DaSilva et al v. Border Transfer of MA, Inc.

Filing 49

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. Border Transfer's motion to dismiss (Docket No. 8 ) is DENIED as to Count I and ALLOWED as to Count II. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
MARCOS DaSILVA and MATTEUS
)
FERREIRA, on behalf of themselves )
and all others similarly situated, )
)
Plaintiffs,
)
)
v.
)
)
BORDER TRANSFER OF MA, INC.,
)
)
Defendant.
)
______________________________
)

Civil Action
No. 16-11205-PBS

MEMORANDUM AND ORDER
January 5, 2017
Saris, C.J.
INTRODUCTION
Plaintiffs DaSilva and Ferreira used to work as delivery
drivers for Defendant Border Transfer. They claim that Border
Transfer improperly treated them as independent contractors when
they were in fact employees, and that as a result Border
Transfer unlawfully deducted certain business expenses from
their pay. Border Transfer moves to dismiss on the basis that
the plaintiffs’ claims are preempted by the Federal Aviation
Administration Authorization Act of 1994 (“FAAAA”), 49 U.S.C.
§ 14501(c)(1).

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Border Transfer fails to show that the plaintiffs’ claims
are preempted. However, the unjust enrichment claim is barred
because there is an available remedy at law. Border Transfer’s
motion to dismiss (Docket No. 8) is DENIED as to Count I of the
complaint and ALLOWED as to Count II of the complaint.
BACKGROUND
I.

Factual Allegations
Border Transfer provides delivery services for large retail

stores such as Sears. The plaintiffs worked as delivery drivers
for Border Transfer delivering Sears merchandise. Their
relationship with Border Transfer was governed by Contract
Carrier Agreements.1
The agreements stated that the plaintiffs were independent
contractors. However, the plaintiffs allege that they should
have been classified as employees because Border Transfer
exercised substantial control over their drivers and the drivers
did not have the ability to maintain an independently
established business. The drivers were required to report to a
Border Transfer/Sears facility five mornings a week, where they
were instructed on how to assemble equipment and how to interact
with customers. They were directed to load goods on their trucks

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The agreements are attached to Border Transfer’s motion to
dismiss as Exhibits A and B. They are incorporated by reference
in the complaint and are properly part of the motion to dismiss
record. Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008).
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in a specific order and to deliver them at specific times,
according to daily manifests provided by Border Transfer. The
drivers were required to log each delivery on a cell phone
application. They also had to be in contact with Border Transfer
and Sears dispatchers throughout the day regarding the status of
deliveries, cancellations, and rescheduling. Each day, the
drivers had to return haul-aways (equipment removed from
customers’ homes or businesses) to the warehouse.
The drivers were not permitted to use helpers unless those
helpers passed Border Transfer’s background checks. Border
Transfer could terminate those helpers at any time.
The drivers were required to own or lease a truck that met
Border Transfer’s specifications. They were also required to
carry insurance at levels dictated by Border Transfer.
Border Transfer monitored customer ratings for each driver
and would suspend drivers whose ratings dropped below a certain
level. Border Transfer could also terminate the contract with
the drivers without cause.
Certain expenses were deducted directly from drivers’
compensation, including when Border Transfer determined that a
delivery had been made in an unsatisfactory manner –- for
instance, when goods or consumer property were damaged. The cost
of uniforms was also deducted, as was the cost of paying for a
replacement driver when a driver could not complete a delivery.
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Certain expenses, such as worker’s compensation coverage, cargo
insurance, fuel costs, vehicle maintenance costs, and payments
to helpers, were borne by the drivers.
II.

Procedural History
After their agreements with Border Transfer expired, the

plaintiffs filed this putative class action complaint. They
asserted two counts: (1) violation of the Massachusetts Wage
Law, Mass. Gen. Laws ch. 149, § 148, and (2) unjust enrichment.
Both causes of action claimed that Border Transfer improperly
treated the plaintiffs as independent contractors rather than as
employees, and as a result unlawfully deducted certain expenses
from their pay.
On August 8, 2016, Border Transfer moved to dismiss on the
basis that the plaintiffs’ claims are preempted by the FAAAA.
DISCUSSION
I.

Motion to Dismiss Standard
A Rule 12(b)(6) motion is used to dismiss complaints that

do not “state a claim upon which relief can be granted.” See
Fed. R. Civ. P. 12(b)(6). In evaluating a Rule 12(b)(6) motion,
the Court must accept the factual allegations in the plaintiffs’
complaint as true, construe reasonable inferences in their
favor, and “determine whether the factual allegations in the
plaintiff’s complaint set forth a plausible claim upon which
relief may be granted.” Foley v. Wells Fargo Bank, N.A., 772
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F.3d 63, 71 (1st Cir. 2014).
II.

