LUPIAN et al v. JOSEPH CORY HOLDINGS LLC

Filing 42

OPINION. Signed by Judge William J. Martini on 4/20/17. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ALEJANDRO LUPIAN, JUAN LUPIAN,
JOSE REYES, EFFRAIN LUCATERO,
ISAIAS LUNA,
Plaintiffs,

Civ. No. 2:16-05172

OPINION

v.
JOSEPH CORY HOLDINGS, LLC,
Defendant.

WILLIAM J. MARTINI, U.S.D.J.:
Plaintiffs Alejandro Lupian, Juan Lupian, Jose Reyes, Effrain Lucatero and Isaias
Luna (collectively “Plaintiffs”) bring this class action against Joseph Cory Holdings, LLC
(“Defendant”), alleging violations of Illinois and New Jersey wage laws and unjust
enrichment, in connection with Plaintiffs’ independent contractor agreements with
Defendant. This matter comes before the Court on Defendant’s motion to certify an order
for interlocutory appeal and stay proceedings pursuant to 28 U.S.C. § 1292(b). There was
no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, Defendant’s
motion is GRANTED.
I.

BACKGROUND

On March 7, 2017, this Court issued an order and opinion (“Opinion”), dismissing
with prejudice Plaintiffs’ New Jersey wage law and unjust enrichment claims but allowing
Plaintiffs’ Illinois wage law claim to proceed. See Op., ECF No. 36. In response to
Defendant’s federal preemption argument, the Court concluded that the Illinois Wage
Payment and Collection Act (“IWPCA”) was not preempted by the Federal Aviation
Administration Authorization Act (“FAAAA”) because the IWPCA’s effect on motor
carriers’ prices, routes or services was too tenuous, remote or peripheral to warrant
preemption. Id. at 7–8. The Court was persuaded by the Seventh Circuit’s reasoning on
the issue, which found that the IWPCA regulates a labor input and is one or more steps
removed from the service that motor carriers offer to their customers at a particular price.
Id. (citing Costello v. BeavEx, Inc., 810 F.3d 1045, 1055 (7th Cir. 2016)). The Court further
concluded that the IWPCA’s prohibition on wage deductions can be contractually
circumvented by acquiring the written consent of an employee, which provided the
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requisite flexibility to avoid preemption identified by the Supreme Court in Northwest, Inc.
v. Ginsberg, 134 S. Ct. 1422, 1431–33 (2014). Id. at 8. Notably, the Court found:
Defendant has not shown at this stage that the costs of acquiring consent
would have a significant impact on Defendants’ prices, routes or services.
Perhaps facts will emerge during discovery that will show otherwise,
however, the Court finds that the IWPCA is not federally preempted on its
face because the law regulates Defendant’s relationship with its employees
and not its relationship with its customers.
Id. (citing Costello, 810 F.3d at 1055–56).
In its Opinion, the Court acknowledged a difference in the reasoning applied
between the Seventh Circuit in Costello and the First Circuit in Schwann v. FedEx Ground
Package Sys., Inc., 813 F.3d 429. See Op. at 7. In Schwann, the First Circuit held that a
portion of the Massachusetts wage law was federally preempted because the “logical
effect” of the requirement at issue would interfere with the FAAAA’s deregulatory
objective. Id. This Court noted that the First Circuit’s “logical effect” test stands in
contrast to the Seventh Circuit’s test, which focuses on whether the law in question
regulates a motor carrier’s relationship with its consumers or with its employees. See id.
at 6–7. The Court further noted that “[w]hile multiple courts in this district have considered
the matter, the Third Circuit has yet to reach the issue.” Id. at 5.
Defendant now moves this Court to certify an order for an interlocutory appeal to
the Third Circuit concerning the issue of whether the FAAAA preempts the IWPCA. See
Def.’s Br. in Supp. of Mot. to Certify Order for Interlocutory Appeal (“Def.’s Mot.”), ECF
No. 39. Defendant argues: (1) that the Opinion concerns a controlling question of law, id.
at 3–4; (2) that the circuit split establishes substantial ground for a difference of opinion,
id. at 4–5; and (3) that an immediate appeal will advance termination of the litigation, id.
at 5. Defendant also argues that the Court should stay proceedings pending the outcome
of an interlocutory appeal to avoid unnecessary time and costs associated with discovery
in a putative class action case. Id. at 6.
Plaintiffs oppose, arguing that the difference in reasoning among the circuits does
not establish substantial grounds for a difference of opinion concerning preemption and
that an interlocutory appeal will not advance termination. See Pls.’ Opp’n to Def.’s Mot.
to Certify (“Pls.’ Opp’n”) 5–13, ECF No. 40. Plaintiffs further oppose the issuance of a
stay in the event that the Court certifies an order for an interlocutory appeal. Id. at 13–15.
Defendant filed a reply. Def.’s Reply, ECF No. 41.
II.

