Schwann v. Fedex Ground Package System, Inc.

United States Court of Appeals
For the First Circuit

No. 15-1214

CLAYTON SCHWANN, individually and on behalf of a class of all
others similarly situated; THOMAS LEDUC, individually and on
behalf of a class of all others similarly situated; RAMON
HELEODORO, individually and on behalf of a class of all others
similarly situated; JAMES E. DUGGAN, individually and on behalf
of a class of all others similarly situated; ERIC VITALE,
individually and on behalf of a class of all others similarly
situated; MUCHIRAHONDO PHINNIAS, individually and on behalf of a
class of all others similarly situated; TEMISTOCLES SANTOS,
individually and on behalf of a class of all others similarly
situated; ROBERT SANGSTER, individually and on behalf of a class
of all others similarly situated; JEFF BAYLIES; LAWRENCE ADAMS,

Plaintiffs, Appellants,

MARVIN SANTIAGO, individually and on behalf of a class of all
others similarly situated; MANUEL MONTROND, individually and on
behalf of a class of all others similarly; SERRULO FERNANDEZ
DEJESUS, individually and on behalf of a class of all others
similarly situated; WAN PYO CONG, individually and on behalf of
a class of all others similarly situated; LEON HECTOR,

Plaintiffs,

v.

FEDEX GROUND PACKAGE SYSTEM, INC., d/b/a FEDEX HOME DELIVERY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before
 Lynch, Stahl, and Kayatta,
Circuit Judges.

Harold L. Lichten, with whom Shannon Liss-Riordan and Lichten
& Liss-Riordan, P.C. were on brief, for appellants.
Peter Sacks, State Solicitor, with whom Maura Healey,
Attorney General of Massachusetts, and Elizabeth N. Dewar,
Assistant State Solicitor, were on brief, for the Massachusetts
Attorney General, amicus curiae.
William M. Jay, with whom James C. Rehnquist, Kate E.
MacLeman, and Goodwin Procter LLP, were on brief, for appellee.

February 22, 2016
 KAYATTA, Circuit Judge. Plaintiffs here are individuals

who contracted with Defendant FedEx Ground Package System, Inc.

("FedEx") to provide so-called first-and-last mile pick-up and

delivery services. They claim that FedEx should have treated and

paid them as employees in certain respects, rather than as

independent contractors, because FedEx cannot satisfy all three

necessary requirements under the Massachusetts Independent

Contractor Statute, Mass. Gen. Laws ch. 149, § 148B(a) (the

"Massachusetts Statute"). We find that the express preemption

provision of the Federal Aviation Administration Authorization Act

of 1994 ("FAAAA"), 49 U.S.C. § 14501(c)(1), preempts the

application of one of those requirements to FedEx. We also find

that the preempted requirement is severable from the two remaining

requirements of the Massachusetts Statute, and we remand for

further consideration of whether Plaintiffs may prevail on their

claims under Massachusetts law by relying on either of those

requirements.

I.

A. Relevant Facts

FedEx is a federally registered motor carrier that is

licensed to provide nationwide package pick-up, transportation,

and delivery services. As relevant to the claims in this case,

FedEx did not itself customarily perform what is called "first-

and-last mile" pick-up and delivery services to customers.

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Instead, it contracted with individuals such as Plaintiffs whom it

treated as independent contractors to perform these services.

FedEx's relationship with these individuals was governed by an

Operating Agreement ("OA").

Under the OA, each individual contractor acquired an

exclusive and transferable interest in customer accounts located

in a designated geographical area in return for assuming the

responsibility of providing daily pick-up and delivery services

for FedEx in that area. The OA contemplated that such services

may be performed by persons other than the individual contractor,

and established a financial structure by which the contractors

were compensated. The OA also provided that FedEx shall not have

authority "to prescribe hours of work, whether or when the

Contractor is to take breaks, what route the Contractor is to

follow, or other details of performance." The contractor bore all

costs and expenses incurred in providing the pick-up and delivery

services, including but not limited to those associated with

obtaining and using a suitable vehicle, fuel, compliant

communications equipment, uniforms, and insurance. At least some

of these costs and expenses were defrayed through forms of

supplemental compensation paid to the contractor under the OA's

financial structure.

