MARCHETTI LAW, P.C.

Anthony L. Marchetti,Jr., Esquire(050531994)

900N. Kings H*y., Suite306
Cherry Hill, NJ 08034
(856)824-1001
fax: (856)414-f806
amarchetti@marchettilaw{irm.co
m
Attorneysfor Plaintiffs
Harold l. Lichten,Esq.
Lichten & Liss-Riordan,P.C.
729BoylstonSt #2000
Boston,MA 02114
(617)994-5800
fax: (617)994-5801
hlichten@llrlaw.com
Attorneysfor Plaintiffs
(Pro hacvice to be submitted)
^

MICHAEL.CARROWAND MICHAEL
FENNElflindividually andon behalfof all
otherssimilarlysituated,

DocKEr
No/-/c

Plaintiffs,
v.

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e.*=ttvi'f;

CNIL ACTION '-

FEDEXGROUNDPACKAGESYSTEMS,
INC.
.,\
Defendant.

1.

SUPERIOR
COURTOFNEWJERSfi

CAMDEN
couNrY
LAwDrvrsroN

6
m
CLASSACTION COMPLAINT,JURfl
DEMAND,DESIGNATIONOF TRIAL
COUNSEL,NOTICEPURSUANTTO
RULESl:5-1(a)andRULE4.5-1
CERTIFICATTON

Plaintiffs, individually and on behalf of all others similarly situated within

the Stateof New Jersey,by way of Complaint againstDefendant,allege as follows:

INTRODUCTION
2.

This is a classaction suit assertingclaims for ConsumerFraud,rescission

and recovery for unjust enrichment,violation of the New JerseyWage PaymentLaw, and
other claims relatingto Defendant'smisclassificationof Delivery Truck drivers.

jj
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3.

Plaintiffs are truck and van drivers engagedin packagedelivery for the

Defendant,Federal ExpressGround PackageSystems,Inc. (herein"Defendant"or

"FXG") in the Stateof New Jersey.
4.

FXG induced the named Plaintiffs and Class Members (collectively,

"Plaintiffs") to obtain a route and to purchasea delivery truck, to insure and maintain that
truck, to purchasea "business support package" and other items required by FXG, and to
deliver packagesfor FXG, all the while representingto them that they are or would be
"independent businessowners" and "business partners" with FXG, and that they had or
would have proprietary interestsin the delivery routes for which they contracted.
5.

These representations made both before an operating agreement is

tendered and the OA itself were false. In reality, FXG micro-manages Plaintiffs'
activities in such a manner that Plaintiffs are defacto employeesof FXG.
6.

FXG has illegally shifted to Plaintiffs the burden of purchasing and

maintaining trucks and equipment necessary to operate FXG's business, makes

deductions from their pay, forces drivers to pay for their own workers' compensation
insurance,and otherwise uses the independentcontractor model to extract a competitive
benefit againstits competitorson the backs of its workers.
7.

FXG has avoided all state and federal employment taxes, workers'

compensationand unemployment compensationobligations and other businessexpenses

by forcing the Class Members, directly or through businessentities that they required the
Classmembersto createin order to obtain/retaintheir jobs, to pay those obligations.
8.

By

this

suit,

the

Plaintiffs

relief/restitutionas a result of FXG's illegal acts.

seek compensatory and

equitable

THE PARTIES
9.

All Plaintiffs reside or work in the State of New Jersey and, during the

past six years, were pick-up and delivery drivers at Defendant FXG's New Jersey
terminals.
10.

Plaintiff Michael Carrow, a New Jerseyresident/citizen,was a contract

driver for FXG at its Barrington, Camden County, New Jersey terminal from May 21,
2013throughNovember30,2015.Mr. Carrowresidesat204 StotesburyAve.,Newfield,
New Jersey. Mr. Carrow performed this work through a corporate entity he formed at
FXG's requestknown as Newfield Transportation,Inc. ("Newfield".)
11.

Newfield came into existencebecauseFXG required that Mr. Carrow

createa corporation before he could begin work with FXG.

12.

Newfield had no ongoing businessand ceasedto exist as an ongoing entity

following Mr. Carrow's separationfrom FXG.

13.

Plaintiff Michael Fennell, a New Jerseyresident/citizen,was a contract

driver for FXG at its Barrington, Camden County, New Jerseyterminal from September
2014 through October 16, 2015.

Mr. Fennell resides at 201 Morris Turnpike,

Branchville, New Jersey. Mr. Fennell performed this work through a corporateentity he
formed at FXG's requestknown as FennellLogistics Corporation.
14.

Fennell Logistics Corporationcame into existencebecauseFXG required

that Mr. Fennell createa corporationbefore he could begin work with FXG.
15.

Fennell Logistics Corporation had no ongoing business,and ceasedto

exist as an ongoingentity following Mr. Fennell'sseparationfrom FXG.

