Lupian v. Joseph Cory Holdings LLC

• Citation: 905 F.3d 127
• Decision Date: 27 September 2018
• Docket Number: No. 17-2346,17-2346
• Parties: Alejandro LUPIAN; Juan Lupian; Jose Reyes; Effrain Lucatero; Isaias Luna, individually and on behalf of those similarly situated v. JOSEPH CORY HOLDINGS LLC, Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

905 F.3d 127

Alejandro LUPIAN; Juan Lupian; Jose Reyes; Effrain Lucatero; Isaias Luna, individually and on behalf of those similarly situated

v.JOSEPH CORY HOLDINGS LLC, Appellant

No. 17-2346

United States Court of Appeals, Third Circuit.

Argued: February 7, 2018

Filed: September 27, 2018

Adam C. Smedstad [ARGUED], Andrew J. Butcher, Scopelitis, Garvin, Light, Hanson & Feary, P.C., 30 West Monroe Street, Suite 600, Chicago, IL 60603, Christopher J. Eckhart, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Suite 1400, 10 West Market Street, Suite 1400, Indianapolis, IN 46204, Peter F. Berk, Genova Burns, 494 Broad Street, Newark, NJ 07102, Counsel for Appellant

Harold L. Lichten [ARGUED], Michael N. Turi, Esq., Lichten & Liss-Riordan, P.C., 729 Boylston Street, Suite 2000, Boston, MA 02116, Shanon J. Carson, Camille Fundora, Alexandra K. Piazza, Sarah R. Schalman-Bergen, Berger & Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, Counsel for Appellees

Adina H. Rosenbaum, Allison M. Zieve, Public Citizen Litigation Group, 1600 20th Street, N.W., Washington, DC 20009, Counsel for Amicus Curiae Public Citizen, Inc.

Before: CHAGARES, SCIRICA, and COWEN, Circuit Judges.

OPINION

CHAGARES, Circuit Judge.

Alejandro Lupian, Juan Lupian, Isaias Luna, Jose Reyes, and Efrain Lucatero (collectively, "the Drivers") are professional delivery drivers who separately contracted to provide equipment and services to Joseph Cory Holdings LLC ("Joseph Cory"), a motor carrier and property broker. The Drivers filed a class action complaint alleging that Joseph Cory deducted wages from their paychecks without obtaining contemporaneous consent in violation of the Illinois Wage Payment and Collection Act ("IWPCA"), 820 Ill. Comp. Stat. 115/1 – 115/15. Joseph Cory moved to dismiss, arguing that the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"), Pub. L. No. 103-305, 108 Stat. 1569, 1606, 49 U.S.C. §§ 14501 –06, preempts the IWPCA. The District Court, inter alia, denied Joseph Cory’s motion, holding that the FAAAA did not preempt the Drivers’ IWPCA claims. For the reasons that follow, we will affirm the District Court’s order.

I.

The contracts between the Drivers and Joseph Cory purported to establish that the Drivers would work as independent contractors, although the Drivers claim the realities of their relationship made them Joseph Cory’s employees under the IWPCA. The contracts expressly permitted Joseph Cory to take "[c]hargebacks" for any expense or liability that the Drivers had agreed to bear — "expenses [that] shall be deducted from the amount of [the Drivers’] compensation." Appendix ("App.") 44, 50. Joseph Cory deducted these expenses — including costs for "insurance, any related insurance claims, truck rentals, ... uniforms," and "damaged goods" — from the Drivers’ paychecks without obtaining contemporaneous consent. App. 20.

The Drivers filed a lawsuit against Joseph Cory in the United States District Court for the District of New Jersey, claiming, inter alia, that Joseph Cory’s practice of deducting wages from their paychecks and those of similarly situated employees without contemporaneous consent violated the IWPCA’s wage-deduction provision, 820 Ill. Comp. Stat. 115/9.¹ The Drivers’ complaint alleged a putative class action under the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.), in which the Drivers would be the named plaintiffs. Joseph Cory moved to dismiss the IWPCA claims under Federal Rule of Civil Procedure 12(b)(6), arguing that the FAAAA preempted the IWPCA. The District Court denied Joseph Cory’s motion to dismiss, holding that, on its face, the IWPCA’s connection to the FAAAA’s subject matter was too attenuated to trigger preemption. Lupian v. Joseph Cory Holdings, LLC, 240 F.Supp.3d 309, 317 (D.N.J. 2017).²

The District Court certified its order for an interlocutory appeal under 28 U.S.C. § 1292(b), and we granted Joseph Cory’s petition to appeal the certified interlocutory order.³

II.

A.

