Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01110/USCOURTS-ca7-15-01110-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 

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In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 15-1109 & 15-1110 

THOMAS COSTELLO, MEGAN BAASE KEPHART, 

and OSAMA DAOUD, on behalf of themselves 

and all other persons similarly situated, 

known and unknown, 

Plaintiffs-Appellees/Cross-Appellants, 

v.

BEAVEX, INCORPORATED, 

Defendant-Appellant/Cross-Appellee. 

____________________ 

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 12 CV 7843 — Virginia M. Kendall, Judge. 

____________________ 

ARGUED SEPTEMBER 18, 2015 — DECIDED JANUARY 19, 2016 

____________________ 

Before BAUER, KANNE, and ROVNER, Circuit Judges. 

KANNE, Circuit Judge. BeavEx, Inc. is a same-day delivery 

service that enlists 104 couriers to carry out its customers’ 

orders throughout the state of Illinois. By classifying its couriers as independent contractors instead of employees, BeavCase: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
2 Nos. 15-1109 & 15-1110 

Ex is not subject to several state and federal employment 

laws, including the Illinois Wage Payment and Collection 

Act (“IWPCA”), 820 ILCS 115, which, among other things, 

prohibits an employer from taking unauthorized deductions 

from its employees’ wages. Plaintiffs, and the putative class, 

were or are individual couriers who allege that they should 

have been classified as employees of BeavEx for purposes of 

the IWPCA, and accordingly, any deductions taken from 

their wages were done so illegally. Complicating Plaintiffs’ 

position is the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”), 49 U.S.C. § 14501(c)(1), which 

expressly preempts any state law that is “related to a price, 

route, or service of any motor carrier.” BeavEx contends that 

the FAAAA preempts the IWPCA, making any deductions it 

withheld from its couriers’ wages valid. 

The district court held that the FAAAA does not preempt 

the IWPCA and so denied BeavEx’s motion for summary 

judgment. At the same time, the district court denied Plaintiffs’ motion to certify the class but granted their motion for 

partial summary judgment, holding that Plaintiffs are employees under the IWPCA. This interlocutory appeal presents for our review the question of whether the FAAAA 

preempts the IWPCA and whether the district court properly 

denied class certification. For the following reasons, we affirm the district court’s denial of BeavEx’s motion for summary judgment, and we vacate its denial of class certification 

and remand for further proceedings. 

 

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Nos. 15-1109 & 15-1110 3

I. BACKGROUND

A. Factual Background

BeavEx provides same-day delivery and logistics services 

to its customers. To perform its services in Illinois, BeavEx 

engages 104 couriers, which it classifies as independent contractors for all purposes. Plaintiffs, and the class they seek to 

represent, are approximately 825 individual couriers who 

performed delivery services for BeavEx in Illinois from October 1, 2002, to the present and were not treated as employees under the IWPCA. 

BeavEx classifies its couriers as independent contractors 

under all state and federal labor laws. Some of BeavEx’s couriers are incorporated, while others are not. Some couriers, 

with BeavEx’s approval, use subcontractors to complete deliveries. To become a courier for BeavEx, a driver must sign 

an Owner/Operator Agreement and a contract with Contract 

Management Services. Under the agreements, BeavEx has 

the authority to terminate a courier’s contract for improper 

conduct. BeavEx also may terminate a contract if a customer 

on the courier’s route stops contracting with BeavEx. 

BeavEx pays its couriers per route or per delivery, rather 

than per hour. Couriers drive their own vehicles, which they 

lease to BeavEx. Couriers must wear uniforms with the 

BeavEx logo, and their cars must bear the BeavEx logo, 

phone number, and Illinois Commerce Commission number. 

BeavEx does not provide health insurance or workers’ compensation and does not pay payroll taxes or unemployment 

contributions for its couriers. In addition, BeavEx deducts 

expenses from its couriers’ wages for occupational accident 

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4 Nos. 15-1109 & 15-1110 

insurance, cargo insurance, uniforms, scanners, cellular 

phone fees, and “chargebacks” for unsatisfactory deliveries. 

BeavEx has ten individuals it considers employees who 

tend to administrative and warehouse duties in Illinois. 

BeavEx pays these employees a salary or an hourly wage 

and provides health insurance and other benefits. BeavEx 

also pays payroll taxes and makes unemployment and 

workers’ compensation insurance contributions for these 

employees. 

B. Procedural Background 

Plaintiffs filed suit against BeavEx on October 1, 2012, alleging that BeavEx misclassified its couriers as “independent 

contractors” instead of “employees” under Illinois statutory 

and common law. Plaintiffs alleged that the misclassification 

caused (1) a deprivation of overtime wages in violation of 

the Illinois Minimum Wage Law; (2) illegal deductions from 

Plaintiffs’ wages in violation of the IWPCA; and (3) unjust 

enrichment of BeavEx. 

