Cossart v. United Excel Corporation, et al

Filing

OPINION issued by Rogeriee Thompson, Appellate Judge; William J. Kayatta , Jr., Appellate Judge and David J. Barron, Appellate Judge. Published. [14-2144]

Case: 14-2144

Document: 00116895959

Page: 1

Date Filed: 09/30/2015

Entry ID: 5941642

United States Court of Appeals
For the First Circuit
No. 14-2144
WILLIAM COSSART,
Plaintiff, Appellant,
v.
UNITED EXCEL CORPORATION and KY HORNBAKER,
Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before
Thompson, Kayatta, and Barron,
Circuit Judges.

Kevin T. Smith, with whom Law Office of Kevin T. Smith LLC
was on brief, for appellant.
Marissa I. Delinks, with whom Hinshaw & Culbertson LLP was on
brief, for appellees.

September 30, 2015

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BARRON, Circuit Judge.

Date Filed: 09/30/2015

Entry ID: 5941642

This case presents a question

about the limits of personal jurisdiction.

The issue arises in

connection with a lawsuit brought in Massachusetts concerning an
alleged

breach

of

an

employment

contract.

The

contract

contemplated that the employee would work from Massachusetts for
a Kansas company, which then facilitated the employee's work from
Massachusetts by, among other things, providing him with equipment
and officially registering a sales office with the Commonwealth.
The employee sued after the company failed to pay him a commission
that he alleges he was due. Under the facts presented, we conclude
that the assertion of jurisdiction over the company and its
president

is

consistent

with

both

statute and the Due Process Clause.

the

Massachusetts

long-arm

We therefore reverse the

District Court's dismissal for lack of personal jurisdiction and
remand for further proceedings.
I.
United Excel Corporation, the employer and one of the
two defendant-appellees, is a so-called "design/build" company
that provides architectural and construction management services
to hospitals.1

It is incorporated and headquartered in Kansas.

1

The recited facts are drawn from the complaint, plaintiff's
evidentiary submissions, and, when uncontradicted, defendants'
affidavits. See C.W. Downer & Co. v. Bioriginal Food & Sci. Corp.,
771 F.3d 59, 65 (1st Cir. 2014).
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William Cossart, the plaintiff-appellant, worked for the company
as a salesman.

He resides in Wayland, Massachusetts.

United Excel recruited Cossart in 2010.

At that time,

Cossart traveled from his home in Massachusetts to United Excel's
offices in Kansas.

There, he negotiated an employment contract

with, among others, Ky Hornbaker, United Excel's president and the
other defendant in this case.
That first employment contract assumed that Cossart
would continue to work out of his home in Wayland, Massachusetts.
United Excel memorialized the contract in a letter addressed to
Cossart in Wayland.

The letter stated that United Excel would

provide Cossart with the business equipment that he would need to
work from Wayland, such as a computer, a printer, a cell phone,
and video conference equipment. United Excel also provided Cossart
with a business telephone number with a Kansas exchange and
redirected calls made to that number to Cossart's phone in Wayland.
And

United

Excel,

acting

through

Hornbaker,

registered

with

Massachusetts to establish a "[g]eneral contracting sales office"
in the state just a day after Cossart started his new job with
United Excel in Wayland.
In 2012, United Excel and Cossart changed Cossart's
employment contract to make him a "commission only employee," while
leaving the other terms of his employment unaltered.

United Excel

once again memorialized the employment contract in a letter sent

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to Cossart at his Wayland address.

Date Filed: 09/30/2015

Entry ID: 5941642

And the new agreement, like

the old, allowed Cossart to use home office equipment provided by
United Excel to facilitate his remote employment.

United Excel

also

to

continued

to

keep

its

registration

up

date

in

Massachusetts.
Over the course of his employment, Cossart made hundreds
of telephone calls and sent hundreds of e-mails on behalf of United
Excel from his Wayland office.

He had numerous meetings and made

cold calls in an effort to solicit business from various hospitals
in Massachusetts, but he did not successfully secure business with
a Massachusetts client.
An attempt to secure an out-of-state client, however,
led to the present action.

In October 2013, Cossart, working from

Massachusetts and under the second employment contract, identified
a potential deal in which United Excel would be retained by a
hospital in California.

Cossart then contacted the California

hospital from his home in Wayland "numerous" times by phone and email in the course of trying to secure that deal.

