Worker Misclassification Cases

Commission erred denying medical and temporary total disability benefits based on finding appellant was an independent contractor; appellant was employee as employer exerted high level of control, required daily progress reports, directed means and methods, and dictated working hours; reversed and remanded to Commission for further proceedings

Timothy P. Chambers & another vs. RDI Logistics, Inc., & another; Dee & Lee, LLC, & another, third-party defendants. Bristol. October 5, 2016. December 16, 2016. Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ. Independent Contractor Act. Federal Preemption. Statute. Federal preemption. Severability. Practice. Civil. Summary judgment. Standing. Employment. Retaliation. Protective Order. In a civil action brought by plaintiffs who contracted with the defendants through small corporations that the plaintiffs had formed for the purpose of contracting to perform services in Massachusetts as furniture delivery drivers, the judge erred in granting summary judgment in favor of the defendants, where, although a portion of G. L. c. 149, § 148B, the independent contractor statute, is preempted by the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. § 14501(c), the remainder was sever-able and remained applicable to the plaintiffs’ claim of misclassification, regarding which material facts remained in dispute [99-108]; and where the plaintiffs had alleged enough facts to establish a genuine issue of material fact whether they had standing to assert claims for misclassification under the independent contractor statute [108-109]; moreover, the judge erred in dismissing, without explanation, one plaintiff’s claim of retaliation [109-110], In a civil action brought by plaintiffs who contracted with the defendants through small corporations that the plaintiffs had formed for the purpose of contracting to perform services in Massachusetts as furniture delivery drivers, the judge did not abuse his discretion in denying the plaintiffs’ emergency motion for a protective order to enjoin one defendant from contacting its workers, where the judge’s determination that the communications were not coercive or misleading was not unreasonable. [110-112] Civil action commenced in the Superior Court Department on September 20, 2013. An emergency motion for a protective order was considered by Richard T Moses, L; a motion for reconsideration was considered by him; and the case was heard by him on motions for summary judgment. The Supreme Judicial Court granted an application for direct appellate review. Harold L. Lichten (Peter M. Delano also present) for the plaintiffs. Michael T. Grant (Andrew J. Fay also present) for the defendants. Individually and on behalf of all others similarly situated. Leroy Johnson, individually and on behalf of all others similarly situated. Richard J. Deslongchamps, Jr. Three T & C Transport, Inc. Lenk, J. We are called upon in this case chiefly to consider whether G. L. c. 149, § 148B, the independent contractor statute, is preempted by the Federal Aviation Administration Authorization Act of 1994 (FA A A A), 49 U.S.C. § 14501(c). The plaintiffs, who contracted with the defendants through small corporations that the plaintiffs apparently formed for this purpose, performed services in Massachusetts as furniture delivery drivers. They brought this putative class action against the defendants under the independent contractor statute, asserting that they had been misclassified as independent contractors. Following the addition of other claims and counterclaims, summary judgment entered for the defendants dismissing the plaintiffs’ claims on the ground that they were preempted by the Federal statute. We conclude that, while a portion of the independent contractor statute is preempted by the FAAAA, the remainder is severable and remains applicable to the plaintiffs’ misclassification claim. Nor is summary judgment dismissing that claim warranted on the separately asserted basis that the plaintiffs lack standing as individuals to assert claims for misclassification under the statute. Material issues of disputed fact preclude the entry of summary judgment on either basis. We conclude similarly that the dismissal, without explanation, of the claim of retaliation that Timothy Chambers individually asserts under G. L. c. 149, § 148A, was improper. Finally, we review the denial of the plaintiffs’ request for a protective order, brought in the wake of the defendants’ communications with putative class members in which they were offered payments in exchange for signed releases. While discerning no abuse of discretion requiring reversal in these circumstances, we acknowledge the legitimate concerns raised by such communications and the authority of a judge to enter appropriate protective orders when necessary. 