Carey v. GateHouse Media Massachusetts I, Inc.
Carey v. GateHouse Media Massachusetts I, Inc.
Opinion
*802
Defendant GateHouse Media Massachusetts I, Inc. (GateHouse), publisher of the Patriot Ledger newspaper, appeals from a separate and final judgment under Mass.R.Civ.P. 54(b),
Background . We recount certain undisputed material facts from the summary judgment record, reserving for later discussion the details of GateHouse's contract with King. GateHouse, a subsidiary of New York-based GateHouse Media, "publishes and distributes" a variety of daily and weekly newspapers within Massachusetts. Gatehouse describes itself as a publisher and distributor of publications in its "Wholesale Agreements" with newspaper delivery drivers such as King. GateHouse employs a sales and advertising *803 department, which works to increase circulation and advertising revenue. Among GateHouse's newspapers is the Patriot Ledger, published on all five weekday afternoons and on Saturday mornings.
GateHouse distributes the Patriot Ledger out of a distribution center in Braintree, employing supervisors, district managers, *423 distribution managers, and others to manage that process. GateHouse has three main distribution methods. First, to distribute the newspaper to residential and business subscribers, GateHouse enters into agreements with individual carriers, 3 whom it classifies as independent contractors. The carriers are required to buy copies of the newspaper from GateHouse at wholesale rates, for resale and distribution within delivery areas designated by GateHouse. Second, GateHouse hires unionized employees to distribute bulk quantities of the newspaper to various types of stores, where they are resold at retail. Third, GateHouse reaches some customers through online publishing.
King became a carrier for GateHouse in 2009, using his own automobile to deliver up to 250 copies of the Patriot Ledger, six days per week, in the Weymouth area. His contract was terminated in 2011, apparently by GateHouse, for reasons not stated in the record.
King then filed this action in Superior Court, asserting that GateHouse had misclassified him as an independent contractor rather than an employee under § 148B. He also asserted claims-dependent on his being an employee under § 148B 4 -that GateHouse had deducted unauthorized charges and fees from its payments to him, in violation of G. L. c. 149, §§ 148 and 150 ; failed to pay him a minimum wage, in violation of G. L. c. 151, § 1 ; and violated his rights under the tip-sharing statute, G. L. c. 149, § 152A. He also asserted an unjust enrichment claim. King sought to represent, and later obtained certification of, a class consisting of all individuals who had signed a written contract to deliver the Patriot Ledger and had provided delivery services under those contracts, during the "class period." 5
*804
On cross motions for summary judgment limited to the misclassification claim, the judge ruled in July, 2014, that under § 148B, King was an employee, rather than an independent contractor. She based her ruling on GateHouse's inability to meet its burden of proving that the service furnished by King was "performed outside the usual course of the business of the employer," as is required under prong two of § 148B's three-prong test. See
Somers
v.
Converged Access, Inc.
,
After the appeal was docketed in this court in August, 2016, GateHouse sought and obtained a stay of appellate proceedings and leave to file a motion for relief from judgment in the trial court. The basis for GateHouse's motion was that two recent Federal appellate decisions had held prong two of § 148B to be preempted, as to certain delivery drivers, by a section of the FAAAA, codified at
Discussion
. 1.
Usual course of business
. As the purpose and operation of § 148B's three prong test
8
have been recently and thoroughly reviewed in
Sebago
v.
Boston Cab Dispatch, Inc.
,
a.
Business's self-description
. Essentially the same question arose in
Athol Daily News
, under the usual course of business portion of the closely-related three-prong employment test of G. L. c. 151A, § 2.
Gatehouse describes its business as "[n]ewspaper [p]ublishing" in its annual corporate filing with the Secretary of the Commonwealth, and describes itself as a publisher and distributor in its agreements with delivery drivers. This description is notable because, even aside from its use of the term "distribute," GateHouse acknowledges that it is a "publisher," and to "publish" means, among other things, "to place before the public (as through a mass medium); DISSEMINATE." Webster's Third New International Dictionary 1837 (2002). A newspaper publisher not only creates newspaper content but also disseminates it to the public in physical or digital form.