Cossart also

traveled from Massachusetts to California for "several" in-person
meetings.
When execution of the contract for the work for the
California hospital was "imminent," Cossart contacted Hornbaker to
discuss Cossart's belief that United Excel would owe him a $219,000
commission under the second employment contract for his work in

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securing

the

deal

with

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the

Date Filed: 09/30/2015

California

hospital.

Entry ID: 5941642

Hornbaker

responded by phone and e-mail that he would not consummate the
California deal unless Cossart agreed to accept a commission of
only $62,000.
When Cossart refused to accept the lower commission,
United Excel rescinded its offer on the California contract, and
Hornbaker fired Cossart.

Cossart then brought this action in a

Massachusetts state court against United Excel and Hornbaker.

The

complaint alleged that the defendants violated the Massachusetts
Wage Act, Mass. Gen. Laws ch. 149, § 148,2 by refusing to pay
Cossart the compensation owed to him under the second employment
contract for his efforts to secure the deal with the California
hospital.
The defendants removed the case to federal district
court on the basis of diversity jurisdiction and then moved to
dismiss for lack of personal jurisdiction over both United Excel
and Hornbaker.

The District Court granted the motion, and Cossart

now appeals.

2

The Wage Act requires employers to "pay . . . [their]
employee[s] the wages earned" -- including "commissions when the
amount of such commissions . . . has been definitely determined
and has become due and payable to such employee" -- within a
certain time period. Mass. Gen. Laws ch. 149, § 148. The Act
also expressly subjects certain corporate officers -- including
"the president and treasurer" -- to individual liability when their
employer is sued under the Act. Cook v. Patient Educ., LLC, 989
N.E.2d 847, 851 (Mass. 2013) (quoting Mass. Gen. Laws ch. 149, §
148).
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II.
"Where, as here, a district court dismisses a case for
lack of personal jurisdiction based on the prima facie record,
rather than after an evidentiary hearing or factual findings, our
review is de novo."

C.W. Downer & Co. v. Bioriginal Food & Sci.

Corp., 771 F.3d 59, 65 (1st Cir. 2014).

In undertaking that

review, "we take the plaintiff's evidentiary proffers as true and
construe them in the light most favorable to the plaintiff's claim,
and

we

also

defendant."

consider
Id.

uncontradicted

facts

proffered

by

the

As the plaintiff, Cossart "bears the burden of

establishing that the district court has personal jurisdiction
over [the defendants]."

Adelson v. Hananel, 510 F.3d 43, 48 (1st

Cir. 2007).
III.
"In determining whether a non-resident defendant is
subject to its jurisdiction, a federal court exercising diversity
jurisdiction is the functional equivalent of a state court sitting
in the forum state."
Cir. 1995).

Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st

Thus, in order to establish personal jurisdiction

over the defendants, Cossart must meet the requirements of both
the Massachusetts long-arm statute and the Due Process Clause of
the Fourteenth Amendment. The requirements of the Massachusetts
long-arm statute are similar to -- although not necessarily the
same as -- those imposed by the Due Process Clause. See Good Hope

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Indus., Inc. v. Ryder Scott Co., 389 N.E.2d 76, 80 (Mass. 1979)
("Although

presented

with

jurisdictional

facts

sufficient

to

survive due process scrutiny, a judge would be required to decline
to exercise jurisdiction if the plaintiff was unable to satisfy at
least one of the statutory prerequisites."); Burtner v. Burnham,
430 N.E.2d 1233, 1235-36 (Mass. App. Ct. 1982) ("It now appears to
be recognized that application of [the Massachusetts long-arm
statute] requires that (even if the fact pattern of the case is
constitutionally acceptable) the circumstances of the particular
case

come

within

Massachusetts

one

of

long-arm

the

specific

statute].").

We

subsections
start

by

of

[the

considering

whether that statute reaches the two defendants, United Excel and
Hornbaker.
A.
Section

3(a)

of

the

Massachusetts

long-arm

statute

provides that "[a] court may exercise personal jurisdiction over
a person . . . as to a cause of action in law or equity arising
from

the

person's

commonwealth."

.

.

.

transacting

any

business

Mass. Gen. Laws ch. 223A, § 3(a).

in

this

We must

"construe[] the 'transacting any business' language of the statute
in a generous manner," and, in applying the clause to these facts,
we must focus on "whether the defendant[s] attempted to participate
in the commonwealth's economic life."

United Elec., Radio & Mach.

Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1087 (1st

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Cir.

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1992).

defendant's

In

deciding

"transacting

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whether

a

from"

business,"

claim

"aris[es]

moreover,

we

look

to

a

see

whether the transacted business was a "but for" cause of the harm
alleged in the claim.