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B. State Law

Plaintiffs contend that FedEx misclassified them as

independent contractors and seek damages for loss of wages,

improper wage deductions, and loss of benefits under the

Massachusetts Statute and the Massachusetts Wage Act (the "Wage

Act"), Mass. Gen. Laws ch. 149, §§ 148, 150, as well as attorneys'

fees.1

The relevant text of the Massachusetts Statute provides

that "an individual performing any service . . . shall be

considered to be an employee" 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.

Id. § 148B(a). For ease of reference, we follow the parties in

referring to the three numbered subsections (1)–(3) as "Prongs 1,

2, and 3."

1
Plaintiffs' complaint also alleged an unjust enrichment
claim, the dismissal of which Plaintiffs do not challenge.

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 If Prong 2 is not preempted, and a court deems, as the

district court did in this case, that the service Plaintiffs

rendered was not "outside the usual course of business of [FedEx],"

then Plaintiffs "shall be considered to be an employee" "[f]or the

purpose of [Chapter 149] and [C]hapter 151." Id. Under those

chapters, an employer must provide certain benefits to its

employees, including various days off, see id. § 47, parental

leave, id. § 105D, work-break benefits, id. § 100, and a minimum

wage, Mass. Gen. Laws ch. 151, § 1. The employer must also track

and record hours worked and amounts paid. Id. § 15; Mass. Gen.

Laws ch. 149, § 52. According to the Massachusetts Attorney

General, under Plaintiffs' proposed application of the

Massachusetts Statute, Chapter 149 would require FedEx to pay for

or reimburse all out-of-pocket expenses incurred for the benefit

of FedEx such as the maintenance and depreciation of the vehicles

they used to perform their services. The statute also bars the

employer from excepting itself from this mandate by contract.

Camara v. Attorney General, 941 N.E.2d 1118, 1121 (Mass. 2011);

Mass. Gen. Laws ch. 149, § 148.2

2 In their original briefing and in the supplemental briefing
we invited, the parties spar over which other state law
requirements are triggered by a finding of employee status under
the Massachusetts Statute and what effect those requirements would
have on FedEx's prices, routes, and services. In deciding the
issues raised on this appeal, we have no occasion to resolve this
dispute concerning the full range of state law requirements

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C. Procedural History

After discovery and a few procedural skirmishes,

Plaintiffs pursued a motion for partial summary judgment arguing

that they were misclassified as independent contractors because

FedEx failed to satisfy Prongs 2 and 3 of the Massachusetts

Statute. FedEx opposed the motion by arguing that there existed

genuine issues of material fact relevant to whether Plaintiffs

were employees of FedEx under Prongs 2 and 3. FedEx also filed

its own summary judgment motion requesting dismissal of all counts.

In its memorandum in support of that motion, FedEx argued that all

of Plaintiffs' claims were preempted by the FAAAA.

In reply to Plaintiffs' opposition to its summary

judgment motion, FedEx scaled back the scope of its preemption

argument, eschewing any argument that Prongs 1 and 3 of the

Massachusetts Statute were preempted. FedEx, rather, clarified in

its reply brief that its motion instead "is based on the specific,

and unique, effects of § 148B's 'usual course of business' factor,"

while reminding the court that it had "expressly stated in its

initial brief that it does not oppose severance of the 'usual

course of business' factor from § 148B if that factor is deemed to

be preempted." Therefore, argued FedEx, "if the 'usual course of

business' factor is found preempted (and the Court finds it to be

triggered by a finding that a person is an employee under
§ 148B(a).

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severable), then summary judgment on that factor should be granted

and the case would proceed to trial" on the issues of whether

Plaintiffs were employees of FedEx under Prongs 1 and 3.

The district court initially granted Plaintiffs' motion

for partial summary judgment under Prong 2. Schwann v. FedEx

Ground Package Sys., Inc., No. 11-11094, 2013 WL 3353776, at *7

(D. Mass. July 3, 2013). It found that FedEx could not satisfy

Prong 2 because the pick-up and delivery services performed by

Plaintiffs were not outside FedEx's "usual course of business."3

Id. at *6. The district court also held that the Massachusetts

Statute was not preempted by the express preemption provision of

the FAAAA because the state law (1) did not sufficiently relate to

FedEx's prices, routes, or services, and (2) did not concern a

motor carrier's transportation of property. Id. at *4.4

The district court then certified several state law

questions concerning damages under the Wage Act to the Supreme

Judicial Court of Massachusetts ("SJC") and stayed the case pending

a response. During the time the case was stayed, we decided

Massachusetts Delivery Ass'n v. Coakley, 769 F.3d 11 (1st Cir.

