606 F.Supp.3d 72
D.N.J.2022Background
- Plaintiffs are owner-operator truck drivers who contracted with National Freight, Inc. (NFI) under Independent Contractor Operating Agreements (ICOAs) and delivered primarily to Trader Joe’s stores on the East Coast during the relevant period (2009–2014).
- ICOAs required drivers to own trucks, lease/use them for NFI (granting NFI exclusive possession while in effect), paid drivers a flat per‑mile rate, and authorized NFI to deduct or escrow funds for items like fuel, insurance, and communications/tracking equipment (Qualcomm) if drivers purchased those through NFI.
- Drivers reported daily to NFI’s warehouse offices (Nazareth/Hatfield), picked up preloaded trailers, coordinated routes with NFI staff, and returned paperwork—facts the court found significant to employer control and NFI’s places of business.
- Plaintiffs sued under New Jersey’s Wage Payment Law (WPL), alleging misclassification as independent contractors and unlawful wage deductions; a class was certified for full‑time owner‑operators under ICOAs with New Jersey choice‑of‑law clauses.
- NFI moved for summary judgment asserting (inter alia) that the UCL Exclusion X applies, federal preemption (FAAAA and Truth‑in‑Leasing/TIL) bars the WPL claims, and that releases signed by some drivers bar recovery; Plaintiffs moved for summary judgment that they are employees under New Jersey’s ABC test.
- The court resolved the motions: it held Plaintiffs are employees under the ABC test, denied NFI’s preemption and statutory‑exception arguments at summary judgment (except it upheld NFI’s summary judgment as to 20 drivers who signed general releases).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether drivers are employees or independent contractors under NJ ABC test | Drivers (Pls) argue NFI cannot satisfy any ABC prong; thus drivers are employees | NFI contends ABC doesn’t preclude them: drivers meet ABC or Exclusion X applies | Court: drivers are employees—NFI fails Prong B; Pls’ motion granted, NFI’s denied |
| Applicability of UCL Exclusion X (motor‑carrier exclusion) | Pls: UCL exclusions do not carry into WPL; even if they did, drivers don’t meet Exclusion X | NFI: Exclusion X applies (drivers, heavy vehicles, paid by distance/weight) | Court: UCL exclusions do not apply to WPL; alternatively, drivers fail to show compensation tied to distance/weight—Exclusion X not met |
| FAAAA preemption of Prong B (course/place of business) | Pls: Bedoya supports no FAAAA preemption; Prong B validly applied | NFI: applying Prong B here interferes with motor‑carrier prices/routes/services and is preempted (cites Schwann) | Court: FAAAA does not preempt Prong B under Bedoya; NFI’s preemption claim rejected |
| TIL (Truth‑in‑Leasing) regulations preempt WPL deductions claims | Pls: TIL only requires disclosure; does not authorize deductions that violate WPL | NFI: TIL permits contractual allocation/deductions and thus preempts conflicting state rules | Held: TIL does not preempt WPL; regulations require disclosure, not substantive authorization of deductions |
| Validity of general releases signed by some drivers | Pls: releases are void under WPL §34:11‑4.8(b) when tied to wage disputes | NFI: §34:11‑4.8(b) applies only to payments conceding disputed wages; these were general releases for severance | Held: Releases enforceable here—20 Plaintiffs who signed are barred; §34:11‑4.8(b) inapplicable as no wage dispute/concession shown |
| Lawfulness of NFI deductions (insurance, Qualcomm, fuel) under WPL exceptions | Pls: WPL generally forbids these deductions; issues of fact remain | NFI: deductions fall within WPL exceptions (employee insurance plans, company products, loan payments) | Held: factual record insufficient for NFI on summary judgment; court denied NFI summary judgment on these exceptions (questions of what insurance/equipment/fuel arrangements existed remain) |
Key Cases Cited
- Hargrove v. Sleepy’s, LLC, 106 A.3d 449 (N.J. 2015) (adopts New Jersey UCL’s ABC test to determine employee status under WPL)
- Bedoya v. American Eagle Express, Inc., 914 F.3d 812 (3d Cir. 2019) (holds New Jersey ABC test is not preempted by the FAAAA)
- Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429 (1st Cir. 2016) (found FAAAA preemption of a state prong that effectively forces carriers to use employees for pickup/delivery)
- Carpet Remnant Warehouse, Inc. v. Dep’t of Labor, 593 A.2d 1177 (N.J. 1991) (interprets Prong B "place of business" to mean physical plants or locations where an integral part of the business is conducted)
- Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364 (2008) (discusses FAAAA preemption and federal deregulation of motor carrier regulation)