On August 13, 2013, BeavEx moved for summary judgment on all of Plaintiffs’ claims.1 With respect to count two, 

BeavEx argues that the FAAAA expressly preempts the 

IWPCA’s definition of “employee” because it is “related to” a 

price, route, or service. Plaintiffs, on September 23, 2013, 

contemporaneously filed a motion for class certification and 

a motion for partial summary judgment on count two, argu-

 

1 Because this appeal was certified only on the question of whether 

prong two of the IWPCA’s test for employment is preempted, we do not 

address counts one and three, which arise under different state laws. 

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Nos. 15-1109 & 15-1110 5

ing that Plaintiffs are “employees” within the meaning of the 

IWPCA. 

The district court disposed of the three motions in one 

order. The district court denied BeavEx’s motion for summary judgment, holding that the FAAAA does not preempt 

the IWPCA. 

The district court then considered and denied Plaintiffs’ 

motion for class certification under Federal Rule of Civil 

Procedure 23(b)(3). Plaintiffs met the numerosity, typicality, 

and commonality prerequisites of Rule 23(a), the court decided. The district court held, however, that Plaintiffs did not 

fulfill the predominance requirement of Rule 23(b)(3) because the first prong of the IWPCA’s three-part employee 

test requires an individualized inquiry to determine if the 

employer controls the worker “in fact.” “Failure to 

acknowledge the individualized inquiry required by the first 

prong [of the IWPCA] because the second prong can be decided through common facts,” the district court concluded, 

“would be the same as ruling on the merits,” which is improper at the class certification stage. Costello v. BeavEx, Inc., 

303 F.R.D. 295, 308 (N.D. Ill. 2014). 

Finally, the district court granted Plaintiffs’ motion for 

partial summary judgment, concluding that Plaintiffs are 

“employees” of BeavEx within the meaning of the IWPCA 

because BeavEx could not satisfy the second prong of the 

IWPCA’s test for employment. 

The district court certified for interlocutory appeal the 

question of whether the FAAAA preempts the IWPCA. 

Plaintiffs filed a cross-appeal contesting the district court’s 

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6 Nos. 15-1109 & 15-1110 

denial of class certification. This court granted leave to appeal. 

II. ANALYSIS

BeavEx challenges the district court’s determination that 

the FAAAA does not preempt the IWPCA, arguing that a 

law that prohibits its use of independent contractors is related to a price, route, or service and is therefore preempted. 

Plaintiffs’ cross-appeal seeks review of the district court’s refusal to certify the proposed class. According to Plaintiffs, 

the district court abused its discretion by finding that common issues did not predominate when common evidence 

would show that BeavEx cannot satisfy prong two of the 

IWPCA’s employment test. We treat each issue in turn. 

A. FAAAA Preemption 

We review a district court’s federal preemption decision 

de novo. Patriotic Veterans, Inc. v. Indiana, 736 F.3d 1041, 1045–

46 (7th Cir. 2013). The touchstone of preemption analysis is 

the intent of Congress. Id. at 1046 (citing Wyeth v. Levine, 555 

U.S. 555, 565 (2009)). 

1. The IWPCA 

The Illinois General Assembly passed the IWPCA in 1973 

“to provide employees with a cause of action for the timely 

and complete payment of earned wages or final compensation, without retaliation from employers.” Byung Moo Soh v. 

Target Mktg. Sys., Inc., 817 N.E.2d 1105, 1107 (Ill. App. Ct. 

2004) (quotation marks omitted). In particular, the IWPCA 

prohibits employers from taking deductions from employees’ wages unless the deductions are “(1) required by law; (2) 

to the benefit of the employee; (3) in response to a valid 

wage assignment or wage deduction order; [or] (4) made 

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Nos. 15-1109 & 15-1110 7

with the express written consent of the employee, given 

freely at the time the deduction is made.” 820 ILCS 115/9. 

The IWPCA provides a broad definition of what constitutes an “employee” using a three-prong test commonly referred to as an ABC test. Id. 115/2. The test is conjunctive, 

meaning that if an employer cannot satisfy each of the 

prongs, then the individual must be classified as an employee for purposes of the IWPCA. See Novakovic v. Samutin, 820 

N.E.2d 967, 973 (Ill. App. Ct. 2004).

At issue in this case is the second prong of the ABC test. 

The second prong requires that to treat an individual as an 

independent contractor, the individual must “perform[] 

work which is ... outside the usual course of business ... of 

the employer.” 820 ILCS 115/2. Plaintiffs argued, and the district court found, that because BeavEx is a delivery company, 

its delivery couriers do not perform work outside the usual 

course of BeavEx’s business. Accordingly, the district court 

held, BeavEx’s couriers must be classified as employees 

within the meaning of the IWPCA.