Indeed, an integral part of "publishing" a daily newspaper is making it immediately available to customers and potential customers, because in twenty-four hours or less much of its content will be largely obsolete and of limited, if any, interest to most readers. It is not too much to say that immediate availability to customers is a part of the product GateHouse sells. That GateHouse achieves such immediate availability through a variety of means-including direct carrier delivery to paper subscribers, bulk distribution by GateHouse employees to stores for resale to the stores' walk-in customers, and via the Internet-does not make carrier delivery any less a part of GateHouse's business. 10 Rather, it reinforces the point that, one way or another, GateHouse goes to considerable lengths, six days per week, to put the Patriot Ledger quickly into the hands (and onto the screens) of readers. 11
*807 Thus, the record shows that GateHouse has a "posted promise in the newspaper to the subscriber" regarding the time by which the newspaper will be delivered, and GateHouse mandated that carriers such as King deliver the newspaper to subscribers by 5 P.M. on weekdays and by 8 A.M. on Saturdays. The agreement required carriers to deliver the newspapers in a dry, readable condition and to the satisfaction of each subscriber. It further provided that if a carrier could not deliver his or her newspapers on a given day, the carrier was required to engage and train a substitute at his or her own expense. If the carrier failed to do so, and GateHouse had to distribute any copy of the newspaper, GateHouse could charge the carrier "liquidated damages" of $2 per weekday copy *426 and $4 per Saturday copy. 12 The agreement did not impose charges for late (as opposed to missed) deliveries, but if a carrier was chronically late in completing his or her route, the Patriot Ledger's home delivery manager stated that GateHouse could consider terminating the agreement with that carrier.
In sum, GateHouse's self-description as a newspaper publisher and distributor, and the manner in which it held itself out to the public and its drivers, support the conclusion that the drivers performed services in the usual course of GateHouse's business.
b.
Necessary vs. incidental services
. "Another factor [in the usual course of business inquiry] is 'whether the service the individual is performing is necessary to the business of the employing unit or merely incidental.' "
Sebago
,
*808
Athol Daily News
,
The
Sebago
decision further illuminated the distinction between necessary and incidental services by comparing two Illinois decisions, one involving taxi drivers using leased medallions and the other involving drivers of leased limousines.
Sebago
,
*427
Sebago
,
GateHouse's delivery drivers are, in several respects, more like the limousine drivers in O'Hare-Midway than the taxi drivers in Parks Cab Co . First, GateHouse takes an active role in securing subscribers for its drivers to service, and for that purpose it deals directly with potential customers. GateHouse employs staff in a sales department that works to increase circulation, as well as *809 district managers who work to retain existing subscribers and to obtain new subscribers in particular territories. Individuals wishing to subscribe to the Patriot Ledger may telephone its call center or send back a card that they were mailed (or had obtained in a store-bought copy) as part of a subscription solicitation. Thus, like the limousine service in O'Hare-Midway , Gatehouse books customers for its drivers.
Although individuals may also arrange subscriptions by dealing directly with a delivery driver, GateHouse is hardly indifferent to such dealings (as were the taxi medallion owners in Parks Cab Co . ), but instead, under the agreement with its drivers, actively encourages them. That agreement requires GateHouse to make free copies of the newspaper available to drivers to "use as samples to drum up more business," and it pays drivers a bounty for each subscription they obtain (in King's case, $20 for an eight-week subscription). If GateHouse acquires a new subscriber within a driver's delivery area, the agreement requires the driver to service that subscriber.