See Tatro v. Manor Care, Inc., 625 N.E.2d

549, 551 (Mass. 1994).
Here,

United

Excel

recruited

and

hired

Cossart,

a

Massachusetts resident, as an employee; registered a sales office
with the Commonwealth in order to facilitate his work for the
company; and retained him as a Massachusetts-based employee for a
period of years.

Moreover, Hornbaker personally negotiated the

employment contract that contemplated that this employee would
work

out

of

Massachusetts

and

signed

the

certificate

of

registration that established the United Excel sales office in
Massachusetts.
Those facts would seem to show -- in straightforward
fashion -- that each defendant "attempted to participate in the
commonwealth's economic life." United Elec., Radio & Mach. Workers
of Am., 960 F.2d at 1087.

But the District Court concluded

otherwise, and thus held that the "transacting any business"
requirement of Section 3(a) was not met.
With respect to United Excel, the District Court based
its conclusion on Tatro, 625 N.E.2d at 551-52, and its reading of
the statement in that case that "[g]enerally the purposeful and
successful

solicitation

of

business

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from

residents

of

the

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Commonwealth . . . will suffice to satisfy" the "transacting any
business" requirement of Section 3(a). See Cossart v. United Excel
Corp., No. 14-10307-GAO, 2014 WL 4927041, at *1 (D. Mass. Sept.
30, 2014). The District Court concluded that because Cossart never
secured business from a Massachusetts client, and thus "[could
not] show that any of [United Excel]'s attempts to transact
business

in

the

Commonwealth

were

successful,"

Section

provided no basis for jurisdiction over United Excel.

3(a)

Id.

But Tatro does not hold that the "transacting business"
language

of

successfully

Section
solicited

3(a)

requires

business

in

that

a

defendant

Massachusetts.

And

have
other

Massachusetts precedent shows that there is no such requirement.
In Haddad v. Taylor, 588 N.E.2d 1375, 1377 (Mass. App. Ct. 1992),
for example, the Massachusetts Appeals Court found that a nonresident defendant had transacted business within the meaning of
Section 3(a) by negotiating, via telephone and the mail, a contract
for

the

sale

of

land

in

Massachusetts

while

outside

the

Commonwealth, even though he was not the owner of the land (but
instead was acting through a power of attorney) and even though no
contract was actually consummated.
in

treating

the

"purposeful

and

Thus, the District Court erred
successful

solicitation

of

business" language in Tatro as a necessary -- rather than merely
a sufficient -- requirement for jurisdiction under Section 3(a).
And without such a requirement, we find that United Excel's conduct

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in Massachusetts easily qualifies as "transacting business" within
the meaning of Section 3(a).
With respect to Hornbaker, the District Court simply
wrote:

"There is no evidence that Hornbaker as an individual

conducted activities within the scope of the long-arm statute."
Cossart, 2014 WL 4927041, at *1.
disagree.

For the reasons given above, we

And precedent supports subjecting corporate officers to

jurisdiction under the long-arm statute at least where they are
"primary participants" in corporate action, as Hornbaker was.

See

LaVallee v. Parrot-Ice Drink Prods. Of Am., Inc., 193 F. Supp. 2d
296, 300-02 (D. Mass. 2002); Johnson Creative Arts, Inc. v. Wool
Masters,

Inc.,

573

F.

Supp.

1106,

1111-12

(D.

Mass.

1983);

Kleinerman v. Morse, 533 N.E.2d 221, 224-25 (Mass. App. Ct. 1989)
(finding

jurisdiction

where

individual

defendant

"was

the

principal actor on behalf of" the corporation).
Finally,
"aris[es]

we

from"

the

Massachusetts.

easily

conclude

defendants'

that

Cossart's

transacting

claim

business

in

As stated above, Tatro held that the business

transacted must only be a "but for" cause of the claim to give
rise to jurisdiction.

625 N.E.2d at 553-54.

That standard is

easily met here, where Cossart's claim arose from his work on the
California deal -- work he performed in Massachusetts under his
employment contract with United Excel and out of the sales office
officially registered in Massachusetts by Hornbaker.

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B.
That leaves the question whether the Due Process Clause
blocks

the

exercise

defendants.

of

personal

jurisdiction

over

these

See Int'l Shoe Co. v. State of Wash., Office of

Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945). The
exercise

of

personal

jurisdiction

may,

consistent

with

due

process, be either "specific or case-linked" or "general or allpurpose".
131

S.