16.

Defendant,FXG, is a Delawarecorporationwith its principal office in

Moon Township,AlleghenyCounty,PA. FXG operatesseveralterminalsin New Jersey

that arethe focusof this matter.
17.

At all times relevant to this action, Defendant has actively and

continuously conductedbusinessthroughout the State of New Jersey, employing

suchasPlaintiffsandthe membersof theproposedClass.
contractor/drivers
FACTS COMMON TO ALL CAUSESOF ACTION
18.

of driversto pick
Defendantis a nationalcompanyemployingthousands

up anddeliverpackagesfor its customersthroughoutthe UnitedStates.

19.

FXG operates
two divisionsin New Jersey:TheGrounddivisionroutinely

The HomeDelivery
(but not exclusively)picksup and deliverspackages
to businesses.
locations.
deliverspackages
to residential
divisionroutinely,but not exclusively,
20.

During the time relevantto this action,FXG retainedwhat is believedto

be morethan 300 deliveryandpick-updriversin New Jersey. FXG retainsthesedrivers

for the purposeof providingits customerswith timely and reliablepick-up and delivery
systemthat is similarto its only real competitor,United
of packagesin a logistics-heavy
ParcelService.
21.

FXG has actively recruited drivers and createsa market for its routes by

engaging in a marketing practice, first through advertisementsand in person meetings

and later through the intemet (e.g., BuildaGroundbiz.com) extolling to the generalpublic
the benefits of becoming a "contractor," making, among others, the misrepresentation
that persons who enter into the "Operating Agreement" either directly or through a

businessthat will be a "partner"with

"businessentity" will havetheir own independent
FXG.
22.

to the public andto the Plaintiffs,that contractdrivers

FXG misrepresents

havethe right to run their own business;to "be your own boss,"to "have the ability to
grow your own business;"to o'havethe chanceto partner with the fastestgrowing
company[FXG] in the country."
transportation
23.

in the OperatingAgreement
FXG, maintainsthese misrepresentations

with the drivers. For example,the

communications
itself, as well as in post-contracting
that suggeststhat the 'ocontractor"will have sole control
OA containsrepresentations
overhow to run the business.This is untrue.
24.

to the Plaintiffs and the public that they "have a

FXG also misrepresents

proprietaryinterestasa FedExGroundfor HomeDelivery]contractor."

25.

In reality, whetherthe contractsare obtainedthrough FXG or whether

receivedfrom another"contractor,"the entirerelationshipis a scam. The only thing that

purchasesis the right to operatea route at FXG's pleasureand FXG's
a oocontractor"
period.
controlfor a one-year
26.

Although FXG does not "sell" routes,it is an essentialand knowing

participantin the sale of routes- FXG must approveany route transfer,and creates
various marketingmaterialssuch as the websitereferencedabove in order to entice
individualsto enterinto routepurchasetransactions.
27.

FXG retainedandexercisedthepowerto requirethat driverswork through

elseFXG would no longerpermitthe driversto work.

LLCs or corporations,

28.

In the Summer of 2015, FXG declaredthat it would no longer permit

single work area drivers, and proclaimed that it would no longer renew OAs for drivers
who did not have 5 routes. This action was in direct retaliation becauseNew Jersey
drivers, through the undersignedcounsel,and drivers acrossthe country, have challenged
the misclassificationbusinessmodel FXG uses.
29.

FXG requires its drivers to sign an Operating Agreement ("Agreement" or

"OA") that characterizeseach driver as an "independentcontractor" representingthat the

driver, through an entity that FXG requires be set up, will have a proprietary and
entrepreneurialinterestin the route.
30.

The existenceof an intervening single-purposeLLC or corporationdoes

not control the employment relationship under New Jerseylaw. Under the ABC test, the
relative nature of the work test, and any other employment test, the individual drivers
here are, in law and in fact, employeesof FXG.
DEFENDANT'S OPERATING AGREEMENT
31.

All Class Memberswere requiredto sign an OperatingAgreementeither

directly or through a businessentity formed for this purpose.Although not identical, the
Agreementsfor the Ground division and the Home Delivery division are substantiallythe
samein all respectsrelevant to this action.
32.

Both the Ground and Home Delivery Agreements generally characterize

the drivers as independentcontractors.

33.