2. The FAAAA 

The district court’s holding that the couriers are “employees” under the IWPCA does not, however, end our 

analysis of the issue. That is because BeavEx contends that 

the FAAAA provision that preempts any state law “related 

to a price, route, or service of any motor carrier” applies to 

the IWPCA’s definition of employee. 49 U.S.C. § 14501(c)(1). 

a. History of the FAAAA 

The Interstate Commerce Act of 1887, ch. 104, 24 Stat. 

379, set into motion nearly a century of federal regulation of 

the transportation industry. The Interstate Commerce ComCase: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
8 Nos. 15-1109 & 15-1110 

mission first regulated the railroad industry, then in 1935 

Congress added the trucking industry, Motor Carrier Act of 

1935, ch. 498, 49 Stat. 543, and in 1938, the airline industry, 

Civil Aeronautics Act of 1938, ch. 601, 52 Stat. 973. 

But by the 1970s, a movement to deregulate the transportation industry was taking off. In 1978, Congress “determin[ed] that ‘maximum reliance on competitive market forces’” would better serve the air transportation industry, and 

so began the process of deregulation. Morales v. Trans World 

Airlines, Inc., 504 U.S. 374, 378 (1992). Congress enacted the 

Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 

1705, which dismantled federal regulation of the airline industry. In addition, the ADA sought to “ensure that the 

States would not undo federal deregulation with regulation 

of their own.” Morales, 504 U.S. at 378. To that end, Congress 

provided in the ADA that “no State ... shall enact or enforce 

any law ... relating to rates, routes, or services of any air carrier.” 92 Stat. at 1708. 

Trucking-industry deregulation was not far behind. In 

1980, Congress passed the Motor Carrier Act of 1980, Pub. L. 

No. 96-296, 94 Stat. 793, which ended the federal government’s management of the trucking industry. Fourteen years 

later, to complete deregulation of the trucking industry, 

Congress enacted a preemption provision in the Federal 

Aviation Administration Authorization Act of 1994, Pub. L. 

No. 103-305, 108 Stat. 1569. The FAAAA borrowed the 

preemptive language of the ADA, providing that “a State ... 

may not enact or enforce a law ... related to a price, route, or 

service of any motor carrier ... with respect to the transportation of property.” Id. at 1606. 

 

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b. The Supreme Court’s Interpretation of the FAAAA 

The Supreme Court has on several occasions interpreted 

the “related to” language contained in the FAAAA and the 

ADA. The Court has interpreted the shared language of the 

two statutes identically. See Rowe v. N.H. Motor Transp. Ass’n, 

552 U.S. 364, 370 (2008). 

The preemptive scope of the FAAAA is broad. See Morales, 504 U.S. at 383–84. A state law is preempted if it has a 

direct connection with or specifically references a carrier’s 

prices, routes, or services. Id. at 384. More expansively, a 

state law may be preempted even if the law’s effect on prices, 

routes, or services “is only indirect.” Id. at 386 (quotation 

marks omitted). This means “that pre-emption occurs at 

least where state laws have a ‘significant impact’ related to 

Congress’ deregulatory and pre-emption-related objectives.” 

Rowe, 552 U.S. at 371 (quoting Morales, 504 U.S. at 390). 

Preemption, however, is not unlimited. The FAAAA does 

not preempt state laws “that affect fares in only a ‘tenuous, 

remote, or peripheral ... manner.’” Id. (quoting Morales, 504 

U.S. at 390). In Morales, the Supreme Court explained that 

laws prohibiting gambling or prostitution, for example, were 

beyond the scope of FAAAA preemption. Morales, 504 U.S. at 

390. 

The Supreme Court has on four occasions elaborated on 

the scope of the “related to” clause of the ADA and FAAAA 

beginning with Morales, 504 U.S. 374. 

In Morales, the National Association of Attorneys General 

promulgated “detailed standards governing the content and 

format of airline advertising, the awarding of premiums to 

regular customers ..., and the payment of compensation to 

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passengers who voluntarily yield their seats on overbooked 

flights.” 504 U.S. at 379. The attorneys general sought to enforce these “guidelines” through their states’ generally applicable consumer protection statutes. Id. at 383. 

The Court rejected the contention that a state law must 

actually direct the setting of rates, routes, or services or specifically target the airline industry to be preempted. Id. at 

385–86. Instead, the Court concluded that enforcement of the 

guidelines through consumer-protection statutes was 

preempted because it “would give consumers a cause of action ... for an airline’s failure to provide a particular advertised fare—effectively creating an enforceable right to that 

fare when the advertisement fails to include the mandated 

explanations and disclaimers.” Id. at 388 (citation omitted). 