3 In light of this finding, the district court explained that
it did not need to reach Plaintiffs' arguments under Prong 3.
Schwann, 2013 WL 3353776, at *6.
4 The district court also entered judgment for FedEx on the

unjust enrichment claim, finding that damages under that theory of
liability would duplicate an award under the Wage Act. Id.
Plaintiffs do not challenge that ruling on this appeal.

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2014) ("MDA"). In MDA, we reversed and remanded a district court

decision that had found Prong 2 not preempted by the FAAAA. Id.

at 14. We ruled that the district court in that case had applied

an unduly narrow interpretation of the FAAAA's express preemption

provision. Id.

The district court in this case then called for

supplemental briefing to address both the import of MDA and

Plaintiffs' summary judgment arguments under Prong 3 of the

Massachusetts Statute. In their opening supplemental brief,

Plaintiffs argued that our decision in MDA did not affect the

district court's finding that the Massachusetts Statute was not

preempted by the FAAAA. Plaintiffs also argued that, even were

Prong 2 preempted, the court should find on summary judgment that

they were employees of FedEx based on Prong 3.5 In its opening

supplemental brief, FedEx argued that MDA required the court to

vacate its previous ruling of non-preemption and to find that

Prong 2 was preempted.6 FedEx also disputed Plaintiffs'

interpretation of Prong 3 and reiterated that there existed genuine

5
Exceeding the permission granted by the district court's
supplemental briefing request, Plaintiffs also advanced for the
first time the argument that the district court could find on
summary judgment that they were employees of FedEx based on Prong
1 of the statute.
6 While FedEx in this supplemental brief generally referred

to "§ 148B" rather than "§ 148B(a)(2)" or "Prong 2," its arguments
echoed those that it made on summary judgment, in which it
specified (in its reply brief) that its preemption argument only
pertained to Prong 2 of the statute.

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issues of material fact relevant to whether Plaintiffs were

employees of FedEx under that prong. Then, in its reply to

Plaintiffs' supplemental brief, FedEx argued for the first time

that Prong 2, if preempted, was not severable from the remainder

of the Massachusetts Statute.

Thereafter the district court issued a second decision

on the parties' summary judgment motions in which it (1) withdrew

its prior opinion insofar as it granted summary judgment to

Plaintiffs on Count I and (2) granted FedEx summary judgment on

all counts. Schwann v. FedEx Ground Package Sys., Inc., No. 11-

11094, 2015 WL 501512, at *2 (D. Mass. Feb. 5, 2015). Tracking

MDA, the district court emphasized that "a statute's 'potential'

impact on carriers' prices, routes, and services can be sufficient

[to trigger preemption] if it is significant, rather than tenuous,

remote, or peripheral," and that this impact need not by proven by

empirical evidence, but may be proven by "the logical effect that

a particular scheme has on the delivery of services." Id. at *1

(quoting MDA, 769 F.3d at 21). After considering "such logical

(if indirect) effects," id., the district court found that the

Massachusetts Statute "unquestionably ha[s] an impact on 'price,

route[s], [and] services' by in effect proscribing the carrier’s

preferred business model," id. (second and third alterations in

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original) (quoting 49 U.S.C. § 14501(c)(1)).7 The district court

thus found that Prong 2 was preempted by the FAAAA. Id. at *2.

The district court next turned to Plaintiffs' summary

judgment arguments under Prong 3. Id. It held that Prong 2 was

not severable from the Massachusetts Statute as a whole because

the court "has no way of knowing whether the Legislature . . . would

have chosen to rewrite the statute less restrictively to consist

of only the first and third prongs," and thus "the entire statute

must be treated as preempted." Id. The district court then added,

sua sponte, a conclusion that FedEx itself was not advocating:

that application of Prongs 1 and 3 against motor carriers would

also be preempted by the FAAAA because "motor carriers would be

impacted by forbidding the preferred business model." Id.