1. Background. Since this case concerns a grant of summary judgment, we “summarize the relevant facts in the light most favorable to the plaintiff[s].” Somers v. Converged Access, Inc., 454 Mass. 582, 584 (2009). RDI Logistics, Inc. (RDI), is a furniture delivery company headquartered in South Easton. Richard Deslongchamps, Jr., is the founder and president of RDI. The company provides “last mile” delivery services for large retail furniture companies. The plaintiffs delivered furniture for RDI for several years on a full-time basis, working approximately sixty hours per week over five or six days. Since RDI only does business with independent business entities, the plaintiffs incorporated prior to entering into contracts with RDI. The contracts contained both nonsolicitation and noncompete clauses, which effectively prevented the plaintiffs from performing any delivery work for RDTs competitors during their tenure with the company and for three years thereafter. RDTs managers informed the plaintiffs that their contracts would be terminated if they worked for any company other than RDI. The company also required the plaintiffs to wear uniforms and to display signs on their trucks bearing either RDTs logo or the logos of RDTs customers. RDI deducted from the plaintiffs’ pay the costs of uniforms, truck lease payments, and damage allegedly done to customers’ property in the course of their deliveries. RDI also regulated how the plaintiffs loaded the furniture on their trucks, which customers they delivered to, and the specific windows of time in which they were to deliver their goods to customers. Finally, RDI required that the plaintiffs follow prescribed routes to reach their customers and use global positioning system devices to ensure that the plaintiffs did not deviate from their assigned routes. After approximately four years of service, RDI terminated its contract with Johnson’s company in December, 2011, under disputed circumstances. During the summer of 2013, Chambers informed his fellow drivers at RDI that he suspected that RDI was misclassifying them as independent contractors rather than as employees. In August, 2013, RDI informed Chambers that his contract was subject to a sixty-day review period. On the evening of September 18, 2013, Deslongchamps confronted Chambers and accused him of attempting to file a lawsuit under the independent contractor statute. After a brief argument, Deslong-champs fired Chambers. Two days later, the plaintiffs filed a class action complaint against RDI and Deslongchamps, individually, alleging misclass-ification. In October, 2013, they filed an amended complaint, adding a claim for unjust enrichment stemming from the purported misclassification, as well as an individual claim on behalf of Chambers alleging retaliation under G. L. c. 149, § 148A. The defendants asserted two counterclaims for breach of contract against Johnson, maintaining that he had violated a release of claims against RDI that he signed upon his termination. They also filed a third-party complaint against the plaintiffs’ respective corporations, asserting that the contracts between those corporations and RDI indemnified RDI against any damages resulting from the plaintiffs’ claims. In July of 2014, the parties engaged in an unsuccessful mediation effort. Three montos later, as discovery was underway, RDI sent a series of letters on an ex parte basis to certain current and former RDI contractors. Each letter contained a check for $1,000 that would, if endorsed, purportedly release all claims against RDI. The two-page letters, in essence, stated that two individuals had filed a class action complaint against RDI in which they claimed that they were misclassified as independent contractors. The letters, which contained toe Superior Court case caption, noted that although “RDI believes firmly that it has not acted improperly with regard” to its classification of its workers, it would offer “a one-time payment in exchange for a release” of any claims relating, inter alia, to the classification of those workers. On learning of these letters, the plaintiffs sought an emergency protective order barring RDI from engaging in further communications with “putative class members.” They asked the judge to strike “any alleged settlements obtained as the result of toe letters and checks” that had been mailed. The motion was denied. A few months later, toe plaintiffs filed a motion for reconsideration of their emergency motion, claiming that an RDI driver had informed the plaintiffs’ counsel that he and his fellow drivers feared they would lose their contracts with RDI if they did not endorse the checks. The judge denied that motion. The plaintiffs sought interlocutory review before a single justice of toe Appeals Court, which also was denied. Two weeks later, the plaintiffs moved for partial summary judgment on their misclassification claim. In response, the defendants filed a cross motion for summary judgment on all of the plaintiffs’ claims, along with their claims against Johnson and the plaintiffs’ companies. The judge denied the plaintiffs’ motion and allowed the defendants’ motion on the ground that the FAAAA preempted the independent contractor statute in its entirety. The plaintiffs’ complaint was dismissed, along with the defendant’s claims against Johnson and the plaintiffs’ companies. We allowed the plaintiffs’ application for direct appellate review. 