MARDIS v. JACKSON HEWITT TAX SERVICE INC.

Not for Publication

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

WANDA MARDI, et al.,

Plaintiffs,

Civil Action No. 16-2115

v.

JACKSON HEWITT TAX SERVICE INC., OPINION

et al.,

Defendants.

John Michael Vazquez, U.S.D.J.

This putative class action concerns Defendants’ alleged violations of Plaintiffs’

employment contracts and various states’ wage laws by reducing the commissions earned by

Plaintiffs as tax preparers for the 2013-2014, 2014-2015, 2015-2016, and 2016-2107 tax seasons.

Currently pending before the Court are Defendants’ motions to dismiss Plaintiffs’ Third Amended

Class Action Complaint (“TAC”). D.E. 165, 166, 167, 168. The Court reviewed the parties’

submissions! and decided the motions without oral argument pursuant to Fed. R. Civ. P. 78(b) and

Defendants submitted four separate motions to dismiss, grouped as follows: (1) LMG (D.E. 165);

(2) Jackson Hewitt (D.E. 166); (3) KEF and TAYLOR (D.E. 167); and (4) WING (D.E. 168).

Plaintiffs submitted two separate oppositions, grouped as follows: (1) opposition to LMG, KEF,

TAYLOR, and WING (D.E. 177); and (2) opposition to Jackson Hewitt (D.E. 176). Defendants

replied separately, grouped as follows: (1) LMG (D.E. 178); (2) KEF and TAYLOR (D.E. 179);

(3) WING (D.E. 180); and (4) Jackson Hewitt (D.E. 181). LMG’s brief in support of its motion

will be referred to as “LMG’s Br.”; Jackson Hewitt’s brief in support of its motion will be referred

to as “Jackson Hewitt’s Br.”; KEF and TAYLOR’s brief in support of their motion will be referred

to as “KEF’s Br.”; and WING’s brief in support of its motion will be referred to as “WING’s Br.”

Plaintiffs’ opposition to LMG, KEF, TAYLOR, and WING will be referred to as “Pls.” Opp. to

Franchisees”; and Plaintiffs’ opposition to Jackson Hewitt will be referred to as “Pls.’ Opp. to

Jackson Hewitt.” LMG’s reply brief will be referred to as “LMG’s Reply”; Jackson Hewitt’s reply

L, Civ. R. 78.1(b). For the following reasons, the Court GRANTS in part and DENIES in part

Defendant Jackson Hewitt’s motion to dismiss, and the Court GRANTS Defendants LMG, KEF,

TAYLOR, and WING’s motions to dismiss for lack of personal jurisdiction.

I. BACKGROUND?

The Court? included an extensive factual background in its March 23, 2017 Opinion,

D.E. 44, which the Court incorporates by reference here insofar as it pertains to the same parties

and claims. By way of background, the following facts are taken from Plaintiffs’ Third Amended

Complaint. D.E. 68. Plaintiffs are Wanda Mardis, Kim Alexander, Cecilia Morris, Karla Dozier,

Sheila Baker, Sandra Coleman, Katrina Corbitt, Jacqueline Knight, Amy Donaldson, Sonja

Niemeyer, Terry Meyer, Catherine Dickerson, Carol Scott, Amanda Disotell, Elaine Fernandez,

Jessica Gay, Christina Babineaux, Brenda Boyd, LaDonna Washington, and Danice Ragland,

(collectively, “Named Plaintiffs”), individually and on behalf of all others similarly situated

(collectively, “Plaintiffs”). TAC FJ 1-20.

Defendants are Jackson Hewitt Tax Service, Inc. (“JHTS”) and Jackson Hewitt, Inc. (“JH”)

(collectively, “Jackson Hewitt”), and KE Farmer Enterprises, LLC (“KEF”), Lemaire-McCumsey

Group, Inc. (“LMG”), Taylor Tax and Accounting (“TAYLOR”), and Wing Financial Services,

brief will be referred to as “Jackson Hewitt’s Reply”; KEF and TAYLOR’s reply brief will be

referred to as “KEF’s Reply”; and WING’s reply brief will be referred to as “WING’s Reply.”

When reviewing a motion to dismiss, the Court accepts as true all well-pleaded facts in the

complaint. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Additionally, a district

court may consider “exhibits attached to the complaint and matters of public record” as well as

“an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss

if the plaintiff's claims are based on the document.” Pension Ben. Guar. Corp. v. White Consol.

Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993),

3 The Court’s previous Opinion dated March 23, 2017 was issued by former Chief Judge Jose

Linares. D.E. 44. This matter was reassigned to this Court on May 20, 2019. D.E. 186.

LLC (“WING”) (collectively, the “Franchisees”), among others.* /d. 21-33. Defendants

collectively provide tax preparation services to customers under the tradename “Jackson Hewitt.”

