Gennell et al v . FedEx CV-05-145-PB 9/10/13 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Robert Gennell, Jr. et a l .

v. Case N o . 05-cv-145-PB Opinion N o .

FedEx Ground Package System, Inc.

AMENDED MEMORANDUM AND ORDER

This class action was filed against FedEx Ground Package

System, Inc. (“FedEx”) by several FedEx drivers based in New

Hampshire who claim that FedEx improperly treated them as

independent contractors rather than employees. The action was

centralized in a multidistrict litigation proceeding with other

similar actions against FedEx. The transferee court later

determined that the New Hampshire drivers could be treated as

independent contractors under New Hampshire common law but that

they qualified as employees under certain state statutes. It

then remanded the action to this court.

Two class claims remain in dispute. Plaintiffs allege in

their second cause of action (“Deduction Claim”) that FedEx made

deductions from the drivers’ compensation that were prohibited by

. They allege in their eighth

cause of action (“Reimbursement Claim”) that FedEx failed to

reimburse the drivers for work-related expenses in violation of

. 1 FedEx has filed a motion for

summary judgment contending that both claims are preempted by

the Federal Aviation Administration Authorization Act of 1994

(“FAAAA”). It also argues that the Reimbursement Claim is

deficient even if it is not preempted. Plaintiffs have filed

their own motion for partial summary judgment.

I. BACKGROUND

A. The Relationship between FedEx and Drivers

FedEx is a nationwide small package pick-up and delivery

company. During the class period, the company conducted its

business delivery operations under the name “FedEx Ground”

(“FEG”) and its home delivery operations under the name “FedEx

Home Delivery” (“FHD”). The class includes New Hampshire

1 The parties agree that plaintiffs’ fifth cause of action for rescission is foreclosed by the transferee court’s ruling, their first cause of action for failure to pay overtime and provide meal breaks and their fourth cause of action alleging a violation of New Hampshire’s Consumer Protection Statute fail under New Hampshire law, and their sixth and seventh causes of action for an accounting and declaratory judgment do not state independent claims for relief. Plaintiffs’ third cause of action for fraud is not a class claim and is not at issue at the present time.

2 drivers from both FEG and FHD who worked for FedEx as

independent contractors between April 2 7 , 2002 and June 1 , 2009.

In re FedEx Ground Package Sys., Inc. Emp’t Practices Litig.,

2 4 , 470–72 (N.D. Ind. 2008); T r . 5. 2

FedEx entered into a standard-form “Operating Agreement”

(“OA”) with each class member. See Doc. N o . 53-3. The OA

characterizes the drivers as independent contractors. Doc. N o .

53-3 at 6 (“Both [FedEx] and Contractor intend that Contractor

will provide these services strictly as an independent

contractor, and not as an employee of [FedEx] for any

purpose.”). The drivers, nevertheless, agreed to conduct their

business in a manner that identified them as part of the FedEx

system. The OA “set[s] forth the mutual business objectives of

the two parties . . . but the manner and means of reaching [the]

results are within the discretion of the Contractor.” Doc. N o .

53-3 at 6.

2 Plaintiffs proposed, and the MDL court granted certification for, a class period starting on April 2 7 , 2002 with no specified end date. In re FedEx, 273 F.R.D. at 4 7 0 , 472. FedEx’s brief describes the class period as running from April 2 7 , 2002 to May 3 1 , 2009. Doc. N o . 53 at 3 0 . At oral argument, the parties agreed that the class period ended on June 1 , 2009, the date FedEx switched to a different business model in New Hampshire. Tr. 4–5. The class period was incorrectly described at oral argument as starting on April 2 9 , 2002. The correct start date is April 2 7 , 2002, as stated in the MDL class certification order. In re FedEx, 273 F.R.D. at 4 7 0 , 472.

3 The drivers agreed to render their services using a FedEx

terminal in New Hampshire as their home base. See id. at 2 1 .

They were required to fill out daily logs and inspection reports

and file the originals with FedEx at the end of each business

day. Id. at 9. The drivers also had to meet an “Agreed

Standard of Service,” which included cooperating with FedEx

employees, maintaining the professional image and good

reputation of FedEx, and conducting all business activities with

integrity and honesty. Id. at 10–12. The OA restricted drivers

from using their equipment for any other purpose while the

equipment was in the service of FedEx. Id. at 8 .