2. Discussion, a. Summary judgment. The defendants claim that they are entitled to judgment as a matter of law on all of the plaintiffs’ claims. They contend that the plaintiffs’ misclassification claim fails for two reasons. First, they suggest that the statute is preempted by the FAAAA. Second, they argue that the plaintiffs do not have standing under the independent contractor statute because their contracts with RDI were through corporate entities. The defendants also suggest that Chambers’s retaliation claim fails because he does not have standing unless he proves that he is an employee. i. Standard of review. “We review a grant of summary judgment de novo to determine ‘whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to judgment as a matter of law.’ ” DeWolfe v. Hingham Centre, Ltd., 464 Mass. 795, 799 (2013), quoting Juliano v. Simpson, 461 Mass. 527, 529-530 (2012). Because we review this matter de novo, “no deference is accorded the decision of the judge in the trial court.” Federal Nat’l Mtge. Ass’n v. Hendricks, 463 Mass. 635, 637 (2012). The defendants, as the moving parties, bear the “burden of establishing that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law.” DeWolfe, supra. ii. Misclassification claim. A. Independent contractor statute. The independent contractor statute “establishes a standard to determine whether an individual performing services for another shall be deemed an employee or an independent contractor for purposes of our wage statutes.” Somers v. Converged Access, Inc., 454 Mass. 582, 589 (2009). “Under this standard, ‘ “an individual performing any service” is presumed to be an employee’ ” (citations omitted). Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321, 327 (2015). “The purpose of the independent contractor statute is ‘to protect workers by classifying them as employees, and thereby grant them the benefits and rights of employment, where the circumstances indicate that they are, in fact, employees’ ” (citation omitted). Depianti v. Jan-Pro Franchising Int’l, Inc., 465 Mass. 607, 620 (2013). To establish that a presumptive employee is actually an independent contractor, an employer must prove that “(1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and “(2) the service is performed outside the usual course of the business of the employer; and “(3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.” G. L. c. 149, § 148B. To “rebut the presumption of employment,” an employer must satisfy all three of these prongs. Depianti, 465 Mass. at 621. B. The FAAAA. In enacting the FAAAA in 1994, Congress sought to deregulate the trucking industry. See Dan’s City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769, 1775 (2013). Congress acted based on a finding “that [SJtate governance of intrastate transportation of property had become ‘unreasonably burdensome]’ to ‘free trade, interstate commerce, and American consumers.’ ” Id., quoting Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 440 (2002). Toward that end, Congress included a preemption clause in the statute that expressly preempts any State “law, regulahon, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1) (2012). “The critical question in any preemption analysis is always whether Congress intended that [F]ederal [law] supersede [S]tate law” (citation omitted). Bay Colony R.R. v. Yarmouth, 470 Mass. 515, 518 (2015). While Congress’s intent to preempt State law under the FAAAA is explicit, “that ‘does not immediately end the inquiry because the question of the substance and scope of Congresses] displacement of [S]tate law still remains.’” Id., quoting Altria Group, Inc. v. Good, 555 U.S. 70, 76 (2008). In order to determine this scope, we “focus first on the statutory language, ‘which necessarily contains the best evidence of Congresses] pre-emptive intent’ ” (citahon omitted). Dan’s City Used Cars, Inc., 133 S. Ct. at 1778. The breadth of the FAAAA’s preemption clause is “purposefully expansive.” Massachusetts Delivery Ass’n v. Coakley, 769 F.3d 11, 18 (1st Cir. 2014). Any State laws “ ‘having a connection with, or reference to,’ carrier ‘ “rates, routes, or services,” are pre-empted’ ” (citation omitted). Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 370 (2008). Congress’s overarching goal in establishing such expansive preemption was twofold. First, it aimed to “ensure transportation rates, routes, and services that reflect[ed] ‘maximum reliance on competitive market forces,’ thereby stimulating ‘efficiency, innovation, and low prices,’ as well as ‘variety’ and ‘quality’ ” (citation omitted). Id. at 371. Second, Congress wanted to sweep aside “a patchwork of [S]tate service-determining laws, rules, and regulations” that would undercut this goal. Id. at 373. The United States Supreme Court has interpreted the FAAAA’s preemptive effect broadly, concluding that preemption occurs “at least where [S]tate laws have a ‘significant impact’ related to Congresses] deregulatory and pre-emption-related objectives” (citation omitted). Id. at 371. Despite its expansive ambit, however, the FAAAA’s preemption is not unlimited. State laws that “affect fares in only a ‘tenuous, remote, or peripheral... manner’ ” are not preempted (citation omitted). Id. The defendants contend that the FAAAA preempts the independent contractor statute for two reasons. First, they contend that the FAAAA preempts the statute because the second prong of G. L. c. 149, § 148B (prong two), dictates that motor carriers such as RDI perform their services using employees rather than independent contractors. They also argue that prong two cannot be severed from the statute because the Legislature drafted the statute as a conjunctive test with three inseparably intertwined prongs. Second, the defendants argue that the FAAAA preempts the application of the independent contractor statute to motor carriers such as RDI because enforcement of the plaintiffs’ misclassification claim would have an impermissible impact on motor carriers’ services. C. Prong Wo. The defendants are correct that prong two draws the independent contractor statute into the gravitational pull of the FAAAA’s preemption. Prong two provides an impossible standard for motor carriers wishing to use independent contractors. This de facto ban constitutes an impermissible “significant impact” on motor carriers that would undercut Congress’s objectives in passing the FAAAA; the statute containing prong two also forms part of an impermissible “patchwork” of State laws due to its uniqueness. See Rowe, 552 U.S. at 371, 373. A delivery driver for a motor carrier necessarily will be performing services within “the usual course of the business of the employer” whenever a court concludes that delivery services are part of its usual course of business. See G. L. c. 149, § 148B (a) (2). Prong two thereby, in essence, requires that motor carriers providing delivery services, such as RDI, use employees rather than independent contractors to deliver those services. As a result, motor carriers are compelled to adopt a different manner of providing services from what they otherwise might choose because prong two dictates the type of worker that will provide the services. This likely also would have a significant, if indirect, impact on motor carriers’ services by raising the costs of providing those services. See, e.g., G. L. c. 151, § 1 (requiring that employers pay employees minimum wage). The statute containing prong two therefore contravenes the objectives of Congress in enacting the FAAAA by “substituting] ... its own governmental commands for ‘competitive market forces’ in determining (to a significant degree) the services that motor carriers will provide.” Rowe, 552 U.S. at 372. Moreover, with prong two included, the statute contravenes the congressional objective of preventing a ‘“patchwork of [S]tate service-determining laws.” Id. at 371. Unlike the first and third prongs, prong two ‘“stands as something of an anomaly” amongst State laws regulating the classification of workers. Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429, 438 (1st Cir. 2016). Very few States have enacted such a test, which explicitly hinges employee status on the connection between the services performed by the worker and the employer’s usual course of business. Id., and cases cited. The provision’s distinctiveness both undercuts Congress’s intent to prevent ‘“a patchwork of [S]tate service-determining laws, rules, and regulations,” Rowe, supra, and suggests that Congress did not intend to allow such provisions to stand as a “type of pre-existing and customary manifestation of the [S]tate’s police power.” Schwann, supra. D. Severability of prong two. The defendants take the view that the prongs of the independent contractor statute are nonseverable because they operate conjunctively and are inextricably intertwined. They argue that, given that prong two of the independent contract statute triggers the FAAAA’s preemption, the entire statute, on this view, must fall. This contention fails for several reasons. When compelled to strike down part of a statute, the court will, ‘“as far as possible,... hold the remainder to be constitutional and valid, if the parts are capable of separation and are not so entwined that the Legislature could not have intended that the part otherwise valid should take effect without the invalid part.” Massachusetts Wholesalers of Malt Beverages, Inc. v. Commonwealth, 41