9] 38-39. Plaintiffs allege that the Franchisees’ “day to day operations [] are closely supervised

and controlled by [Jackson Hewitt]” and that “although [Jackson Hewitt] may purport to be

separate from [the Franchisees], in reality, they act as an integrated enterprise, alter egos of each

other and as joint employer[s].” Jd. 39. All Named Plaintiffs claim that they were previously,

or are currently, employed by Jackson Hewitt. Jd. 1-20. In addition, Named Plaintiffs Corbitt,

Knight, Donaldson, Niemeyer, Meyer, Dickerson, Scott, Disotell, Babineaux, and Washington

claim to have been previously jointly employed by Jackson Hewitt and one of the Franchisees. Jd.

7-14; 17, 19.

For the duration of each tax season, Jackson Hewitt and the Franchisees employ tax

preparers, such as Plaintiffs, to file clients’ tax returns. /d. 475. These tax preparers receive

employment contracts with compensation plans based, in part, on the individual revenues they

generate during the tax season. /d. 75. For the 2013-2014 tax season, Defendants administered

4 promotional program to induce new customers to use Defendants’ tax service (the “Gift Card

Promotion”). /d. ff] 49, 80. As part of the Gift Card Promotion, Plaintiffs were required to offer

prepaid gift cards to all new customers who qualified for the promotion and filed their taxes with

Jackson Hewitt. fd. 481. At the conclusion of the 2013-2014 tax season, Plaintiffs were paid their

sales commission in accordance with their compensation plans. /d. 52. In calculating Plaintiffs’

commissions, however, Jackson Hewitt deducted the value of the prepaid gift cards from the

revenues that Plaintiffs earned during the tax season, thus resulting in Plaintiffs receiving lower

* Plaintiffs also assert claims against additional defendants; however, the Court addresses only the

Defendants who have moved to dismiss Plaintiffs’ claims.

commission payments. /d. Plaintiffs claim this deduction was in breach of Plaintiffs’ employment

contracts and various states’ wage laws. /d. 52. Defendants continued to deduct the cost of the

Gift Card Promotion from the revenues Plaintiffs earned for the 2014-2015, 2015-2016, and 2016-

2017 tax seasons, resulting in Plaintiffs receiving lower commission payments for each of those

respective tax seasons. Id. [9] 56-57.

IL. PROCEDURAL HISTORY

On October 4, 2017, Plaintiffs were instructed to file their Third Amended Complaint

naming all franchises at which Named Plaintiffs worked. D.E. 66. On November 15, 2017,

Plaintiffs filed their Third Amended Complaint, naming as additional defendants LMG, KEF,

TAYLOR, and WING, among other franchises. D.E. 68. Specially, Plaintiffs assert twelve claims

against either Jackson Hewitt, the Franchisees, or both: (1) breach of contract against LMG, KEF,

TAYLOR, and WING; (2) unjust enrichment against Jackson Hewitt; (3) violation of Kentucky

wage law against Jackson Hewitt; (4) violation of Illinois wage law against Jackson Hewitt; (5)

violation of New York wage law against Jackson Hewitt; (6) violation of New Jersey wage law

against Jackson Hewitt; (7) violation of Pennsylvania wage law against Jackson Hewitt; (8)

violation of California wage law against TAYLOR and Jackson Hewitt; (9) violation of South

Carolina wage law against KEF and Jackson Hewitt; (10) violation of North Carolina wage law

against Jackson Hewitt; (11) violation of Oklahoma wage law against WING and Jackson Hewitt;

and (12) violation of Washington wage law against Jackson Hewitt. TAC §§ 253-330.

Defendant Jackson Hewitt moved to dismiss Count Eleven for failure to state a claim. D.E.

166. Defendant LMG moved to dismiss all counts against it for lack of personal jurisdiction, for

failure to state a claim, for improper venue, and for improper joinder, or in the alternative, for a

more definite statement. D.E. 165. Defendants KEF and TAYLOR together moved to dismiss all

counts against them for lack of personal jurisdiction, for failure to state a claim, and pursuant to

the doctrine of forum non-conveniens, or in the alternative, for Plaintiffs’ claims to be severed and

transferred. D.E. 167. Defendant WING moved to dismiss all counts against it for lack of personal

jurisdiction and pursuant to the doctrine of forum non-conveniens, or in the alternative, for

Plaintiffs’ claims to be severed and transferred. D.E. 168. Plaintiffs separately opposed Jackson

Hewitt’s motion to dismiss, D.E. 176, and LMG, KEF, TAYLOR, and WING’s motions to

dismiss. D.E. 179, Defendants replied. D.E. 178, 179, 180, 181.

il. STANDARD OF REVIEW

A. Rule 12(b)(2) - Motion to Dismiss for Lack of Personal Jurisdiction:

Federal Rule of Civil Procedure 12(b)(2) permits a party to move to dismiss a case for

“lack of personal jurisdiction.” Fed. R. Civ. P. 12(b)(2). In such a motion, the plaintiff “bears the

burden of demonstrating the facts that establish personal jurisdiction.” Pinker v. Roche Holdings

Ltd., 292 F.3d 361, 368 (3d Cir. 2002). When a court “resolves the jurisdictional issue in the

absence of an evidentiary hearing and without the benefit of discovery, the plaintiff need only

establish a prima facie case of personal jurisdiction.” Otsuka Pharm. Co. v. Mylan Inc., 106 F.

