Portillo v. Nat'l Freight, Inc.

• Decision Date: 09 June 2022
• Docket Number: 15-cv-07908-JHR-MJS
• Citation: 606 F.Supp.3d 72
• Parties: John F. PORTILLO, Rafael Suarez, Martin Duran, German Bencosme, Edin Vargas, Luis A. Hernandez, Josue Paz, and Alvaro Castaneda, individually and on behalf of all others similarly situated, Plaintiffs, v. NATIONAL FREIGHT, INC. and NFI Interactive Logistics, Inc., Defendants.
• Court: U.S. District Court — District of New Jersey

606 F.Supp.3d 72

John F. PORTILLO, Rafael Suarez, Martin Duran, German Bencosme, Edin Vargas, Luis A. Hernandez, Josue Paz, and Alvaro Castaneda, individually and on behalf of all others similarly situated, Plaintiffs,

v.NATIONAL FREIGHT, INC. and NFI Interactive Logistics, Inc., Defendants.

No. 15-cv-07908-JHR-MJS

United States District Court, D. New Jersey.

Signed June 9, 2022

Alexandra Koropey Piazza, Camille Fundora Rodriguez, Berger Montague PC, Philadelphia, PA, Zachary Levy Rubin, Lichten & Liss-Riordan PC, Boston, MA, for Plaintiffs.

Caroline Riley Robb, Morgan, Lewis & Bockius LLP, Philadelphia, PA, Adam R. Roseman, Christiana Lynn Signs, Greenberg Traurig, LLP, Philadelphia, PA, Robert H. Bernstein, Greenberg Traurig LLP, Florham Park, NJ, for Defendants.

Joseph H. Rodriguez, United States District Judge

Plaintiffs in this case are a class of commercial truck drivers who allege that Defendants National Freight, Inc. and NFI Interactive Logistics, LLC (collectively "NFI") misclassified them as independent contractors and that, due to this misclassification, certain deductions from Plaintiffs’ pay violated the New Jersey Wage Payment Law, N.J. Stat. Ann. § 34:11–4.1 et seq. ("WPL"). Before the Court are cross motions for summary judgment on the issue of whether the driver Plaintiffs were independent contractors or employees of NFI under New Jersey law. NFI also moves for summary judgment on the issue of whether federal law preempts Plaintiffs’ WPL claims, whether some deductions were unlawful, and whether certain Plaintiffs who signed general releases can recover. For the reasons set forth below, the Court will grant Plaintiffs’ motion. The Court will also grant NFI's motion as to the Plaintiffs who signed releases, but will otherwise deny NFI's motion.

I. Background

NFI¹ is a third-party logistics company that provides transportation services to its clients. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶¶ 1–2].² Those services include "dedicated contract carriage," whereby NFI provides trucks, trailers, drivers, and other personnel necessary to transport a client's goods from one location to another. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶¶ 2–3]. To perform these carriage services, NFI uses "company drivers" who do not own their own their own trucks, and "owner operators" who own their own semi-tractor trucks. [See Dkt. 276, NFI's Opp. to Pls’ SUMF ¶ 13; Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 10]. NFI classified company drivers as NFI employees and owner operators as independent contractors.

The named Plaintiffs in this case represent a class of owner operators who drove for NFI from 2009 to 2014 (the "Relevant Period"), and who primarily delivered goods to and from Trader Joe's retail stores on the east coast. [See Dkt. 276, NFI's Opp. to Pls’ SUMF ¶ 1].³ Before driving for NFI, seven of the eight named Plaintiffs drove as owner operators for another trucking company, and the eighth drove for that company as a company driver. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 11]. These Plaintiffs primarily delivered goods to Trader Joe's stores for the predecessor company. [Id. ].

a. Contractual Relationship Between Plaintiffs and NFI

Three different Independent Contractor Operating Agreements ("ICOA") form the basis for Plaintiffs’ relationship with NFI: the "2009 ICOA," the "2010 ICOA," and the "2017 ICOA." [See Dkt. 190-13–17]. Each Plaintiff signed one or more of these ICOAs depending on when he drove for NFI. Some Plaintiffs contracted directly with NFI as sole proprietors, while others signed on behalf of businesses that they owned. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 36, 36 n.36].