American Airlines, Inc. v. Wolens was the Supreme Court’s 

second foray into interpreting the scope of ADA preemption. 

513 U.S. 219 (1995). In Wolens, the plaintiffs filed suit against 

American Airlines under Illinois’s Consumer Fraud Act and 

for breach of contract because of the airline’s retroactive 

changes in the terms and conditions of its frequent flyer program. Id. at 224–25. The Court held that claims under the 

Consumer Fraud Act were preempted because they “serve[] 

as a means to guide and police the marketing practices of the 

airlines.” Id. at 228–29. The breach-of-contract claims, however, were not preempted because they are “privately ordered obligations” that “simply hold[] parties to their 

agreements” and “thus do not amount to a State’s enact[ment] or enforce[ment] [of] any law” for purposes of 

ADA preemption. Id. (quotation marks omitted). 

The scope of the preemption clause in the FAAAA itself 

first appeared before the Supreme Court in Rowe, 552 U.S. 

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364. In Rowe, Maine enacted a statute that required Mainelicensed tobacco retailers to use a delivery service that verified the recipient’s identity, legal age, signature, and government-issued photo identification. Id. at 368–69. The Court 

held that the Maine law was preempted because it “will require carriers to offer a system of services that the market 

does not now provide (and which the carriers would prefer 

not to offer).” Id. at 372. A state law that requires carriers to 

offer particular services to its customers was precisely the 

result that the FAAAA was designed to prevent. Id. 

Finally, the Supreme Court revisited FAAAA preemption 

in Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (2014). In Northwest, the plaintiff brought a state-law claim for breach of the 

implied covenant of good faith and fair dealing after Northwest terminated his “Platinum Elite” frequent-flier status. Id. 

at 1426. The Court held that the state common-law claim was 

preempted because “it seeks to enlarge the contractual obligations that the parties voluntarily adopt[ed].” Id. If, however, the state’s common law “permits an airline to contract 

around those rules,” then the state law is not preempted. Id. 

at 1433. 

c. Lower Courts’ Interpretations of the FAAAA

The various courts of appeal have also grappled with resolving which laws are “related to” a price, route, or service 

and which laws are too “tenuous, remote, or peripheral” to 

fall within the ambit of FAAAA preemption. 

We gave that question extensive treatment in S.C. Johnson 

& Son, Inc. v. Transport Corporation of America, Inc., 697 F.3d 

544 (7th Cir. 2012). In that case, S.C. Johnson learned that its 

transportation director, Milton Morris, was receiving cash, 

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goods, travel, and services from certain motor carriers. Id. at 

546. In exchange, Morris was giving the carriers business 

they otherwise would not have received or having S.C. Johnson pay above-market rates for the transportation services. 

Id. S.C. Johnson brought five state-law claims against the 

motor carriers involved in Morris’s scheme for: “(1) fraudulent misrepresentation by omission; (2) civil conspiracy to 

violate the Wisconsin bribery statute; (3) civil conspiracy to 

commit fraud; (4) violation of the Wisconsin Organized 

Crime Control Act (WOCCA); and (5) aiding and abetting a 

breach of fiduciary duty.” Id. (citations omitted). We held 

that S.C. Johnson’s claims for fraudulent misrepresentation 

and conspiracy to commit fraud were preempted. Id. at 557. 

S.C. Johnson’s claims of bribery and racketeering, however, 

we held were not preempted.2 Id. at 560. 

The fraud claims we described as “well-meaning but 

widely varying paternalistic provisions designed to protect 

consumers from the rigors of the market.” Id. at 557 (emphasis added). Enforcing these laws, therefore, amounts to a 

state substituting its own policy for the agreement the airline 

and its customers reached. Id.

In contrast, we described the bribery and racketeering 

claims as “state laws of general application that provide the 

backdrop for private ordering.” Id. at 558. We acknowledged 

that virtually any state law, at some level, has an effect on 

the market price. Id. We used state labor laws as an example, 

 

2 We did not address the breach-of-fiduciary-duty claim because S.C. 

Johnson had not appealed the district court’s dismissal of the claim as 

time-barred. S.C. Johnson & Son, Inc. v. Transp. Corp. of Am., 697 F.3d 544, 

557 (7th Cir. 2012). 

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Nos. 15-1109 & 15-1110 13

noting that changes to “minimum wage laws, worker-safety 

laws, anti-discrimination laws, and pension regulations” affect the cost of labor, and in turn, the price at which a motor 

carrier offers a service. Id. Yet, we concluded: 

[N]o one thinks that the ADA or the FAAAA 

preempts these and the many comparable state 

laws because their effect on price is too “remote.” 

