Schwann v. Fedex Ground Package System, Inc.
813 F.3d 429
| 1st Cir. | 2016Background
- Plaintiffs are individual contractors who provided first-and-last-mile pick-up and delivery for FedEx under Operating Agreements; FedEx treated them as independent contractors.
- Massachusetts Independent Contractor Statute (Mass. Gen. Laws ch. 149, § 148B(a)) defines an individual as an employee unless three prongs are met: (1) freedom from control, (2) service outside the usual course of employer's business, (3) contractor engaged in an independent trade.
- Plaintiffs sought damages under the Massachusetts statute and the Wage Act, arguing FedEx failed Prongs 2 and 3.
- District court initially granted summary judgment to Plaintiffs on Prong 2; later, following this Court’s MDA decision, it found Prong 2 preempted by the FAAAA and then held the entire statute (and Prongs 1 and 3) preempted or non-severable, granting FedEx summary judgment.
- On appeal, the First Circuit considered whether application of Prong 2 to FedEx is preempted by the FAAAA, whether Prong 2 is severable from the statute, and whether Prongs 1 and 3 are themselves preempted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether applying Prong 2 (service is outside the usual course of employer's business) to FedEx is preempted by the FAAAA | Prong 2 is a generally applicable state law governing employee status and does not sufficiently relate to carriers’ prices, routes, or services | Application of Prong 2 to FedEx would affect how FedEx structures services, so it relates to prices, routes, and services and is preempted | Prong 2, as applied to FedEx’s first-and-last-mile arrangement, is preempted by 49 U.S.C. § 14501(c)(1) |
| Whether the preempted Prong 2 is severable from Prongs 1 and 3 | If Prong 2 is invalid, the statute should fall in whole because Prong 2 is central | Prong 2 can be severed; the statute’s three prongs are separately enumerated | Prong 2 is severable; Prongs 1 and 3 remain valid under Massachusetts law |
| Whether Prongs 1 and 3 are also preempted as applied to motor carriers | Plaintiffs: Prongs 1 and 3 are traditional state regulatory matters and not preempted | FedEx expressly declined to press a preemption challenge to Prongs 1 and 3 | Court refused to accept a new preemption argument and reversed district court’s ruling that Prongs 1 and 3 were preempted |
| Whether appellate review should resolve summary judgment on Prongs 1 or 3 now | Plaintiffs asked for summary judgment on Prongs 1 and 3 | FedEx opposed; factual issues exist | Court declined to decide merits of Prongs 1/3 on appeal and remanded to district court |
Key Cases Cited
- Massachusetts Delivery Ass'n v. Coakley, 769 F.3d 11 (1st Cir. 2014) (interpreting FAAAA preemption scope and remanding similar dispute)
- Rowe v. New Hampshire Motor Transp. Ass'n, 552 U.S. 364 (2008) (FAAAA/ADA preemption protects against state laws that relate to carriers' prices, routes, or services)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) (broad preemption principles shaping ADA/FAAAA interpretation)
- Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013) (exceptions to FAAAA preemption identify matters states may still regulate)
- DiFiore v. American Airlines, Inc., 646 F.3d 81 (1st Cir. 2011) (limited example of state law effecting service provision but distinguishable)
- Peterson v. Commissioner of Revenue, 825 N.E.2d 1029 (Mass. 2005) (Massachusetts severability analysis focuses on legislative intent)