LEGAL STANDARD

“Under 28 U.S.C. § 1292(b), district courts may, in their discretion, certify an
interlocutory order for immediate appeal.” In re Cendant Corp. Secs. Litig., 166 F. Supp.
2d 1, 13 (D.N.J. 2001). Section 1292(b) provides three criteria for a district court’s exercise
of discretion: “[t]he order must (1) involve a ‘controlling question of law,’ (2) offer
‘substantial ground for difference of opinion’ as to its correctness, and (3) if appealed
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immediately ‘materially advance the ultimate termination of the litigation.’” Katz v. Carte
Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974) (quoting 28 U.S.C. § 1292(b)). “A
controlling question of law must encompass at the very least every order which, if
erroneous, would be reversible error on final appeal.” Id. at 755. The difference of opinion
and likelihood of termination are discretionary findings made by the district court. See id.
at 754–55 (determining that there can be “little difficulty” over these criterion). At a
practical level, “saving of time of the district court and of expense to the litigants” are
highly relevant factors to consider. See id. at 755.
III.

DISCUSSION

Matters of first impression concerning the question of whether a federal statute or
regulation preempts a conflicting state statute, regulation or common law have been the
subject of multiple interlocutory appeals granted by the Third Circuit. See, e.g., Facenda
v. N.F.L. Films, Inc., 542 F.3d 1007, 1013 (3d Cir. 2008) (considering, in part, whether
federal copyright law preempted plaintiff’s state-law right-of-publicity claim); Levine v.
United Healthcare Corp., 402 F.3d 156, 161 (3d Cir. 2005) (considering, in part, whether
a New Jersey statute was “saved” from federal preemption by the Employee Retirement
Income Security Act); Voilas v. Gen. Motors Corp., 170 F.3d 367, 372 (3d Cir. 1999)
(considering whether plaintiff’s fraud claim was preempted by the Labor-Management
Relations Act and the National Labor Relations Act).
Similarly, the Court finds that certification of an order for an interlocutory appeal is
warranted here. First, it is indisputable that the question of whether the FAAAA preempts
the IWPCA is a “controlling question of law.” If the Third Circuit determined that the
IWPCA was preempted by the FAAAA, then such a finding would constitute reversible
error on final appeal. See Katz, 496 F.2d at 755.
Second, the Court finds that there is a clear difference of opinion as evidenced by
the differing tests applied by the First and Seventh Circuits in analyzing the same question
put to this Court. Plaintiffs attempt to persuade the Court that there is no discernible
difference of opinion because the Seventh Circuit, in addition to multiple courts in this
district, have already held that the FAAAA does not preempt the IWPCA. See Pls.’ Opp’n
at 6–7. Defendant correctly points out, however, that the question of FAAAA preemption
is a question of federal law, which does not bind the Third Circuit to the Seventh Circuit’s
holding in Costello. See Def.’s Reply at 3.
Plaintiffs further suggest that the Schwann holding does not create a difference of
opinion because it only found that one of the three prongs of the Massachusetts employee
test was preempted, leaving the other two prongs as effective state law. See Pls.’ Opp’n at
7–9. This argument is equally unavailing. As previously noted, it is the differing tests
applied by the circuit courts that creates the substantial difference of opinion. The First
Circuit applied a “logical effect” test, whereas the Seventh Circuit applied a relational
test—i.e., whether the state law governs a motor carrier’s relationship with its consumers
(preempted) or its employees (not preempted). It is not difficult to envision a scenario
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where the “logical effect” of the IWPCA, or any other state law governing motor carriers
and their employees, creates a significant impact on a motor carrier’s prices, routes or
services, thereby resulting in polar opposite outcomes depending on which test is applied.
Third, the Court finds that certification of an order could materially advance
termination of the instant litigation. If the Third Circuit grants an interlocutory appeal and
subsequently holds that the FAAAA preempts the IWPCA, then Plaintiffs’ case will be
completely terminated because all other claims were dismissed with prejudice by this Court
in the March 7 Opinion. In light of § 1292(b)’s purpose to avoid “wasted trial time and
litigation expense,” the Court concludes that the three factors are met and certification is
warranted. See Katz, 496 F.2d at 756. In that same light, the Court finds that a stay of the
district court proceedings pending the outcome of Defendant’s petition for an interlocutory
appeal is warranted. See Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (“[T]he power to
stay proceedings is incidental to the power inherent in every court to control the disposition
of the causes on its docket with economy of time and effort for itself, for counsel and for
litigants.”); Gold v. Johns-Manville Sales Corp., 723 F.2d 1068, 1077 (3d Cir. 1983) (citing
Landis, 299 U.S. at 254–55).
IV.

CONCLUSION

For the reasons stated above, Defendant’s motion is GRANTED and the Court will
certify an order for interlocutory appeal to the Third Circuit concerning the question of
whether the FAAAA preempts the IWPCA. Defendant’s request for a stay of the district
court proceedings pending the outcome of its petition for an interlocutory appeal before the
Third Circuit is also GRANTED. An appropriate order follows.

/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: April 20, 2017

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