707 F. Supp. 2d at 82 (same). The Massachusetts Supreme Judicial Court analyzes two factors to determine whether a service is within the usual course of business of a putative employer: 1) whether the service is necessary as opposed to incidental to the purported employer’s business, and 2) whether the service falls within the “purported employer’s own definition of its business.” Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321, 332 (2015). With respect to the first factor, the distinction between “necessary” and “merely incidental” typically proceeds by analogy. See id. at 333-34. For example, the Massachusetts Attorney General has identified the following as examples of incidental as opposed to necessary services: moving office furniture, washing windows, and mowing grass for an unrelated business, such as an accounting firm. Advisory 2008/1, An Advisory from the Attorney General's Fair Labor Division on M.G.L. c. 149, s. 148B. On the other hand, the Attorney General has identified limousine drivers as providing a necessary service to limousine businesses: “[w]hen one is in the business of dispatching limousines, the services of chauffeurs are provided in the usual course of business Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 9 of 22 10 because the act of driving is necessary to the business.” Id. (quoting Carpetland U.S.A., Inc. v. IL Dept. of Employment Security, 201 Ill. 2d 351, 386-88 (2002)).4 Here, LimoLink characterizes its business as taking reservations from customers (referred to by LimoLink as “LimoLink customers” or “LimoLink passengers”) and “assigning” those reservations to a driver or a vendor, preferably one of its independent operator drivers. SOF, ¶¶ 2, 5, 32-33, 41-52. In the same way that the services of limousine chauffeurs are necessary to the business of dispatching limousines, the services of limousine chauffeurs are necessary to the business of booking reservations and assigning those reservations to drivers. See Advisory 2008/1. Plaintiffs’ position finds strong support in Sebago. In that case, brought by taxicab drivers subject to strict municipal regulation, the SJC explicitly warned of businesses that artificially distinguish between “administrative and operational aspects of their business”: This is also not a case of owners creating a false dichotomy between the administrative and operational aspects of their business. Contrast Massachusetts Delivery Ass’n v. Coakley, 769 F.3d 11, 14, 21 n. 4 (1st Cir. 2014) (“[C]ouriers deliver packages for delivery companies. There can be no dispute that they act in the course of business for the delivery companies, even if one performs the deliveries and the other arranges the deliveries”). 471 Mass. at 330 (emphasis added). 4 “[A]s the Attorney General's office is the department charged with enforcing the wage and hour laws, its interpretation of the protections provided thereunder is entitled to substantial deference. . . .” Elec. Data Sys. Corp. v. Attorney Gen., 454 Mass. 63, 69, 907 N.E.2d 635, 640 (2009) (internal quotation marks omitted) (citation omitted). Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 10 of 22 11 Here, LimoLink admits that it manages the provision of transportation services to its customers. SOF, ¶ 2. To the extent that LimoLink argues it is merely in the business of arranging reservations, not the actual provision of transportation services, this is exactly the false dichotomy of which the SJC warned in Sebago. See also 3PD, 2013 WL 1320454, at *15 (“3PD cannot persuasively argue that it did not provide delivery services because those services were provided by third parties . . . . That is merely an attempt to ‘separat[e] . . . executive and managerial functions’ which is insufficient to ‘take the service provided by workers outside the course of a business.’ (citation omitted)). As did the Attorney General, the SJC in Sebago looked to the distinctions made by Illinois courts between limousine chauffeurs, whose services are necessary to the business of limousine companies, and taxicab drivers, whose services are incidental to the business of medallion owners: [The] Parks cab drivers are readily distinguishable from the chauffeurs in the case at bar. While the cab drivers were free to pick up passengers wherever they chose, [the chauffeurs] picked up customers who had ‘booked’ limousine services with [the employer]. While the cab drivers paid a set weekly rate for their leases, [the chauffeurs] paid a percentage of their commissions to [the employer], thus establishing a financial interdependence, or a direct financial stake with the limousine company. Id. at 334 (quoting O'Hare–Midway Limousine Serv., Inc. v. Baker, 232 Ill. App. 3d 108, 111 (1992). The SJC determined that Sebago “hews much closer to Parks Cab than to O’Hare-Midway” because “[t]he medallion owners [in Sebago] are not concerned with the results of the plaintiffs' operations, as drivers are not required to remit a percentage of their revenues, which include both fares and tips.” Sebago, 471 Mass. at 334. Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 11 of 22 12 Here, the undisputed facts demonstrate that as in O-Hare-Midway, LimoLink is heavily invested in the results of Plaintiffs’ operations: • Plaintiffs are not free to pick up LimoLink passengers whenever they choose; they may only pick up passengers that LimoLink assigns to them. SOF ¶¶ 73, 99(b). • Plaintiffs are not financially independent from LimoLink because LimoLink retains exclusive control over billing passengers; LimoLink determines how much to charge its customers, charges its customers per trip, and pays Plaintiffs per trip, keeping the difference as revenue to LimoLink. SOF ¶¶ 53-66, 70. • LimoLink retained a significant portion of the gratuities charged to LimoLink customers. SOF ¶¶ 13-17. Moreover, as in O’Hare-Midway, Plaintiffs clearly “represented the interests of [LimoLink] whenever they picked up passengers,” 232 Ill. App. 3d at 113: • LimoLink mandated Plaintiffs’ use of LimoLink branded materials, including nameboards, labels on water bottles, and business cards. SOF ¶¶ 87-90. • LimoLink required Plaintiffs to comply with its Chauffeur Standards. SOF ¶ 69. • LimoLink required Plaintiffs to wear not just dark suits but black suits, and established the length of the wool coats they could wear in winter. SOF ¶ 92. • LimoLink required Plaintiffs to check in with LimoLink four times prior to any passenger pick-up, as part of its “quality call” program. SOF ¶¶ 106-15. • LimoLink employed numerous procedures so as to advertise itself as “having the world’s largest personally vetted chauffeur network.” SOF ¶¶ 4, 101-28. These same facts establish that even under LimoLink’s own characterization of its business, Plaintiffs provided services in the usual course. See also, SOF, ¶ 103, Ex. 14 at LimoLink_8366-67 (“Please respond to email requests [from LimoLink] when you receive them so we can continue to pursue 5 star service levels together.”). Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 12 of 22 13 Based on the undisputed facts, the question of whether Plaintiffs performed services in the usual course of business of LimoLink is not even a close call. Solely based on prong two, Plaintiffs are entitled to a determination that they are employees. B. LimoLink cannot prove that its independent operators were free from control and direction in connection with the performance of the service. The undisputed facts further demonstrate that as a matter of law, Plaintiffs were not “free from control and direction in connection with the performance of the service” and therefore they are entitled to summary judgment under prong one as well. M.G.L. c. 149, § 148B(a)(1). Under prong one, an individual must be free from control both 1) “under his contract for the performance of service” and 2) “in fact.” Id. “The essence of the distinction [which derives from] common law has always been the right to control the details of the performance and the freedom from supervision ‘not only as to the result to be accomplished but also as to the means and methods that are to be utilized in the performance of the work.’” Athol Daily News v. Bd. of Review of Div. of Emp’t and Training, 439 Mass. 171, 177, 786 (2003) (citation omitted) (emphasis added). LimoLink both retained the right to control under standard Service Provider Agreements, which incorporate LimoLink’s standardized procedures, and exercised control in fact over virtually every aspect of the service performed by Plaintiffs. 1. Right to Control LimoLink required Plaintiffs to sign standard Service Provider Agreements. SOF, ¶¶ 67-68. The Service Provider Agreement clearly and unambiguously sets forth LimoLink’s right to control the performance of Plaintiffs’ services to LimoLink: Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 13 of 22 14 • Plaintiffs are prohibited from accepting payment directly from LimoLink customers because LimoLink is exclusively responsible for all aspects of the customer relationship, including setting rates for rides, negotiating with customers, billing customers, and determining what additional charges may be passed along to customers; • LimoLink determines the amount that a driver will be paid for any given trip, and informs the driver of that amount in the Vendor Reservation Confirmation; • LimoLink retains full discretion not to pay drivers for any additional charges beyond those provided by LimoLink in the Vendor Reservation Confirmation; • Plaintiffs are prohibited from independently providing services to LimoLink customers; • LimoLink may unilaterally terminate the Service Provider Agreement, and therefore the driver’s ability to provide services to LimoLink customers, upon “failure of [driver] to meet the high standards of service required by participation in the LimoLink Reservation Network”; • Plaintiffs are prohibited from subcontracting (also known as “farming out”) LimoLink reservations, unless specifically “authorized, approved, and documented by LimoLink”; • Plaintiffs must be available “24 hours a day and 7 days