FedEx compensated the drivers through weekly settlement

payments. The settlement payments were calculated using a

compensation formula that took into account the volume of the

drivers’ package deliveries, the number of stops they made, and

the density of their delivery area, and deducted certain

expenses FedEx incurred on behalf of the drivers. Id. at 18–20.

Deemed “independent contractors,” the drivers were required

to procure their own trucks and operate them at their own

expense. Id. at 7 (requiring the drivers to bear all costs and

expenses of operating the trucks, including maintenance, fuel,

oil, tires, repairs, taxes, insurance, workers compensation

4 assessments, licenses, vehicle registration fees, and tolls).

The drivers were also required to mark their trucks and other

equipment with FedEx colors, logos, numbers, marks, and insignia

and wear a FedEx uniform. Id. at 8 , 1 2 . The drivers either

paid for these expenses out-of-pocket or they were deducted from

their weekly settlement payments. For instance, to facilitate

the payment of licenses, taxes, and fees, the drivers authorized

FedEx to pay the charges on the drivers’ behalf and then deduct

the expenses from their weekly settlement payments. Id. at 7–8.

Drivers could elect to participate in a business support package

(“BSP”) through which FedEx provided the drivers with uniforms,

communications equipment, Department of Transportation (“DOT”)

inspections, equipment washing, and drug tests to meet DOT

requirements. Most drivers participated in the BSP and the cost

was deducted from their weekly settlement payments. Id. at 2 4 .

If a driver did not elect to acquire the communications

equipment necessary to fulfill his obligations through the BSP,

he was required to purchase or lease i t . Id. at 1 2 .

In addition to the BSP deduction, plaintiffs allege that

FedEx deducted the cost of deadhead,3 work accident insurance,

3 Deadhead insurance is insurance to cover a tractor when it is operated without a load. Great Am. Assurance. C o . v . Sanchuk, LLC, 8:10-cv-2568-T-33AEP,

, at *7 n.2 (M.D. Fla.

5 and cargo insurance, as well as the postage fees associated with

sending correspondence to the drivers. Doc. Nos. 46 at 11–12;

46-3 at 1 0 .

B. Plaintiffs’ Claims

Plaintiffs base the Deduction Claim on

(“Deduction Statute”), which bars an employer from

withholding or diverting money from an employee’s wages unless

one or more enumerated exceptions are satisfied. Plaintiffs

argue that FedEx violated this provision by deducting charges

for items such as DOT inspections, insurance, uniforms,

communications equipment, and drug testing.

The Reimbursement Claim is based on

(I) (“Reimbursement Statute”), which provides:

An employee who incurs expenses in connection with his or her employment and at the request of the employer, except those expenses normally borne by the employee as a precondition of employment, which are not paid for by wages, cash advance, or other means from the employer, shall be reimbursed for the payment of the expenses within 30 days of the presentation by the employee of proof of payment.

Plaintiffs argue that FedEx violated this provision by requiring

drivers to bear the cost of a variety of work-related items such

as the cost of owning and operating their trucks.

July 3 0 , 2012).

6 To prevail on either claim a driver must be an “employee.”

defines an employee as “every

person who may be permitted, required, or directed by an

employer, in consideration of direct or indirect gain or profit,

to engage in any employment . . . .” It then provides several

exceptions, including a narrowly-defined independent contractor

exception.

The transferee court ruled that the plaintiffs

qualified as employees under this provision and were not covered

by the independent contractor exception because the exception

does not apply to a person who “‘holds himself or herself out to

be in business for himself or herself.’” In Re FedEx Ground

Package Sys., Inc.,

3 8 , 698 (N.D. Ind. 2010)

(quoting

:42II(e)).

II. STANDARD OF REVIEW

Summary judgment is appropriate when the record reveals “no

genuine dispute as to any material fact and that the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The evidence submitted in support of the motion must be

considered in the light most favorable to the nonmoving party,

drawing all reasonable inferences in its favor. See Navarro v .

Pfizer Corp.,

0 , 94 (1st Cir. 2001).