Plaintiffs appealed. We now review the district court's

preemption and severability holdings de novo. See MDA, 769 F.3d

at 17.

II.

The FAAAA's express preemption provision provides that

all state laws that "relate[] to a price, route, or service of any

motor carrier . . . with respect to the transportation of property"

7 The district court also recognized that in MDA, "a case
virtually identical to this one in its relevant respects," we held
that the Massachusetts Statute concerns a motor carrier's
transportation of property. Schwann, 2015 WL 501512, at *1-2.
Plaintiffs do not contest this aspect of the district court's
ruling.

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are preempted. 49 U.S.C. § 14501(c)(1). Congress, in writing the

portion of this clause that is pertinent to this appeal, copied

the language of the preemption clause of the Airline Deregulation

Act of 1978 ("ADA"), 49 U.S.C. § 41713(b)(1). Rowe v. N.H. Motor

Transp. Ass'n, 552 U.S. 364, 370 (2008). It did so in order to

adopt "the broad preemption interpretation [of the ADA] adopted by

the United States Supreme Court in [Morales v. Trans World

Airlines, Inc., 504 U.S. 374 (1992)]." Id. (citing H.R. Conf.

Rep. 103–677, at 83). As we observed in MDA, the resulting scope

of FAAAA preemption is therefore both informed by interpretations

of ADA preemption and, like ADA preemption, is "purposely

expansive." MDA, 769 F.3d at 18.

The Supreme Court has identified the dual objectives

that account for this broad reach: to "ensure that the States

would not undo federal deregulation with regulation of their own,"

Rowe, 552 U.S. at 368 (quoting Morales, 504 U.S. at 378); and to

avoid "a patchwork of state service-determining laws, rules, and

regulations," id. at 373. In this manner, Congress sought 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. at 371 (quoting Morales, 504 U.S.

at 378).

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 Section 14501(c)(1) preemption may therefore occur "even

if a state law's effect on rates, routes, or services 'is only

indirect,'" id. at 370 (quoting Morales, 504 U.S. at 386), and

applies "at least where state laws have a 'significant impact'

related to Congress' deregulatory and pre-emption-related

objectives," id. at 371 (quoting Morales, 504 U.S. at 390). We

summarized these principles in MDA by explaining that "a state

statute is preempted if it expressly references, or has a

significant impact on, carriers' prices, routes, or services."

MDA, 769 F.3d at 17–18.

Congress itself acknowledged the breadth of this

language by perceiving a need to include paragraph (c)(2) of the

statute to "restrict" from its otherwise broad preemptive scope

certain specified areas traditionally governed by the states, such

as "the safety regulatory authority of a State with respect to

motor vehicles" and "the authority of a State to impose highway

route controls or limitations." 49 U.S.C. § 14501(c)(2). The

Supreme Court has explained that "[t]he exceptions to

§ 14501(c)(1)'s general rule of preemption identify matters a State

may regulate when it would otherwise be precluded from doing so."

Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769, 1780 (2013).

There is, of course, "a necessary limit to the scope of

FAAAA preemption." MDA, 769 F.3d at 18. After all, in a broad

sense, everything "relates to" everything else in some manner.

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See N.Y. State Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 655 (1995) ("If 'relate to' were

taken to extend to the furthest stretch of its indeterminacy, then

for all practical purposes pre-emption would never run its

course . . . ."). Case law therefore excludes from the otherwise

broad reach of § 14501(c)(1) those state laws that have only a

"tenuous, remote, or peripheral" impact on prices, routes, or

services. See Rowe, 552 U.S. at 371 (quoting Morales, 504 U.S. at

390). As examples of such unpreempted laws, the Supreme Court has

pointed to laws against gambling and prostitution, Morales, 504

U.S. at 390, and "state regulation that broadly prohibits certain

forms of conduct and affects, say, truckdrivers, only in their

capacity as members of the public (e.g., a prohibition on smoking

in certain public places)," Rowe 552 U.S. at 375. These examples

demonstrate both that there is a limit to the preemptive scope of

§ 14501(c)(1) and that one must move quite far afield to

confidently reach that limit. See DiFiore v. Am. Airlines, Inc.,

646 F.3d 81, 86-87 (1st Cir. 2011). Exactly where the boundary

lies between permissible and impermissible state regulation is not

entirely clear.