Joseph Cory moved to dismiss the Drivers’ IWPCA claim based on federal preemption. This Court conducts plenary review of the grant or denial of a motion to dismiss based on preemption. Rosenberg v. DVI Receivables XVII, LLC, 835 F.3d 414, 418 (3d Cir. 2016). Facts alleged in the complaint are accepted as true for purposes of the motion. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Preemption is an affirmative defense that the defendant has the burden to prove. In re Asbestos Prods. Liab. Litig. (No. VI), 822 F.3d 125, 133 n.6 (3d Cir. 2016). Therefore, Joseph Cory has the burden to demonstrate that the Drivers’ state-law claims under the IWPCA are preempted. To prevail on a Rule 12(b)(6) motion to dismiss based on an affirmative defense,⁴ as Joseph Cory seeks to do here, a defendant must show that "the defense is ‘apparent on the face of the complaint’ and documents relied on in the complaint." Bohus v. Restaurant.com, Inc., 784 F.3d 918, 923 n.2 (3d Cir. 2015) (quoting Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) ); see also Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007) ; Leveto v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001). Put another way, dismissal is appropriate under Rule 12(b)(6) only when "preemption is manifest in the complaint itself." In re Asbestos Prods. Liab. Litig., 822 F.3d at 133 n.6 ; see also Simmons v. Sabine River Auth., 732 F.3d 469, 473 (5th Cir. 2013).

The doctrine of preemption is derived from the Supremacy Clause of Article IV of the Constitution, which provides that "the Laws of the United States ... shall be the supreme Law of the Land." U.S. Const. art. VI. Thus, state law "which interferes with or is contrary to federal law, must yield." Free v. Bland, 369 U.S. 663, 666, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962). There are three types of federal preemption: field preemption, implied conflict preemption, and — as is relevant here — express preemption. See Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 395 (3d Cir. 2010). Express preemption requires a analysis of whether "[s]tate action may be foreclosed by express language in a congressional enactment." Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001).

When a federal statute contains a provision preempting state law claims that pertain to "areas of traditional state regulation" or police power, we apply a presumption against preemption. Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005) ; see also N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995).⁵ Areas of traditional state regulation or police power include regulation of "the employment relationship to protect workers in the State" such as regulation of "minimum and other wage laws." DeCanas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 47 L.Ed.2d 43 (1976), superseded by statute on other grounds as recognized in Arizona v. United States, 567 U.S. 387, 404, 132 S.Ct. 2492, 183 L.Ed.2d 351 (2012) ; see also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) ("[P]re-emption should not be lightly inferred in this area, since the establishment of labor standards falls within the traditional police power of the State."). The Supreme Court in City of Columbus v. Ours Garage & Wrecker Service, Inc., considered another issue under the FAAAA preemption clause and applied this presumption against preemption, noting that its "[p]reemption analysis ‘start[s] with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’ " 536 U.S. 424, 438, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) ). To discern Congress’s purpose, we look first to the plain language employed in the statutory provision at issue,⁶ and, if necessary, the statutory structure as a whole, Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977), as well as our "understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law," Medtronic, Inc., 518 U.S. at 486, 116 S.Ct. 2240.

B.

1.

Prior to 1978, the interstate airline industry in the United States was tightly regulated by the federal government. See Federal Aviation Act of 1958, Pub. L. No. 85–726, 72 Stat. 731 (codified at 49 U.S.C. §§ 1.01 et seq. (repealed) ); see also Taj Mahal Travel, Inc. v. Delta Airlines, Inc., 164 F.3d 186, 190 (3d Cir. 1998). Congress determined in 1978 that both consumers and the economy would benefit from open competition in the airline industry, especially in the areas of rates and services, and that this could be achieved by economic deregulation of the industry. Taj Mahal Travel, Inc., 164 F.3d at 190–91 (citing 49 U.S.C. § 1302 (recodified as amended 49 U.S.C. § 40101 ) ). As a result, the Airline Deregulation Act of 1978 (the "ADA"), Pub. L. No. 95-504, 92 Stat. 1705 (codified at 49 U.S.C. §§ 40101, etseq. ) was enacted. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) ("Congress, determining that ‘maximum reliance on competitive market forces’ would best further ‘efficiency, innovation and low prices’ as well as ‘variety [and] quality ... of air transportation services,’ enacted the [ADA]." (quoting 49 U.S.C. App. § 1302(a)(4) & (a)(9) ) ). "To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision, prohibiting the States from enforcing any law ‘relating to rates, routes, or services’ of any air carrier." Id. at 378–79, 112 S.Ct. 2031 (quoting 49 U.S.C. App. § 1305(a)(1) ).

The Motor Carrier Act...