52 F.4th 1
1st Cir.2022Background
- Plaintiffs (delivery drivers for Eloah, a FedEx contractor) allege their supervisor withheld 23% of weekly gross pay as tax withholdings but Eloah never remitted those sums to tax authorities.
- Plaintiffs also allege they never received their 2020 W-2 forms; they did not allege any separate damages from that omission.
- Plaintiffs sued FedEx in Massachusetts state court under the Massachusetts Wage Act seeking restitution, treble damages, and other relief; FedEx removed to federal court.
- The district court dismissed, holding the Wage Act claim was statutorily barred (tax statutes allocate withheld amounts to government) and that Plaintiffs lacked Article III standing (no concrete injury).
- The First Circuit affirmed the lack of Article III standing because withheld tax amounts are held in trust for the government, but remanded to the district court to brief whether the case should be returned to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (injury-in-fact) | Withheld wages were "stolen"—Plaintiffs were injured because employer withheld and never remitted amounts | Withheld amounts are credited to employees and belong to government under tax statutes; no concrete injury to employees | Plaintiffs lack Article III standing: no concrete injury alleged from tax-withheld sums held in trust for government |
| Statutory bar to Wage Act recovery for withheld tax sums | Wage Act entitles employees to treble damages and restitution even if sums were characterized as withheld | IRC and Mass. tax law treat withheld sums as trust funds for government and bar employee suits to recover those amounts | Tax statutes displace employee recovery of withheld tax amounts; only government has direct recourse against employer |
| Harms from missing W-2s and other tax/benefit consequences | Failure to provide W-2s and potential Social Security or refund impacts constitute injury | Plaintiffs did not allege actual harm from missing W-2s or concrete adverse tax/benefit consequences; some arguments undeveloped/waived | No concrete injury pleaded from W-2 omission; other contentions deemed waived or speculative |
| Proper disposition after lack of federal jurisdiction | (Not fully briefed by parties) | (Not fully briefed by parties) | Case vacated and remanded to district court to obtain supplemental briefing on whether to remand to state court under 28 U.S.C. § 1447(c) |
Key Cases Cited
- TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (concrete-injury requirement for Article III standing in statutory cases)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (baseline standing elements)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (statutory violations must also produce a concrete injury)
- Slodov v. United States, 436 U.S. 238 (withheld taxes are credited to employees; government's recourse is against employer)
- Mills v. Harmon L. Offs., P.C., 344 F.3d 42 (remand required when federal court lacks subject-matter jurisdiction)
- Maine Ass'n of Interdependent Neighborhoods v. Comm'r, Me. Dep't of Hum. Servs., 876 F.2d 1051 (ordering remand where plaintiffs lacked standing)
- Int'l Primate Prot. League v. Adm'rs of Tulane Educ. Fund, 500 U.S. 72 (remand for lack of jurisdiction)
- Reuter v. City of Methuen, 184 N.E.3d 772 (Mass. decision recognizing concrete injury from delayed payment of wages under Wage Act)