Bedoya v. Am. Eagle Express Inc.

• Decision Date: 29 January 2019
• Docket Number: No. 18-1641,18-1641
• Citation: 914 F.3d 812
• Parties: Ever BEDOYA; Diego Gonzales; Manuel Decastro, on Behalf of Themselves and All Others Similarly Situated v. AMERICAN EAGLE EXPRESS INC., d/b/a AEX Group v. KV Service, LLC; M&J Express, LLC; A&D Delivery Express, LLC American Eagle Express, Inc., Appellant
• Court: U.S. Court of Appeals — Third Circuit

914 F.3d 812

Ever BEDOYA; Diego Gonzales; Manuel Decastro, on Behalf of Themselves and All Others Similarly Situated

v.AMERICAN EAGLE EXPRESS INC., d/b/a AEX Group

v.KV Service, LLC; M&J Express, LLC; A&D Delivery Express, LLC American Eagle Express, Inc., Appellant

No. 18-1641

United States Court of Appeals, Third Circuit.

Argued November 14, 2018

Opinion Filed: January 29, 2019

Harold L. Lichten [ARGUED], Lichten & Liss-Riordan, 729 Boylston Street, Suite 2000, Boston, MA 02116, R. Andrew Santillo, Peter D. Winebrake, Winebrake & Santillo, 715 Twinning Road, Suite 211, Twinning Office Center, Dresher, PA 19025, Counsel for Plaintiff-Appellees

Joseph C. DeBlasio [ARGUED], Jackson Lewis, 220 Headquarters Plaza, East Tower, 7th Floor, Morristown, NJ 07960, Counsel for Defendant-Appellant

Adina H. Rosenbaum, Public Citizen Litigation Group, 1600 20th Street, NW., Washington, DC 20009, Counsel for Amicus Public Citizen Inc.

Christopher W. Weber [ARGUED], Emily M. Bisnauth, Office of Attorney General of New Jersey, Department of Law & Public Safety, Richard J. Hughes Justice Complex, 25 Market Street, P.O. Box 112, Trenton, NJ 08625, Counsel for Amicus New Jersey Department of Labor and Workforce Development

Before: GREENAWAY, JR., SHWARTZ, and BIBAS, Circuit Judges.

OPINION

SHWARTZ, Circuit Judge.

Plaintiff delivery drivers Ever Bedoya, Diego Gonzalez, and Manuel Decastro (collectively, "the Drivers") filed a putative class action against Defendant American Eagle Express, Inc., ("AEX"), alleging that AEX misclassified them as independent contractors when they are actually employees under the New Jersey Wage and Hour Law ("NJWHL"), N.J. Stat. Ann. §§ 34:11-56a to -56a3, and the New Jersey Wage Payment Law ("NJWPL"), N.J. Stat. Ann. §§ 34:11-4.1 to -4:14. AEX moved for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c), arguing that the Drivers’ claims are preempted by the Federal Aviation Authorization Administration Act of 1994 ("FAAAA"), 49 U.S.C. §§ 14501 -06. The District Court denied AEX’s motion and certified the order for interlocutory appeal. Because the FAAAA does not preempt the New Jersey law for determining employment status for the purposes of NJWHL and NJWPL, we will affirm the order and remand for further proceedings.

I

AEX is a logistics company that provides delivery services to various medical organizations. The Drivers are New Jersey residents who make deliveries for AEX. The Drivers filed this putative class action against AEX seeking, among other things, a judgment declaring that they are employees of AEX, rather than independent contractors, which entitles them to compensation under the NJWHL and NJWPL.¹ AEX moved for judgment on the pleadings, arguing that the FAAAA preempts the Drivers’ claims.

The District Court denied AEX’s motion, Bedoya v. Am. Eagle Express, Civ. No. 14-2811, 2017 WL 4330351, at *1 (D.N.J. Sept. 29, 2017), reasoning that "[t]here is no clear indication" that Congress intended for the FAAAA to preempt state wage laws, Dkt. 109 at 6, 10, and that the connection between regulation of AEX’s workforce and the "prices, routes, and services" provided to its consumers is too attenuated to justify preempting claims under the NJWHL and NJWPL, id. at 8-9. We now consider AEX’s interlocutory appeal of the order denying the motion pursuant to 28 U.S.C. § 1292(b). Bedoya, 2017 WL 4330351, at *1-4.