Among other things, the Agreementsprovide that:

a. Plaintiffs must provide and maintain their own vehicle, paying for all costs
and expensesincidental to its operation, including maintenance,gas, oil,

repairs,tax, licensesand tolls. Moreover, Plaintiffs must adorn the vehicle

with specific colors, logos and marks, identiffing it as "part of the FXG
system."

b. Plaintiffs must maintain liability insurance for operation of the vehicle

without packages on board, naming FXG as an insured; Plaintiffs must
preparedriver logs and inspection/maintenancereports, and such shipping
documents"as FXG may from time to time designate;"
c . Plaintiffs must wear "an FXG-approved uniform," and keep his/her
personalappearanceconsistentwith standards"promulgated from time to
time by FXG;"
FXG may changea driver's Primary Service Area, notwithstanding FXG's
representationand promise that each driver has a proprietary interest in the
customershe or sheserves;
e. The OA may not be altered, changedor amendedin any respectunless in
writing and signedby both parties; and
FXG can terminate the Agreement, or can, for a perceived minor
infraction, provide notice prior to termination. FXG may non-renew at
will.

34.

TheAgreementis andat all timesmentionedhereinhasbeena contractof

adhesion,draftedby FXG andits legalcounsel,printedby FXG, anddistributedby FXG

amongdriversfor mandatorysignature.Plaintiffshaveno opportunityto negotiatewith
FXG over the termsor conditionscontainedin the AsreementandFXG offersits drivers
no meaningfulchoiceof terms.

35.

The Agreementis, and at all material times has been, unlawful and

unconscionable
in form and effect. The Third Circuit Court of Appeals,in the matter
known as Lucey v. FedEx Ground,found the arbitrationclausewithin the OA to be
unenforceable
assubstantivelyandprocedurallyunconscionable.
The ArbitrationClause,
which coversonly terminations,doesnot precludeor affect Plaintiffs' claimsassertedin
this Complaint.
36.

Despitethe OperatingAgreementand despiterepeatedrepresentations

by

FXG, Plaintiffsare,underNew Jerseylaw, employeesof FedExGround,for the reasons

setforth herein.
DEFENDANT'SCONTROL OF PLAINTIFFS AND OTHER WRONGFUL ACTS
37.

FXG exercisesextensivecontrol over the meansbv which Plaintiffs

performtheirjobs.
Such control is exertedin part through the OperatingAgreementsand

38.

provisionsdescribedabove,which Plaintiffswere requiredto sign as a conditionof

employment.
39.

FXG's completecontroloverPlaintiffsis alsoexercised

by otherrulesand

regulations,writtenandunwritten,includingbut not limited to the following:

a. FXG requires Plaintiffs, directly or through an entity they are required to
form to obtainthejob, to obtain a vehicle that meetsFXG's specifications;
b. FXG requiresPlaintiffs, directly or indirectly, to pay for the purchaseor
lease of such vehicle, as well as for its maintenanceand upkeep. Other
vehicle-relatedcosts required to be paid by Plaintiffs include fuel, oil,

tires, repairs,taxes, insurancecoverage,licenses,vehicle registration

renewalfees,baseplatesandall highway,bridgeandferry tolls;
c. FXG requiresthat Plaintiffs' vehiclesmeetcertainuniquespecifications,
on both the insideand outside.Plaintiffs are requiredto paint the vehicle
with FXG's colorsandput FXG's logoson thevehicle;
d. Although Plaintiffs could technically use the vehicles for their own
they arenot permittedto do so without
commercialandpersonalpurposes,
removingor coveringall FXG identifyinglogosand marks.Additionally,
the hours worked by the drivers generallyexceedten hours each day,
leavingno time to usethe vehiclesfor anyotherendeavor;
e. Plaintiffsandotherdrivershaveno controloverthe pricesFXG chargesto
for pick-upanddeliveryservice;
FXG's customers
Plaintiffs and other drivers do not have authority to reject deliveries or
pick-ups. They are required to adhereto FXG's strict route schedulesand
their failure to make a pick up or delivery subjectsthem to discipline;
o

FXG mandatesthat Plaintiffs wear an FXG-approved uniform, and follow

such other guidelines as FXG might promulgate regarding their personal
appearance;

h. FXG instructs and controls drivers as to the appearanceof their vehicles;

i . FXG requires that Plaintiffs perform specified maintenance on their

setby FXG;
vehiclesaccordingto a schedule
j.

FXG requiresthat Plaintiffs and other drivers purchaseor leasecertain

electronic communicationsequipment that complies with FXG's

specifications.That equipment includes a "scanner" which contains global

positioning system("GPS") capability, which allows FXG to monitor the
location of the drivers at all times;
k. FXG prescribes forms to be used during the work, and required that
Plaintiffs use same;
l.