In MDA, the district court failed to apply this broad

interpretation of § 14501(c)(1) in finding that, based on facts

similar to those in this case, Prong 2's effects did not

sufficiently impact a motor carrier's prices, routes, or services.

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MDA, 769 F.3d at 14. In our decision vacating the district court's

order, we noted that "a statute's 'potential' impact on carriers'

prices, routes, and services" 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." Id. at 21

(alteration in original) (quoting N.H. Motor Transp. Ass'n v. Rowe,

448 F.3d 66, 82 n.14 (1st Cir. 2006), aff'd, Rowe, 552 U.S. 364).

This logical effect, we said, "can be sufficient even if indirect"

so that motor carriers can be immunized "from state regulations

that threaten to unravel Congress's purposeful deregulation in

this area." Id. Because the district court in MDA ultimately

based its holding on an erroneous finding that § 14501(c)(1)'s

"with respect to the transportation of property" requirement had

not been satisfied, we remanded that case to the district court so

that it could decide, consistent with our opinion, whether the

"related to" standard was met. Id. at 17–22.

We now pick up where MDA left off, as we have a district

court's considered application of § 14501(c)(1)'s "related to"

standard to Prong 2 of the Massachusetts Statute. We begin by

defining precisely the question before us. Whether Prong 2 is

facially preempted in the abstract is not the question. Unlike

the provisions of the Maine state statute in Rowe specifically

targeting the services provided by tobacco carriers, 552 U.S. at

368, 373, the Massachusetts Statute is a generally applicable law

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regulating the relationships between businesses and persons who

perform services for those businesses, Mass. Gen. Laws ch. 149,

§ 148B(a). Thus, our preemption analysis in this case trains

instead upon the manner in which Prong 2 of the Massachusetts

Statute would apply to FedEx's operations. In this respect, our

inquiry is analogous to that undertaken by the Supreme Court in

Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (2014), where the

question before it was not whether the state common law implied

covenant theory was facially preempted, but whether ADA preemption

precluded the plaintiffs from employing that theory to add to the

terms of a contract governing an airline's frequent flyer program,

id. at 1427.

Plaintiffs' successful reliance on Prong 2 in this case

would necessarily require that we first look at the "service"

performed by Plaintiffs on behalf of FedEx, that we next determine

that that service is not "outside the usual course of the business

of [FedEx]," and that we then, in substance, bar FedEx from using

any individuals as full-fledged independent contractors to perform

that service. See Mass. Gen. Laws ch. 149, § 148B(a)(2). For the

following reasons, we find that Prong 2, if applied in this way,

would "relate[] to" the "service of a motor carrier . . . with

respect to the transportation of property." 49 U.S.C.

§ 14501(c)(1).

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 For starters, we observe the directly referential

relationship between Plaintiffs' application of Prong 2 and

FedEx's motor carrier services. By honing in on a "service" and

then directing the court to determine whether that service fits

within the "usual course of business of [FedEx]," see Mass. Gen.

Laws § 148B(a)(2), Prong 2 requires a judicial determination of

the extent and types of motor carrier services that FedEx provides.

The text of Prong 2 as applied in this way thus "expressly

references," MDA, 769 F.3d at 17, FedEx's motor carrier services.

Prong 2 also stands as something of an anomaly because

it makes any person who performs a service within the usual course

of the enterprise's business an employee for state wage law

purposes. By contrast, under the federal Fair Labor Standards

Act, 29 U.S.C. §§ 201-19, and the law of many states, the

relationship between the service performed and the usual course of

the enterprise's business is simply one among many factors to be

considered, see, e.g., Baystate Alt. Staffing, Inc. v. Herman, 163

F.3d 668, 675 n.5 (1st Cir. 1998); Empire Star Mines Co. v. Cal.

Emp't Comm'n, 168 P.2d 686, 692 (Cal. 1946), overruled on other

grounds by People v. Sims, 651 P.2d 321, 328 n.8 (Cal. 1982).