See Goodyear Dunlop Tires Operations, S.A. v. Brown,

Ct.

defendants

2846,
may

2851

(2011).

constitutionally

Because
be

we

find

subjected

that

to

these

specific

jurisdiction, we need not address general jurisdiction.
In
jurisdiction

determining
over

an

whether

out-of-state

the

exercise

defendant

of

conforms

specific
to

the

constitutional limits established by the Due Process Clause, we
evaluate "(1) whether the claim directly arises out of, or relates
to,

the

defendant's

forum

state

activities;

(2)

whether

the

defendant's in-state contacts represent a purposeful availment of
the privilege of conducting activities in the forum state, thereby
invoking the benefits and protections of that state's laws and
making the defendant's involuntary presence before the state's
courts foreseeable; and (3) whether the exercise of jurisdiction
is reasonable."

C.W. Downer & Co., 771 F.3d at 65 (internal

quotation marks and alterations omitted).

And, after applying

this test, under which all three prongs must be met, see id., we

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conclude

that

due

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permits

the

exercise

of

Entry ID: 5941642

specific

jurisdiction over both defendants.
1.
The first prong of the test, regarding "relatedness,"
"serves the important function of focusing the court's attention
on the nexus between a plaintiff's claim and the defendant's
contacts with the forum."

Sawtelle, 70 F.3d at 1389.

In this

case, to determine relatedness, we "must consider the contacts
between the defendants and the forum state viewed through the prism
of plaintiff['s] . . . claim" for unpaid compensation that is
allegedly

due

under

the

Massachusetts Wage Act.

second

Id.

employment

contract

and

the

Given that we are dealing here with

a contract dispute, we pay particularly close attention to "the
parties' prior negotiations and contemplated future consequences,
along with the terms of the contract and the parties' actual course
of dealing." C.W. Downer & Co., 771 F.3d at 66 (internal quotation
marks and citation omitted).
The defendants contend that Cossart's claim bears little
to

no

relationship

to

Massachusetts

because

the

disputed

commission arose out of a contract with a California hospital, to
be performed in California.

And further, the defendants assert

that their decision to not move forward with the California deal,
and thus to not pay Cossart any commission for his work on that
deal, was made in Kansas.

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Fundamentally, that argument fails because it overlooks
the fact that this lawsuit arises out of an alleged breach not of
a contract with a California hospital, but rather of the contract
defendants procured with a Massachusetts resident to be performed
by the resident primarily from Massachusetts.

Nor, for that

matter, was the potential California account that triggered the
employment-contract dispute without its forum-state contacts.
Cossart performed a substantial portion of the work that
led to the potential California account from the Massachusetts
sales office that United Excel (through Hornbaker) had registered
with the Commonwealth.

That work included sending e-mails and

making phone calls from Massachusetts to California. At all times,
moreover, Cossart was acting within the scope of his employment
with

United

Excel,

through

an

employment

relationship

the

defendants had entered into with full knowledge that Cossart would
perform his duties from Massachusetts.
In addition, when final execution of the California
contract

was

"imminent,"

Cossart

contacted

Hornbaker

from

Massachusetts to discuss payment of his commission, which he says
he had already earned.

And when United Excel, through Hornbaker,

refused to pay the commission that was allegedly due, the company
did

so

via

e-mail

and

phone

conversations

with

Cossart

in

Massachusetts, thereby directly giving rise to this Massachusetts
Wage Act claim.

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We thus conclude that Cossart's claim relates to United
Excel's and Hornbaker’s contacts with Massachusetts, for reasons
similar to those expressed in our recent decision in C.W. Downer
& Co.

See id. at 66 ("[The foreign corporate defendant] had an

ongoing connection with Massachusetts in the performance under the
[inter-firm

services]

contract.

[The

resident

corporate

plaintiff's] claims arise from the alleged breach of that contract.
That is enough to establish relatedness.").

And so we proceed to

the next part of the inquiry: purposeful availment.
2.
The record is equally clear that "the defendant[s'] instate contacts [identified in the relatedness inquiry] represent
a purposeful availment of the privilege of conducting activities
in the forum state, thereby invoking the benefits and protections
of that state's laws and making the defendant[s'] involuntary
presence before the state's courts foreseeable,"
(quotation marks and citation omitted).