7 A party seeking summary judgment must first identify the

absence of any genuine dispute of material fact. Celotex Corp.

v . Catrett,

1 7 , 323 (1986). A material fact “is one

‘that might affect the outcome of the suit under the governing

law.’” United States v . One Parcel of Real Prop. with Bldgs.,

0 0 , 204 (1st Cir. 1992) (quoting Anderson v . Liberty

Lobby, Inc.,

4 2 , 248 (1986)). If the moving party

satisfies this burden, the nonmoving party must then “produce

evidence on which a reasonable finder of fact, under the

appropriate proof burden, could base a verdict for i t ; if that

party cannot produce such evidence, the motion must be granted.”

Ayala-Gerena v . Bristol Myers-Squibb Co.,

6 , 94 (1st

Cir. 1996); see Celotex,

. On cross motions for

summary judgment, the standard of review is applied to each

motion separately. See Am. Home Assurance C o . v . AGM Marine

Contractors, Inc.,

1 0 , 812 (1st Cir. 2006).

III. ANALYSIS

The principal issue raised by the present motions is

whether the FAAAA preempts the Deduction and Reimbursement

Claims. Accordingly, I begin with the preemption issue.

8 A. Preemption

The FAAAA has an express preemption provision, which reads:

“[A] State . . . may not enact or enforce a law, regulation, or

other provision having the force and effect of law related to

price, route, or service of any motor carrier . . . with

respect to the transportation of property.”

(c)(1). FedEx argues that both the Deduction Claim and the

Reimbursement Claim are preempted by the FAAAA because the

statutes on which the claims are based affect its brand

communication practices in a way that is “related to” its

pricing and services.

The FAAAA’s preemption provision is modeled on a similar

provision in the Airline Deregulation Act of 1978 (“ADA”) and

courts have analyzed both provisions in pari materia. Brown v .

United Airlines, Inc.,

0 , 65 (1st Cir. 2013). Because

the Supreme Court and the First Circuit have construed the

relevant terms in both statutes on multiple occasions, I first

look to precedent for guidance and then apply the statute to the

facts of the case to determine whether plaintiffs’ claims are

preempted.

1. Precedent

The Supreme Court first dealt with ADA preemption in

9 Morales v . Trans World Airlines, Inc.,

(1992). In

holding that state guidelines setting airline fare advertising

were preempted by the ADA, the Court made several statements

that have guided its subsequent preemption jurisprudence under

the ADA and the FAAAA. First, relying on both common usage and

a similarly worded preemption provision in the Employee

Retirement Income Security Act, the Court noted that the use of

the phrase “relating to” in the preemption provision

“express[es] a broad preemptive purpose.”

. The

Court also considered and rejected both plaintiff’s argument

that ADA preemption applied only to provisions that directly set

airline rates, routes, or services and its contention that only

provisions that specifically targeted the airline industry were

subject to preemption.

. At the same time, the

Court was careful to note that “‘[s]ome state actions may affect

[airline fares] in too tenuous, remote, or peripheral a manner’

to have preemptive effect.”

at 390 (quoting Shaw v . Delta

Air Lines, Inc.,

5 , 100 n.21 (1983)). Applying these

principles, the Court determined that the fare advertising

guidelines were related to airline prices both because they

dictated how an airline could communicate rate information to

its customers and because “it is clear as an economic matter

10 that state regulations on fare advertising have the forbidden

significant effect upon fares.” Id. at 387-88.

Three years later, in American Airlines v . Wolens,

(1995), the Court was required to determine whether the

ADA’s preemption provision barred participants in American

Airlines’ frequent flyer program from using a state consumer

protection statute and state contract law to recover damages

they suffered when American made retroactive changes to the

program. Following its reasoning in Morales, the Court had

little difficulty in concluding that the consumer protection act

claim was preempted, but it determined that the plaintiffs could

proceed with their breach of contract claim because the

preemption provision did not bar a plaintiff from using state

contract law to force an airline to abide by its own agreements.

.

In Rowe v . New Hampshire Motor Transport Ass’n,

(1998), an association of transport carriers argued that

certain sections of Maine’s Tobacco Delivery Law were preempted

by the FAAAA. One of the challenged provisions prohibited

anyone other than a state-licensed retailer from accepting an

order for delivery of tobacco products and another required

retailers to use a specific form of “recipient-verification

11 service” when shipping tobacco products.

. In

determining that the provisions were preempted even though they

targeted shippers rather than carriers, the Court reasoned that

the provisions were preempted because they had the effect of

regulating the services that carriers provide to their

customers.

