Opinion ID: 197890
Heading Depth: 2
Heading Rank: 1

Heading: Dykes's Employment Status.

Text: 28 Three of Dykes's contentions stand or fall on whether he was an employee rather than an independent contractor. Both ERISA (Count II) and the Massachusetts Antidiscrimination Statute, Mass. Gen. Laws Ann. ch. 151B (Count X), 5 protect employees, but neither extends to independent contractors. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 320-21, 112 S.Ct. 1344, 1346-47, 117 L.Ed.2d 581 (1992) (ERISA does not reach independent contractors); Speen v. Crown Clothing Corp., 102 F.3d 625, 628-29 (1st Cir.1996) (Massachusetts Antidiscrimination Statute covers only employees, not independent contractors); Comey v. Hill, 387 Mass. 11, 438 N.E.2d 811, 814 (1982) (same). The parties agree that the ADA (Count XI) also applies only to employees. 6 Accordingly, in order to avoid DePuy's motion for summary judgment on these statutory claims, Dykes must produce evidence sufficient to allow a reasonable factfinder to conclude that he was a DePuy employee. See Anderson, 477 U.S. at 248-49, 106 S.Ct. at 2510-11. 29 To determine whether a plaintiff qualifies as a protected employee under ERISA or the Massachusetts Antidiscrimination Statute, this court will ordinarily utilize the traditional common law test of agency. See Speen 102 F.3d at 632. The test provides no shorthand formula or magic phrase that can be applied to find the answer, ... all of the incidents of the relationship must be assessed and weighed with no one factor being decisive. Darden, 503 U.S. at 324, 112 S.Ct. at 1348-49 (quoting NLRB v. United Ins. Co. of Am., 390 U.S. 254, 258, 88 S.Ct. 988, 990-91, 19 L.Ed.2d 1083 (1968)). The lower courts should consider: 30 the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry 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. 31 Id. at 323-24, 112 S.Ct. at 1348 (quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S.Ct. 2166, 2178-79, 104 L.Ed.2d 811 (1989)). 32 We shall employ the same common law agency test in assessing Dykes's status for purposes of his ADA claim. A major reason given by the Supreme Court for its adoption of the common law test in the ERISA context was ERISA's completely circular definition of the term employee. Id. at 323, 112 S.Ct. at 1348. That definition of employee--any individual employed by any employer, 29 U.S.C. § 1002(6)--is virtually the same as the ADA's definition--an individual employed by an employer, 42 U.S.C. § 12111(4). Hence the same common law agency standards seem appropriate for deciding whether Dykes was an employee for ADA purposes. See also Birchem, 116 F.3d at 312 (applying the common law test to an ADA claim). 33 Turning to the present case, the facts relevant to Dykes's claim to be DePuy's employee are much the same as those that we considered in Speen. In that case, applying the common law test of agency, this court held that Speen, a traveling salesman, had failed to raise a triable issue regarding his asserted employee status. See Speen, 102 F.3d at 632-34. Finding Speen to be an independent contractor, we affirmed judgment as a matter of law for the defendant on Speen's ADEA, ERISA, and state discrimination claims. See id. at 634. 34 Like Speen, Dykes enjoyed broad control over his day-to-day business: he set his own hours, paid his own salary, and decided where and when to make sales calls. Neither salesman had to report regularly to a corporate headquarters. Both Dykes and Speen sold the same brand of product for over fifteen years. Both conducted business through their own corporate entities and both were paid on a commission basis. Both received Form 1099s rather than W-2s for federal tax purposes. 35 Further, because Dykes ran his own business, he enjoyed greater freedom than Speen in several important ways. The evidence demonstrates that Dykes controlled the employment and salaries of his office staff and sales associates. 7 Dykes and Health Systems rented and maintained office space and acquired office furniture. Also, whereas Speen was required to phone his sales numbers in to the home office daily, DePuy had no knowledge of Dykes's expenses and profits. Moreover, unlike Speen, Dykes had a signed written contract that clearly stated that he was an independent contractor, and that [a]ll personnel of Representative [Health Systems] shall be employees, or independent contractors of Representative, and not of DePuy. 36 Dykes tries to escape from under the shadow of Speen by arguing that DePuy maintained more control over his business than Crown Clothing did over Speen's. Dykes does not persuade us. Several of the arguments that Dykes makes to distinguish Speen are not supported by the record. 8 Some of his other arguments cut in both directions. For example, Dykes argues that internal memoranda and marketing directives produced by DePuy limited his business discretion greatly. Dykes supports this argument by claiming that DePuy required him to hire a medical specialist if he wanted to sell spine products. This piece of evidence cuts both ways, as it demonstrates that Dykes had discretion over which products he wished to sell. See Johnson v. Equitable Life Assurance Soc'y of the United States, 1997 WL 417409, at  3 (N.D.Ill. July 22, 1997) (finding that discretion over which products to sell points toward independent contractor status). 37 Dykes insists that the Compensation Upon Termination program was a retirement program used by DePuy to control its sales representatives to such a degree that they effectively became employees of DePuy. The program, however, depended on several contingencies prior to vesting, and while it undoubtedly provided a strong incentive for sales representatives to want to maintain their contractual relationship with DePuy, it does not overcome the many indicia that that relationship was one of independent contract, not employment. 