per week” to comply with LimoLink’s four-step “quality call” program (described below); • Plaintiffs must maintain automobile liability coverage of specified coverage limits, with LimoLink named as an additional insured on the policies; • Plaintiffs must provide LimoLink with requested documentation; • Plaintiffs must “comply with and be bound by the requirements contained” in the incorporated “Chauffeur Standards” document, which includes the following provisions: § Plaintiffs must use a LimoLink-branded nameboard; § Plaintiffs may only utilize LimoLink-branded business cards with LimoLink passengers; § Plaintiffs must provide LimoLink passengers with chilled water labeled with a LimoLink-branded label; Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 14 of 22 15 § Plaintiffs must thank the passenger for traveling with LimoLink at the end of the trip; § Plaintiffs must wear a “neutral smelling deodorant and minimal cologne”; SOF, ¶¶ 67-79 (Service Provider Agreement); SOF, ¶¶ 87, 89, 90, 95 (Chauffeur Standards). LimoLink is anticipated to argue that it does not always enforce the provisions of its Service Provider Agreements. But that argument mistakes the right to control with the exercise of control in fact. LimoLink cannot dispute the terms of its standard Service Provider Agreements, nor the text of the incorporated Chauffeur Standards. These undisputed facts are distinguishable from 3PD, where the court ultimately determined that “Plaintiffs fall short of their burden, though not far short” to prove control as a matter of law. 2013 WL 1320454, at *20. In that case, the defendant, 3PD, could dispute the exercise of control in practice, because the agreement plaintiffs signed was vastly more open-ended than the LimoLink agreement. For example, the 3PD agreement, attached as Exhibit A, stated that drivers must “wear ‘an appropriate uniform’ and ‘keep his/her personal appearance consistent with reasonable standards of the consumer delivery industry.’” 3PD Agreement [Ex. A]. Here, on the other hand, the LimoLink agreement dictated drivers’ appearance and presentation down to the level of their deodorant and cologne. Moreover, Plaintiffs were explicitly prohibited from “farming out” any given reservation to another driver unless it was specifically “authorized, approved, and documented by LimoLink” on a reservation-by-reservation basis, a reminder that is included with each reservation confirmation. SOF, ¶ 75. This contractual language firmly establishes LimoLink’s right to control “the means and Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 15 of 22 16 methods that are to be utilized in the performance of [Plaintiffs’] work.’” Athol Daily News, 439 Mass. at 177. In contrast, under the 3PD agreement, the plaintiffs had complete discretion to hire drivers and helpers, subject only to background checks performed by the plaintiffs. 3PD 2013 WL 1320454, at *3; 3PD Agreement [Ex. A] (Drivers “may, without prior notice to 3PD, employ or otherwise provide qualified person(s) to assist [driver] in performing the obligations specified by this Agreement.”). Additionally, Plaintiffs were subject to LimoLink’s non-solicitation clause, which prevented them from independently providing services to LimoLink passengers. SOF, ¶ 73. The undisputed terms of LimoLink’s standard Service Provider Agreement establish a right to control as a matter of law over Plaintiffs’ performance of services, and therefore Plaintiffs are entitled to summary judgment on this ground alone. 2. Control “In Fact” LimoLink cannot dispute that it exercised control over Plaintiffs’ services in fact as well as contract. It employed four primary mechanisms for exercising control: 1) by ranking Plaintiffs and preferentially assigning trips to independent operators that more fully comply with its policies and preferences (referred to as the “pecking order”); 2) its quality call program that required four distinct confirmations of reservations; 3) its mystery ride program (similar to a secret shopper program); and 4) its system of investigating and documenting “deviations.” “Pecking Order” The first, and most important, mechanism by which LimoLink exercises control over its drivers is through its preferential system of assigning reservations to drivers. Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 16 of 22 17 SOF, ¶¶ 41- 52. LimoLink maintains a spreadsheet for each market, including Massachusetts, with vendors listed in order of preference. SOF, ¶ 45. The document is referred to internally as the “pecking order” or “PO.” Id. Vendors that have a more favorable position in the pecking order (i.e. independent operators) are assigned more reservations by LimoLink. SOF, ¶ 46. LimoLink uses the threat of a lower position in the pecking order to ensure drivers’ compliance not only with its detailed policies and procedures but also requirements that are established via email. The following is a sample of text taken from emails sent to LimoLink’s vendors: • “When you miss deadlines or fail to comply with LimoLink