Id. at 65

Our recent decision in

C.W. Downer & Co. once again shows why.
There,

we

held

that

an

out-of-state

company

had

purposefully availed itself of the privilege of doing business in
Massachusetts

by

investment bank.
company's

retaining

the

Id. at 66-69.

voluntary

services

of

a

Boston-based

We rested that judgment on the

solicitation

of

the

bank's

services;

the

active formation of a long-term contractual relationship with a

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party reasonably known to be in Massachusetts (such that the
contracted-for services would foreseeably be rendered there); and
the performance of work under that contract by the bank, which was
treated as contact with the forum by the out-of-state company
because the voluntary contractual relationship had foreseeably led
the bank to undertake that work.

Id. at 66-67 ("[The forum

plaintiff]'s extensive Massachusetts activities in this case,
given the context, were not unilateral.

They were undertaken at

[the non-forum defendant]'s request and are attributable to [the
non-forum defendant]." (internal quotation marks omitted)).
Those same factors are present here.

United Excel

recruited Cossart at his home in Massachusetts.

The resulting

employment contract, as negotiated by Hornbaker, contemplated that
Cossart would continue to work from Massachusetts on United Excel's
behalf and that the company would facilitate that work by providing
the requisite office equipment.
In the course of performing that contract, moreover,
United Excel (through Hornbaker) voluntarily facilitated Cossart's
work from Massachusetts by registering a sales office with the
Commonwealth and keeping that registration current while Cossart
remained a United Excel employee.3

In addition, in the course of

3

Indeed, the facts here show even greater purposeful
availment than in C.W. Downer & Co. insofar as the non-forum
defendants here actively facilitated -- and did not merely
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the performance of that agreement, Cossart did significant work
for United Excel in Massachusetts -- as the defendants clearly
foresaw he would.

That work included his efforts to secure the

California deal, for which Cossart asserts he is owed a commission
under the employment agreement.

Finally, United Excel (again

through Hornbaker) allegedly breached the employment agreement
when it informed Cossart at his Massachusetts home that he would
not be paid the commission on the California deal.
The

facts

that

prevented

personal

jurisdiction

in

Phillips v. Prairie Eye Center, 530 F.3d 22 (1st Cir. 2008), the
principal case cited by defendants, are thus not present here.

In

Phillips, the non-forum defendant did negotiate a contract with a
Massachusetts employee.
to

be

performed

by

530 F.3d at 28-29.
the

employee

in

But the contract was

Illinois,

not

from

a

Massachusetts sales office that had been registered with the
Commonwealth by the non-forum defendant.

See id.

3.
In light of our conclusion that the first two prongs of
the specific-jurisdiction test are met, we could find that the Due
Process Clause bars the exercise of personal jurisdiction over
these defendants only if such exercise would not be fair and
reasonable.

See C.W. Downer & Co., 771 F.3d at 69.

To determine

reasonably foresee -- the plaintiff's performance of the contract
from Massachusetts.
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whether that is the case, we must consider the so-called "gestalt"
factors: "(1) the defendant[s'] burden of appearing [in the forum
state], (2) the forum state's interest in adjudicating the dispute,
(3) the plaintiff's interest in obtaining convenient and effective
relief, (4) the judicial system's interest in obtaining the most
effective

resolution

interests

of

policies."

all

of

the

sovereigns

controversy,
in

and

promoting

(5)

the

common

substantive

social

Id.
Here, neither defendant has shown that "some kind of

special or unusual burden" would result from Massachusetts serving
as the forum.

Bluetarp Fin., Inc. v. Matrix Const. Co., 709 F.3d

72, 83 (1st Cir. 2013) (citations and quotation marks omitted);
see also C.W. Downer & Co., 771 F.3d at 69 ("Bioriginal identifies
no special burden imposed by requiring it to litigate across the
Canada–United States border . . . .").

And Massachusetts clearly

has an interest in being the forum that determines whether Cossart,
who performed his work for the company in the Commonwealth, has a
meritorious claim under the Massachusetts Wage Act.

Cf. C.W.

Downer & Co., 771 F.3d at 70 ("Massachusetts has 'significant'
interests

in

providing

a

convenient

forum

.

.

.

when

[its

citizens'] commercial contracts are said to be breached by outof-state defendants.").

The remaining factors relevant to the

inquiry also do not indicate a problem with Massachusetts serving

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We therefore conclude that constitutional due

process does not bar Massachusetts from doing so.
IV.
For the foregoing reasons, we reverse the District Court's
order and judgment of dismissal for lack of personal jurisdiction
as to both defendants and we remand for further proceedings.

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