.

Earlier this year, the Court again confronted the issue of

preemption under the FAAAA in Dan’s City Used Cars, Inc. v .

Pelkey, 133 S . C t . 1769 (2013). There, a vehicle owner brought

suit against a towing company alleging that it had improperly

stored and ultimately sold his vehicle in violation of state

laws that regulate the storage and sale of towed vehicles. Id.

at 1775. In holding that the state statutes were not preempted,

the Court noted that the FAAAA, unlike the ADA, only preempts

claims that relate to price, routes, or services “with respect

to the transportation of property.” Id. at 1778. Adopting

language from a dissent by Justice Scalia in an earlier case,

the Court noted that this phrase “‘massively limits the scope of

preemption’ ordered by the FAAAA.” Id. at 1778 (quoting

Columbus v . Ours Garage & Wrecker Serv., Inc.,

2 4 , 449

(2002) (Scalia, J., dissenting)). The Court then reasoned that

the plaintiff’s claims were not preempted because the conduct on

12 which the claims were based occurred long after the vehicle was

towed, and, therefore, the claims did not relate to

transportation services. Id. at 1779.

The First Circuit decision that speaks most directly to the

preemption question at issue here is DiFiore v . American

Airlines, Inc.,

(1st Cir. 2011). In DiFiore, a

class of skycaps challenged American Airlines’ curbside baggage

check fee, arguing that it was inconsistent with a Massachusetts

statute governing tips. 4 In concluding that the tips law claim

was preempted by the ADA, the court distinguished the tips law

from other employee compensation laws that ordinarily would not

be preempted by noting that “the tips law has a direct

connection to air carrier prices and services and can fairly be

said to regulate both.”

at 8 7 . In reaching this

conclusion, the court rejected American Airlines’ argument that

a sufficient connection between a state law and a motor

carrier’s prices, routes, or services can be established merely

by demonstrating that the law imposes costs on an airline that

could result in price increases.

at 8 9 . Instead, the Court 4 The statute provided in pertinent part that “[n]o employer or other person shall demand . . . or accept from any . . . service employee . . . any payment or deduction from a tip or service charge given to such . . . service employee . . . by a patron.”

at 84 (quoting Mass. Gen. Laws ch. 149, § 152A(b)).

13 based its ruling on the fact that the plaintiffs were using the

tips law to directly attack a charge that American was

attempting to impose on its customers for an airline service.

Id. Accordingly, the court held that “the tips law as applied

here directly regulates how an airline service is performed and

how its price is displayed to customers - not merely how the

airline behaves as an employer or a proprietor.” Id. at 8 8 ; see

also Brown,

(applying DiFiore to common law

claims challenging baggage handling f e e ) .

B. Application

The Supreme Court has never held that a state employee

compensation statute is preempted by either the ADA or the

FAAAA. Moreover, DiFiore, the only First Circuit decision to do

s o , involved an effort to use an employee compensation statute

to directly attack an airline’s prices and services. This case

is obviously distinguishable from DiFiore because, unlike the

Massachusetts tips law that was at issue in that case, the

Deduction and Reimbursement Statutes have no direct connection

to FedEx’s prices, routes, or services. Thus, to succeed with

its preemption defense, FedEx must find some other way to

demonstrate that plaintiffs’ claims have a sufficient connection

to its prices, routes, or services to warrant their preemption.

14 FedEx attempts to meet this challenge by first arguing that

it does not need evidence to establish the required relationship

between its prices and services and the plaintiffs’ claims and

because the connection can be established through the use of

logic alone. In simplified form, FedEx reasons that its

branding strategy, which requires drivers to use the FedEx brand

on their trucks and uniforms, obviously relates to the services

the company provides. It then asserts that the Deduction and

Reimbursement Statutes relate to its branding strategy because

it cannot continue to use the strategy unless it complies with

both statutes. It then follows as a matter of logic, FedEx

claims, that if its branding strategy relates to its services

and the Deduction and Reimbursement Statutes relate to its

branding strategy, the statutes must also relate to its services

in a way that requires preemption.