Supp. 3d 456, 461 (D.N.J. 2015). In such cases, a court “take[s] the allegations of the complaint

as true.” Dayhoff Inc. v. HJ. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996).

However, once a defendant raises a jurisdictional defense, ‘a plaintiff bears the burden of

proving by affidavits or other competent evidence that jurisdiction is proper.” /d. In other words,

a court looks beyond the pleadings to all relevant evidence and construes all disputed facts in favor

of the plaintiff. See Carteret Sav. Bank v. Shushan, 954 F.2d 141, 142 n.1 (3d Cir. 1992). Plaintiff

must establish “with reasonable particularity sufficient contacts between the defendant and the

forum state.” Otsuka, 106 F. Supp. 3d at 462 (citing Mellon Bank (E) PSFS, Nat'l Ass'n v. Farino,

960 F.2d 1217, 1223 (3d Cir. 1992)). In addition, a court “may always revisit the issue of personal

jurisdiction if later revelations reveal that the facts alleged in support of jurisdiction remain in

dispute.” Otsuka, 106 F. Supp. 3d at 462 n.5 (citing Metcalfe v. Renaissance Marine, Inc., 566

F.3d 324, 331 (3d Cir. 2009)).

A federal court “engages in a two-step inquiry to determine whether it may exercise

personal jurisdiction”: (1) “whether the relevant state long-arm statute permits the exercise of

jurisdiction,” and (2) “if so, [whether] the exercise of jurisdiction comports with due process”

under the Fourteenth Amendment. Display Works, LLC v. Bartley, 182 F. Supp. 3d 166, 172

(D.N.J. 2016) (citing JMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 258-59 (3d Cir. 1998)). “New

Jersey’s long-arm statute extends the state’s jurisdictional reach as far as the United States

Constitution permits, so the analysis turns on the federal constitutional standard for personal

jurisdiction.” Jd. (citing JMO Industries, 155 F.3d at 259). Accordingly, the two steps are

collapsed into one and a court must ‘“‘ask whether, under the Due Process Clause, the defendant

has certain minimum contacts with [New Jersey] such that the maintenance of the suit does not

offend traditional notions of fair play and substantial justice.” O'Connor v. Sandy Lane Hotel Co.,

496 F.3d 312, 316 (3d Cir. 2007) (internal quotation marks omitted). In other words, to establish

personal jurisdiction, the Due Process Clause requires (1) minimum contacts between the

defendant and the forum; and (2) that jurisdiction over the defendant comports with “‘fair play and

substantial justice.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985) (quoting Int’

Shoe Co. v, Washington, 326 U.S. 310, 320 (1945)).

“Personal, or in personam, jurisdiction, [generally] divides into two groups: ‘specific

jurisdiction’ and ‘general jurisdiction,”” Display Works, 182 F. Supp. 3d at 172 (citing Burger

King, 471 U.S. at 472 n. 14 (1985)). Specific jurisdiction “depends on an affiliatio[n] between the

forum and the underlying controversy (i.e., an activity or an occurrence that takes place in the

forum State and is therefore subject to the State’s regulation).” Jd. (quoting Walden v. Fiore, 571

U.S. 277, 284 n.6 (2014)). General jurisdiction “permits a court to assert jurisdiction over a

defendant based on a forum connection unrelated to the underlying suit.” Jd. (quoting Walden,

571 U.S. at 284 n.6). Personal jurisdiction can also be obtained through consent, waiver, or in-

state service on a defendant, See Carnival Cruise Lines, Inc. v, Shute, 499 U.S, 585, 590-97 (1991)

(regarding consent via a forum selection clause); Burnham v. Superior Court of Cal., 495 U.S.

604, 628 (1990) (regarding in-state service); Jn re Asbestos Products Liability Litigation (No. V1),

921 F.3d 98, 104-05 (3d Cir. 2019) (regarding waiver); Jasper v. Bexar County Adult Detention

Center, 332 Fed App’x. 718, 719 (3d Cir. 1999) (regarding consent).

B. Rule 12(b)(6) - Motion to Dismiss for Failure to State a Claim

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for “failure to state a

claim upon which relief can be granted[.]” For a complaint to survive dismissal under Rule

12(b)(6), it must contain sufficient factual matter to state a claim that is plausible on its face.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl Corp. v. Twombly, 550 U.S. 544,

570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery

will uncover proof of her claims.” Connelly v. Lane Const. Corp., 809 F.3d 780, 789 (3d Cir.

2016). In evaluating the sufficiency of a complaint, district courts must separate the factual and

legal elements. Fowler vy. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). Restatements

of the elements of a claim are legal conclusions, and therefore, not entitled to a presumption of

truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however,

“must accept all of the complaint’s well-pleaded facts as true.” Fowler, 578 F.3d at 210. Even if

plausibly pled, however, a complaint will not withstand a motion to dismiss if the facts alleged do

not state “a legally cognizable cause of action.” Turner v./.P. Morgan Chase & Co., No. 14-7148,

2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).

