United States Court of Appeals

For the Eighth Circuit

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No. 12-1956

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Robert W. Kramer, III, doing business as CIS Internet Services,

lllllllllllllllllllll Plaintiff - Appellant,

v.

Cash Link Systems, A Florida corporation; AmeriP O S, Inc. a Florida

corporation; OTB Products, A Florida corporation; AMP Dollar Savings, Inc. an

Arizona corporation doing business as MortgageLeads.tv, doing business as

Leads.tv; Healthstop, Inc. a Minnesota corporation, doing business as Health Stop

Shop; Michael Moebeck, a Minnesota resident; Joseph Ingersoll, a Minnesota

resident; Internet Services Zocalo, a California corporation; GZ Media, Inc. a New

York corporation, doing business as 24/7 Downloads; TEI Marketing Group, a

Florida corporation,

lllllllllllllllllllll Defendants,

National Credit Systems, Inc. a New York corporation,

lllllllllllllllllllll Defendant - Appellee,

Jerry Poole, a Florida resident; Carmen Lyman, a Massachusetts resident, also

known as Carmen Rodriguez; Kevin Hertz, a California resident; Mihir Teneja, a

Florida resident,

lllllllllllllllllllll Defendants.

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 Appeal from United States District Court 

for the Southern District of Iowa - Davenport

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 Submitted: December 12, 2012

 Filed: May 28, 2013

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Before LOKEN, MELLOY, and COLLOTON, Circuit Judges.

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COLLOTON, Circuit Judge.

Robert Kramer alleged that National Credit Systems (“NCS”) conducted a

spam e-mail campaign that harmed his business, in violation of Iowa and federal law. 

After a bench trial, the district court entered judgment in favor of NCS and dismissed

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Kramer’s claims. Kramer appeals, and we affirm.

I.

Robert Kramer owned and operated CIS Internet Services (“CIS”), a small

Internet service provider in Clinton, Iowa. Kramer claims that between 2001 and

2003, spam e-mails flooded CIS’s server, interfering with the ability of CIS’s

customers to access the Internet. Many of the spam e-mails advertised the debt

collection services of NCS. 

After filing an initial complaint against 300 unnamed defendants, Kramer filed

an amended complaint in 2004, naming NCS, a New York corporation, as a

defendant, and asserting that NCS was responsible for many of the spam e-mails that

damaged CIS. Kramer alleged violations of the Iowa anti-spam statute in effect at the

time, Iowa Code § 714E.1 (2003) (repealed 2005), the federal Racketeer Influenced

and Corrupt Organizations Act, 18 U.S.C. § 1962, and the federal Computer Fraud

The HonorableCharlesR. Wolle, United StatesDistrict Judge for the Southern 1

District of Iowa.

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and Abuse Act, 18 U.S.C. § 1030. He also brought several Iowa common-law causes

of action. NCS denied the allegations, and the case proceeded to a bench trial.

At trial, Kramer sought to prove that William Stolars, a salesman, sent the emails on behalf of NCS. The e-mails at issue advertised NCS’s services, were similar

to other NCS advertisements, and contained accurate contact information for NCS. 

But all of that information was publicly available, and an information-technology

specialist testified that the e-mails had been routed through servers in foreign

countries, so none of them could be traced to the original sender. Chris Rehkow and

Lynn Goldberg, the only shareholders of NCS, both testified that they neither sent the

spam e-mails themselves nor authorized any employee to send the e-mails. 

Kramer and his former attorney, Pete Wellborn, testified that Stolars admitted

to sending the e-mails. In his deposition, Wellborn claimed that he called the

telephone number listed in the e-mails and spoke with Stolars. According to

Wellborn, Stolars admitted that he worked for NCS and that he wassending the spam

e-mails on behalf of NCS. Kramer testified that he spoke with Rehkow and Stolars,

both of whom acknowledged that Stolars was sending the e-mails. According to

Kramer, Rehkow admitted that Stolars was in charge of marketing and was running

the e-mail campaign. Rehkow denied ever speaking with Kramer. Stolars was

unavailable to testify because he died before the trial.

Goldberg acknowledged that a salesperson could have conducted the e-mail

campaign without telling him or Rehkow. But Goldberg explained that the entire

sales force—including Stolars—operated as independent contractors, rather than as

employees. NCS introduced several sample contracts that it executed with its sales

force, all of which provided that the salespeople would be independent contractors. 

Although Stolars’s contract was lost, Goldberg stated that Stolars would have signed

a form contract similar to the contracts in evidence.