38 We conclude that a reasonable factfinder could not find on this record that DePuy was Dykes's employer. 9 Dykes has pointed to no case law in which a court has held, on similar facts, that an employer-employee relationship existed. Under the multi-factored common law test of agency, and in light of Speen, Dykes has failed to raise genuine factual issues regarding his employment status. Since as a matter of law Dykes was an independent contractor, the district court properly granted summary judgment on Dykes's ERISA, ADA, and state antidiscrimination claims. 39 B. Dykes's Allegations Regarding Breach of the Implied Covenant of Good Faith and Fair Dealing. 40 Dykes alleges that DePuy improperly terminated his relationship in bad faith in order to avoid paying him his Compensation Upon Termination (Count I). When facing a claim that does not arise under the Constitution or the laws of the United States, a federal court must apply the substantive law of the forum in which it sits, including that state's conflict-of-laws provisions. See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). This principal applies with equal force to a state-law claim brought under supplemental jurisdiction, such as this. See Bi-Rite Enters., Inc. v. Bruce Miner Co., 757 F.2d 440, 442 (1st Cir.1985) (citing United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966)). Thus, we must determine what law a Massachusetts court would apply. 41 If two contracting parties express a specific intent as to the governing law, Massachusetts courts will uphold the parties' choice as long as the result is not contrary to public policy and as long as the designated State has some substantial relation to the contract. See Steranko v. Inforex, Inc., 5 Mass.App.Ct. 253, 362 N.E.2d 222, 228 (1977) (citations omitted). The SRA signed by Dykes and DePuy states that it is governed by and interpreted in accordance with the laws of the State of Indiana. Neither of the parties here argues that application of Indiana law would contravene public policy. Since DePuy is headquartered in Indiana, that state bears a substantial relation to the contract. Id. Accordingly, if Dykes's claims for breach of good faith and fair dealing arise from the SRA, we will apply Indiana law. 42 Dykes seeks to avoid this result by arguing that Count I of his complaint somehow presents a cause of action for wrongful discharge distinct from Dykes's contract and that therefore Count I should be evaluated under the substantive law of Massachusetts. We believe that Dykes's claim can properly be understood only as a claim for breach of an implied term of the SRA, the contract governing his relationship with DePuy. For that reason, it is governed by Indiana law. 43 In order to support his contention that his wrongful termination rests solely on Massachusetts's law, Dykes relies on a line of Massachusetts cases that have held that an employee at-will who is fired without good cause may recover amounts wrongfully withheld by an employer. 10 See Fortune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251, 1255-56 (1977). It is true that Dykes's arrangement was at-will, in that under the SRA either party could withdraw upon giving ninety days' notice. However, Fortune, the case that created this exception to the general presumption that an at-will employee may be fired for any reason or no reason at all, states expressly that termination by the employer of a contract of employment at will which is motivated by bad faith or malice ... constitutes a breach of the employment contract. Id. This language belies any notion of a cause separable from the employment contract; rather the Massachusetts Supreme Judicial Court appears to have infused Massachusetts express or implied at-will employment contracts with an implied term that they be executed in good faith. If there is a Massachusetts legal requirement that cabined DePuy's ability to terminate its arrangement with Dykes it would arise as a covenant implied within the SRA itself. 11 Dykes alleges that the bad faith reason for terminating him was DePuy's desire to avoid paying Dykes any money under the Compensation Upon Termination program. Since the program was created by the SRA, any rights that Dykes might have are inextricably bound up with that agreement. We conclude that a Massachusetts court, following the SRA's choice of law provision, would look to Indiana substantive law to evaluate Count I of Dykes's complaint. 44 Further, the parties agree that Dykes's two separate allegations of breach of the duty of good faith and fair dealing, Counts III and VIII, both arise under the SRA. In light of our discussion above, then, we apply Indiana law for the purposes of determining Dykes's rights relative to those claims as well. 45 The SRA allows either party to terminate the agreement for any reason or no reason, provided only that the terminating party give ninety days' notice. Dykes does not argue that DePuy provided insufficient notice. DePuy, therefore, was within at least its express contractual rights in terminating its arrangement with Dykes. 