FXG requiresPlaintiffs to provide servicesto FXG's customerson days

and at times that are compatible with the customer's schedules and
requirementsas acceptedby FXG;

m. FXG assignsPlaintiffs to the areaeach driver is to service;

n. FXG must first give approval for any helpers or substitutes,even though

Plaintiffsarerequiredto pay suchsubstitutes'wages;

o. FXG retains the power to terminate drivers, and/or their "business
entities"and/orto approveor disapprovehelpers;
p . Plaintiffs may not carry non-authorizedpassengersor packageswhile on
FXG business;

q. Plaintiffs must submit to a drug screenadministeredat whatever time and

place and in whatevermanner dictated by FXG;

r. FXG retains an exquisite level of control as to the methods and manner in

which the work is performed and actively monitor's the drivers'
compliance with these rules, such as how he or she drives and carries the
packages;
FXG employs Terminal Managers,Pickup and Delivery Managers, Safety
Managers and other supervisory personnelto managethe drivers, process

10

the drivers' paperworkand to give each driver his or her delivery and
pick-upschedules;
FXG's assignmentof packagesand unilateral modification of pay
structureseffectively and efficiently controls Plaintiffs' earningsand
ability to completetheir work;
u. FXG doesnot compensate
driversfor time spentloadingthetrucks;
v. FXG pays its drivers on a piece rate system,for the number of stops,
deliveriesand pick-upsmade,togetherwith certainfixed paymentsthat
ensurea minimumamountof income.
40.

Plaintiffs' deliveryof packagesis an active,integraland indispensable

partof FXG's business

enterprise.
By driving vehicleswith FXG's colorsand logos,by
reliablyservingFXG's customers,
by following FXG's controlleddeliveryroutesand
delivery and pick-up methodsand in other ways, Plaintiffs and other delivery drivers
haverendered,andcontinueto render,valuablepersonalservicesto DefendantFXG. The
personalservicesdescribed
immediately
above:
a. confer substantialbenefits on FXG;
b. are an integral part of the process which enables FXG to offer its
customerstimely and reliablepick-up and delivery services;
c. is performed at FXG's workplace, and at the locations of FXG's
customers;and
d. do not involve the kind of expertise which requires entrustment to an
independentprofessional,as opposedto an employee.

l1

4I.

Plaintiffs are not free from FXG control over the methodand mannerof

how the work is performed.

42.

Plaintiffs work is not outsidethe ordinarycourseof FXG's business,and

which includespick up anddeliveries

thework is performedat FXG's placeof business,
at FXG's customerlocations.
43.

Plaintiffs have no bona fide ongoing businessentity that could or did

survive the termination from FXG.

CLASSACTION ALLEGATIONS
44.

Plaintiffs bring this class action on behalf of themselvesand other

similarly situateddrivers/contractors."
45.

Specifically,Plaintiffsbring this actionas a classactionon behalfof all

personswho worked, on a full time basis,for DefendantFXG at its GroundDivision

and/orHome DeliveryDivisionterminalsin New Jersey,from March 16, 2010to the
time of trial (the "Class Period") as packagedelivery drivers and/or packagepick-up
drivers, and who were signatoryto an OperatingAgreementwith DefendantFXG,
entity. This proposedclassdefinitionexcludesdrivers
directlyor on througha business
who first signedan OA prior to October2007, andarethereforemembersof the certified
classin the matter known as Tofautev. Fedex GroundPackageSystems.Inc. to the
to conclusionin that matter.
extentthattheir damageclaimsareaddressed
46.

Upon informationandbelief,the numberof membersof the Plaintiff Class

exceeds
300duringtheClassPeriod.
47.

The Plaintiff Classis so numerousthat their individualjoinder into a

Althoughthe exactnumberof ClassMemberscannotbe

singleactionis impracticable.

t2

properly determined without further discovery, the number and identity of the Class
Members can easily be ascertainedfrom Defendants' records.
48.

By classifying its drivers as IndependentContractors, FXG enjoys a

significant savings over its competitors, in that the pay is less, there are no benefits, and
the drivers incur the cost of the truck, among other things.
49.

In order to maintain this competitive advantage,FXG requires a steady

streamof individuals to serveas "contractors." In order to do this, FXG engagesand has,

at all times relevant, engaged in a systematic marketing, advertising and recruiting
campaign within the State of New Jersey,addressedat all times to the generalpublic, to
induce members of the public, such as Plaintiffs, to agreeto obtain/purchaseand service
one of FXG's delivery routes.
50.

FXG advertisesthe supposedbenefits of the relationship to the general

public on its web site,Buildagroundbiz.comas well as in other places.

51.

While FXG doesnot directly "sell" the routes,they are an essentialpart of

the chain of distribution,as no routes may be sold without FXG's explicit approvaland
FXG derives a benefit from the sale/purchaseof the routes. FXG does, as part of the
actual relationship, chargedrivers for the use of certain equipmentand consumables.
52.

Through the above-referencedcampaign, FXG induces and has induced

individuals, including Plaintiffs, to become drivers for FXG by representing that the
drivers will be independentbusinessesin partnershipwith FXG, and that those businesses
have value basedupon a property interest.Theserepresentationsare false and misleading,
as FXG controls the routes and the drivers in such a manner that the routes have virtually
no value and the drivers can not srow their business.

l3

53.