Instead, laws that regulate these inputs operate one 

or more steps away from the moment at which the 

firm offers its customer a service for a particular 

price. 

Id. (citations omitted and emphasis added). 

We also turn to our sister circuits’ treatment of employment laws for additional guidance. Most relevant is the First 

Circuit’s recent opinion in Massachusetts Delivery Association 

v. Coakley (“MDA I”), 769 F.3d 11 (1st Cir. 2014). In MDA I, 

the First Circuit addressed a Massachusetts law that used an 

ABC test for employment that is substantially similar to the 

IWPCA’s. The district court found that the second prong of 

the ABC test was not preempted because the fact “[t]hat a 

regulation on wages has the potential to impact costs and 

therefore prices is insufficient to implicate preemption.” Id at 

21 (alteration in original and quotation marks omitted). 

But the First Circuit reversed and remanded for further 

consideration. Id. at 23. The First Circuit declined to adopt a 

categorical rule exempting all generally applicable employment laws from preemption. Id. at 20. Instead, the court 

highlighted an error in the district court’s analysis: when 

evaluating FAAAA preemption, a court should examine the 

potential impact of the law to determine if the effect of the 

law could be significant. Id. at 21. In addition, the district 

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court only considered the impact of the law on the carriers’ 

prices, not their routes and services. Id. at 21–22. 

After remand, the district court held that the FAAAA did 

preempt the second prong of the Massachusetts statute’s 

ABC test for employment. Mass. Delivery Ass’n v. Healey 

(“MDA II”), No. 10-cv-11521, 2015 WL 4111413, at *10 (D. 

Mass. July 8, 2015). The court found that the carrier would 

now have to alter its routes to begin at couriers’ homes, pay 

stem miles, provide meal and rest breaks, maintain a fleet of 

delivery vehicles, and eliminate on-demand delivery services or pay employees to be “on call.” Id. at *4–6. All of 

these changes, the district concluded, would have a significant impact related to the company’s prices, routes, and services, and therefore, the statute was preempted. Id. at *10. 

No other circuits have addressed the precise question of 

where to draw the preemption line when state law mandates 

classification of couriers as employees for particular purposes. What our sister circuits do show is that the effect of a labor law, which regulates the motor carrier as an employer, is 

often too “remote” to warrant FAAAA preemption. 

The First Circuit underscored this distinction in DiFiore v. 

American Airlines, Inc., in which the court held that a Massachusetts law prohibiting an employer from keeping a payment advertised as a “service charge” was preempted. 646 

F.3d 81, 88 (1st Cir. 2011). This was so because the law “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 proprietor.” Id.

The effects of generally applicable meal and rest break 

laws, the Ninth Circuit concluded, are also too remote to 

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Nos. 15-1109 & 15-1110 15

warrant preemption. Dilts v. Penske Logistics, Inc., 769 F.3d 

637, 650 (9th Cir. 2014). The court explained: 

[G]enerally applicable background regulations that 

are several steps removed from prices, routes, or 

services, such as prevailing wage laws or safety 

regulations, are not preempted, even if employers 

must factor those provisions into their decisions 

about the prices that they set, the routes that they 

use, or the services that they provide. 

Id. at 646. 

Several circuits have held that claims of employment discrimination or retaliatory discharge are not preempted by 

the FAAAA. For example, in Branche v. Airtan Airways, Inc., 

the Eleventh Circuit noted that “[i]t is true that an airline’s 

employment decisions may have an incidental effect on its 

‘services,’” but the court held that the incidental effect of 

employment-retaliation claims was too remote to warrant 

preemption. 342 F.3d 1248, 1259–60 (11th Cir. 2003); see also 

Wellons v. Nw. Airlines, Inc., 165 F.3d 493, 495 (6th Cir. 1999) 

(holding that race-discrimination claim was not preempted);

Anderson v. Am. Airlines, Inc., 2 F.3d 590, 597–98 (5th Cir. 

1993) (holding that retaliatory-discharge claim was not 

preempted because its effect on airline services was too remote). 

Our opinion in S.C. Johnson and the decisions of our sister 

circuits confirm that there is a relevant distinction for purposes of FAAAA preemption between generally applicable 

state laws that affect the carrier’s relationship with its customers and those that affect the carrier’s relationship with its 

workforce. Laws that affect the way a carrier interacts with 

its customers fall squarely within the scope of FAAAA 

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16 Nos. 15-1109 & 15-1110 

preemption. Laws that merely govern a carrier’s relationship 

with its workforce, however, are often too tenuously connected to the carrier’s relationship with its consumers to warrant preemption. The Supreme Court’s preemption decisions 

do not counsel a different conclusion. See e.g., Morales, 504 

U.S. at 388 (preempting state-law claim because “it would 

give consumers a cause of action ... for an airline’s failure to 

provide a particular advertised prices” (emphasis added and 

citation omitted)); Rowe, 552 U.S. at 372 (preempting a state 

law that determined “the services that motor carriers will 

provide” to their customers). 