IV. LAW AND ANALYSIS

A. Personal Jurisdiction over Defendants KEF, TAYLOR, LMG, and WING

Defendants KEF, TAYLOR, LMG, and WING each move to dismiss Plaintiffs’ Third

Amended Complaint for, inter alia, lack of personal jurisdiction. KEF’s Br. at 7; LMG’s Br. at 7;

WING’s Br. at 7. The Court finds that Plaintiffs have failed to establish personal jurisdiction over

KEF, TAYLOR, LMG, and WING.

When a court “resolves the jurisdictional issue in the absence of an evidentiary hearing and

without the benefit of discovery, the plaintiff need only establish a prima facie case of personal

jurisdiction.” Otsuka Pharm. Co., 106 F. Supp. 3d at 461. In such cases, a court “takefs] the

allegations of the complaint as true.” Dayhoff Inc., 86 F.3d at 1302. However, once a defendant

raises a jurisdictional defense, “a plaintiff bears the burden of proving by affidavits or other

competent evidence that jurisdiction is proper.” Jd. In other words, a court looks beyond the

pleadings to all relevant evidence and construes all disputed facts in favor of the plaintiff. See

Carteret Sav. Bank, 954 F.2d at 142 n.1. A plaintiff must establish “with reasonable particularity

sufficient contacts between the defendant and the forum state.” Ofsuka, 106 F. Supp. 3d at 462

(citing Mellon Bank (E) PSFS, Nat'l Ass'n, 960 F.2d at 1223).

Here, Plaintiffs’ argument that there exists personal jurisdiction over KEF, TAYLOR,

LMG, and WING is solely based on a forum section clause in the Franchisees’ franchise agreement

with Jackson Hewitt. See TAC, Ex. 5 at 23; Pls.’ Opp. to Franchisees at 4-19.° As an initial matter,

the Court notes that in their Third Amended Complaint, Plaintiffs put forth only the conclusory

allegation that the Franchisees “have conducted business within the State of New Jersey,” TAC

{ 36, but otherwise fail to establish “by affidavits or other competent evidence that jurisdiction is

proper.” Dayhoff inc., 86 F.3d at 1302. Conversely, the Franchisees contest Plaintiffs’ single

allegation with various certifications and affidavits to the contrary. See D.E. 165, Ex. 2; D.E. 167,

Exs. 3,4; D.E. 168, Ex. 2. In their opposition brief, Plaintiffs do not contest the “exhaustive

jurisdictional minimum-contacts analysis” set forth in the Franchisees’ moving briefs. Pls.” Opp.

to Franchisees at 2. Rather, Plaintiffs argue for the first time that the Franchisees “signed valid

forum selection clauses and [thus] waived opposition to personal jurisdiction in New Jersey.” Jd.

at 2.

The Court finds that the forum selection clause is not applicable to this case. The forum

selection clause reads as follows:

28.2. Jurisdiction. You [the Franchisees] consent to venue and

personal jurisdiction in all litigation brought by us [Jackson Hewitt]

or our Affiliates against you [Franchisees], which in any way arises

out of or relates to your franchise relation with us, including, but not

limited to, any and every aspect of entering into the franchise

relation, this Agreement, any guaranty or other Collateral

Agreements with us or our Affiliates, our performance in connection

with the franchise relation, any termination, rescission, cancellation

or nonrenewal of the franchise relation, and conduct post-

termination or post-expiration of this Agreement, in the following

> The Court notes that the numbering of the paragraphs in the franchise agreement attached as

Exhibit 5 to the Third Amended Complaint is different from the numbering of the paragraphs cited

by Plaintiffs in their opposition brief. For example, Plaintiffs’ opposition brief cites to paragraph

29.2 for the relevant provision regarding jurisdiction, but that provision is actually paragraph 28.2

of the franchise agreement attached to the Third Amended Complaint. Compare D.E. 177, with

D.E. 68-5. It appears that the paragraph numbering in Plaintiffs’ opposition brief instead tracks the

paragraph numbering of the franchise agreement submitted by Defendants KEF and TAYLOR as

Exhibit B to their motion to dismiss. See D.E. 167-7. The difference, however, is immaterial to

the Court’s analysis.

courts: (a) the state or county court of any city or county where we

have our principal place of business, (presently, Morris County,

New Jersey); and, (b) the United States District Court nearest to our

principal place of business, (presently the District of New Jersey,

Newark Division).

TAC, Ex. 5 at 23 (emphasis added). Furthermore, the franchise agreement contains the following

definition: “Affiliated Companies’ or ‘Affiliate(s)’ means any person [or entity®] that, directly or

indirectly, controls, is controlled by, or is under common control with, the referenced party” Jd.

at 1.