Plaintiffs point to, at most, only a small number of states that

have, for wage law purposes, enacted a standard similar to Prong 2.

Prong 2, as Plaintiffs would apply it, thus requires FedEx to use

persons who are employees to perform first-and-last mile pick-up

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and delivery services even if those persons could be deemed

independent contractors under federal law and the law of many

states.

This relatively novel aspect of Prong 2 runs counter to

Congress's purpose to avoid "a patchwork of state service-

determining laws, rules, and regulations" that it determined were

better left to the competitive marketplace. Rowe, 552 U.S. at

373. Additionally, that same novelty cuts against any argument

that Prong 2 is simply a type of pre-existing and customary

manifestation of the state's police power that we might assume

Congress intended to leave untouched.

The regulatory interference posed by Plaintiffs'

application of Prong 2 is not peripheral. The decision whether to

provide a service directly, with one's own employee, or to procure

the services of an independent contractor is a significant decision

in designing and running a business. As this case shows, that

decision implicates the way in which a company chooses to allocate

its resources and incentivize those persons providing the service.

Imagine, for example, state legislation that barred any company

from vertically integrating (that is, performing all connected

services itself through its own employees). Legislation of that

type would directly and substantially restrain the free-market

pursuit of perceived efficiencies and competitive advantage that

some competitors might otherwise choose to pursue in designing the

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manner in which they perform their services to meet market demands.

Prong 2, as Plaintiffs propose to apply it, is simply the flip

side of this same type of market interference: It requires a court

to define the degree of integration that a company may employ by

mandating that any services deemed "usual" to its course of

business be performed by an employee. Such an application of state

law poses a serious potential impediment to the achievement of the

FAAAA's objectives because a court, rather than the market

participant, would ultimately determine what services that company

provides and how it chooses to provide them.

This case serves as a good example. A company that

transports property might opt to transport the property itself

from pick-up to delivery. Or it might opt to run only a portion

of the route itself, contracting with others to transport the

property for some portion of the route. In other words, a company

might provide transportation, or it might provide for

transportation by others. FedEx opted to do both. It had its own

employees transport the packages most of the way, but left local

pick-up and delivery to individuals who (1) purchased the right to

service certain FedEx customer accounts in an area, (2) bore the

expense for servicing such accounts, (3) received compensation

based on a formula that accounted for the number of packages

delivered, and (4) reserved for themselves the right to decide

what route to follow in making deliveries. Through such an

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arrangement, FedEx provided these individuals with an economic

incentive to keep costs low, to deliver packages efficiently, and

to provide excellent customer service. [See R. 556, ¶ 12.]

This method of providing for delivery services would be

largely foreclosed by Plaintiffs' application of Prong 2 if a court

determined that first-and-last mile transportation was "the usual

course of the business of [FedEx]." As the Attorney General

acknowledged in a bit of an understatement, "§ 148B's Prong 2 makes

it quite difficult for carriers like FedEx to treat individual

drivers as independent contractors, rather than employees [for

state wage law purposes]." And the parties as well as the Attorney

General admit that because Prong 2 would mandate that FedEx

classify these individual contractors as employees, FedEx would be

required to reimburse them for business-related expenses. The

logical effect of this requirement would thus preclude FedEx from

providing for first-and-last mile pick-up and delivery services

through an independent person who bears the economic risk

associated with any inefficiencies in performance.

This regulatory prohibition would also logically be

expected to have a significant impact on the actual routes followed

for the pick-up and delivery of packages. FedEx through its

employees did not fix or determine the precise route for the first-

and-last mile of pick-up and delivery. Rather, FedEx delegated

the precise design of the route to the contractor, who assumed the

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risks and benefits of increased or decreased efficiencies achieved

by the selected routes. It is reasonable to conclude that

employees would have a different array of incentives that could

render their selection of routes less efficient, undercutting one

of Congress's express goals in crafting an express preemption

proviso. See Rowe, 552 U.S. at 371 (describing "Congress'

overarching goal as helping 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'" (quoting Morales, 504

U.S. at 378)).