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The district court entered judgment in favor of NCS. The court credited the

testimony of NCS’s principals, describing their testimony as “the most persuasive

evidence” of Stolars’s relationship to NCS. It also noted that Kramer and Wellborn

had reasons “to stretch the truth about what Stolars told them on the phone,” and

found that they were “not sufficiently credible” to support key parts oftheir testimony

about the telephone calls. The district court did not make a finding about whether

Stolars sent the spam e-mails. But the court ruled that even if he did, then NCS was

not liable, because Stolars was an independent contractor, not an employee as Kramer

asserted. The court concluded that “neither Re[h]kow nor Goldberg, nor any other

authorized NCS agent, initiated SPAM e-mails to market NCS’s debt collection

business or for any other purpose.”

We dismissed Kramer’s first attempt to appeal the district court’s decision for

lack of a final judgment. Now that all remaining defendants have been dismissed

with prejudice, the judgment below isfinal, and we have jurisdiction over this appeal. 

See 28 U.S.C. § 1291.

II.

Kramer contends that the district court erred in rejecting two alternative

theories of recovery. First, he asserts that NCS’s principals, Rehkow and Goldberg,

authorized the spam e-mail campaign, and that the district court erred in finding to

the contrary. Second, he argues that NCS is accountable for the actions of its

employees, and that the district court erred by concluding that Stolars was not an

employee of NCS. While Kramer’s state-law claims are governed by the substantive

law of Iowa, see Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), the standard of review

is a procedural issue that is governed by federal law. Mayer v. Gary Partners & Co.,

29 F.3d 330, 334 (7th Cir. 1994); Felder v. United States, 543 F.2d 657, 664 (9th Cir.

1976); see Newberry v. Burlington Basket Co., 622 F.3d 979, 983 (8th Cir. 2010). 

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We thus apply Federal Rule of Civil Procedure 52(a), which provides that we must

not set aside the district court’s findings of fact unless they are clearly erroneous.

A.

Kramer argues that documentary evidence contradictsthe testimony ofRehkow

and Goldberg that NCS did not engage in any “mass mail campaigns” or direct

anyone to send spam e-mails. He contends that the inference is inescapable that the

principals employed e-mail marketing techniques, because the spam e-mails

advertised NCS’s services with a valid e-mail address, the messages were similar to

various online advertisements posted by NCS, and NCS elsewhere encouraged

customers to contact the company by e-mail. This evidence might support an

inference that NCS’s principals were involved with the e-mails, but it does not

compel that conclusion. The e-mails could not be traced to NCS, and anyone could

have composed the e-mails by copying and pasting text from NCS’s website or its

other advertisements. Therefore, the testimony of Rehkow and Goldberg on this

score was not contradicted by the documentary evidence. 

Kramer also contends that the court should have credited his testimony that

Rehkow admitted over the phone that NCS was responsible for the e-mail campaign. 

Kramer relies on an e-mail that he says was written to memorialize the conversation. 

In the e-mail, Kramer wrote that after he called NCS to complain about spam e-mails,

a receptionist told him to expect a call from the chief executive officer of NCS, and

that he then received a call from a man named “Chris,” which is Rehkow’s first name. 

Chris purportedly said that “he could not understand how anything like this could

happen,” and that “cis.net was not on their list.” 

On its face, however, Kramer’s summary of the call does not reflect an

admission by Rehkow that NCS was responsible for the spam e-mails. The quoted

comments are more akin to a denial. The district court, moreover, thought Kramer’s

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e-mail “deserve[d] less weight than if it were notes handwritten or prepared at the

precise time” of the conversation. The court also was generally skeptical of Kramer’s

credibility, saying that he “exaggerated” histestimony about NCS’s responsibility and

damages, provided testimony that was “not always consistent with the content of

documentary evidence,” and “gave guarded and unpersuasive answers” about some

of his activities. It was not clear error for the court to find no admission by Rehkow.

If a witness’s testimony is “coherent and facially plausible,” and is not

contradicted by extrinsic evidence, then a district court’s decision to credit the

testimony “can virtually never be clear error.” Anderson v. City of Bessemer City,

470 U.S. 564, 575 (1985). The district court heard from Kramer, Rehkow, and

Goldberg in a bench trial, and it found NCS’s principals more credible than Kramer. 

The evidence cited by Kramer does not establish a clear error.

B.

Kramer next contends that the district court erred by concluding that Stolars

was an independent contractor rather than an employee of NCS. Kramer argues that

because Stolars sent the spam e-mails as an employee of NCS, the company should

be vicariously liable for his actions. The district court made no finding about whether

Stolars sent the e-mails, but it rejected Kramer’s theory of vicarious liability because

it concluded that Stolars was an independent contractor. Assuming for the sake of

analysis that NCS could be held responsible for the actions of its employee under

each of Kramer’s causes of action, we agree with the district court that Stolars is

better viewed as an independent contractor. 