requests, you can expect fewer follow up phone calls from Ground Management and you can expect your work flow to decrease or stop. We’ll assume that your lack of cooperation reflects your intent to accept less LimoLink reservations.” SOF, ¶ 99(a). • “A standard for completing LimoLink reservations is proper attire: Black suit, white shirt, LimoLink tie, black socks, black shoes that are shined. During cold weather, the only acceptable coat is a black wool coat that extends down near the knees. The purpose for this particular coat is that it looks as good as the suit being worn underneath. No other coats do. Understand clearly, proper attire is essential for maintaining your standing with LimoLink and for the distribution of reservations. Proper attire matters a lot.” SOF, ¶ 92. • “LimoLink’s volume is very strong from early September thru mid-December, except for Thanksgiving week. . . . Choosing to not work during the busy season that started this week seems to us to be an odd and costly decision to make. We adjust our service provider network based on the service provider availability that we observe from day to day. Please understand that as you schedule oil changes, holidays, etc.” SOF, ¶ 48. • “December 31, 2012 is the last day we’ll accept 2009 vehicles for LimoLink reservations.” SOF, ¶ 83. LimoLink also disciplines and terminates drivers for failing to comply with its policies and procedures, referring to such actions as “firing” and “suspending” drivers Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 17 of 22 18 by dropping them to the bottom of the pecking order or by deactivating their LimoLink accounts. SOF, ¶ 49, 52, 66. This level of hands-on micro-management of reservations and carefully curated “pecking order” provides LimoLink with a powerful tool for control. See O'Hare- Midway, 232 Ill. App. 3d at 112–13 (“Even though the drivers could set their own hours and decline customers, O'Hare–Midway retained the right to stop leasing the limousines, and admitted [] that if calls were declined regularly, it would, in fact, terminate leasing arrangements. This indirect sanction, is an important element of O'Hare–Midway's control.”). “Quality Calls” The quality call program required Plaintiffs to confirm every reservation four times with LimoLink: at the time of reservation, twelve-hours in advance of the pick-up, two hours in advance, at which time vendors with more than one driver must supply LimoLink with the name of the driver, and at “spot-time.” SOF, ¶¶ 106-15. The final confirmation is a “spot-time” call conducted with the driver to ensure that he is on- location for a pickup; it is conducted thirty minutes in advance of the scheduled customer pick-up at an airport, and fifteen minutes in advance for non-airport pickups. SOF, ¶ 110. During the “spot-time” call, an employee with LimoLink’s Command Desk reviews the reservation details with the driver, checks to make sure that the name on the nameboard is spelled correctly, ensures that the driver is complying with all special customer requests, and reminds the driver to notify LimoLink if he moves from that location. SOF, ¶ 111. For example, during the spot-time call, Command Desk staff Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 18 of 22 19 determined that Plaintiff Sharma did not have chilled water ready for a regular passenger, and therefore gave him a “deviation,” described below. SOF, ¶ 112. LimoLink’s elaborate four-step confirmation process is a form of quality control that allows LimoLink to monitor driver compliance with LimoLink procedures. Mystery Rides LimoLink’s mystery ride program allows LimoLink to ensure that its drivers are complying with the Chauffeur Standards policies. SOF, ¶¶ 121-28. Mystery riders are often LimoLink employees, who score the drivers’ performance, the results of which are emailed to the driver. Id. The Mystery Ride scoresheet is provided to drivers at the time that they sign the Service Provider Agreement. SOF, ¶ 125. LimoLink strives to conduct Mystery Rides at least once per year and ideally more than once per year. SOF, ¶ 126. Drivers receive 15 points toward the 100 possible points for saying “LimoLink” when the passenger asks who to call for future rides. SOF, ¶ 127. Drivers receive deductions from their Mystery Ride scores for failing to comply with LimoLink’s branding procedures.5 SOF, ¶ 128. In addition to the formal Mystery Ride program, LimoLink employees observe drivers and report on their quality when they have occasion to visit a particular market. SOF, ¶ 102. The Mystery Ride Program is clearly a mechanism of quality control, because LimoLink employees commonly conduct the rides and “communicate the results” to Plaintiffs. Compare 3PD, 2013 WL 1320454, at *2.6 5 The Mystery Ride scoresheet specifies use of LimoLink nameboard, wearing a LimoLink tie, providing a LimoLink sales brochure, using a LimoLink business card, and saying “Thank you for using LimoLink” at the end of the ride. SOF, ¶ 128. 