The fatal flaw in this argument is that it is based on a

serious misreading of precedent. FedEx rests its argument on a

statement in the First Circuit’s decision in New Hampshire Motor

Transport Ass’n v . Rowe, in which the court noted that evidence

quantifying the cost of complying with a statute is not required

if the court is able to discern “the logical effect that a

particular scheme has on the delivery of services or the setting

15 of rates. . . .”

6 , 80 n.14 (1st Cir. 2006), aff’d

sub nom. Rowe v . N.H. Motor Transport Ass’n,

(2008). In making this statement, the court was not declaring

that every state statute that can be tied to a motor carrier’s

prices, routes, or services through the use of logic is

preempted. Instead, it was merely acknowledging the fact that

evidence will not be required to establish a prohibited effect

on prices, routes, or services if the prohibited effect can be

discerned through the use of logic.

Almost all state laws that affect a motor carrier’s

transportation business will have the kind of logical relation

to its prices or services that FedEx complains of in this case.

Zoning laws limit the places where a carrier can locate its

facilities. Tax laws affect the cost of a carrier’s operations.

Traffic laws affect the number of deliveries that a driver can

make in a day. Wage and hour laws impact the conditions under

which a carrier’s employees can be made to work. All of these

laws have a logical relation to a carrier’s prices and services

because they either affect the way in which a carrier provides

its services or they potentially impose costs on a carrier that

could affect the prices it charges its customers. Laws of this

type, however, are not ordinarily subject to preemption. See

16 Dan’s City, 133 S . C t . at 1780 (noting that zoning regulations

are not preempted); DiFiore,

(rejecting argument

that state laws that affect a carrier’s costs are necessarily

preempted).

As the Supreme Court recently noted in Dan’s City, the

FAAAA’s preemption provision is targeted at “a State’s direct

substitution of its own governmental commands for competitive

market forces in determining (to a significant degree) the

services that motor carriers will provide.” 133 S . C t . at 1780

(quoting Rowe, 522 U.S. at 3 7 2 ) . This purpose is not served

when the FAAAA is construed so broadly as to require the

preemption of every employee compensation statute that has a

logical connection to a carrier’s prices, routes, or services.

Thus, FedEx’s argument from logic is not sufficient to justify

its preemption defense.

FedEx argues in the alternative that the evidentiary record

demonstrates that the Deduction and Reimbursement Statutes are

related to its prices, routes, and services. The evidence FedEx

relies o n , however, supports only its argument that its branding

strategy is an essential aspect of the services it provides to

its customers. FedEx conceded at oral argument that it

presented no evidence to suggest that either statute actually

17 interfered with FedEx’s pricing or services. T r . 34–35.

Moreover, this is not a case where I can rely on an

understanding of basic economics to substitute for evidence.

See, e.g., Morales,

(noting that “it is clear as

an economic matter that state restrictions on fare advertising

have the forbidden significant effect upon fares”). In fact, in

the absence of evidence, basic economics suggests that, as in

fact happened in this case, 5 FedEx should be able to comply with

both statutes without changing either its prices or services

merely by renegotiating its contracts with its drivers.

In summary, the record in this case demonstrates that the

Deduction and Reimbursement Statutes are employee compensation

statutes that have no direct connection to FedEx’s prices,

routes, or services. Moreover, neither statute relates to

FedEx’s prices, routes, or services merely because FedEx must

comply with both statutes if it chooses to bar its drivers from

5 On January 8 , 2009, FedEx announced its intention to transition to a new contractor workforce model in New Hampshire effective June 1 , 2009. Doc. N o . 51-5. In exchange for payment, drivers would release claims against FedEx and agree to early termination of the OAs. The announcement contained three sample Independent Service Provider (“ISP”) agreements. Under the new model, FedEx contracts with ISPs who act as corporate entities and employers (i.e. “John Smith, Inc.”). The contractors hire and supervise employees to meet the service objectives. FedEx also offers an “optional brand promotion program” through which ISPs can get FedEx logos on their trucks and uniforms.

18 holding themselves out to be in business for themselves.

Finally, no evidence has been produced to support a claim that

either statute actually affects FedEx’s pricing or the services

it provides to its customers. Accordingly, any connection that

exists between the Deduction and Reimbursement Statutes and

FedEx’s prices, routes, or services is simply too tenuous to

warrant preemption.6 Accord Schwann v . FedEx Ground Package

Sys., Inc., N o . 11-11094-RGS,

, at *4 (D. Mass.