Perhaps recognizing that this result is incompatible

with § 14501(c)(1), Plaintiffs argue that such an effect does not

necessarily follow from the application of Prong 2. Instead,

Plaintiffs argue that FedEx may continue to use an incentive-based

arrangement by paying employee drivers, for instance, on a "per-

package" or "per-stop" basis or providing them with performance-

based bonuses. [Id.] Of course, such incentive structures would

lack the fuller selective force of the structure chosen by FedEx,

which guarantees no net income for the services rendered. More

importantly, we find the interference inherent in dictating such

an approach to exceed the interference found excessive in DiFiore,

where the necessity of a solution in that case highlighted how the

state tips law "require[d] changes in the way the service is

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provided." DiFiore, 646 F.3d at 88. Here, too, Plaintiffs'

suggestion that FedEx change the manner in which it incentivizes

efficient delivery simply highlights the tangible manner in which

Plaintiffs' proposed application of Prong 2 would significantly

affect how FedEx provides good and efficient service. This

interference, in combination with the points we have already

discussed, demonstrates that application of Prong 2 in this case

would transgress Congress's "view that the best interests of [motor

carrier service beneficiaries] are most effectively promoted, in

the main, by allowing the free market to operate." Northwest, 134

S. Ct. at 1433.8

We do not hold that FedEx has free rein to classify

workers by fiat as independent contractors. In line with our

explanation in DiFiore, motor carriers are not exempt "from state

taxes, state lawsuits of many kinds, and perhaps most other state

8 In reaching our conclusion, we considered the recent Seventh
Circuit decision in Costello v. BeavEx, Inc., Nos. 15–1109, 15–
1110, 2016 WL 212797 (7th Cir. Jan. 19, 2016). There, the Court
distinguished the Massachusetts statute at issue in MDA from the
Illinois statute before it in holding that the latter was not
preempted by the FAAAA. Id. at *8-10. Important to the Court's
decision were the carrier's ability under Illinois law to contract
around the state rule prohibiting deductions from wages, the lesser
scope of laws implicated by application of the challenged state
independent contractor statute, and the carrier's failure to show
that application of the law would require a change in the services
that the carrier itself provides. Id. We note, too, that
presumably for these reasons the Seventh Circuit did not consider
the significance of the statute's requirement that the court define
the carrier's scope of business, or the potential effects on routes
of any binding change on incentive structures.

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regulation of any consequence." 646 F.3d at 89. Such state laws

that are more or less nationally uniform, 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. Completing the analysis we began in MDA,

we hold only that Prong 2 as Plaintiffs propose to apply it

sufficiently "relate[s] to" FedEx's service and routes and is thus

preempted by § 14501(c)(1).

III.

Our finding that Prong 2 is preempted as applied to FedEx

in this case requires us to decide next whether the district court

correctly held that this preempted prong is not severable from

Prongs 1 and 3 of the Massachusetts Statute. The answer to this

question is controlled by state law. See Ackerley Commc'ns of

Mass., Inc. v. City of Cambridge, 135 F.3d 210, 215 (1st Cir.

1998).

In Massachusetts, "[t]he ultimate question on

severability . . . is the intent of the Legislature." Peterson v.

Comm'r of Revenue, 825 N.E.2d 1029, 1038 (Mass. 2005). "We must

[therefore] seek to ascertain whether the Legislature would have

enacted the particular bill without the [invalid] provision, or

whether, in the absence of the [invalid] provision, the Legislature

would have preferred that the bill have no effect at all." Id.

(internal quotation marks and citations omitted). Guiding this

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inquiry is a well-established judicial preference in favor of

severability and a recognition that "the Legislature has announced

its own preference in favor of severability" as well. Id.; see

also Mass. Gen. Laws ch. 4, § 6 ("The provisions of any statute

shall be deemed severable, and if any part of any statute shall be

adjudged unconstitutional or invalid, such judgment shall not

affect other valid parts thereof.").

In divining legislative intent, Massachusetts courts

consider whether the structure of the statute allows the valid

provisions to stand independent of the invalid, or whether the

provisions are so entwined that "the Legislature could not have

intended that the part otherwise valid should take effect without

the invalid part." Murphy v. Comm'r of the Dep't of Indus.

Accidents, 635 N.E.2d 1180, 1183 (Mass. 1994) (quoting Mass.