II²

A

The question before us is whether the FAAAA preempts New Jersey’s test for determining employment classification for purposes of the NJWHL and NJWPL. Under this test, workers performing services for a given company in exchange for pay are deemed employees unless the company can demonstrate each of the following:

A. Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

B. Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

C. Such individual is customarily engaged in an independently established trade, occupation, profession, or business.

N.J. Stat. Ann. §§ 43:21-19(i)(6)(A)-(C) ("New Jersey ABC classification test"). Where a company successfully demonstrates all three elements with respect to a worker, that worker qualifies as an independent contractor under the NJWHL and NJWPL. Hargrove v. Sleepy’s, LLC, 220 N.J. 289, 106 A.3d 449, 458 (2015). The company, in turn, is exempt from requirements under those statutes with respect to the worker. Id. For individuals classified as employees, however, the employing company is subject to each statute’s obligations, including minimum and overtime wage requirements, N.J. Stat. Ann. § 34:11-56a4, conditions regarding the time and mode of pay, N.J. Stat. Ann. § 34:11-4.2, 4.2a, and restrictions on pay deductions, N.J. Stat. Ann. § 34:11-4.4. AEX contends that the New Jersey ABC classification test is preempted by the FAAAA.

B

The preemption doctrine stems from the Supremacy Clause, which provides that "the Laws of the United States ... shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. Thus, "Congress ... has the power to preempt state law." In re Vehicle Carrier Servs. Antitrust Litig., 846 F.3d 71, 83 (3d Cir. 2017) (citing Arizona v. United States, 567 U.S. 387, 132 S.Ct. 2492, 183 L.Ed.2d 351 (2012) ), cert. denied sub nom., Alban v. Nippon Yusen Kabushiki Kaisha, ––– U.S. ––––, 138 S.Ct. 114, 199 L.Ed.2d 31 (2017). There are three categories of preemption: field preemption, conflict preemption, and express preemption. Holk v. Snapple Beverage Corp., 575 F.3d 329, 334 (3d Cir. 2009) (citing Hillsborough County, Fla. v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985) ).

Because preemption is an affirmative defense, we examine the specific preemption defense asserted. In re Vehicle, 846 F.3d at 84 (citing Oneok, Inc. v. Learjet, Inc., ––– U.S. ––––, 135 S.Ct. 1591, 191 L.Ed.2d 511 (2015) ). AEX argues that New Jersey’s ABC classification test is subject to express preemption under 49 U.S.C. § 14501(c)(1). "Express preemption requires a[n] analysis of whether ‘[s]tate action may be foreclosed by express language in a congressional enactment.’ " Lupian v. Joseph Cory Holdings, LLC, 905 F.3d 127, 131 (3d Cir. 2018) (alteration in original) (quoting Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001) ).

In evaluating AEX’s argument, we first decide whether the presumption against preemption applies. City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 438, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002) (applying the presumption against preemption in the FAAAA context). Under this presumption, "the historic police powers of the States" are "not to be superseded by [a] [f]ederal [a]ct unless that was the clear and manifest purpose of Congress." Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 687 (3d Cir. 2016) (quoting Wyeth v. Levine, 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009) ). Thus, we "presume claims based on laws embodying state police powers are not preempted." In re Vehicle, 846 F.3d at 84 ; see also Farina v. Nokia Inc., 625 F.3d 97, 116 (3d Cir. 2010).

Many employment regulations, such as the wage laws at issue here, seek to ensure workers receive fair pay. Because they protect workers, they are within New Jersey’s police power, and the presumption against preemption by federal law applies. See, e.g., Lupian, 905 F.3d at 131 (stating wage laws that protect workers represent an exercise of "police power"); see also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (applying the presumption against preemption to a state labor law regarding severance pay "since the establishment of labor standards falls within the traditional police power of the State").

The presumption is rebutted where Congress had a "clear and manifest purpose" to preempt state laws. Sikkelee, 822 F.3d at 687 (citation omitted); see also Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (directing courts to examine congressional intent, the "ultimate touchstone" in discerning the preemptive scope of a statute (internal quotation marks and citation omitted) ). To determine Congress’ purpose, we look to the plain language of the statute and, if necessary, to the statutory framework as a whole. Medtronic, Inc. v. Lohr, 518 U.S. 470, 486, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (citation omitted). Thus, we next examine Congress’ purpose in enacting the FAAAA and the Airline Deregulation Act of 1978 ("ADA"), 49 U.S.C. §§ 40101 - 130, an earlier statute with a similar preemption provision.

C

In 1978, following a long period of heightened regulation, Congress enacted the ADA, which sought to deregulate the air-travel industry to "maxim[ize] reliance on competitive market forces." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (quoting 49 U.S.C. App. § 1302(a)(4) ). To ensure that this objective would not be frustrated by state regulation, Congress included a preemption provision providing that "no State ... shall enact or enforce any law ... relating to rates, routes, or services of any air carrier." Id. at 420, 112 S.Ct. 2031 (Stevens, J., dissenting) (quoting 49 U.S.C. App. § 1305(a) ).

Congress enacted similar laws focused on deregulating interstate trucking, culminating with the passage of the FAAAA in 1994. Lupian, 905 F.3d at 132-33. Via the FAAAA, Congress sought to "level the playing field" between air carriers and motor carriers so that both could benefit from federal deregulation. H.R. Conf. Rep. No. 103-677, at 88 (1994); see also Californians for Safe &...