3. Application of the FAAAA to the IWPCA

With this background in mind, we turn to the question 

presented for our review: whether the express-preemption 

provision of the FAAAA preempts prong two of the definition of employee contained in the IWPCA. 

There are no bright-line rules to resolve whether a state 

law is preempted. Instead, we must “decide whether the 

state law at issue falls on the affirmative or negative side of 

the preemption line.” S.C. Johnson, 697 F.3d at 550. Because 

the IWPCA is not specifically directed to motor carriers, the 

task before us is to determine whether the IWPCA will have 

a significant impact on the prices, routes, and services that 

BeavEx offers to its customers. We conclude that it does not. 

BeavEx asks this court to apply the approach articulated 

by the First Circuit in MDA I, which it contends leads to the 

conclusion that a law that requires a motor carrier to classify 

its couriers as employees instead of independent contractors 

is preempted by the FAAAA. BeavEx’s reliance on MDA I for 

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Nos. 15-1109 & 15-1110 17

its conclusion is misplaced, and we conclude that MDA I 

counsels a different result here. 

Importantly, the Massachusetts statute at issue in MDA I 

triggers far more employment laws than the employment 

definition contained in the IWPCA, MDA I, 769 F.3d at 15 

n.1; see also MDA II, 2015 WL 4111413, at *4–6, which led the 

district court to hold it preempted. We, however, consider 

the impact that the IWPCA would have on BeavEx’s business 

model. Empirical evidence is not mandatory for this court to 

conclude that the IWPCA is preempted. See, e.g. Rowe, 552 

U.S. at 373–74 (not relying on empirical evidence to find 

FAAAA preemption). Instead, we conduct an individualized 

inquiry that “engage[s] with the real and logical effects of the 

state statute.” MDA I, 769 F.3d at 20 (emphasis added). 

The scope of the IWPCA is limited, and Plaintiffs are only 

seeking to enforce the provision prohibiting wage deductions. BeavEx has not cited any authority showing that the 

IWPCA would trigger state employment laws to the extent 

of those in MDA I. Because the scope of the IWPCA is limited, its logical effect is necessarily more limited than the 

statute at issue in MDA I. We find this distinction relevant 

and conclude that the impact of the IWPCA is too “tenuous, 

remote, or peripheral” to warrant FAAAA preemption. 

Furthermore, the IWPCA is precisely the type of background labor law that this court alluded to in S.C. Johnson—a 

law that only indirectly affects prices by raising costs. The 

IWPCA is a law that regulates a labor input and “operate[s] 

one or more steps away from the moment at which the firm 

offers its customers a service for a particular price.” S.C. Johnson, 697 F.3d at 558 (emphasis added). In other words, the 

IWPCA regulates the motor carrier as an employer, and any 

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18 Nos. 15-1109 & 15-1110 

indirect effect on prices is too tenuous, remote, or peripheral. 

Cf. DiFiore, 646 F.3d at 87 (“Importantly, the tips law does 

more than simply regulate the employment relationship between the skycaps and the airline.”); Tobin v. Fed. Express 

Corp., 775 F.3d 448, 456 (1st Cir. 2014) (distinguishing between state laws that regulate “how [a] service is performed 

(preempted) and those that regulate how an airline behaves 

as an employer or proprietor (not preempted)” (quotation 

marks omitted)). 

That is not to say that we are adopting “a categorical rule 

exempting from preemption all generally applicable state 

labor laws,” MDA I, 769 F.3d at 20, but rather, we conclude 

that the IWPCA’s effect on the cost of labor is too tenuous, 

remote, or peripheral to have a significant impact on BeavEx’s setting of prices for its consumers.

BeavEx asserts that if the IWPCA is not preempted, it 

would 

be subject to numerous legal obligations toward 

those couriers that do not currently apply, including minimum wage, maximum hour, and overtime 

requirements, mandated payroll tax payments and 

withholding requirements, mandated workers’ 

compensation and medical insurance, and mandated contributions to state unemployment insurance, 

in addition to remedies specifically requested in 

Plaintiffs’ complaint, which include requirement 

[sic] BeavEx to purchase or lease, store, and maintain automobiles for its couriers. 

(Appellant’s Br. at 16.) 