Wholesalers of Malt Beverages, Inc. v. Commonwealth, 609 N.E.2d

67, 72 (Mass. 1993)).9

Accordingly, we first look to the structure of § 148B(a)

to determine whether Prong 2 is capable of separation from the

remainder of the statute, or instead is so "entwined" that "the

9 Massachusetts courts also consider a statute's legislative
history. See Peterson, 825 N.E.2d at 1037–39. FedEx asks that we
interpret the legislative history of the Massachusetts Statute,
including a 2004 amendment which eliminated an alternative method
to satisfy Prong 2, to find that Prong 2 is the "centerpiece" of
the statute and is, therefore, not severable. Given the clear
evidence of legislative purpose, we decline to engage in such
retrospective political analysis.

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Legislature could not have intended that" Prongs 1 and 3 survive

without Prong 2. See id. (quoting Mass. Wholesalers of Malt

Beverages, Inc., 609 N.E.2d at 72). This is not a difficult

question. The separated itemization of § 148B(a)'s three factors

easily allows for the straightforward deletion of one factor

without touching the others. Nor do we need to somehow dissect

Prong 2 itself in order to save Prongs 1 and 3. In short, Prong 2

may easily be eliminated from the statute, leaving the remainder

intact. FedEx does not argue to the contrary.

We examine next the "intent of the Legislature,"

Peterson, 825 N.E.2d at 1038, in enacting § 148B(a). The salient

aim of the statute was "to protect employees from being deprived

of the benefits enjoyed by employees through their

misclassification as independent contractors." Somers v.

Converged Access, Inc., 911 N.E.2d 739, 749 (Mass. 2009). So, the

question is: does leaving § 148B(a) in place without Prong 2 as

applied to Plaintiffs leave Plaintiffs with less protection from

misclassification than would Massachusetts law without § 148B(a)

altogether? FedEx makes no claim that such a reduction would occur

if Prongs 1 and 3 are left standing. Nor do Plaintiffs or the

Massachusetts Attorney General make such a claim even though they

would have great incentive to argue for non-severability were a

pruned statute worse than no statute. On such a record, it would

seem that § 148B(a) without Prong 2 still provides as much (or

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more) protection against misclassification than does Massachusetts

law without § 148B(a) altogether. We therefore think that the

legislature's plain aim in enacting this statute favors two-thirds

of this loaf over no loaf at all as applied to motor carriers with

respect to the transportation of property.

IV.

We next turn to the district court's single-sentence

disposition of Prongs 1 and 3 of the Massachusetts Statute as

preempted. Schwann, 2015 WL 501512, at *2. This holding puzzles

us because, as explained above, FedEx expressly disavowed making

such an argument on summary judgment. Even on appeal, in the face

of Plaintiffs' argument that Prongs 1 and 3 are not preempted,

FedEx does not argue otherwise, instead stating that "[it] did not

seek to invalidate [Prongs 1 and 3] except to the extent they are

non-severable." This litigation has already lasted over four-and-

one-half years. It should be narrowing rather than widening at

this point. We therefore hold FedEx to its decision not to argue

to us that Prongs 1 and 3 are preempted, and for that reason alone

vacate and reverse the district court's ruling that Prongs 1 and

3 are preempted.

V.

Finally, we are left with Plaintiffs' argument that the

district court should have granted summary judgment for them under

Prong 1 or 3 of § 148B(a). Denials of summary judgment are

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customarily not appealable final orders. Rogers v. Fair, 902 F.2d

140, 142 (1st Cir. 1990). Moreover, the analysis required to

determine whether Plaintiffs should have been considered employees

under Prong 1 or 3 has very little overlap with our analyses of

the preemption or severability issues. So, even if we had

appellate jurisdiction to review whether Plaintiffs have shown on

summary judgment that they were employees under Prong 1 or 3, it

would be unwise to do so before the district court does so.

VI.

Consistent with the foregoing, we affirm the district

court's holding that Plaintiffs' proposed application of Prong 2

to the individuals who provide first-and-last mile pickup and

delivery services for FedEx is preempted; we reverse the district

court's holdings that Prong 2 is not severable and that Prongs 1

and 3 are preempted; and we remand for further proceedings

consistent with this opinion. No costs are awarded to either

party.

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