Issue link: https://read.dmtmag.com/i/164136
Cover Story not preempt Section 148B. Relying on First Circuit decisions addressing similar ADA preemption principles in the airline context, the Court in Martins rejected the defense argument that Massachusetts' independent contractor statute would "enlarge the bargain" between motor carrier and driver in violation of the FAAAA. It ruled the statute does not regulate the prices 3PD charges for any services but only the operation of the underlying employment relationship between 3PD and its drivers, which plays a role in setting the market price. "This is not sufficiently related to regulating the 'price, route or service' of motor carriers." 2013 U.S. Dist. LEXIS 45753 at [*37]. The Court also discarded 3PD's argument that the FAAAA preempts Section 148B because it enlarges the bargain between motor carrier and driver. It ruled the unjust enrichment claims do not seek to regulate the prices 3PD sets for its services, but rather, ". . . seek to enforce 3PD's obligations as an employer under Massachusetts law. . . . [3PD's] argument misses the point by misapprehending Plaintiffs' claims. Plaintiffs' claims do not implicate the prices under the [service agreements]. . . .They claim instead that 3PD failed in its obligations under Massachusetts employment law, not that there was any error in performance under the [service agreements]." Id., at [*38]. The Court also rejected 3PD's argument that it was not in the delivery business but was only a property broker or freight forwarder: "An employer cannot escape liability under Section 148B by attempting to obfuscate the nature of its business or through simple sleight of hand. . . . Id., at [*46]. Without [the plaintiffs'] delivery service, 3PD would not exist." Id., at [*47]. Finally, the Court ruled that the fact that some drivers were incorporated businesses cannot work as a shield for avoiding the classification statute. Less than a week after the decision in Martins, the Court in Sanchez v. Lasership, Inc. reached the opposite conclusion on FAAAA preemption of Massachusetts' / owner operator / September 2013 / / independent contractor statute. Sanchez was substantially similar to Martins: the Sanchez plaintiffs sued Lasership seeking compensatory and punitive damages and injunctive relief, claiming they had been misclassified as independent contractors in violation of Section 148B. Lasership moved for summary judgment, arguing the plaintiffs' claims were preempted by the FAAAA because the statute dictated how the motor carrier was to perform its services. The Court in Sanchez did an in-depth analysis of the material facts presented by the defendant in the context of FAAAA preemption decisions from the Supreme Court on down. It recognized the convergence of the FAAAA with Massachusetts' classification statute, concluded the latter did have a significant effect on the Lasership's prices, routes and services in violation of the FAAAA, was preempted, and therefore granted Lasership's motion for summary judgment. In Sanchez the Court scrutinized the effects the Massachusetts statute would have on Lasership's operations as a motor carrier. "At its core, Section 148B is an unprecedented and fundamental change in independent contractor law. Its unique 'usual course of business' prong is unlike any other statute in the country, as it is the only statute that requires independent contractors to perform services outside an entity's 'usual course of business.'" 2013 U.S. Dist. LEXIS 49174 at [*28-29]. The Court concluded Section 148B, as applied to Lasership, was preempted because its compliance would significantly increase Lasership's costs, which would negatively impact its prices, routes and services. "The Court finds Lasership's evidence compelling. The significant costs incurred by Lasership's compliance with Section 148B will have a significant impact on its prices." Id., at [*49-50]. The Court also found "Section 148B preempted because it creates a patchwork of differing state laws that impact motor carriers' routes and services, a result the Supreme Court in Rowe explicitly held to be inconsistent with 24 OO 0913 text.indd 24 8/7/13 8:30 AM