Second, unlike the taxi drivers in Parks Cab Co ., the delivery drivers pay no flat fee to GateHouse, but instead pay GateHouse a wholesale price for each Patriot Ledger newspaper they purchase from GateHouse and deliver to a subscriber. The subscriber pays a retail price, 14 plus an optional tip, and the price difference plus any tip is the driver's net profit (or compensation). In substance, like the limousine drivers in O'Hare-Midway , the drivers here pay GateHouse a portion of the revenue they receive from each customer; the more customers they have, the more they pay GateHouse. Moreover, it is only "in some cases" that the subscriber pays the driver; other subscribers pay the retail prices plus tips directly to GateHouse. 15 And subscribers may provide specific delivery instructions, and complaints about deliveries, directly to GateHouse, which maintains systems for conveying this information to the drivers. 16
In sum, GateHouse is not merely a wholesaler that takes little *810 interest in whether and how its drivers succeed in reselling newspapers at retail to customers. Rather, GateHouse deals directly with potential customers in selling subscriptions that include the drivers' delivery services; *428 GateHouse assigns subscribers to delivery territories, deals directly with subscribers in accepting payments, specific delivery instructions, and delivery complaints and conveys those instructions and complaints to the drivers; and GateHouse maintains contractual disincentives to poor delivery service, as well as contractual incentives for expanding delivery service to new customers.
Thus it can fairly be said that the drivers, like the limousine drivers in
O'Hare-Midway
, perform services on behalf of GateHouse, not merely for their own account. GateHouse, unlike the taxi medallion owners in
Parks Cab Co.
, is very much "concerned with the results of the [drivers'] operations"; GateHouse's "business is ... directly dependent on the success of the drivers' endeavors."
Sebago
,
c. GateHouse's arguments . While acknowledging that it "needs to get its product into the hands of consumers," GateHouse asserts that the same is true of businesses like consumer-electronics manufacturers and online retailers. GateHouse asserts that drivers for the delivery services used by those businesses, such as private delivery companies or the United States Postal Service, cannot be considered those businesses' employees, and thus that newspaper delivery drivers cannot be considered GateHouse employees. But GateHouse has not offered any evidence as to those other businesses' actual operations, including their relationships, if any, with delivery drivers, or the centrality of immediate delivery to the nature of the products they offer. 17 We also recognize that retail sales and associated services are in a period of rapid transition, due to technical change and other factors. We *811 deal only with the case and the evidence presently before us, and we imply no comment on the employment status of workers in any of the industries in GateHouse's examples.
GateHouse's remaining argument is premised on the fact that another of its distribution mechanisms involves wholesaling its newspaper to stores and similar businesses, which then retail the newspaper to individual readers. Gatehouse argues that to view delivery to readers as occurring in GateHouse's usual course of business would create the "inescapable" yet unreasonable result that "none of these stores can be independent contractors-even though they are unquestionably independent businesses that fully satisfy the first and third prongs" of § 148B -and that GateHouse would become the employer of the stores' employees who actually sell the newspapers to customers. Again, however, GateHouse has not offered any evidence as to those retailers' actual operations. Nor has it addressed, in a manner rising to the level of appellate argument, see Mass.R.A.P. 16(a)(4), as amended,
*429
We therefore conclude that the delivery drivers furnish services in the ordinary course of GateHouse's business and accordingly are GateHouse employees under § 148B.
2.
Waiver of preemption defense
. In denying GateHouse's FAAAA preemption-based motion for relief from judgment-filed more than two years after the judge ruled that King was a GateHouse employee, and nearly one year after the entry of a rule 54(b) judgment embodying that ruling-the judge observed that GateHouse had failed to raise the preemption defense in its answer or in a pretrial motion. See Mass.R.Civ.P. 8(c),
There was no abuse of discretion in these rulings. The Federal courts may "excuse a party for failing to raise a defense only when the defense, if timely asserted, would have been futile under binding precedent."
Bennett
v.
Holyoke
,
Next, although a change in governing law may sometimes warrant relief under Mass.R.Civ.P. 60(b)(6),
*430
At oral argument in this appeal, GateHouse raised an argument never made in the trial court or in its appellate briefs: that the FAAAA deprives State courts of subject matter jurisdiction and, accordingly, that FAAAA preemption is a jurisdictional matter that cannot be waived. See
Central Transp., Inc.