46 As noted, courts in some states limit employers' discretion to sever at-will employment relationships by reading a duty of good faith and fair dealing into at-will employment contracts. See, e.g., Mitford v. de Lasala, 666 P.2d 1000, 1007 (Alaska 1983); Fortune, 364 N.E.2d at 1255-56 (Massachusetts); Hall v. Farmers Ins. Exch., 713 P.2d 1027, 1029-30 (Okla.1985). Indiana courts, however, have taken the position that there is no general implied duty of good faith and fair dealing in at-will employment contracts. See Mehling v. Dubois County Farm Bureau Coop. Ass'n, Inc., 601 N.E.2d 5, 9 (Ind.Ct.App.1992) (declaring that Indiana does not recognize a covenant of good faith and fair dealing in [the at-will employment] context); Hamblen v. Danners, Inc., 478 N.E.2d 926, 929 (Ind.Ct.App.1985) (same); see also Bob Nicholson Appliance, Inc. v. Maytag Co., 883 F.Supp. 321, 327 (S.D.Ind.1994) (observing that [i]t is well-known that Indiana does not recognize an implied good faith and fair dealing in contracts). The Indiana Supreme Court has declared that, if contract language is clear, [i]t is not the province of the courts to require a party acting pursuant to such a contract to be 'reasonable,' 'fair,' or show 'good faith' cooperation. First Fed. Sav. Bank v. Key Markets, Inc., 559 N.E.2d 600, 604 (Ind.1990). 47 The primary exception to this rule is that a court may imply a duty of good faith if it is necessary to effectuate the clear intent of the parties. Prudential Ins. Co. of Am. v. Crouch, 606 F.Supp. 464, 469 (S.D.Ind.1985) (interpreting Indiana law); see also Key Markets, 559 N.E.2d at 605; Hamlin v. Steward, 622 N.E.2d 535, 540-41 (Ind.Ct.App.1993). In the present case, however, the language of the SRA is unambiguous. It sets forth with clarity the conditions precedent to claiming under the Compensation Upon Termination program. It expressly provides that the program shall not restrict the right of DePuy to terminate the Representative and that termination before Representative and Principal have met the conditions precedent will leave no rights under the agreement. In a situation such as this one, we believe that Key Markets runs contrary to implying a duty of good faith and fair dealing and that, therefore, Dykes's state claims must fail. 48 Dykes relies upon an Indiana intermediate appellate court decision to argue that Indiana courts are changing their traditional view of contract interpretation. See Weiser v. Godby Bros., Inc., 659 N.E.2d 237 (Ind.Ct.App.1996). In Weiser, the court reversed a lower court's grant of summary judgment in favor of a defendant who told an at-will employee to [s]ign [a new contract] or clean out your desk and you will be fired. Id. at 239. A one-judge plurality stated that, [a]lthough the contract terms may be wholly unambiguous and, thus, not amenable to a fair dealing requirement, the formulation of that contract is susceptible to a good faith/fair dealing analysis. Id. We are not persuaded. 49 First, Weiser applied the fair dealing analysis to the formation of the contract only; the judge expressly noted that there is no general fair dealing requirement under state law. Since Dykes does not argue that he was coerced into signing the SRA, Weiser is inapposite. Second, the other two judges on the panel did not join in the good faith and fair dealing analysis used by the plurality judge, rendering Weiser of no precedential value. Robinson v. Century Personnel, Inc., 678 N.E.2d 1268, 1270 n. 2 (Ind.Ct.App.1997). Third, another Indiana appellate court has recently disavowed Weiser, calling its continued viability into question. See id. (stating, [i]n any event, we agree with the dissent in Weiser ). 50 We conclude that the applicable Indiana law precludes Dykes from recovering on his good faith claims. Although we need not reach the question, we also agree with the district court that Dykes could likely not recover under Massachusetts law either. This is so because Massachusetts allows plaintiffs in Dykes's position to recover only reasonably ascertainable future compensation based upon [ ] past services. Gram I, 429 N.E.2d at 29. Thus, the compensation that the plaintiff seeks must be specifically related to a particular past service. McCone v. New England Tel. & Tel. Co., 393 Mass. 231, 471 N.E.2d 47, 50 (1984). In this case, Dykes was four years away from qualifying for payment under DePuy's Compensation Upon Termination program. Moreover, he had to meet a yet-to-be-determined sales quota in his final year. In these circumstances, it appears that Dykes's claim would be denied by Massachusetts courts as overly speculative. Cf. Gram v. Liberty Mut. Ins. Co., 391 Mass. 333, 461 N.E.2d 796, 798 (1984) (Gram II ) (denying a plaintiff recovery for lost career credits, which were bonus payments based upon the length of Gram's service as a sales representative). 51 We conclude that the district court properly granted summary judgment on Dykes's good faith claims, and affirm as to Counts I, III & VIII. 52 C. Dykes's Motion for Reconsideration of the Magistrate Judge's Discovery Order. 53 Dykes also appeals from the magistrate judge's denial of his request to compel DePuy to release information relating to whether any sales representatives successfully claimed their Compensation Upon Termination benefits. Dykes sought this information to establish that DePuy's stated reasons for his termination were pretextual. Dykes claims that this information is directly related to claims upon which the District Court granted summary judgment. We cannot agree. 54 Even if Dykes were to obtain the requested discovery and DePuy's asserted reasons for terminating him were pretextual, he could still not recover. Not being an employee, he is not protected by federal and state antidiscrimination statutes. And under applicable state law he may not recover for breach of an implied duty of good faith and fair dealing. No viable claims remain. 12 Hence, any possible abuse of discretion in denying Dykes's motion to compel was harmless. 55 Affirmed. Costs to appellee.