Edson Teles Machado & others vs. System4 LLC & another. Norfolk. December 4, 2014. April 13, 2015. Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ. Massachusetts Wage Act. Contract, Franchise agreement, Arbitration. Arbitration, Damages, Arbitrable question. In a class action brought by franchisee janitorial workers (plaintiffs) who had signed agreements with a regional subfranchisor of the master franchisor, the master franchisor (a nonsignatory to the agreements) could compel, under principles of equitable estoppel, the plaintiffs to pursue their substantive claims in arbitration based on their agreements with the regional subfranchisor, where the plaintiffs asserted multiple claims that arose out of and related directly to terms within the agreements, which contained the arbitration clause [209-215], and where the plaintiffs consistently had alleged concerted misconduct by the defendants [215-216]; further, the plaintiffs’ claims under the Wage Act, G. L. c. 149, § 148, were arbitrable, given that the plaintiffs had not unwittingly relinquished their right to recovery under the Wage Act upon signing the agreements [216-218]; finally, there was no merit to the plaintiffs’ claim that the agreements were permeated with a series of unconscionable provisions that rendered them invalid under Massachusetts law, especially in light of the presence of a severability clause and the strong public policy in favor of arbitration [218-220]. Civil action commenced in the Superior Court Department on March 24, 2010. Following review by this court, 465 Mass. 508 and 466 Mass. 1004 (2013), a motion for a ruling that an arbitration clause did not apply to certain claims was heard by Patrick F. Brady, J. The Supreme Judicial Court granted an application for direct appellate review. Eric H. Karp for the defendants. Shannon Liss-Riordan for the plaintiffs. Jocilene da Silva, Stenio Ferreira, Poliane Santos, Glaucea de Oliveira Santos, and Luiz Santos. NECCS, Inc., doing business as System4 of Boston, LLC (NECCS). Cordy, J. This case was filed in 2010 by a franchisee janitorial worker, on behalf of himself and other similarly situated individuals, against System4 LLC (System4), a “master franchisor,” and NECCS, Inc., doing business as SystemA of Boston, LLC (NECCS), a regional “subfranchisor,” originally alleging, in relevant part, breach of contract, rescission of contract, and misclassification as independent contractors in their franchise agreements. The franchise agreements are signed only by the plaintiffs and NECCS; however, the complaint as originally filed, and as subsequently amended, does not differentiate NECCS from SystemA and alleges that the former is “the agent of’ and “exists solely to conduct [the] business” of the latter. The agreements govern a franchisee’s right to customer account referrals and the use of SystemA’s proprietary information in operating commercial janitorial cleaning businesses. They also require the franchisee plaintiffs to arbitrate virtually all disputes. While the plaintiffs raise a number of arguments on appeal, of central importance is the question whether SystemA, a nonsignatory, can compel the franchisee plaintiffs to arbitrate their substantive claims in accord with the arbitration provision in the plaintiffs’ franchise agreements. We conclude that by reason of equitable estoppel they can do so in the circumstances of this case. Background. SystemA, an Ohio limited liability company, contracts with a regional subfranchisor in the Boston area, NECCS, who subsequently enters into franchise agreements with franchisees, such as the plaintiffs. Although SystemA is not a signatory to these agreements, the agreements provide the franchisees with access to SystemA’s marketing expertise, business practices, training, and use of trademarks, by way of a separate agreement between SystemA and NECCS. 1. Arbitration clause. The franchisee plaintiffs are parties to agreements to operate SystemA franchises (franchise agreements). Under these agreements, NECCS offers its franchisees customer accounts to service, which the franchisees are free either to accept or refuse. The agreements purport to guarantee gross monthly billings to the franchisees based on the value of the customer accounts offered to them. In addition, the agreements authorize the franchisees to use System4’s proprietary information, including its brand and trademarks. The agreements characterize the franchisees as independent contractors, a characterization they contest, and each agreement contains an arbitration clause. The arbitration clause is broad in scope, requiring arbitration of any claims between the franchisee and NECCS and its subsidiaries, affiliates, shareholders, officers, directors, managers, representatives, and employees, arising out of or related to: (1) the franchise agreement or any other agreement between the parties, including claims related to the validity of the franchise agreement or any other agreement; (2) NECCS’s relationship with the franchisee; or (3) claims relating to the operation of the franchised business. Accordingly, virtually all claims arising out of the franchise relationship are subject to arbitration. 