Plaintiffs contend that they are “Affiliates” within the meaning of the franchise agreement

because Plaintiffs — as employees — “were all directly and indirectly controlled by [Jackson Hewitt]

and/or were under common control with [Jackson Hewitt] and the [Franchisees].” Pls.’ Opp. to

the Franchisees at 5. In other words, Plaintiffs claim that, as employees, they fall under the

definition of “any person [or entity] that, directly or indirectly . . . is controlled by, or is under

common control with [Jackson Hewitt].” /d. In response, the Franchisees argue that are not

“Affiliates” of Jackson Hewitt within the meaning of the franchise agreement. KEF’s Reply 1-8;

LMG’s Reply at 3-7; WING’s Reply at 1-5. The Court agrees with the Franchisees.

Courts must “[i]nterpret a contract according to its plain language by reading the document

as a whole in a fair and common sense manner so as to match the reasonable expectations of the

parties.” f/linois Nat, Ins. Co. v. Wyndham Worldwide Operations, Inc., 653 F.3d 225, 231 (3d Cir.

§ The Court notes that the contractual language cited in Plaintiffs’ opposition brief regarding

“Affiliate” is slightly different than the language in the franchise agreement attached as Exhibit 5

to Plaintiffs’ Third Amended Complaint. Compare TAC, Ex. 5, with Pls.’ Opp. to Franchisees

at5. The language cited in Plaintiffs’ opposition again appears to track the language of the

franchise agreement submitted by Defendants KEF and TAYLOR as Exhibit B to their motion to

dismiss, which reads as follows: “‘Affiliated Companies’ or ‘Affiliate(s)’ means any person or

entity that, directly or indirectly, controls, is controlled by, or is under common control with, the

referenced party.” See D.E. 167-7, Ex. B (emphasis added). The difference, however, is immaterial

to the Court’s analysis,

10

2011) (citing Hardy ex rel. Dowdell v. Abdul-Matin, 965 A.2d 1165, 1168-69 (N.J. 2009) (“A

basic principle of contract interpretation is to read the document as a whole in a fair and common

sense manner.”)). “In making a determination concerning the clarity or ambiguity of [a] contract

term{], the [c]ourt should avoid interpreting contractual language in a way that renders any term

of the contract meaningless or superfluous.” Glenpointe Associates, III y. Regency Sav. Bank, No.

06-1690, 2006 WL 2786885, at *6 (D.N.J. Sept. 25, 2006) (citing Penske Logistics, Inc. V. KLLM,

Inc,, 285 F. Supp. 2d 468, 474 (D.N.J. 2003)).

Here, reading the franchise agreement in a “fair and common sense manner” leads to the

conclusion that Plaintiffs are not “Affiliates” of Jackson Hewitt within the meaning of the franchise

agreement. Plaintiffs admit that they are employees. The franchise agreement makes a clear

distinction between affiliates and employees. For example, Section 18.3 of the franchise

agreement prohibits the Franchisees from hiring the “employees” of Jackson Hewitt or its

Affiliates, stating in relevant part:

18.3. Covenant Against Recruiting or Hiring Our Employees.

During the term of this Agreement . . . neither you [Franchisee] nor

any of your Owners may, without our prior written permission,

during the below-mentioned employees’ employment with us or our

Affiliates... solicit, recruit, or hire... any of our or our Affiliates’

emplovees{.|

TAC, Ex. 5 at 17 (emphasis added). This provision clearly indicates that a Franchisee may not

recruit or hire the employees of Jackson Hewitt or its affiliates.’ In other words, the franchise

agreement differentiates between affiliates and employees.

7 If the Court were to accept Plaintiff's interpretation of the term “Affiliate,” then this provision

would mean that the “Affiliates’ employees” language would actually mean the “Employees’

employees.” Such a reading is nonsensical; there is no indication that Plaintiffs, as employees,

were permitted or did hire their own employees.

11

A similar distinction between employees and affiliates is found in Section 28.1 of the

franchise agreement:

28.1, Governing Law. We accept this Agreement in the State of

New Jersey. In any action, suit, or claim ... by or against you

[Franchisee] or us (including our present or former agents and

employees, our [A]ffiltates, and our [A]ffiliates’ present or former

agents and employees, which in any way arises out of or relates to

your [Franchisee’s] franchise relation with us... [.]

TAC, Ex. 5 at 22. Again, if Plaintiffs’ interpretation of “Affiliate” were adopted, then the distinct

use of the different terms “employee” and “Affiliate” would be rendered “meaningless or

superfluous.” Glenpointe Associates, II, 2006 WL 2786885, at *6 (explaining that a “[cJourt

should avoid interpreting contractual language in a way that renders any term of the contract

meaningless or superfluous”). The same distinction between the terms “employee” and “‘A ffiliate”

is also found in Section 28.3 (discussing venue), Section 28.5 (discussing waiver of jury trial), and

Section 28.6 (discussing waiver of punitive damages), among other sections. TAC, Ex. 5 at 23-24.

Accordingly, the franchise agreement clearly distinguishes between the terms “employee” and

“Affiliate,” and therefore, the Court declines to read them as synonymous.

