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Hogan v. SPAR Group, Inc.

United States Court of Appeals, First Circuit

January 25, 2019

PARADISE HOGAN, on behalf of himself and all others similarly situated, Plaintiff, Appellee,
v.
SPAR GROUP, INC., Defendant, Appellant, SPAR BUSINESS SERVICES, INC., Defendant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Leo T. Sorokin, U.S. District Judge]

          James M. Nicholas, with whom Jillian M. Collins and Foley & Lardner LLP were on brief, for appellant.

          Brook S. Lane, with whom Hillary Schwab and Fair Work, P.C. were on brief, for appellee.

          Before Torruella, Kayatta, and Barron, Circuit Judges.

          TORRUELLA, Circuit Judge

         SPAR Group, Inc. ("SPAR") appeals from the district court's denial of its motion to compel arbitration. SPAR, a retail services provider, obtains most of its personnel from a staffing company named SPAR Business Services, Inc. ("SBS"). SBS engaged plaintiff-appellee Paradise Hogan ("Hogan") as an independent contractor and assigned him to perform services for SPAR. Hogan and SBS entered into an "Independent Contractor Master Agreement" to which SPAR was not a party. Subsequently, Hogan sued SBS and SPAR, and both sought to compel arbitration invoking an arbitration clause in the Independent Contractor Master Agreement. The district court compelled arbitration as to Hogan's claims against SBS, but found that SPAR had no legal basis to compel Hogan to arbitration.

         SPAR appealed, pressing two alternate theories for why it can compel Hogan to arbitrate despite not being a party to the agreement containing the arbitration clause. A review of the facts here mandates the conclusion that "the obvious bar to arbitrability is the abecedarian tenet that a party cannot be forced to arbitrate if it has not agreed to do so." InterGen N.V. v. Grina, 344 F.3d 134, 137 (1st Cir. 2003). We affirm.

         I. Background

         Because SPAR's request "to compel arbitration was made in connection with a motion to dismiss or stay, we draw the relevant facts from the operative complaint and the documents submitted to the district court in support of the motion to compel arbitration." Cullinane v. Uber Techs., Inc., 893 F.3d 53, 55 (1st Cir. 2018).

         A. Factual Background

         SBS is a staffing company that provides personnel to various retail services providers, including SPAR. SPAR executes field merchandising, auditing, and assembly services for retailers through personnel referred to as "Field Specialists," substantially all of whom are supplied by SBS. SBS is "affiliate[d]" to SPAR "but is not a subsidiary of or controlled by SPAR."[1] SBS classifies the Field Specialists it provides to SPAR as independent contractors.

         Paradise Hogan entered into an "Independent Contractor Master Agreement" (the "Master Agreement") with SBS, which SBS requires all Field Specialists to sign.[2] Paragraph twenty of the Master Agreement requires its parties to resolve disputes through arbitration:

Any dispute between the Parties relating to this Master Agreement or otherwise arising out of their relationship under its terms, including but not limited to any disputes over rights provided by federal, state, or local statutes, regulations, ordinances, and/or common law, shall be determined by arbitration. . . . The Parties acknowledge the Master Agreement evidences a transaction involving interstate commerce, and the arbitration shall be governed by the United States Federal Arbitration Act (9 U.S.C., Sections 1-16) ("FAA").

Paragraph twenty of the Master Agreement also states that "[t]he Parties agree that any claim shall be brought solely in the individual capacity of SBS or the Independent Contractor, and not as a representative of any other persons or any class." SPAR is not a party to the Master Agreement.

         In or about May 2015, SBS assigned Hogan to perform Field Specialist duties for SPAR. Neither SBS nor SPAR reimbursed Hogan or other Field Specialists for costs or expenses incurred in the performance of their assignments. While SBS required Hogan and other Field Specialists to acquire general liability and workers' compensation insurance, neither SBS nor SPAR paid for or contributed to these expenses. Hogan's regular hourly rate for performing services as a Field Specialist was minimum wage.

          B. Procedural Background

         On January 6, 2017, Hogan filed a putative class action complaint against both SBS and SPAR essentially alleging that they misclassified him and other Field Specialists as independent contractors rather than employees, such that they avoid paying mandated expenses and cause them to earn less than minimum wage. Hogan asserted various causes of action, including breach of contract, unjust enrichment, and violations to the Fair Labor Standards Act and Massachusetts wage and hour statutes.

         On May 2, 2017, after SBS and SPAR moved to compel arbitration or dismiss for failure to state a claim, Hogan requested to amend the complaint to "narrow the scope of his claims." The district court allowed Hogan's request and denied as moot defendants' motion to compel arbitration. On May 17, 2017, Hogan filed "Plaintiff's First Amended Class Action Complaint and Demand for Jury Trial" (the "Amended Complaint"), abandoning all but his claims pursuant to the Massachusetts Wage Act, Mass. Gen. Laws ch. ...


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