To urge that Stolars was an employee, Kramer relies on the test employed by

federal courts to determine whether a party is an “employee” for the purposes of

federal statutes that use the term without defining it. See Nationwide Mut. Ins. Co.

v. Darden, 503 U.S. 318, 322-23 (1992); Cmty. for Creative Non-Violence v. Reid,

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490 U.S. 730, 739-41 (1989). In Darden and Reid, the Supreme Court applied the

following common-law test:

In determining whether a hired party is an employee under the general

common law of agency, we consider the hiring party’s right to control

the manner and means by which the product is accomplished. Among

the other factors relevant to thisinquiry are the skill required; the source

of the instrumentalities and tools; the location of the work; the duration

of the relationship between the parties; whether the hiring party has the

right to assign additional projects to the hired party; the extent of the

hired party’s discretion over when and how long to work; the method of

payment; the hired party’s role in hiring and paying assistants; whether

the work is part of the regular business of the hiring party; whether the

hiring party is in business; the provision of employee benefits; and the

tax treatment of the hired party. 

Darden, 503 U.S. at 323-24 (quoting Reid, 490 U.S. at 751-52). No single factor is

determinative, Reid, 490 U.S. at 752, and courts should consider “all aspects of the

working relationship.” Wilde v. Cnty. of Kandiyohi, 15 F.3d 103, 106 (8th Cir. 1994). 

But the first factor—whether the hiring party has the right to control the means of

performance—is a “primary consideration.” Schwieger v. Farm Bureau Ins. Co. of

Neb., 207 F.3d 480, 484 (8th Cir. 2000). 

Although the parties do not mention it, Iowa law sets forth a similar but not

identical analysis for distinguishing employees fromindependent contractors. Iowa’s

test takes account of ten factors:

(1) the individual’s right to control the physical conduct and progress of

the work, except asto final results; (2) whether the individual was on the

employer’s payroll; (3) the method of payment, whether by time or by

job; (4) the individual’s obligation to furnish necessary tools, supplies,

and materials to accomplish the work; (5) the existence of a contract for

the performance by a person of a certain piece or kind of work at a fixed

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price; (6) the independent nature of the individual’s business; (7) the

individual’s employment of assistants, with the right to supervise their

activities; (8) the time for which the individual is employed; (9) whether

the work is part of the regular business of the employer; and (10) the

intent of the parties.

Fesler v. Whelen Eng’g Co., 688 F.3d 439, 442-43 (8th Cir. 2012) (citing Iowa Mut.

Ins. Co. v. McCarthy, 572 N.W.2d 537, 542-43 (Iowa 1997)). As under federal law,

“the primary focus is on the extent of control by the employer over the details of the

alleged employee’s work.” McCarthy, 572 N.W.2d at 542. 

Whether an individual is an employee or an independent contractor is a

question of law, so we consider the question of employment status de novo. Fesler,

688 F.3d at 442. Because this case turns on factors common to the analysis under

both federal and state law, we analyze all of Kramer’s claims together.

Kramer disputes the district court’s findings that the testimony of NCS’s

principals was “the most persuasive evidence” of “Stolars’ relationship to NCS,” and

that the testimony was “entirely consistent” with the sample contracts in evidence. 

A typical sample contract provided that the sales representative “is at all times under

this Agreement an independent contractor to [NCS],” that he would be “free of

Company direction and control,” and that he “shall determine his own hours, days,

and methods of selling National Credit Systems’ services.” According to Kramer,

however, other evidence contradicted Rehkow and Goldberg and showed that Stolars

was an employee.

Kramer’s main argument for employee status is that NCS controlled the

activities of Stolars and other salespeople by requiring a rigorous training regimen. 

Kramer relies on two pieces of evidence: that NCS gave its salespeople a lengthy

sales manual with specific directions about how to sell NCS’s services, and that

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Rehkow testified he would call the salespeople five times a week to discuss their

progress and offer instruction.

While it is true that NCS distributed a sales manual and that Rehkow

maintained telephone contact, Kramer presented no evidence that the sales force was

obliged to follow the manual or to accept Rehkow’s advice. Instead, Rehkow

testified that the salespeople “could market pretty much anyway theywanted to,” and

that “their time [was] their own,” such that the sales force could choose how long to

work, and whether to work from the office or from home. In fact, the salespeople

usually only came to the office two or three times per week. Where a sales

representative has the option to set his own schedule and to train himself, he is not

subject to the sort of control that exists in the traditional employer-employee

relationship. See Schwieger, 207 F.3d at 484-85. 

Other factors point in both directions. Some favor independent-contractor

status. Stolars was paid by commission. He was responsible for his own taxes and

insurance. See id. at 486. Kramer responds by citing factors that tend to show

employment status: NCS provided marketing brochures and order forms used by the

sales force; the job required no particular skills except those taught by NCS; and the

work of the sales force was an integral part of NCS’s business. The primary

consideration, however, is the hiring party’s control over the means of performance,

and we agree with the district court that the weight of the evidence taken as a whole

establishes an independent contractor arrangement. As such, we reject Kramer’s

contention that an employment relationship makes NCS responsible for any e-mail

activity by Stolars.

* * *

The judgment of the district court is affirmed.

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