FXG actively participates and profits from a scheme in which drivers

spend tens of thousands of dollars to purchase a purported "business" that is nothing

more than a job with piecework pay and a one year term.
54.

In its Operating Agreements, as in the marketing materials discussed

above, Defendant conceals the true nature of the relationship between FXG and its
drivers:that of employerand employee.
55.

that it has and exercisesexquisitecontrol over the

FXG also misrepresents

drivers, through wording that suggestsFXG will not control the work of the drivers,
when that is exactly what it does.
56.

As a result of Defendant's misrepresentations,the Plaintiffs pay

substantial sums of money for the routes, purchaseor lease of vehicles that meet FXG
specifications,and pay all costsof operatingand maintaining those vehicles.
57.

FXG doesnot pay for workers' compensationcoverageor unemployment

insurance,illegally shifting those coststo the "contractor."

58.

The purposeand intent of the misclassification is to shift the burden of the

costs of running a delivery business upon the workers, to avoid worker protections,
including the Law Against Discrimination, Family Leave, Unemployment and Worker's
Compensation,and to otherwise obtain an unfair advantageover its competitors.
59.

As describedabove,FXG systemicallycontrols virtually all aspectsof the

relationship with Plaintiffs in such a manner and extent that the drivers are in fact
employeesof FXG.
60.

Under the ABC test applicableto the Wage Payment Law, the relative

nature of the work test applicable to Workers Compensationand all other testsutilized in

T4

New Jersey,every driver who operatesa FXG truck is, as a matter of New JerseyLaw, a
FXG employee.
61.

The Defendant's actions have inflicted the sametypes of harm upon each

and every memberof the Class.

62.

There are questionsof law and fact that affect and are common to all Class

Members. The central questionsof law and fact involved in this action are of a common
or generalinterest.
63.

Common legal and factual issues predominate over any questions

affecting only individual membersof the Class.Among the common questionsof law and
fact are the followine:

a. WhetherFXG violatedthe New JerseyConsumerFraudAct, N.J.S.A.

of its routesand
56:8-1,et. seq.,by participatingin the marketing/sale
productsto Plaintiffs;
b. Whetherthe contractordriversareactuallyFXG employees;
c. WhetherFXG unlawfully forced Plaintiffs to pay for businessexpenses
thatrightfully shouldhavebeenpaid for by their employer,FXG;
d. WhetherFXG, by makingunlawful deductionsfrom the pay of Plaintiffs
entities,"violatedthe WagePaymentLaw;
and/ortheir"business
the Classas
e. WhetherFXG wasunjustlyenrichedby failing to compensate
insuranceto its
employees,by shifting the cost of workerscompensation
statutory employees, failing to provide employment benefits and
emolumentsof employees,by evading employment taxes, and by

15

wrongfully benefiting from its requirement that the Class pay for FXG's
businessexpenses;
f.

Whether injunctive and declaratoryrelief are proper;

g. Whether the agreementpermitting FXG to shift the burden of employment

expenses,taxes, workers' compensationand other insurancesis illegal and
thereforevoid: and.
h. Whether Defendants' actions violate the implied covenant of good faith
and fair dealing.
64.

The claims of the named representativePlaintiffs are typical of the claims

of other membersof the Plaintiff Class. The named Plaintiffs sharethe same interestsas
other membersof the Class in this action because,like other Class Members, they have
eachsufferedfinancial loss of thousandsof dollarsdue to FXG's conduct.
65.

The Class Representatives have an incentive and are committed to

vigorously prosecutingthis action becausethey have actually suffered losesas a result of

Defendant'sactions.
66.

Plaintiffs have retained qualified counsel, experiencedin class action

practice, especially with this Defendant, to represent them in this matter.

The

undersigned has actively litigated misclassification and other employment-basedcases

againstFXG for the past 11 years.
67.

A class action is the only realistic method available for the fair and

efficient adjudication of this controversy. Because the damagessuffered by individual

Class Membersmay be relatively small, in comparisonwith the expenseand burden of

t6

individual litigation makesit impracticablefor membersof the Classto seekredress

individuallyfor the wrongfulconducthereinalleged.
68.

Were each individual memberrequiredto bring a separatelawsuit, the

resultingmultiplicity of proceedingswould causeunduehardshipand expensefor the

litigantsand the court.The prosecutionof separateactionswould also createthe risk of
inconsistentrulings,which may be dispositiveof the interestof ClassMemberswho are
not partiesto the adjudicationand/ormay substantiallyimpedeClassMembers'ability to
protect their interests,and thereforewould be contraryto the interestof justice and
equity.
COUNT I - VIOLATION OF THE CONSUMERFRAUD ACT
69.

of this Complaint
Plaintiffsincorporateby referencethe aboveParagraphs

asif fully setforth herein.