July 3 , 2013) (rejecting preemption challenge to similar claims

based on Massachusetts l a w ) ; Martins v . 3PD, Inc., N o . 11-11313-

DPW,

, at *12-13 (D. Mass. Mar. 2 8 , 2013) (same).

6 FedEx also argues that plaintiffs’ claims are preempted to the extent that they seek compensation beyond that agreed upon in the OA because state law cannot “enlarge or enhance” transportation-related contracts. Doc. N o . 44-1 at 9. This argument is based on dictum in Wolens in which the Court explained its ruling that the ADA preempted a state consumer protection act claim but not a common law breach of contract claim by stating that “[t]his distinction between what the State dictates and what the airline itself undertakes confines courts, in breach-of-contract actions, to the parties’ bargain, with no enlargement or enhancement based on stated laws or policies external to the agreement.” See

. FedEx makes too much of this statement by failing to acknowledge that the Wolens Court determined that the extra-contractual claim that was then before it was preempted because it was related to the airline’s rates and services. See

. Wolens does not hold, and the text of the FAAAA’s preemption provision would not permit, a cause of action that does not otherwise relate to a carrier’s prices, routes, or services to be preempted merely because it seeks a determination that the carrier’s contracts with its workers violate state employee compensation laws.

19 B. Reimbursement Statute

The Reimbursement Statute requires an employer to reimburse

an employee for certain expenses incurred by the employee within

thirty days of presentment by the employee of proof of payment.

To be covered under the statute, the expenses must be incurred

“at the request of the employer.”

(I). The statute, however, does not cover expenses that

are “normally borne by the employee as a precondition of

employment.”

Nor does it cover expenses that are “paid for

by wages, cash advance, or other means from the employer.”

Plaintiffs seek to recover for a variety of business-

related expenses that they agreed to assume in the OA. Their

theory is that FedEx asked them to assume the expenses in the

OA, that the expenses are not of a type that are normally borne

by an employee as a precondition of employment, and that the

expenses are not otherwise “paid for” by FedEx. FedEx responds

by claiming that the OA does not qualify as a “request” that the

employee incur the expenses and that, in any event, the expenses

were paid for by “other means” through the settlement payments

that it made to the drivers pursuant to the OA.

I decline to resolve this issue at the present time because

the matter has not been adequately briefed. If the OA is deemed

20 to be FedEx’s request that the drivers assume the expenses, it

would seem that FedEx’s promise in the OA to make settlement

payments to the drivers is the means by which FedEx agreed to

compensate them for their acquiescence in FedEx’s request.

Thus, even if I accept plaintiffs’ argument that the OA is a

request to assume expenses, it would appear that the

Reimbursement Statute does not cover the drivers’ expenses

because the settlement payments were the “other means” by which

the drivers were compensated for incurring the expenses.

Because, however, the parties have not adequately addressed this

issue in their briefs, I deny both motions to the extent that

they are addressed to the Reimbursement Claim without prejudice

to either party’s right to seek summary judgment again at a

later time.

C. The Deduction Claim

Plaintiffs move for summary judgment on their claim that

FedEx violated the Deduction Statute by improperly withholding

expenses from their wages. Plaintiffs seek to recover four

types of deductions: (1) business support package deductions;

(2) work accident and deadhead insurance deductions; (3) cargo

insurance claim deductions; and (4) postage deductions. Doc.

N o . 46 at 11–13.

21 The Deduction Statute bars employers from withholding wages

from an employee unless the withholding is authorized by an

exception recognized in the statute. At the beginning of the

class period, the statute provided in pertinent part that:

No employer may withhold or divert any portion of an employee's wages unless: . . . (b) The employer has a written authorization by the employee for deductions for a lawful purpose accruing to the benefit of the employee as provided in regulations issued by the commissioner.

(2002). In 2004 and 2005, the

statute was amended to add exceptions to the general prohibition

on deductions that are not relevant to the current dispute. In

2007, the statute was amended again to include several

additional exceptions that had previously been included in the

regulations adopted to implement the statute. Plaintiffs argue

that they are entitled to partial summary judgment on the

Deduction Claim because the deductions that were made by FedEx

during the class period were not authorized under the statute.

