Massachusetts Delivery Ass'n v. Coakley

• Decision Date: 20 January 2012
• Docket Number: No. 11–1441.,11–1441.
• Citation: 18 Wage & Hour Cas.2d (BNA) 1138,671 F.3d 33
• Parties: MASSACHUSETTS DELIVERY ASSOCIATION, Plaintiff, Appellant, v. Martha COAKLEY, in her official capacity as Attorney General of the Commonwealth of Massachusetts, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

18 Wage & Hour Cas.2d (BNA) 1138

671 F.3d 33

MASSACHUSETTS DELIVERY ASSOCIATION, Plaintiff, Appellant,

v.Martha COAKLEY, in her official capacity as Attorney General of the Commonwealth of Massachusetts, Defendant, Appellee.

No. 11–1441.

United States Court of Appeals, First Circuit.

Heard Dec. 5, 2011.Decided Jan. 20, 2012.

David C. Casey, with whom Walter C. Hunter, Carie A. Torrence, Vanessa K. Hackett, and Littler Mendelson, P.C. were on brief, for appellant.

Steven A. Pletcher, Lynne D. Lidke, Braden K. Core, and Scopelitis, Garvin, Light, Hanson & Feary, P.C. for Messenger Courier Association of America and Air and Expedited Motor Carrier Association, amici curiae.

Douglas S. Martland, Assistant Attorney General, with whom Pierce O. Cray, Assistant Attorney General, Kate J. Fitzpatrick, Assistant Attorney General, and Martha Coakley, Attorney General, were on brief, for appellee.Harold L. Lichten, Shannon Liss–Riordan, Michael S. Rabieh, and Lichten & Liss–Riordan, P.C., for Stephen Reynolds, amicus curiae.

Before LYNCH, Chief Judge, STAHL and LIPEZ, Circuit Judges.

LYNCH, Chief Judge.

The issue on appeal is whether abstention under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), is proper in a federal court civil rights suit brought against the Massachusetts Attorney General by a business trade association, which is not itself a party to any relevant state litigation, and where three of its forty-plus members are defendants in ongoing state civil proceedings brought not by the Attorney General but by private parties. The district court found that Younger abstention was appropriate in these circumstances. Mass. Delivery Ass'n v. Coakley, 797 F.Supp.2d 164, 176 (D.Mass.2011). We reverse that determination and hold that Younger abstention is inappropriate and the federal courts should exercise jurisdiction. We remand to the district court for further proceedings consistent with this opinion.

I.

The suit by the Massachusetts Delivery Association (MDA) asserts that a state law is pre-empted as to motor carriers under the Federal Aviation Administration Authorization Act of 1994 (FAAAA), Pub.L. No. 103–305, 108 Stat. 1569 (codified in scattered sections of 49 U.S.C.), which expressly pre-empts state attempts to regulate “a price, route, or service of any motor carrier,” 49 U.S.C. § 14501(c)(1). The MDA claims that the state law at issue here is such a regulation and is unconstitutional under the Supremacy Clause. The challenged state law is a portion of a Massachusetts statute, Mass. Gen. Laws ch. 149, § 148B(a)(2), which requires that an individual performing a service for another be classified as an employee unless “the service is performed outside the usual course of the business of the employer.” The MDA also asserts that the state statute imposes an undue burden which violates the Commerce Clause. We describe these state and federal statutes before turning to the Younger abstention issue.

A. The Massachusetts Statute Defining Employees

The state law challenged as unconstitutional is part of a state statutory scheme meant to enhance protections for those whom the state considers to be “employees,” in contrast to independent contractors. See Somers v. Converged Access, Inc., 454 Mass. 582, 911 N.E.2d 739, 749 (2009). This provision was initially enacted in 1990 as “[an act] enhancing the enforcement of labor laws.” 1990 Mass. Legis. Serv. 464. Amended in 2004, the law currently provides:

(a) For the purpose of this chapter and chapter 151, an individual performing any service, except as authorized under this chapter, shall be considered to be an employee under those chapters unless:

(1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and

(2) the service is performed outside the usual course of the business of the employer; and,

(3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

Mass. Gen. Laws ch. 149, § 148B.¹

Subsection (a) provides that individuals performing services shall be deemed employees, unless all of the requirements outlined in the three subsections are satisfied. See Somers, 911 N.E.2d at 747 (“The failure of the employer to prove all three criteria set forth above suffices to establish that the individual in question is an employee.”).

