240 F. Supp. 3d 309
D.N.J.2017Background
- Defendant Joseph Cory Holdings, LLC is a New Jersey motor carrier that used independent-contractor agreements to engage delivery drivers who performed deliveries in Illinois and elsewhere.
- Five Illinois-resident drivers (Plaintiffs) sued as a putative class alleging: (Count I) Illinois Wage Payment and Collection Act (IWPCA) violations for unlawful deductions; (Counts II–III) New Jersey wage-law and overtime claims; and (Count IV) unjust enrichment for being misclassified as independent contractors.
- Drivers operated under written Dedicated Contract Carrier Agreements (DCCAs) containing New Jersey forum-selection and choice-of-law clauses; Plaintiffs proceeded under Illinois law and, in the alternative, New Jersey law.
- Defendant moved to dismiss under Rule 12(b)(6), arguing (a) FAAAA preemption of state wage-law claims, (b) lack of standing for New Jersey claims, and (c) unjust enrichment barred by an express contract.
- The Court declined to enforce the New Jersey choice-of-law clause for these Illinois workers, dismissed the New Jersey wage claims with prejudice, denied preemption of the IWPCA on the pleadings, and dismissed the unjust enrichment claim with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of NJ choice-of-law clause | NJ clause should govern disputes | Clause should control because it’s in the contract | Court refused to apply NJ law to Illinois workers; IWPCA governs; NJ wage claims dismissed |
| Applicability of NJ wage laws to out-of-state employees | Plaintiffs asserted NJ claims alternatively | Defendant argued NJ laws govern per contract | Court held NJ wage laws do not reach out-of-state employees; Counts II–III dismissed |
| Whether FAAAA preempts IWPCA misclassification/deduction claims | IWPCA regulates employment relationship and does not significantly affect carrier prices/routes/services | FAAAA preempts state laws that relate to motor carriers’ prices, routes, or services | Court denied preemption on the pleadings — IWPCA not preempted because it governs employer–worker relations and any effect on prices is too tenuous |
| Whether unjust enrichment survives when an express contract exists | Unjust enrichment is a viable alternative claim | Written contract governs relationship and bars unjust enrichment | Court dismissed unjust enrichment with prejudice under Illinois law |
Key Cases Cited
- Costello v. BeavEx, Inc., 810 F.3d 1045 (7th Cir. 2016) (IWPCA regulates employer–worker relations and is too attenuated to warrant FAAAA preemption)
- Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429 (1st Cir. 2016) (second-prong employee test interferes with carrier’s business-design decisions and may be preempted)
- Rowe v. New Hampshire Motor Transp. Ass'n, 552 U.S. 364 (2008) (FAAAA adopted broad preemptive purpose; state laws with connection to prices/routes/services may be preempted)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) (broad preemption under deregulation statutes interpreted by Supreme Court)
- Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (2014) (state common-law claims confined to contract terms are less likely to be preempted)
- Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013) (examples of state regulation outside preemption when not tied to transportation services)