Rather, by interpreting the franchise agreement in a “fair and common sense manner so as

to match the reasonable expectations of the parties,” the Court finds that Plaintiffs are not

“Affiliates” of Jackson Hewitt within the meaning of the franchise agreement, and therefore, the

forum selection clause is not applicable as a basis for personal jurisdiction.? Because Plaintiff

8 The Court also notes that Plaintiffs are attempting to enforce the forum-selection clause of a

contract to which they are non-parties. “In the Third Circuit, a non-signatory party may enforce a

forum selection clause in a contract if that party is a third-party beneficiary of the contract or is

closely related to the contractual relationship or dispute such that it is foreseeable that the party

will be bound.” D’Elia v. Grand Caribbean Co., Ltd., No. 09-1707, 2010 WL 1372027, at *3

(D.N.J. Mar. 30, 2010). ‘To qualify as a third-party beneficiary, it must be shown that the contract

was ‘made for the benefit of that third party within the intent and contemplation of the contracting

parties.”” Jd. (quoting Hadley v. Shaffer, No. 99-144, 2003 WL 21960406, at *5 (D. Del. Aug. 12,

12

provides no other basis for this Court to assert personal jurisdiction over the Franchisees, the Court

therefore grants Defendants KEF, TAYLOR, LMG, and WING’s motions to dismiss for lack of

personal jurisdiction.’

2003)). Here, there is no indication that the franchise agreements between Jackson Hewitt and the

Franchisees were made for the benefit of Plaintiffs. Rather, the franchise agreement appears to be

just that — an agreement between a franchisor and a franchisee. It makes little sense that Jackson

Hewitt (and its affiliates) would have entered into a franchise agreement with the Franchisees with

the intent to benefit the Franchisees’ (then un-hired) employees. Moreover, as noted by the court

in in re Mushroom Transp. Co., Inc.,

It is one thing for a party, with rights and obligations under a

contract, to seek [] enforcement [of a forum selection clause] against

others. It is quite a another, however, for a non-party individual or

organization to seek to enforce a [forum selection] clause against a

contracting party. It stretches logic and reason to assert that non-

party parties with absolutely no rights or obligations under a contract

(indeed, who were nowhere in the picture when the contract was

signed) should be allowed to enforce a clause against a party to the

contract in later litigation.

247 B.R. 395, 398 n.4 (E.D. Pa. 2000). Because the Court finds that the forum selection clause is

not applicable in the first instance, however, the Court therefore need not reach the issue as to

whether Plaintiffs may enforce the forum selection clause as non-parties.

The Court’s decision is limited to a finding of no personal jurisdiction over KEF, TAYLOR,

LMG, and WING. The Court does not reach the other issues raised by the Franchisees concerning

Plaintiffs’ failure to state a claim, improper venue, improper joinder, the doctrine of forum non-

conveniens, nor the Franchisees’ requests that Plaintiffs’ claims be severed and transferred. To

the extent the Franchisees raise these issues, their motions are denied as moot.

13

B. Defendant Jackson Hewitt’s Motion to Dismiss for Failure to State a Claim’?

Plaintiff Washington and the Oklahoma Sub-Class'! bring Count Eleven against Jackson

Hewitt, among others, for violation of the Oklahoma Protection of Labor Act, Okla. Stat. Ann. tit.

40, §§ 165 et seg. TAC 99 320-325. Specifically, Plaintiff Washington and the Oklahoma Sub-

Class assert (1) that they were or are “employees” of Jackson Hewitt as defined by Okla. Stat. Ann.

tit. 40, § 165.1.2; (2) that Jackson Hewitt is an “employer” as defined by Okla. Stat. Ann. tit. 40,

§ 165.1.1; and (3) that the commissions earned by Plaintiff Washington and the Oklahoma Sub-

Class constitute “wages” as defined by Okla. Stat. Ann. tit. 40, § 165.1.4. Jd. 9 321-323. As

such, Plaintiff Washington and the Oklahoma Sub-Class claim that Jackson Hewitt failed to pay

Plaintiff Washington and the Oklahoma Sub-Class their earned wages in violation of Okla. Stat.

Ann. tit. 40, § 165, et seq. Id. 9] 324-325.

Defendant Jackson Hewitt moved to dismiss Count Eleven against it for failure to state a

claim under Rule 12(b)(6), arguing that neither JHTS nor JH can be considered an “employer”

under Okla. Stat. Ann. tit. 40, § 165.1.1. Jackson Hewitt’s Br. at 1-2. Plaintiff Washington and

the Oklahoma Sub-Class acknowledge that JHTS is the parent corporation of JH, and JH is the

franchisor of WING, the franchisee. TAC □□□ 19, 21-22, 40. Therefore, Jackson Hewitt asserts that

the Court explained in its previous Opinion, D.E. 44, in exercising its diversity jurisdiction

over this action, the Court would generally apply the law of the forum state - New Jersey. Am.