Legal Framework
A.

Massachusetts Wage Law

The Massachusetts Wage Law requires prompt and full payment
of wages due. It provides that “in no event shall wages remain
unpaid by an employer for more than six days from the
termination of the pay period in which such wages were earned by
the employee.” Mass. Gen. Laws ch. 149, § 148. The Massachusetts
Supreme Judicial Court has interpreted the statute as banning
improper wage deductions, even where the employee has given his
or her assent. Camara v. Attorney Gen., 941 N.E.2d 1118, 1121–22
(Mass. 2011).
The term “employee” in the Massachusetts Wage Law is
defined by the Massachusetts Independent Contractor Statute:
[A]n individual performing any service, except as
authorized under this chapter, shall be considered to be
an employee under those chapters unless:
(1) the individual is free from control and
direction in connection with the performance of the
service,
both
under
his
contract
for
the
performance of service and in fact; and
(2) the service is performed outside the usual
course of the business of the employer; and,
(3) the individual is customarily engaged in an
independently
established
trade,
occupation,
profession or business of the same nature as that
involved in the service performed.
Mass. Gen. Laws ch. 149, § 148B(a). All three prongs must be met
for a worker to be an independent contractor rather than an

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employee. The case law refers to the three prongs as Prongs 1,
2, and 3 (or, occasionally, Prongs A, B, and C).
B.

FAAAA Preemption

The FAAAA expressly preempts any state law “related to a
price, route, or service of any motor carrier . . . or any motor
private carrier, broker, or freight forwarder with respect to
the transportation of property.” 49 U.S.C. § 14501(c)(1). There
are three exceptions to the preemption provision, none of which
apply here. Id. § 14501(c)(2).
Congress copied the FAAAA preemption provision from the
preemption clause of the Airline Deregulation Act of 1978
(“ADA”), 49 U.S.C. § 41713(b)(1). See Rowe v. N.H. Motor Transp.
Ass’n, 552 U.S. 364, 370 (2008). The ADA was part of a wave of
federal deregulation and was based on Congress’s determination
that “‘maximum reliance on competitive market forces’ would
favor lower airline fares and better airline service.” Id. at
367–68 (quoting Morales v. Trans World Airlines, Inc., 504 U.S.
374, 378 (1992)). The purpose of ADA preemption was to “ensure
that the States would not undo federal deregulation with
regulation of their own.” Id. at 368 (quoting Morales, 504 U.S.
at 378).
By adopting the wording of the ADA preemption clause in the
FAAAA, Congress also adopted the Supreme Court’s “broad
preemption interpretation” of the ADA. Rowe, 552 U.S. at 370.
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Like the ADA, the FAAAA was intended to “help[] ensure
transportation rates, routes, and services that reflect ‘maximum
reliance on competitive market forces,’ thereby stimulating
‘efficiency, innovation, and low prices,’ as well as ‘variety’
and ‘quality.’” Id. (quoting Morales, 504 U.S. at 378).
Under the broad ADA/FAAAA preemption standard, a state law
is preempted “if it expressly references, or has a significant
impact on, carriers’ prices, routes, or services.” Mass.
Delivery Ass’n v. Coakley, 769 F.3d 11, 17–18 (1st Cir. 2014). A
state law can be preempted even if its effect on prices, routes,
or services “is only indirect.” Rowe, 552 U.S. at 370. Of
course, there must be a limit to preemption because, “in a broad
sense, everything ‘relates to’ everything else in some manner.”
Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429, 436
(1st Cir. 2016). Therefore, state laws that only have a
“tenuous, remote, or peripheral” impact on prices, routes, or
services are not preempted. Rowe, 552 U.S. at 371.
The First Circuit has held that a state law’s potential
impact on prices, routes, and services is sufficient for
preemption if that impact is significant, rather than tenuous,
remote, or peripheral. Mass. Delivery Ass’n, 769 F.3d at 21. The
potential impact need not be proven by empirical evidence.
Rather, courts may “look[] to the logical effect that a
particular scheme has on the delivery of services or the setting
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of rates.” Id. (alteration in original) (quoting N.H. Motor
Transport Ass’n v. Rowe, 448 F.3d 66, 82 n.14 (1st Cir. 2006),
aff’d, 552 U.S. 364 (2008)).
In Schwann, the First Circuit applied the broad FAAAA
preemption standard to the Massachusetts Independent Contractor
Statute and found Prong 2 to be preempted. According to the
First Circuit, Prong 2 was “something of an anomaly” in
“mak[ing] any person who performs a service within the usual
course of the enterprise’s business an employee for state wage
law purposes, . . . even if those persons could be deemed
independent contractors under federal law and the law of many
states.” Id. at 438. As such, Prong 2 caused “regulatory
interference” by “preclud[ing] FedEx from providing for firstand-last mile pick-up and delivery services through an
independent person who bears the economic risk associated with
any inefficiencies in performance.” Id. at 438–39. That, the
First Circuit reasoned, would have a significant effect on the
carrier’s routes and services as a matter of logic. Id.
III. FAAAA Preemption
Border Transfer argues that the FAAAA preempts the
plaintiffs’ unjust enrichment claim, the Massachusetts Wage Act
claim, and the entirety of the independent contractor definition
statute in § 148B.