6 Even if LimoLink had not “communicated the results,” Mystery Rides are a powerful form of control. See 3PD, 2013 WL 1320454, at *19 (“3PD argues that Plaintiffs have provided no evidence that Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 19 of 22 20 Deviation Reports LimoLink maintains a formal system for investigating and documenting violations of LimoLink policies, referred to as “deviations,” in a “Deviation Report.” SOF, ¶¶ 116-20. Deviations may include not providing chilled water to a LimoLink passenger and operating a vehicle with a door that does not open properly. SOF, ¶ 117. When assessing the implications of a “client-impacting” deviation, LimoLink admittedly takes into account whether the driver offers to forego payment for the reservation resulting in the deviation. SOF, ¶ 118. LimoLink may also ask a driver to discount his charge for a deviation. SOF, ¶ 119. Drivers with more deviations are assigned a lower level in LimoLink’s pecking order and receive less work. SOF, ¶ 120. LimoLink’s preferential system of assigning reservations to drivers, combined with its painstaking quality control mechanisms, demonstrate LimoLink’s extensive control over Plaintiffs’ performance of service, in fact, not just in contract. For the above reasons, the Court should award summary judgment to Plaintiffs as to 1) LimoLink’s liability for violating the Massachusetts Tips Law, and 2) LimoLink’s misclassification of Plaintiffs as independent contractors, under prong two and/or prong one of the Independent Contractor Statute. 3PD ever communicated the results of the surveys to Plaintiffs or that any termination was the result of poor results on surveys. However, this does not undercut the potency of the surveys as a method of control. Plaintiffs' understanding that poor results on a customer survey can lead to fewer [] assignments gives teeth to the other elements of control such as appropriate appearance and delivery windows. This mechanism of enforcing other controls weighs in favor of a finding of control.”) Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 20 of 22 21 Respectfully submitted, VLADIMIR CHEBOTNIKOV, EUGENE PANTYUKHIN, YOGESH SHARMA, on behalf of themselves and all individuals similarly situated, By their attorneys, /s/ Rachel Smit Hillary Schwab, BBO #666029 Rachel Smit, BBO #688294 FAIR WORK, P.C. 192 South Street, Suite 450 Boston, MA 02111 (617) 607-3260 (617) 488-2261 (fax) Email: hillary@fairworklaw.com, rachel@fairworklaw.com James R. Knudsen, BBO #567358 Knudsen, Burbridge & Manchur, P.C. 401 Edgewater Place, Suite 140 Wakefield, MA 01880 781-246-3030 781-246-3050 (fax) Email: jrk@kbmlawfirm.com Dated: November 1, 2016 Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 21 of 22 22 CERTIFICATE OF SERVICE I hereby certify that I caused a true copy of this document to be served via electronic filing on all counsel of record on November 1, 2016. /s/ Rachel Smit Rachel Smit Case 1:14-cv-13475-FDS Document 127 Filed 11/01/16 Page 22 of 22 EXHIBIT A Case 1:14-cv-13475-FDS Document 127-1 Filed 11/01/16 Page 1 of 19 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 1 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 2 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 2 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 3 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 3 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 4 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 4 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 5 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 5 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 6 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 6 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 7 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 7 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 8 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 8 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 9 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 9 of 18Case 1:14-cv-13475-F S Document 127-1 il 11/ 1/ 6 10 of 19 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 10 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 1 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 11 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 2 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 12 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 3 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 13 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 4 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 14 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 5 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 15 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 6 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 16 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 7 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 17 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 8 f 9 Case 1:11-cv-11313-DPW Document 44-4 Filed 09/07/12 Page 18 of 18 : 4- - 3475-FDS Document 127-1 il 11/ 1/ 6 9 f 9