2. Plaintiffs as franchisees. Machado, the original named plaintiff in this action, signed a franchise agreement with NECCS on February 14, 2008, initialing each page. After signing his franchise agreement, Machado both rejected and accepted offers extended to him by NECCS to service customer accounts. In October, 2008, Machado informed NECCS that he wished to sell his franchise, and he stopped performing services for his accounts. In November, 2008, Machado spoke with the president of NECCS, Jonathan Caffrey, and asked for his franchisee fees back. When Caffrey declined to return the fees, Machado ceased communication with NECCS. 3. Procedural history. Machado filed a complaint in the Superior Court in March, 2010, on behalf of himself and “other similarly situated individuals.” In so doing, Machado named both System4 and NECCS as defendants, and claimed that both had committed a breach of the franchise agreement by not providing him with sufficient customer accounts. In addition, Machado claimed that both defendants misclassified him as an independent contractor in the agreement and committed other violations of the Massachusetts Wage Act, G. L. c. 149 §§ 148, 148B, and 150 (Wage Act). In June, 2010, the defendants, citing the arbitration clause in Machado’s franchise agreement, filed a motion to stay the court proceedings pending arbitration. A judge denied the motion, holding that the arbitration agreement was unenforceable because it contained waivers of class proceedings and multiple damages. Subsequently, in April, 2011, the United States Supreme Court held in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (Concepcion), that the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (2012) (FAA), prohibits States from conditioning the enforceability of arbitration agreements on the availability of class action procedures. Thereafter, Machado amended his complaint, adding additional named plaintiffs as well as a putative class of individuals who had performed cleaning services for NECCS and System4. The amended complaint again asserted claims against both defendants without differentiation, seeking rescission of the franchise agreements and damages for misclassification among other violations of the Wage Act. In December, 2011, the defendants moved for reconsideration of the denial of their motion to compel arbitration in light of Concepcion. The judge denied the defendants’ motion, and the defendants petitioned for interlocutory review. A single justice of the Appeals Court referred the issue to a full panel of the Appeals Court, and we granted the plaintiffs’ application for direct appellate review. The appellate filings of both the plaintiffs and the defendants in that interlocutory appeal addressed the enforceability of the arbitration clause as a whole and made no argument as to whether the arbitration clause, if enforceable, would require arbitration of the plaintiffs’ claims only against NECCS and not System4. We issued a decision in June, 2013, but stayed issuance of the rescript until August, 1, 2013, pending submissions by the parties on the effect, if any, of the United States Supreme Court’s decision in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013). See Machado v. System4 LLC, 465 Mass. 508 (2013) (Machado I). In light of the decisions of the United States Supreme Court, we concluded that a class action waiver provision was not an adequate ground on which to invalidate an agreement to arbitrate. See Machado v. System4 LLC, 466 Mass. 1004, 1004 (2013) (Machado II). See also Machado I, supra at 513-517. We then remanded the case to the Superior Court judge for proceedings consistent with our decision. See Machado II, supra. Subsequently, the plaintiffs filed a motion, as well as a post-hearing letter, again asking the judge to deny the defendants’ motion to compel arbitration on several grounds: first, that the arbitration clause could not apply to their Wage Act claims because it did not specifically reference the Wage Act, an argument that was based on our decision in Crocker v. Townsend Oil Co., 464 Mass. 1, 14 (2012) (holding that release of claims must specifically reference Wage Act in order to apply to Wage Act claims); second, that the arbitration clause was unenforceable, as it contained multiple unconscionable provisions; and third, that the plaintiffs were not bound to arbitrate their claims against System4 because it was not a signatory to the franchise agreements. The judge rejected the plaintiffs’ Wage Act claim and also held that issues of unconscionability of the arbitration clause could be decided by an arbitrator. However, the judge agreed