Section 148B governs whether an individual is deemed an employee for purposes of various wage and employment laws, chapters 62B, 149, 151 and 152 of the Massachusetts General Laws.² See Mass. Gen. Laws ch. 149, § 148B(a), (d). The Massachusetts Supreme Judicial Court has said that “[a] legislative purpose behind the independent contractor statute is to protect employees from being deprived of the benefits enjoyed by employees through their misclassification as independent contractors.” Somers, 911 N.E.2d at 749.

If an employing entity improperly classifies an employee as an independent contractor under § 148B,³ a variety of sanctions are available, including civil and criminal penalties to be assessed by the state. Mass. Gen. Laws ch. 149, §§ 27C, 148B(d). But the state is not always involved in disputes about compliance with § 148B. Independently, employees who allege improper classification as independent contractors may bring their own actions for injunctive relief and treble damages, and may bring such suits as class actions. Mass. Gen. Laws ch. 149, § 150; see also Somers, 911 N.E.2d at 748. Before bringing suit, such employees must first file a complaint with the Attorney General; employees must wait to file suit in court until 90 days after filing such a complaint, although they may file earlier if the Attorney General consents in writing. Mass. Gen. Laws ch. 149, § 150. When an employee brings suit, he “institute[s] and prosecute[s][it] in his own name and on his own behalf, or for himself and others similarly situated, [as] a civil action.” Id. He does not bring suit in the name of the state. Nor does he have the range of remedies available to the Attorney General.

The MDA alleges that its members must change their fundamental business model—the use of independent contractor delivery drivers—to comply with the state statute or risk penalties. No other state, the MDA alleges, has made unlawful this use of the historic business model. The Massachusetts law, it says, would force motor carriers to use only employees as delivery drivers, which would drive up costs, and adversely affect prices, routes, and services. Not only is the law expressly pre-empted but it also imposes an impermissible burden on interstate commerce, according to the MDA.

B. The FAAAA's Pre–Emption Provision and the Commerce Clause Issue

For businesses in interstate commerce involving transportation, Congress, concerned both with the states imposing undue burdens and with the national interest in uniform rules, has expressly preempted certain state regulations. See, e.g., 49 U.S.C. § 14501(a)(1) (pre-emption of state regulations relating to motor carriers of passengers); id. § 14501(b)(1) (pre-emption of state regulations relating to freight forwarders and brokers); id. § 14501(d)(1) (pre-emption of state regulations relating to pre-arranged ground transportation); id. § 41713 (pre-emption of state regulations relating to air carriers).

Congress enacted such a pre-emption provision as part of the FAAAA:

Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

Id. § 14501(c)(1). “Motor carrier” is defined as “a person providing motor vehicle transportation for compensation.” Id. § 13102(14).

In enacting this provision, Congress found that state regulation of intrastate transportation of property had “imposed an unreasonable burden on interstate commerce,” as well as “an unreasonable cost on the American consumers,” and thus “certain aspects of the State regulatory process should be preempted.” FAAAA § 601(a), 108 Stat. at 1605. The conference report explained that “preemption legislation is in the public interest as well as necessary to facilitate interstate commerce. State economic regulation of motor carrier operations causes significant inefficiencies, increased costs, reduction of competition, inhibition of innovation and technology and curtails the expansion of markets.” H.R.Rep. No. 103–677 (1994), 1994 U.S.C.C.A.N. 1715, 1759 (Conf.Rep.).

This federal pre-emption provision relating to motor carriers is substantially identical to a provision pre-empting state regulation of air carriers enacted in 1978, 49 U.S.C. § 41713, and the two statutes are often interpreted in pari materia. See DiFiore v. Am. Airlines, Inc., 646 F.3d 81, 85–86 & n. 4 (1st Cir.2011), cert. denied, ––– U.S. ––––, 132 S.Ct. 761, 181 L.Ed.2d 483 (2011). These pre-emption provisions are “broad but vague,” and have been the subject of considerable litigation. Id. at 86.

II.

The MDA is a non-profit trade organization formed to support businesses involved in the delivery service industry. The MDA has over forty member businesses,⁴ which are entities that provide same-day delivery services and often engage delivery drivers they consider to be independent contractors.

The MDA brought suit against Martha Coakley, the Attorney General of Massachusetts, in her official capacity, on September 7, 2010. The complaint, as amended, alleges that § 148B(a)(2) would require delivery companies to classify their drivers as...