Though the ICOAs changed over time, several key provisions remained constant. The ICOAs required that Plaintiffs or their businesses owned their own trucks. [See Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 48]. The ICOAs provided that Plaintiffs would lease their trucks to NFI and provide transportation services to NFI using those trucks. [E.g. Dkt. 145-5, 2010 ICOA ¶ 1(a); Dkt. 190-15, 2017 ICOA ¶ 1(a)].⁴ The ICOAs provided that NFI would have "exclusive possession, control, and use" of Plaintiffs’ trucks so long as the ICOAs were in effect. [E.g. Dkt. 145-11; Dkt. 145-5, 2010 ICOA ¶ 3; Dkt. 190-15, 2017 ICOA ¶ 3]. The ICOAs also authorized Plaintiffs to sublease their trucks back from NFI, to use the trucks for other purposes, and to hire other drivers to complete Plaintiffs’ driving responsibilities for NFI.⁵ [Dkt. 145-11, 2009 ICOA ¶ E; 145-5, 2010 ICOA ¶¶ 6(b), 7(a); Dkt. 190-15, 2017 ICOA ¶¶ 1(c), 7(a)]. In each ICOA, the parties agreed that Plaintiffs would work for NFI as independent contractors and not as employees. [E.g. Dkt. 145-5 at 4, 2010 ICOA ¶ 7].

The ICOAs defined how NFI would compensate Plaintiffs for their work. Each ICOA provided that NFI would pay Plaintiffs a flat per-mile rate. [E.g. Dkt. 145-5 at 11, 2010 ICOA Attachment A ¶ 1; Dkt. 190-15, 2017 ICOA Attachment A ¶ 1].⁶ The ICOAs listed other tasks for which Plaintiffs would be compensated if Plaintiffs performed those tasks, and events for which Plaintiffs would be compensated if those events occurred. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶¶ 51–55]. The ICOAs also listed expenses for which NFI would reimburse Plaintiffs, such as tolls and fuel surcharges.⁷ [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶¶ 56, 58].

Other relevant details of the ICOAs include:

• The ICOAs indicated that Plaintiffs would be responsible for all "operating expenses," including fuel, supplies, and the cost of repairs. [Dkt. 190-14, 2010 ICOA ¶ 8(a); Dkt. 190-15, 2017 ICOA ¶ 8(a)].

• The ICOAs required Plaintiffs to deposit money into an escrow account from which NFI could deduct funds "utilized towards the payment of items necessary to fulfill [Plaintiffs’] contractual agreement with [NFI]." [Dkt. 190-13, 2009 ICOA ¶ O; Dkt. 190-15, 2017 ICOA ¶ 19].

• The ICOAs required Plaintiffs always to maintain various forms of insurance at their own expense, including "non-trucking liability insurance,"⁸ workers’ compensation or occupational accident insurance, and passenger insurance. [See Dkt. 190-15, 2017 ICOA Attachment C ¶ 2]. The ICOAs generally⁹ permitted Plaintiffs to procure their own insurance policies or to purchase insurance through NFI. [Dkt. 190-14, 2010 ICOA Attachment C ¶ 5; Dkt. 190-14, Attachment C ¶¶ 2, 5(a)]. If Plaintiffs elected to purchase their insurance through NFI, they also authorized NFI to deduct the insurance cost from Plaintiffs’ pay or escrow account. [Dkt. 190-14, 2010 ICOA Attachment C ¶ 5; Dkt. 190-14, Attachment C ¶ 5(a)]. One Plaintiff testified that he preferred to have NFI handle insurance payments. [E.g. Dkt. 280-7, 7/8/2019 Castaneda Dep. 150:24–152:10].