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In response, the plaintiffs argue for a categorical rule
that the FAAAA does not preempt generally applicable state
employment laws. The plaintiffs rely on a number of out-ofcircuit cases, principally Costello v. Beavex, 810 F.3d 1045,
1055 (7th Cir. 2016) (holding that the Illinois Wage Payment and
Collection Act, which prohibits wage deductions in a similar way
as the Massachusetts Wage Law, is not FAAAA-preempted because it
“regulates the motor carrier as an employer, and any indirect
effect on prices is too tenuous, remote, or peripheral”);
Amerijet Int’l Inc. v. Miami-Dade County, 627 Fed. App’x 744
(11th Cir. Sept. 21, 2015) (holding a state minimum wage law not
FAAAA-preempted); and Dilts v. Penski Logistics, LLC, 769 F.3d
637, 646–47 (9th Cir. 2014) (holding that California meal and
rest break laws were not FAAAA-preempted because they were
“generally applicable background regulations that are several
steps removed from prices, routes, or services”).
However, the First Circuit has already rejected a
categorical rule of that nature. In Massachusetts Delivery
Association v. Coakley, the Massachusetts Attorney General
“argue[d] for a categorical rule against preemption of
‘background’ labor laws” that “are generally applicable and not
directed to a particular area of federal authority.” 769 F.3d at
18. The First Circuit “refuse[d] . . . to adopt such a
categorical rule exempting from preemption all generally
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applicable state labor laws.” Id. at 20. The First Circuit noted
that Supreme Court precedent favored a broad reading of “related
to” preemption and that the Attorney General’s proposed
categorical rule would “creat[e] an utterly irrational loophole
(there is little reason why state impairment of the federal
scheme should be deemed acceptable so long as it is effected by
the particularized application of a general statute).” Id.
(quoting Morales, 504 U.S. at 386). Instead, wrote the First
Circuit, “we must carefully evaluate even generally applicable
state laws for an impermissible effect on carriers’ prices,
routes, and services,” and “engage with the real and logical
effects of the state statute, rather than simply assigning it a
label.” Id.
The First Circuit in Schwann conducted such an analysis on
Prong 2 and found it to be preempted. That conclusion is binding
here. See N.H. Motor Transp. Ass’n, 448 F.3d at 72–73 (“[I]f a
state law is preempted as to one carrier, it is preempted as to
all carriers.”). The plaintiffs argue that Schwann also did that
work for Prongs 1 and 3 and found them to be, unlike Prong 2,
not preempted. But the plaintiffs misrepresent the holding of
Schwann. Schwann held that Prong 2 was preempted, but said
nothing about whether either Prongs 1 or 3 was preempted.
Instead, Schwann vacated and reversed the district court’s
holding that Prongs 1 and 3 were preempted on the basis that
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FedEx never made such an argument either before the district
court or before the First Circuit. Schwann, 813 F.3d at 441.
That the First Circuit in Schwann “h[e]ld FedEx to its decision
not to argue to us that Prongs 1 and 3 are preempted,” id., is
different from a holding on the merits that Prongs 1 and 3 are
not preempted.
As such, the question before the Court is whether the
Massachusetts Wage Law claim and Prongs 1 and 3 of the
Massachusetts Independent Contractor Statute actually have a
significant impermissible effect on carriers’ prices, routes and
services. Border Transfer’s “related to” analysis fails to make
that showing. Border Transfer does nothing more than argue in a
conclusory manner that the plaintiffs’ state law claims are
service-determinative, with a citation to Schwann. But the FAAAA
analysis is not so simple and Schwann does not do the work that
Border Transfer wants it to.
Schwann’s holding on Prong 2 does not extend to Prongs 1
and 3. Schwann found it to be significant that Prong 2 made any
person who performs a service within the usual course of the
enterprise’s business an employee for state wage law purposes -in other words, it necessarily made any person who drove for
FedEx an employee. Schwann, 813 F.3d at 438. That was a severe
constraint on FedEx’s business model that, by preventing FedEx
from being able to set up drivers with particular economic
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incentives, had a significant effect on FedEx’s routes and