70.

Defendants,
throughthe actionsdescribedabove,haveviolatedthe New

FraudAct,N.J.S.A.56:8-1et.seq.
Jersey
Consumer
71.

Defendant's marketing and recruitment materials are offered and

presented
to membersof the generalpublic within the Stateof New Jersey.Specifically,
while FXG doesnot physicallytakethe moneyfrom the saleof the routes,it servesas
marketmakerandin an internalpartof anyroutesaletransaction.
72.

Part of Plaintiffs' considerationfor route purchasewas Plaintiffs'

acquiringthe deliverytruck, purchaseof the businesssupportpackageandan agreement

to provideservices.Further,FXG maintainsand promotesthe "sale" of routesbetween
driversthroughvarious intemetvehicleswhich suggestthe ability to "Build a Ground
Business."

I7

73.

When such transactionstake place, FXG plays an integral role, and must

approvethe transfer and perform an investigation before the route can be purchased.
74.

This sale and transfer of routes benefits FXG, which usesthesetransfersto

attempt to bolster its claim for contractor status, and ensures that FXG always has
sufficient coveragefor its routes.
75.

Defendant'srepresentations
to Plaintiffs and other membersof the general

public through their advertising, marketing and recruitment processwere false and were
false statements of intention, when made, and therefore constitute affirmative
misstatementsof material fact.
76.

FXG has engagedin unconscionablecommercialpracticesof deception,

fraud, false pretense,false promise, and misrepresentationin recruiting and retaining its
drivers, the public at large, and the Class specifically, regarding the status of the Class
Members as independentbusiness owners as pled in this Complaint. Specifically,
Defendant misled Plaintiffs to believe that they were going to be "partners" with FXG,
that Plaintiffs would have an independent business, fully marketable and transferable,
that Plaintiffs were investing in a business and would have a proprietary interest that
would grow, along with their income, that the routes had and would have value, and other
representationsdesigned to convince Plaintiffs and members of the general public to
acquire a truck and service Defendant's customersunder the terms of a burdensomeand
nonnegotiablecontract.
77.

Defendant knowingly concealed, suppressedor omitted the fact that it

intended to micro-manage Plaintiffs' work and income, that Defendant's management

and control utterly destroyed or would destroy any perceived value of the routes that

l8

FXG had no intention of leaving the means and methods of the work to Plaintiffs, that
other jurisdictions have found that driver-contractors were actually employees, not
business owners, that Defendant intended to treat Plaintiffs as employees, not
entrepreneurs,and other material facts regarding the transaction.
78.

Defendant's actions constitute an unconscionablecommercial practice,

deception, fraud, false pretense,violation of applicable regulations, false promise,

misrepresentation,and/or the knowing concealment,suppressionor omission of material
facts with intent that the Plaintiffs, and those like them, rely upon its concealment,
suppressionor omission, in connectionwith the sale of the routesto Plaintiff.
79.

FXG failed to disclose to Plaintiffs the material fact that it intended to

enactthe ISP program, in which FXG unilaterallydecidedthat as of Septemberl, 2015,

it would no longer contract with drivers who did not have at least4 or 5 routes.
80.

Defendant committed affirmative misrepresentations,knowing omissions,

and regulation violations of the New Jersey ConsumerFraud Act, N.J.S.A. $ 56:8-2,
entitling Plaintiff to the remediesunder the Act.
81.

As a result of Defendant'sconduct, Plaintiffs enteredinto the Operating

Agreement as described above, purchased the routes and made the associated and
required investments in the purchaseof a truck and other equipment and purchasedor
leasedequipmentand servicesfrom FXG.
82.

As a result of Defendant's control, micro-management,and abusethereof,

Defendant has destroyedthe potential financial value of the routes, causing lossesunder
an out ofpocket and benefit ofthe bargaintheory.

l9

83.

Plaintiffs suffered ascertainablelosses as a result of Defendant's actions,

including but not limited to, the loss of value of the routes,lost opportunity to sell the
routes, lost profits, additional insurancecosts, taxes and other expensesthat should have
beenpaid by FXG as an employer,and other losses.
WHEREFORE, Plaintiffs respectfully request that the Court enter judgment in
their favor and against the Defendant for compensatory damages, injunctive and
declaratoryrelief, consequentialdamages,treble damages,plus costs,counselfees, preand post-judgmentinterest, and such further relief as may be just and proper.
COUNT II . MISREPRESENTATION
84.

Plaintiffs incorporateby referencethe above Paragraphsof this Complaint

as if fully set forth herein.

85.

Defendant's knowing misrepresentationsand omissions also constitute

legal and equitable fraud. Defendant's actions were willful, wanton and taken with
recklessdisregardto the harm they would causePlaintiff.
86.