Conspicuously absent from BeavEx’s parade of horrors is 

any citation of authority showing that it would be required 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 19

to comply with this slew of federal and state laws. We do not 

accept BeavEx’s bare assertion that its couriers will need to 

be classified as employees for all purposes. Instead, the only 

substantive requirement of the IWPCA that Plaintiffs seek to 

enforce is that BeavEx refrain from making deductions from 

its couriers’ pay without “express written consent of the employee, given freely at the time the deduction is made.” 820 

ILCS 115/9. 

As a result of our holding, BeavEx will have to choose 

whether to absorb the costs it previously deducted or pass 

them along to its couriers through lower wages or to its customers through higher prices. We do not see, however, how 

the increased labor cost will have a significant impact on the 

prices that BeavEx offers to its customers. BeavEx has offered no evidence to persuade us differently. 

In fact, the only numerical figure BeavEx alleges is that 

the human resources department would incur an additional 

cost of $185,000 per year to employ a human resources professional to oversee the Illinois workforce. BeavEx has offered no frame of reference upon which we could conclude 

that this $185,000 would significantly impact BeavEx’s prices. 

Even less obvious is any significant impact that prohibiting deductions would have on BeavEx’s routes or services. 

We agree with BeavEx that reclassifying its couriers as employees for all purposes could undermine its ability to continue offering on-demand delivery services. When BeavEx 

gets on-demand orders from customers, it contacts a courier 

and offers the delivery. The courier is then free to accept or 

decline. In order to offer the same on-demand service with 

an employee workforce, BeavEx would have to pay couriers 

to be “on call,” and couriers would be unable to pursue othCase: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
20 Nos. 15-1109 & 15-1110 

er work opportunities during their on-call time. Such a requirement could have a significant impact on the ability of 

BeavEx to offer on-demand services, which its customers 

currently desire. 

We do not see, however, how ruling that the IWPCA applies to BeavEx’s couriers would create that situation. 

BeavEx has offered no specific evidence of the effect of the 

IWPCA on its business model, instead preferring to rely on 

conclusory allegations that compliance with the IWCPA will 

require BeavEx to switch its entire business model from independent-contractor-based to employee-based. We see no 

basis for concluding that the IWPCA would require that 

change given that the federal employment laws and other 

state labor laws have different tests for employment status. 

See, e.g., 26 U.S.C. § 3121(d)(2) (for purposes of the federal 

tax code, an employee is “any individual who, under the 

usual common law rules applicable in determining the employer-employee relationship, has the status of an employee”); Ill. Admin. Code tit. 56, § 210.110 (providing six factors 

to determine if an individual is an employee for purposes of 

the Illinois Minimum Wage Law, 820 ILCS 105). 

BeavEx also raises concerns that if we do not hold that 

the IWPCA is preempted, it will “require motor carriers to 

change their business practices from state to state to comply 

with a patchwork of random state-level requirements.” (Appellant’s Br. at 15.) We find the Supreme Court’s decision in 

Northwest instructive. In that case, the petitioners argued that 

all state-law breach-of-implied-covenant claims must be 

preempted; otherwise, “airlines [would] be faced with a baffling patchwork of rules, and the deregulatory aim of the 

ADA will be frustrated.” Northwest, 134 S. Ct. at 1433. The 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 21

Court rejected that argument, holding that a State’s impliedcovenant laws are not preempted if the State’s law “permits 

an airline to contract around those rules.” Id. The Court added, “[w]hile the inclusion of such a provision may impose 

transaction costs and presumably would not enhance the attractiveness of the program, an airline can decide whether 

the benefits of such a provision are worth the potential 

costs.” Id. 

The IWPCA benefits from this same flexibility—the 

IWPCA’s prohibition on deductions from wages can be contracted around by “express written consent of the employee, 

given freely at the time the deduction is made.” 820 ILCS 

115/9. It is up to BeavEx to decide whether to stop making 

deductions or absorb the transaction costs of acquiring consent. What is clear is that BeavEx has not demonstrated to 

this court that preventing it from deducting from its couriers’ wages or the transaction costs associated with acquiring 

consent to do so would have a significant impact related to 

its prices, routes, or services. 

Because we hold that the IWPCA is not “related to a 

price, route, or service of any motor carrier,” we decline to 

address the second prong of the preemption analysis, which 

requires that the state law be related to a price, route, or service “with respect to the transportation of property.” 49 

U.S.C. § 14501(c)(1); see also Dan’s City Used Cars, Inc. v. 

Pelkey, 133 S. Ct. 1769, 1778 (2013) (“[T]he addition of the 

words ‘with respect to the transportation of property’ ... 

massively limits the scope of preemption ordered by the 

FAAAA.” (quotation marks omitted)). 