Cyanamid v. Fermentta Animal Health, 54 F.3d 177, 180 Gd Cir. 1995). The parties do not

dispute, however, that the Oklahoma state law claim asserted by Plaintiff Washington and the

proposed Oklahoma Sub-Class is governed by the law of Oklahoma. For purposes of this motion,

the Court has accepted the parties’ position.

1! Named Plaintiffs bring this suit on behalf of themselves and all others similarly situated, the

latter of which are grouped into “State Sub-Classes.” TAC 9 245. The Third Amended Complaint

defines the Oklahoma Sub-Class as “[a]ll persons in the State of Oklahoma who are current or

former tax-preparers of . .. JHTS[], [JH] and [the] Franchisees, from January 2014 through the

present.” Jd. 4] 245.

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regardless of Plaintiffs’ theory of joint employer liability, pursuant to Okla. Stat. Ann. tit, 59, §

6005(B),(C) “[a] franchisor shall not be considered the employer of a franchisee or a franchisee’s

employees,” and “[t]he employees of a franchisee shall not be considered employees of the

franchisor[.]” Jackson Hewitt’s Br. at 2 (citing Okla. Stat. Ann. tit. 59, § 6005(B),(C)). In other

words, JH (the franchisor) and JHTS (the franchisor’s parent corporation) cannot be considered an

“employer” of Plaintiff Washington or the Oklahoma Sub-Class under Oklahoma law, nor can

Plaintiff Washington and the Oklahoma Sub-Class be considered “employees” of Jackson Hewitt.

Jackson Hewitt’s Br. at 2. As such, Jackson Hewitt asserts that neither Plaintiff Washington nor

the Oklahoma Sub-Class have sufficiently pled that Jackson Hewitt meets the statutory definition

of “employer” under Okla. Stat. Ann. tit. 40, § 165.1.1 or “employee” under Okla. Stat. Ann. tit.

40, § 165.1.2. Jd. Plaintiffs respond that Okla. Stat, Ann. tit. 59, § 6005 has an effective date of

November 1, 2016, and therefore the statute should not be applied retroactively to bar Count

Eleven insofar as Plaintiffs’ claims arose before November 1, 2016. Pls.” Opp. to Jackson Hewitt

at 2-5. Plaintiff, however, appears to concede that Okla. Stat. Ann. tit. 59, § 6005 bars Count

Eleven insofar as it pertains to claims arising on or after November 1, 2016. /d. at 2.

The Court finds that Okla. Stat. Ann. tit. 59, § 6005 does not apply retroactively. Under

Oklahoma law, “statutes and amendments are to be construed to operate only prospectively unless

the [l]egislature clearly expresses a contrary intent.” Anagnost v. Tomecek, 390 P.3d 707, 711-12

(Okla, 2017); see also Cole v. Silverado Foods, Inc., 78 P.3d 542, 546 (Okla. 2003) (“Absent a

plain legislative intent to the contrary, statutes are generally presumed to operate prospectively

only.”); see also Wickham v. Gulf Oil Corp., 623 P.2d 613, 615 (Okla. 1981) (explaining that

“[s]tatutes are generally presumed to operate prospectively”) (quoting Scott Paper Company v.

City of Anacortes, 578 P.2d 1292, 1299 (Okla. 1978)). “However, this presumption does not defy

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rebuttal if the purposes and intention of the Legislature to give a statute a retrospective effect are

expressly declared or are necessarily implied from the language used.” Wickham, 623 P.2d at 615-

616. Where there exists doubt as to the purpose and intent of the legislature, however, “the doubt

should be resolved against retrospective effect.” Barnhill v. Multiple Injury Tr. Fund, 37 P.3d 890,

898 (Okla. 2001); see also CNA Ins. Co. v. Ellis, 148 P.3d 874, 877 (Okla. 2006) (“Statutes are

typically not given retroactive effect unless the Legislature has made its intent to do so clear, Any

doubts must be resolved against a retroactive effect.”). Here, the Court is entirely unable to discern

from the Oklahoma legislature a clearly expressed contrary intent to the general presumption that

statutes are to operate prospectively only. See Anagnost, 390 P.3d at 711-12 (Okla. 2017)

(explaining that “statutes and amendments are to be construed to operate only prospectively unless

the [IJegislature clearly expresses a contrary intent”).

Jackson Hewitt argues that retroactivity can be implied from the context in which the

Okiahoma legislature enacted § 6005. Specifically, Jackson Hewitt argues that the Oklahoma

legislature intended to apply § 6005 retroactively in the wake of the National Labor Relations

Board’s 2015 decision in Browning-Ferris Industries of California Inc., which expanded the joint-

employer standard under the National Labor Relations Act. See 362 N.L.R.B. 1599, 1614 (2015),

affirmed in part and reversed in part, Browning-Ferris Industries of California, Inc. v. Natl. Lab.

Rel. Bd., 911 F.3d 1195, 1222 (D.C. Cir. 2018). Additionally, Jackson Hewitt argues that the U.S.