FedEx does not argue that any of the deductions at issue

here were expressly authorized by any version of the Deductions

Statute that was in effect during the class period. Nor does it

contend that the deductions were expressly authorized by the

statute’s implementing regulations. Instead, it cites what it

argues is a clarifying amendment to the statute that was enacted

22 after the class period ended and argues that the amendment makes

it clear that the deductions were authorized by implication

under earlier versions of the statute. That amendment, which

was adopted in 2011, adds to the list of deductions permitted

under the statute deductions that are made:

For any purpose on which the employer and employee mutually agree that does not grant financial advantage to the employer, when the employee has given his or her written authorization and deductions are duly recorded.

I (b)(12) (2011).

I reject FedEx’s argument. Although FedEx claims that the

2011 amendment clarifies earlier versions of the Deduction

Statute, it has failed to identify any ambiguous statutory text

that the amendment was intended to clarify. The statute itself

is quite clear in specifying that deductions are not permitted

unless they are authorized by the statute itself or in

regulations issued by the Department of Labor. FedEx does not

point to any statutory exceptions to the general prohibition on

deductions that the 2011 amendment was intended to clarify. Nor

does it explain how the 2011 amendment could have clarified the

statute’s implementing regulations.

FedEx also invokes

.03(b)

to support its argument that the Deduction Statute must be

23 construed to authorize deductions even if they are not expressly

authorized in the statute or its implementing regulations. Lab

803.03(b) bars an employer from requiring an employee or an

applicant for employment to “pay” for “the cost of a medical

examination, non-required drug or alcohol testing, records

required by the employer, or any item required by and for the

benefit of the employer.” FedEx notes that neither the statute

nor the regulations authorize deductions for the kind of

expenses covered by Lab 803.03(b). It then reasons that the

statute must authorize deductions that are not expressly

exempted from the general prohibition on deductions because

otherwise Lab 803.03(b) would be superfluous. I reject this

argument for two reasons. First, it is by no means clear that

Lab 803.03(b) would be superfluous unless the Deduction Statute

is read to authorize deductions that are not expressly exempted.

Lab 803.03(b) is a limitation on an employer’s ability to

require any employee to “pay” for certain business-related

expenses. It does not apply only to deductions. Thus, it would

not be superfluous if the statute is construed to authorize only

deductions that are expressly exempted. Second, the

construction of the statute that FedEx proposes is inconsistent

with the statute’s text, which plainly establishes a general

24 prohibition on deductions unless they are authorized in the

statute itself or the regulations implementing the statute. I

decline to adopt an interpretation of the statute that is

contrary to its plain meaning even if it would render a

regulatory interpretation of that statute superfluous.

Because I am unpersuaded by FedEx’s claim that the 2011

amendment was intended merely to clarify the law as it existed

during the class period, and FedEx has failed to offer any other

persuasive argument that the plaintiffs’ motion should not be

granted, I determine that plaintiffs are entitled to partial

summary judgment with respect to the Deduction Claim.7

V. CONCLUSION

Finding that plaintiffs’ claims are not preempted by the

FAAAA, I deny FedEx’s motion for summary judgment (Doc. N o . 44)

to the extent that it is based on preemption; grant the

7 To the extent that FedEx claims that the 2011 amendment should apply retroactively, it does so only in a conclusory fashion that does not require independent analysis. See Doc. N o . 53 at 2 1 . In any event, it appears likely that any attempt to apply the 2011 amendment to conduct that occurred prior to its adoption would be unlikely to survive a challenge based on the New Hampshire Constitution’s prohibition on retrospective legislation. See, e.g., Maplevale Builders, LLC v . Danville, N o . 2012-485,

, at *5 (N.H. June 5 , 2013) (describing constitutional prohibition on retrospective legislation).

25 plaintiffs’ motion for partial summary judgment (Doc. N o . 39) on

their illegal deductions claim (Count I I ) ; and deny both

parties’ motions for summary judgment on plaintiffs’

reimbursement claim (Count VIII) without prejudice.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

September 1 0 , 2013

cc: Susan E . Ellingstad, Esq. Jordan M . Lewis, Esq. Edward K. O’Brien, Esq. Jozef Kopchick, Esq. Kenneth Sansom, Esq. Leann M . Walsh, Esq. James C . Rehnquist, Esq. Lucy J. Karl, Esq.

26