Defendant engagedin misrepresentationsand omissions described above

as part of a systematiccorporatepolicy.
87.

Defendantmade the representationsset forth herein above.

88.

Defendant knew, or should have known, or recklessly or negligently

disregardedthe truth of the representations,which were false when made, or which were
promises of future action which Defendant did not intend to comply with at the time
when they were made.
89.

Defendant made said representationswith the intent that Plaintiffs would

relv on same.

20

90.

Plaintiffs relied upon Defendant's misrepresentations,actions and

intentionalomissionsin decidingto enterinto the Operatingagreement.

91.

Plaintiffs suffered harm as a result of Defendant's misrepresentations.

WHEREFORE, Plaintiffs respectfully request that the Court enter judgment in

their favor and against the Defendant for compensatory damages, injunctive and
declaratoryrelief, consequentialdamages,treble damages,rescission,plus costs,counsel
fees,pre- and post-judgmentinterest, and such further relief as may be just and proper.
COUNT III_ RECISSION OF OPERATING AGREEMENT
92.

Plaintiffs incorporateby referencethe above Paragraphsof this Complaint

as if fully set forth herein.

93.

Despite the express terms of the Operating Agreement, Plaintiffs'

relationship with FXG satisfiesevery aspectof eachNew Jerseytest for employment, and
not for independentcontractorstatus.
94.

The Operating Agreement illegally and unfairly advantages FXG, by

mischaracterizing the status of the Plaintiffs in that FXG evades employment related
obligations, such as social security contributions, workers' compensationcoverage,and
state disability and unemployment compensation, makes illegal wage deductions,
illegally shifting the expenseof workers' compensationcoverageand other expensesto
Plaintiffs.
95.

The Operating Agreement betweenFXG and each Plaintiff and member of

the Classis void as being illegal and./oragainstpublic policy and thereforeunenforceable.

96.

The OA is specifically void under the provisions of the Wage Payment

Law. N.J.S.A. 34:ll-4.7.

2l

97.

The Operating Agreement between FXG and each Plaintiff is an

unconscionable contract of adhesion, which is unenforceable as contrary to public

interest,policy andlaw.
98.

The OperatingAgreementillegally shifts upon Plaintiffs the burdenof

certaincoststhat an employermustpay.
99.

While actingon the direct instructionof FXG and dischargingtheir duties

for FXG, Plaintiffsandthe ClassMembersincurredbusinessexpensesfor, inter alia, the

operatingcostsand adornmentof vehicles;insurance;
purchaseor lease,maintenance,
anduniforms.
andfurther
contractors,"
as"independent
its employees
100. By misclassifying
FXG hasbeen
to pay FXG's own expenses,
requiringthoseemployees
by contractually
unjustlyenriched.
101. As a direct and proximateresultof FXG's conduct,FXG has received
substantialbenefitsto which it had no entitlement,at Plaintiffsand the ClassMembers'
taxes,premiumsfor insuranceto replace
expense,includinglost profits,self-employment
of
and disability benefits,businessexpenses,compensation
workers' compensation
workers,andotherexpenses.
replacement
102.

Plaintiffs are entitledto restitutionfor all of the businessexpensesthey

were illegally requiredby FXG to bear,for all of the employmenttaxes,unemployment

compensationand workerscompensationthat FXG shouldhave but did not pay, and
Plaintiffsareentitledto thequantummeruitvalueof their servicesasemployees.
WHEREFORE,Plaintiffs respectfullyrequestthat the Court enterjudgmentin
their favor andagainstthe Defendantrescindingthe OperatingAgreement,and awarding

22

restitution compensatingfor the reasonablevalue of the benefit provided to FXG,

disgorgingthe profitsimproperlyobtainedby FXG, alongwith compensatory
damages,
punitive damages,consequentialdamages,declaratoryjudgment and injunctive relief,
costs,counselfees,pre- andpost-judgment
interest,andsuchfurtherrelief asmay bejust
andproper.
COUNT IV - VIOLATION OF THE WAGE PAYMENT LAW
103. Plaintiffs incorporateby referencethe preceding Paragraphsof this
Complaintasif fully setforth herein.
104. FXG is an employerwithin the meaningof theNew JerseyWagePayment
Law,N.J.S
.A. 3411-4.I (a).
withinthemeaningof N.J.S.A.34:ll105. EachClassMemberis an employee
4.1(b).
106. FXG has paid to the Plaintiffs compensationfor their servicesthat are
wageswithinthemeaningof N.J.S.A.34:11-4.1(c).
107. Because
of the closednatureof the so-calledbusiness
entities,whichFXG
requires,a deductionfrom the entitiesis really a deductionof the Plaintiffs' wages.
108. FXG has withheld and divertedfrom the Plaintiffs' wagesamountsfor
workers' compensation,
employmenttaxes,and businessexpensessuch as vehicle
vehiclemaintenance,
the"business
supportpackage"andotherexpenses.
insurance,
actsas a director
109. FXG's actionsin mandatingthe paymentof expenses,
indirectdeductionfrom wases.
110. FXG withheldanddivertedthewasesof thePlaintiffsassetforthabovein
violationofN.J.S.A.]4:ll-4.4 et.seq.