Department of Labor’s 2016 Opinion Letter, which broadly interpreted the joint-employer

standard with respect to the Fair Labor Standards Act and Migrant and Seasonal Agricultural

Worker Protection Act, also influenced the Oklahoma legislature to enact § 6005. See 2016 WL

284582 (Jan. 20, 2016). Therefore, according to Jackson Hewitt, the NLRB’s decision in

Browning-Ferris — decided on August 27, 2015 ~ and the Department of Labor’s Opinion Letter

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~ issued on January 20, 2016 — prompted the Oklahoma legislature to ratify § 6005 — enacted on

May 24, 2016. See 2016 Okla. Sess. Law Serv. Ch. 327 (S.B. 1496) (codified at Okla. Stat. Ann.

tit. 59, § 6005).

However, even accepting Jackson Hewitt’s argument that the Oklahoma legislature enacted

§ 6005 in response to the proceedings described above, Jackson Hewitt provides no indication that

the legislature did so with the particular intention of applying § 6005 retroactively. At best,

Jackson Hewitt’s argument merely casts doubt as to whether § 6005 should apply retroactively,

and therefore, “the doubt should be resolved against retrospective effect.” Barnhill, 37 P.3d at

898: see also CNA Ins, Co., 148 P.3d at 877 (‘Statutes are typically not given retroactive effect

unless the Legislature has made its intent to do so clear. Any doubts must be resolved against a

retroactive effect.”).

Moreover, Jackson Hewitt also argues that the stated purpose of § 6005 is to “provide[] for

clarification of employment status.” Jackson Hewitt’s Br. at 9. Jackson Hewitt cites to Polymer

Fabricating, Inc. v. Employers Workers’ Compen, Ass'n, 980 P.2d 109, 114 (Okla. 1998) for the

proposition that “clarifying amendments” are to apply retroactively. /d. at 8. Polymer Fabricating

found that “{[w]here an earlier legislative enactment is unclear in some respect and a later

enactment attempts to remove the ambiguity, the amendatory statute constitutes a clarifying

enactment that is to be given retrospective force.” 980 P.2d at 114 (emphasis removed). As further

explained by the Oklahoma Supreme Court:

A clarifying amendment is one that explains ambiguous law in order

to remove doubt concerning the legislative intent in the original text.

By amending a statute the legislature may have intended (a) to

change existing law or (b) to clarify ambiguous law. Its precise

intent is ascertained by looking to the circumstances that surround

the change. If the earlier statute definitely expressed an intent or

had been judicially interpreted, the Legislature’s amendment is

presumed to have changed an existing law, but if the meaning of the

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earlier statute was in doubt, or where uncertainty as to the law’s

meaning did exist, a presumption arises that the amendment was

designed to more clearly express the legislative intent that was left

indefinite by the earlier text.

Polymer Fabricating Inc., 980 P.2d at 114 n.18 (internal citations omitted).

Here, the Court disagrees that § 6005 was a “clarifying amendment.” There was no

ambiguity in any previous version of § 6005 because there was no previous version of the statute.

As argued by Jackson Hewitt, the Oklahoma legislature allegedly first enacted § 6005 in response

to the federal proceedings described above. Insofar as Jackson Hewitt argues that Okla. Stat. Ann.

tit. 59, § 6005 should instead be read as “clarifying” Okla. Stat. Ann. tit. 40, § 165, the latter is a

wholly separate statute addressing different issues. Cf Polymer Fabricating, Inc., 980 P.2d at 114

(where original text of § 149.1 of the Workers’ Compensation Act was ambiguous, an added

subsection to same statute constituted a “clarifying” amendment and thus applied retroactively);

Samman v. Multiple Injury Tr. Fund, 33 P.3d 302, 307 (Okla. 2001} (where no ambiguity existed

in original version of statute, a later amendment to the same statute “[could] not be said to have

been enacted by the []]egislature to clarify the earlier law”). Even assuming that Okla. Stat. Ann.

tit. 59, § 6005 could be read as clarifying Okla. Stat. Ann. tit. 40, § 165, the latter is not an

“ambiguous law” in need of clarification “to remove doubt concerning the legislative intent in the

original text.” Polymer Fabricating, Inc.,980 P.2d at 114.18. Rather, it appears that Okla. Stat.

Ann. tit. 59, § 6005 was enacted as an entirely new statute addressing the employer/employee

relationship as it relates to franchises.

Accordingly, Court finds that Okla. Stat. Ann. tit. 59, § 6005 does not apply retroactively

to bar Count Eleven insofar as Plaintiffs’ claims arose before November 1, 2016. However, the

Court also finds — and Plaintiffs appear to concede — that Okla. Stat. Ann. tit. 59, § 6005 does bar

Count Eleven insofar as Piaintiffs’ claims arose on or after November 1, 2016.

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Vv. CONCLUSION

For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendant

Jackson Hewitt’s motion to dismiss Count Eleven, and GRANTS Defendants LMG, KEF,

TAYLOR, and WING’s motions to dismiss for lack of personal jurisdiction. An appropriate Order

accompanies this Opinion.

Dated: December Zo" 2019

John ‘Michael Vazquez .S4D.S.

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