,
Conclusion . The judgment entered November 12, 2015, is *814 affirmed. The order entered December 19, 2016, denying GateHouse's motion for relief from judgment is affirmed.
So ordered .
We acknowledge the amicus brief submitted by the Massachusetts Newspaper Publishers Association.
In this opinion we use the terms "carriers" and "drivers" interchangeably; although not material for present purposes, we note that some carriers cover their delivery areas on foot.
Section 148B determines employee status "[f]or the purpose of this chapter [149] and chapter 151." G. L. c. 149, § 148B( a ), as appearing in St. 2004, c. 193, § 26.
That period is not specified in the record materials before us.
The judge observed as to the first prong that the question of GateHouse's "control" over its drivers was "a close call." As to the third prong, the judge noted King's failure to contest GateHouse's contention that he was customarily engaged in an independently established trade or business and that King and other drivers also delivered newspapers other than the Patriot Ledger, but she reached no conclusion as to that prong.
Apparently before receiving that ruling, GateHouse notified the judge that the Supreme Judicial Court had just reached a similar conclusion regarding FAAAA preemption of § 148B's prong two, in
Chambers
v.
RDI Logistics, Inc
.,
"[A]n individual performing any services, except as authorized under this chapter, shall be considered to be an employee ... unless:-
"(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."
G. L. c. 149, § 148B( a ), as appearing in St. 2004, c. 193, § 26.
Of course, this approach must have its limits. A business cannot alter the substance of its usual course of business merely by careful (or careless) self-labeling in its dealings with contractors, employees, customers, or the public. Cf.
Sebago
,
The summary judgment record does not establish what proportion of the Patriot Ledger's circulation is achieved through each of these methods. The most the record shows is that "GateHouse's Massachusetts newspapers reach 1.4 million print readers and 1.2 million monthly unique [online] visitors."
We refer to "customers" and "readers" interchangeably, while noting that in addition to "customers" who purchase a paper or online subscription or a copy at a store, GateHouse benefits from having nonpaying "readers," to the extent that it can document them (e.g., through tracking unique online visits). The record shows that GateHouse markets itself to potential advertisers based on the number of people that its publications "reach," through both paid circulation and on the Internet.
GateHouse asserted that there was no evidence it had actually imposed such charges, but that any dispute over that issue was immaterial for summary judgment purposes.
The court drew these illustrations, respectively, from
Mattatuck Museum-Mattatuck Historical Soc
. v.
Administrator, Unemployment Compensation Act
,
The agreement assumes that the retail price will be GateHouse's "suggested resale price," elsewhere termed by Gatehouse its "published retail rate." The agreement leaves carriers free to charge less (or more) than that price, although the parties did not agree on whether any carrier had ever done so. That dispute is not material for present purposes.
GateHouse then applies these amounts as a credit against the wholesale price charged to the driver, and it pays any positive balance to the driver.
Such information may alternatively be conveyed directly from subscriber to driver.
As the Sebago court recognized:
"One may also be engaged in a business that cannot be conducted unless he ... can ship the finished product to the various markets. It is hard to imagine a business that is not dependent in some way upon transportation. In such instances, while transportation is a necessity, it does not thereby become a part of or a process in the business but it continues as ancillary and incidental thereto."
Sebago
,
In this connection, GateHouse fails to address "[t]he threshold question" under § 148B : whether putative employees provide services to a particular entity.
Sebago
,
Compare
Commonwealth
v.
Vasquez
,
See note 7, supra .
The relevant portion of the FAAAA, codified at
"Except as provided in paragraphs (2) and (3), a State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier ... or any motor private carrier, broker, or freight forwarder with respect to the transportation of property."
Reference
- Full Case Name
- Suzanne E. CAREY, Personal Representative, v. GATEHOUSE MEDIA MASSACHUSETTS I, INC.
- Cited By
- 15 cases
- Status
- Published