23

IIL

The Operating Agreement as describedherein violates the Wage Payment

Law, and is unlawful, null and void pursuantto N.J.S.A. 34:ll-4.7.

ll2.

Pursuantto N.J.S.A. 34 Il-4.7, Plaintiffs have a private right of action

against FXG, their employer, for the full amount of wrongfully withheld or diverted
wages.
WHEREFORE, Plaintiffs respectfully request that the Court enter judgment in
their favor and against the Defendant for wrongfully withheld and diverted wage,
compensatory damages,declaratory judgment holding the Operating Agreement to be
null and void, plus costs, counsel fees, pre- and post-judgment interest, and such further
relief as may bejust and proper.
COUNT V - BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING
113.

Plaintiffs incorporate by reference the preceding Paragraphsof this

Complaint as if fully set forth herein.

ll4.

Under New Jerseylaw, each Operating Agreement contains a covenant of

good faith and fair dealing that FXG owes each Plaintiff and ClassMember.
115.

Defendant has breachedthat dutv. acted in bad faith and has failed and

refusedto deal with the membersof the Cfus fuirfy UV'

a. intentionally misclassifying the Class Members as independentcontractors
when, becauseof the level of FXG's control, the Class Members are
actuallyemployees;
b. destroying the value of the plaintiffs' routes in such a manner as to render
them of little or no value, thereby depriving the Plaintiffs of the value of
their bargain;

z4

c. unilaterallyrestructuringroutesto FXG's benefitand to the Plaintiffs'

detriment,without adequate
compensation;
d. subjecting the drivers to an annual renewal processpermitting the
employerto terminatethe agreementwithout cause,thereforedestroying
any intrinsic value to the route; making unilateralchangesto the pay
structurefor the routes,thereforecontrollingPlaintiffs' incomein orderto
increasetheir profits;
e. Changingthebusiness
modelto enactthe ISPrequirement;
and,
f. otherwisedeprivingPlaintiffsof the benefitof their bargainwith FXG.
116. Plaintiffshave sufferedlossesas a direct and proximateresult of the
Defendant'sbreaches,
unfair businesspracticesandactionsdescribedabove.
WHEREFORE,Plaintiffs respectfullyrequestthat the Court enterjudgment in
their favor and againstthe Defendantfor compensatorydamages,punitive damages,
consequential
damages,declaratoryjudgmentand injunctive relief, plus costs,counsel
fees,pre- andpost-judgment
interest,andsuchfurtherrelief asmay bejust andproper.

Dated:March16.2016

MARCHETTI LAW, P.C.

Attorneysfor Plaintiffs

25

LICHTEN LISS-RIORDAN,P.C.
Attorneysfor Plaintiffs

HAROLD L. LICHTEN,ESQ.
(PHV to be submitted)

JURY TRIAL DEMAND

Plaintiffsdemanda trial by jury asto all issuesso triable.
MARCHETTI LAW, P.C.
Attornevsfor Plaintiffs

ANTHONY L. MARCHETTI.JR.

CERTIFICATION PURSUANT TO RULE 4:5.1

I hereby certify that to my knowledge the matter in controversy is not the subject
of any other action pending in any court or of a pending arbitration proceeding,nor is any
other action or arbitration proceeding contemplated. There are multiple currentlypending actions against the Defendant for misclassification in other states for various
time periods.
I know of no other parties who should be joined in this action, other than the
membersof the potentialClass.

26

MARCHETTI LAW, P.C.

Attomeysfor Plaintiffs

ONY L. MARCHETTI.JR.
DESIGNATION OF TRIAL COUNSEL
Pursuantto Rule 4:25-4,Anthony L. Marchetti,Jr. is herebydesignatedas trial
attorneyin the abovecaptionedlitigationon behalfof the Plaintiffs.

MARCHETTI LAW, P.C.

s for Plaintiffs

NOTICE PURSUANT TO RULES l:5-1(a) AND 4:17-4(c)

Take notice that the undersignedattomey, counsel for Plaintiffs, hereby demands
pursuantto Rules 1:5-1(a) and 4:17-a@)and any amendmentsthereto, that each party
herein serving pleadings and interrogatories and receiving any answers thereto, serve
copies of all such pleadings and answered interrogatories received from any party,
including any documents, papers and other materials referred to therein, upon the
undersignedattorney and take notice that this is a continuing demand.

27

MARCHETTI LAW, P.C.

Attorneysfor Plaintiffs

28