with the plaintiffs that, because System4 was not a signatory to the franchise agreements, the plaintiffs could proceed to litigate their claims against System4 in court. System4 appealed the judge’s decision regarding the enforceability of the arbitration clause as applied to it. The plaintiffs did not file a cross appeal regarding the judge’s decision denying them relief on their other grounds, but filed an application for direct appellate review, which we granted. The plaintiffs ask us to affirm the judge’s reasoning in declining to enforce the arbitration clause with respect to System4 or, in the alternative, to affirm the ruling on one of the grounds rejected by the judge. Discussion. Denials of applications to compel arbitration are reviewed de novo. See Joulé, Inc. v. Simmons, 459 Mass. 88, 92-93 (2011); Feeney v. Dell Inc., 454 Mass. 192, 199 (2009), S.C., 465 Mass. 470, and 466 Mass. 1001 (2013). See also War- field v. Beth Israel Deaconess Med. Ctr., Inc., 454 Mass. 390, 395 (2009) (motion to compel arbitration treated summarily and judge’s order reviewed de novo). The Massachusetts Arbitration Act, G. L. c. 251, similarly to the FAA, “expresses a strong public policy favoring arbitration as an expeditious alternative to litigation for settling commercial disputes.” Miller v. Cotter, 448 Mass. 671, 676 (2007), quoting Home Gas Corp. of Mass., Inc. v. Walter’s of Hadley, Inc., 403 Mass. 772, 774 (1989). “[T]he lack of a written arbitration agreement is not an impediment to arbitration.” Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir. 1993), cert. denied sub nom. Sunkist Growers, Inc. v. Del Monte Corp., 513 U.S. 869 (1994). 1. Nonsignatory compulsion of signatory to arbitrate. We begin our discussion with a consideration of whether SystemA, a non-signatory to the franchise agreements, can compel the plaintiffs to pursue their substantive claims in arbitration based on the agreements they entered into with NECCS. In Depianti v. Jan-Pro Franchising Int’l, Inc., 465 Mass. 607, 622, 624-625 (2013), we recently held that a franchisee, much like the plaintiffs in this case, could hold a nonsignatory to his franchise agreement liable for misclassifying him as an independent contractor in that agreement if the nonsignatory had attempted to insulate itself from liability by “causing or creating another entity to [enter the agreement].” This is essentially what the plaintiffs allege here, that is, that NECCS was created solely to conduct SystemA’s franchising business in Massachusetts; that the franchise agreements are SystemA’s standard form contracts; and that SystemA controls the relationships between the parties and between the plaintiffs and their clients. Therefore, they argue, SystemA is just as liable for the misclassification in their franchise agreements as NECCS, even though SystemA did not sign them. Although denying liability and an agency relationship with NECCS, SystemA essentially argues that where the plaintiffs contend that SystemA was effectively the franchisor, the creator of the agreements and their terms, the violator of those terms, and the beneficiary of the purported misclassification term, any dispute arising out of the agreements should be resolved in accord with the arbitration clause that provides for such dispute resolution. While a nonsignatory attempting to bind a signatory to an arbitration agreement is distinct from a signatory attempting to bind a nonsignatory, courts often consider both scenarios under a similar legal framework. Traditionally, courts have recognized six theories for binding nonsignatories to arbitration agreements: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego; (5) equitable estoppel, and (6) third-party beneficiary. See J.E. Grenig, Alternative Dispute Resolution § 7:4 (3d ed. 2005). See also Walker v. Collyer, 85 Mass. App. Ct. 311, 319 (2014); Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347, 356 (5th Cir. 2003), cert. denied, 541 U.S. 937 (2004). Notably, while Federal courts have been “hesitant to estop a nonsignatory seeking to avoid arbitration,” they generally “have been willing to estop a signatory from avoiding arbitration with a nonsignatory.” InterGen N. V. v. Grina, 344 F.3d 134, 145-146 (1st Cir. 2003), quoting Thomson-CSF, S.A. v. American Arbitration Ass’n, 64 F.3d 773, 779 (2d Cir. 1995). The theory with clearest application to the facts of this case is equitable estoppel, a doctrine governed by State contract law. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009). There are no reported Massachusetts appellate decisions determining whether this doctrine may be applied to extend the reach of an agreement to compel a signatory into arbitration with a nonsignatory. Nevertheless, we are guided in our analysis by decisions of several circuit courts of the United States Court of Appeals that have applied equitable estoppel in this precise context. And while “[t]he [Federal circuit courts] have not uniformly articulated the standards for application of estoppel, . . . their formulations have contained common elements.” Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 449 Fed. Appx. 704, 708 (10th Cir. 2011). Equitable estoppel typically allows a nonsignatory to compel arbitration in either of two circumstances: (1) when a signatory “must rely on the terms of the written agreement in asserting its claims against the nonsignatory” or (2) when a signatory “raises allegations of substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.” Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 527 (5th Cir.), cert. denied, 531 U.S. 1013 (2000), quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999). In such situations, a reviewing court may consider all of “the relationships of persons, wrongs and issues” in the case. Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 131 (2d Cir. 2003), citing Chocotaw Generation Ltd. Partnership v. American Home Assur. Co., 271 F.3d 403, 406 (2d Cir. 2001). a. Reliance on terms of written agreement. When the signatory’s claims against a nonsignatory refer to or presume the existence of the written agreement that compels arbitration, the signatory’s claims may be considered to arise out of and be directly intertwined with that agreement, rendering arbitration appropriate. See CD Partners, LLC v. Grizzle, 424 F.3d 795, 798 (8th Cir. 2005). Essentially, if a party’s claims are so intimately founded in and closely related to an agreement which also mandates arbitration, the party opposing arbitration is equitably estopped from denying the arbitrability of its claims, even against a nonsignatory. “The plaintiff’s actual dependence on the underlying contract in making out the claim against the nonsignatory defendant is therefore always the sine qua non of an appropriate situation for applying equitable estoppel.” Lenox MacLaren Surgical Corp., 449 Fed. Appx. at 710 (citation omitted). Courts frequently rule in favor of nonsignatories in such circumstances because “it would be unfair to allow the signatory to rely on the agreement in formulating its claims but to disavow availability of the arbitration clause of that same agreement.” PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830, 835, 836 (8th Cir. 2010) (permitting arbitration under equitable estoppel theory in part because allegations were intimately founded in and intertwined with agreement containing arbitration clause). See CD Partners, LLC, 424 F.3d at 800-801 (arbitration compelled where franchisee’s claims arose directly out of and related to its operation of franchises under agreement containing arbitration clause). For example, in JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 177-178 (2d Cir. 2004), the court held that nonsignatory ship owners could compel arbitration when charterers alleged that the owners conspired to inflate price terms in contracts between the charterers’ and the owners’ subsidiaries, as these claims were “undeniably intertwined” with the contracts containing an arbitration clause. Additionally, in Grigson, 210 F.3d at 529-531, a different court held that allegations that nonsignatories tortiously interfered with a film distribution agreement containing an arbitration clause were sufficiently intertwined with the agreement to compel arbitration where the very essence of the claims required a determination whether the nonsignatories had fulfilled their obligations under the agreement. Similarly, here, the plaintiffs assert multiple claims that arise out of and relate directly to terms within the franchise agreements containing the arbitration clause. Contrast In re Wholesale Gro eery Prods. Antitrust Litig., 707 F.3d 917, 921-924 (8th Cir. 2013) (no equitable estoppel where signatory alleged no violation of contract terms and signatory’s claims existed independently of agreement containing arbitration clause). Specifically, the plaintiffs allege both that the defendants misclassified the plaintiffs as independent contractors in the agreements and used unfair and deceptive business practices that misrepresented the terms of their contractual relationship. Indeed, it is the franchise agreements themselves that the plaintiffs allege created the service relationship between them and the defendants, mischaracterized the relationship as one of independent contractor rather than employee, and “contain[ed] numerous provisions that are unfair, unconscionable, [and] against public policy.” These claims are inextricably intertwined with and relate directly to the franchise agreements containing the arbitration provision. In particular, the plaintiffs’ request for contract rescission and allegations of unenforceability necessarily depend on an analysis of the terms, provisions, and warranties delineated within their agreements. See Liles v. Ginn-La West End, Ltd., 631 F.3d 1242, 1255-1257 (11th Cir. 2011)