services as a matter of logic. But, as the Massachusetts Supreme
Judicial Court recently held, Prongs 1 and 3 do not have such a
drastic effect. See Chambers v. RDI Logistics, Inc., 2016 WL
7253568, at *7 (Mass. Dec. 16, 2016) (“Unlike prong two, there
is nothing intrinsic to [Prongs 1 and 3] that prevents motor
carriers from using independent contractors.”). Prongs 1 and 3
still allow a carrier to use an independent contract driver
model as long as the carrier does not exert a certain level of
control over them or prevent them from engaging in an
independently established trade.
Schwann also suggested that state laws that are anomalous
relative to laws of other states would logically have a greater
effect on prices, routes, and services. It emphasized that not
only did Prong 2 constrain carriers’ business models by
automatically making any driver an employee, but that it was
also unlike the law of many other states. Prongs 1 and 3, in
contrast, are fairly standard elements of an independent
contractor test. See Khan v. E. Coast Critical, LLC, No. MICV
2015-2762-D (Mass. Sup. Ct. May 4, 2016), slip op. at 3 (“Prongs
1 and 3 of § 148B(a) on their face adopt wide-spread and
apparently nationally uniform tests for determining the
employer/employee relationship . . . .”). As the First Circuit
suggested, “state laws that are more or less nationally uniform,
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and therefore pose no patchwork problem, or that have less of a
reference to and effect on a carrier’s service and routes pose
closer questions than that presented in this case.” Schwann, 813
F.3d at 440.
Border Transfer’s “related to” argument boils down to an
assertion that the Massachusetts Wage Law plus the Massachusetts
Independent Contractor Statute “compel different service terms
than those in the Agreement.” Docket No. 27 at 2. But the basis
for that argument is tenuous because the agreement between
Border Transfer and its drivers does not contain service terms.
Border Transfer fails to allege any facts that Massachusetts
law, by overriding Border Transfer’s contract with the drivers,
has a significant impact on the services that Border Transfer
provides to its customers.
Instead, Border Transfer makes the legal argument that if
the Court finds under Massachusetts law that Border Transfer
employs truck drivers who transport goods, then that finding may
also trigger “motor carrier” status under federal law. Border
Transfer considers itself to be a broker, not a motor carrier.
See 49 U.S.C. § 13102(2) (defining “broker”), (14) (defining
“motor carrier”). Border Transfer claims that if it were
required to meet the various operating requirements that federal
law imposes on motor carriers, there would be a significant
impact on the services that it currently offers. See, e.g., id.
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§§ 14101, 14102. Any application of the federal motor carrier
statute to Border Transfer, however, would be by operation of
the federal statutory definition of a motor carrier, see id.
§ 13102(14), and federal regulations that define the terms
“employer” and “employee” for purposes of the federal motor
carrier safety regulations, 49 C.F.R. § 390.5. The parties have
not addressed any case law construing these definitions. In any
event, whether the plaintiffs fall within the definition is a
matter of federal law, not state law.
On this record, the Court does not find the Massachusetts
Wage Act or Prongs 1 or 3 of the Massachusetts Independent
Contractor Statute preempted by the FAAAA. Border Transfer’s
motion to dismiss is DENIED as to Count I.
IV.

Unjust Enrichment
A party with an adequate remedy at law cannot claim unjust

enrichment. Santagate v. Tower, 833 N.E.2d 171, 176 (Mass. App.
Ct. 2005). The Massachusetts Wage Act is available as a
statutory remedy, and that is sufficient to bar unjust
enrichment. Reed v. Zipcar, Inc., 883 F. Supp. 2d 329, 334 (D.
Mass. 2012) (noting that the viability of the remedy at law “is
beside the point” and that “mere availability” of the remedy at
law bars unjust enrichment), aff’d, 527 F. App’x 20 (1st Cir.
2013); see also Fernandes v. Havkin, 731 F. Supp. 2d 103, 114

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(D. Mass. 2010). Border Transfer’s motion to dismiss is ALLOWED
as to Count II.
ORDER
Border Transfer’s motion to dismiss (Docket No. 8) is
DENIED as to Count I and ALLOWED as to Count II.

/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

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