• The ICOAs required Plaintiffs to install, maintain, and pay for communication and tracking equipment in their trucks, [e.g. Dkt. 145-5, 2010 ICOA ¶ 8(g)], which NFI used to communicate with Plaintiffs as they were driving. [E.g. Dkt. 190-2, 7/23/2019 Bencosme Dep. 145:2–6]. Although Plaintiffs generally referred to this equipment as their "Qualcomm" device, [e.g. Dkt. 190-2, 7/23/2019 Bencosme Dep. at 145:2–13], only the 2009 ICOA explicitly referred to and required Qualcomm brand products. [Dkt. 190-13, 2009 ICOA at 9]. This equipment also allowed NFI to monitor Plaintiffs’ progress as they drove. [See Dkt. 276, NFI's Opp. to Pls’ SUMF ¶ 52]. The 2010 and 2017 ICOAs permitted Plaintiffs to purchase their Qualcomm equipment or to rent the equipment from NFI, [Dkt. 145-5 at 6, 2010 ICOA ¶ 8(g); Dkt. 190-15, 2017 ICOA ¶ 8(g)], while the 2009 ICOA required Plaintiffs to rent the equipment from NFI. [Dkt. 145-11 at 9, 2009 ICOA Ex. A at 2]. Plaintiffs authorized NFI to deduct "messaging and usage" costs from their paychecks or escrow accounts. [E.g. Dkt. 190-15(g)].

• The ICOAs indicated that Plaintiffs would receive a credit card that they could use to purchase fuel. [E.g. , Dkt. 190-13 at 9, 2009 ICOA at 9; Dkt. 190-14 at 5, 2010 ICOA ¶ 8(e)]. The ICOAs stated that, if Plaintiffs used this card, NFI was authorized to deduct fuel costs from Plaintiffs’ pay or escrow account. [Dkt. 190-13 at 9, 2009 ICOA at 9; Dkt. 190-14 at 5, 2010 ICOA ¶ 8(e); Dkt. 190-15 at 9, 2017 ICOA ¶ 8(e)].

b. Plaintiffs’ Work and Interaction with NFI

From 2009 to 2019, NFI transported grocery products from a warehouse in Nazareth, Pennsylvania (the "Nazareth Warehouse") to Trader Joe's retail stores on the east coast. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 77]. NFI did not own the Nazareth Warehouse. [See Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 84]. NFI maintained an office in a double-wide trailer in the parking lot of the Nazareth Warehouse which it staffed with employees whose titles varied but included managers, dispatchers, and supervisors. [Dkt. 276, NFI's Opp. to Pls’ SUMF ¶ 17]. NFI also transported "frozen grocery products" from a warehouse in Hatfield, Pennsylvania (the "Hatfield Warehouse") to Trader Joe's stores beginning in 2010, but moved these operations to the Nazareth Warehouse in August 2013. [Dkt. 285, Pls’ Opp. to NFI's SUMF ¶¶ 78, 81]. NFI did not own the Hatfield Warehouse but maintained an office inside. [See Dkt. 285, Pls’ Opp. to NFI's SUMF ¶ 84]. Three NFI employees, a manager and two coordinators, worked in this office from 2010 to 2013. [Dkt. 280-2, Motzer Decl. ¶ 7]. The Court will refer to the Nazareth and Hatfield Warehouses collectively as the "Warehouses," and to the offices maintained at the Nazareth and Hatfield Warehouses as the "Warehouse Offices."

Plaintiffs’ face-to-face interactions with NFI personnel occurred primarily at the Warehouse Offices, and some Plaintiffs signed their ICOAs at the Warehouse Offices. [See Dkt. 190-13, Bencosme 2009 ICOA Ex. A; Dkt. 280-7, 7/8/2019 Castaneda Dep. 150:5–7]. NFI also stored the NFI-owned trailers used to transport its clients’ goods in the parking lots outside of the Warehouses. [Dkt. 276, NFI's Opp. to Pls’ SUMF ¶ 18].

Plaintiffs began their shifts by reporting to the Warehouse Offices. When Plainti...