Rush v. FastCAP Systems Corporation, et al. (Lawyers Weekly No. 09-006-17)
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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, so SUPERIOR COURT
CIVIL ACTION
NO. 2017-02842-BLS2
JACK RUSH,
Plaintiff
vs.
FASTCAP STYSTEMS COPRATION, JOHN COOLEY, JAMES HARRIS,
MATTHEW FENSLAU AND RICCARDO SIGNORELLI,
Defendants
MEMORANDUM OF DECISION AND ORDER ON
MOTION FOR TRUSTEE PROCESS ATTACHMENT
AND FOR ATTACMENTS OF REAL PROPERTY
This action alleges violations of the Massachusetts Wage Act, G.L.c. 149 §148B. Specifically, the plaintiff Jack Rush alleges that the defendant FastCAP Systems Corporation (FastCAP) misclassified and compensated him as an independent contractor when he should have been classified and paid as an employee within the meaning of G.L.c. 149 §148. It then terminated him when he complained about his compensation. Certain individuals are also named as defendants on the grounds that, because they exercised managerial control over FastCAP, they are personally liable for these violations. Cook v. Patient Ed LLC, 465 Mass. 548, 552-553 (2013). The case is now before the Court on the plaintiff’s motion to attach the bank accounts of FastCAP in the amount of $ 594,593, and to attach real property owned by the individual defendants. After hearing and careful review of the parties’ submissions, this Court concludes that, taking into account the likelihood of success on the merits, the balance of equities supports the denial of these motions, for the following reasons.
Whether seeking an attachment of real property or an attachment of funds by way of
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trustee process, plaintiff must establish a reasonable likelihood that he will recover judgment against the defendant in an amount at least equal to the amount sought to be attached; he must further demonstrate that there is no liability insurance available that could satisfy any possible judgment. See Rules 4.1 and 4.2, Mass.R.Civ.P. Although there is no explicit requirement that the Court balance the relative harms to the parties, the Rules are based on the idea that there must be a need for the relief requested; moreover, because it is equitable nature, the Court can and should take into account the relative equities in denying or allowing the requested relief. In the instant case, FastCAP makes out a compelling case that a trustee process attachment would have a serious impact on its business. The Company is in the business of developing cutting edge power systems and has ongoing contracts with NASA and U.S. Department of Energy, with sales to top oilfield service companies. See Affidavit of Matthew Fenselau. With seventeen full time employees and the financial backing of a Boston investment firm, FastCAP is optimistic about its future. An attachment of its bank accounts, however, could cause FastCAP’s financial backing to be withdrawn and could trigger claims by other individuals and entities. If on the other hand, no attachment issues, the harm to plaintiff is that any judgment he obtains would be uncollectible, but that danger is neither imminent nor is it certain. Indeed, FastCAP has known about Rush’s claim and his threat to bring suit since April of this year, and yet has taken no action to dissipate or conceal its assets.
Given the harm that could befall the defendants from an attachment that was improvidently granted, this Court is inclined to require plaintiff to make a very strong showing on the merits. The problem is that that the allegations themselves are very fact driven, and the Court at this very early juncture in the case has very limited information before it. Moreover, that information that is before me suggests that liability is not clear cut.
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In attempting to demonstrate a likelihood of success, the plaintiff relies on the Verified Complaint. Those allegations state that the plaintiff was a full time employee of FastCAP from January 2014 through October 2016 but was wrongfully classified and paid as an independent contractor. The defendants have submitted documents, however, showing that during most of that time, Rush was an employee of a consulting firm Momentum which in turn entered into a contract with FastCAP entitled “Independent Contractor Agreement.” Under that contract, FastCAP paid what is described as “commissions” to Momentum in return for the services of certain Momentum employees whose work Momentum directed and controlled and who Momentum (not FastCAP) paid. Although plaintiff may have been the only Momentum employee to actually provide services to FastCAP, it is not clear whether he did work for other Momentum clients at the same time. This Court also has no evidence before it as to why Rush worked through Momentum and not directly with FastCAP. These are all facts which may be relevant to plaintiff’s misclassification claim.
This Court understands that in a misclassification case, there is a presumption that an individual is an employee unless the business receiving the benefit of his services can satisfy three tests as set forth in G.L.c. 149 §148B. It is also cognizant of case law which makes it clear that individuals who provide services through a corporate entity may still be considered employees of the entity receiving those services; otherwise, it would be far too easy for an employer to misclassify its employees by setting up a separate corporate structure simply to avoid the employer’s statutory obligations. Chambers v. RDI Logistics, Inc. 476 Mass. 95, 109-110 (2016). Ultimately, however, there is no bright line rule defining who is an employee and who is an independent contractor: the inquiry turns on the particular facts. As those facts develop in the course of discovery, plaintiff may very well have a basis to renew his request for
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security against a judgment, particularly since any victory on his part will also require the trebling of damages and attorney’s fees. At this point, however, his request is premature, particularly when this Court considers the harm that would be inflicted on FastCAP if its bank accounts were attached.
Accordingly, for all the foregoing reasons and for other reasons articulated in defendants’ Memoranda in Opposition, Plaintiff’s Motion for Attachment by Trustee Process is DENIED. Because the liability of the individual defendants depends on FastCAP itself being held liable, this Court also DENIES the plaintiff’s Motion for Real Estate Attachments.
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Janet L. Sanders
Justice of the Superior Court
Dated: September 19, 2017