 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
22 Nos. 15-1109 & 15-1110 

B. Class Certification 

We turn now to Plaintiffs’ cross-appeal, which seeks review of the district court’s refusal to certify the class. 

We review a district court’s denial of a plaintiff’s motion 

for class certification for an abuse of discretion. Messner v. 

Northshore Univ. Healthsystem, 669 F.3d 802, 811 (7th Cir. 

2012). “If, however, the district court bases its discretionary 

decision on an erroneous view of the law or a clearly erroneous assessment of the evidence, then it has necessarily 

abused its discretion.” Id. 

1. The Rule Against One-Way Intervention 

BeavEx’s central contention on appeal is that the relief 

Plaintiffs request—certification of the class—is barred by the 

rule against one-way intervention. 

The rule against one-way intervention prevents plaintiffs 

from moving for class certification after acquiring a favorable ruling on the merits of a claim.3 Peritz v. Liberty Loan 

Corp., 523 F.2d 349, 354 (7th Cir. 1975) (“Inasmuch as the 

plaintiffs here did not seek certification, and in fact affirma-

 

3 This is not to say that defendants are precluded from seeking a dispositive ruling on the merits prior to class certification, and we have looked 

upon such a procedure favorably. See Cowen v. Bank United of Texas, FSB, 

70 F.3d 937, 941 (7th Cir. 1995) (‘The [defendant] elected to move for 

summary judgment before the district judge decided whether to certify 

the suit as a class action. This is a recognized tactic and does not seem to 

us improper.” (citations omitted)); see also Fed. R. Civ. P. 23(c)(1) advisory committee’s notes to 2003 amendment (“The party opposing the class 

may prefer to win dismissal or summary judgment as to the individual 

plaintiffs without certification and without binding the class that might 

have been certified.” (emphasis added)). 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 23

tively sought resolution on the merits prior to certification in 

the face of objections by the defendants, they have themselves effectively precluded any class certification in this 

case.”); Wiesmueller v. Kosobucki, 513 F.3d 784, 787 (7th Cir. 

2008) (“[T]he plaintiff, as well as the district judge, put the 

cart before the horse, by moving for class certification after 

moving for summary judgment.”). 

The rule exists because it is “unfair to allow members of a 

class to benefit from a favorable judgment without subjecting themselves to the binding effect of an unfavorable one.” 

Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 547 (1974). If an 

individual plaintiff were to get a favorable ruling on the 

merits prior to certification—and its corresponding notice 

and opportunity to opt out—then class members are incentivized to remain in the lawsuit to take advantage of the favorable ruling. If an individual plaintiff got an unfavorable 

ruling on the merits prior to class certification, class members are incentivized to opt out of the class to avoid application of the unfavorable ruling. Allowing class members to 

decide whether or not to be bound by a judgment depending 

on whether it is favorable or unfavorable is “strikingly unfair” to the defendant. Sprogis v. United Air Lines, Inc., 444 

F.2d 1194, 1207 (7th Cir. 1971) (Stevens, J., dissenting). 

In this case, Plaintiffs filed for partial summary judgment 

and class certification contemporaneously. In one order, the 

district court first denied class certification and then granted 

Plaintiffs’ motion for partial summary judgment. Therefore, 

the rule against one-way intervention does not preclude 

class certification in this case because the district court 

properly ruled on class certification before granting partial 

summary judgment in Plaintiffs’ favor. 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
24 Nos. 15-1109 & 15-1110 

It bears noting, however, that Plaintiffs, by moving for 

class certification and partial summary judgment at the same 

time, came dangerously close to precluding review of the 

class certification decision. Had the district court chosen to 

decide Plaintiffs’ motion for partial summary judgment prior 

to deciding class certification, the rule against one-way intervention may have precluded certification. 

We urge plaintiffs to exercise caution when seeking a ruling on the merits of an individual plaintiff’s claim before the 

district court has ruled on class certification and given notice 

of the ruling to absent class members. See Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 299 n.7 (1st Cir. 2000) 

(“[W]e do not pass upon the appropriateness of delaying a 

class certification ruling until after acting upon an individual 

plaintiff’s summary judgment motion. We note, however, 

that this sequencing raises serious questions, and we urge 

district courts to exercise caution before deciding to embrace 

it.” (citations omitted)). 

2. Merits of Class Certification 

Because the rule against one-way intervention does not 

apply to preclude class certification, we turn now to the merits of the district court’s certification ruling. Plaintiffs argue 

that the district court abused its discretion in finding that 

common issues did not “predominate.” We agree. 

To be certified as a class action, the putative class must 

first meet the four requirements of Federal Rule of Civil Procedure 23(a): numerosity, typicality, commonality, and adequacy. Messner, 669 F.3d at 811. The district court found that 

Plaintiffs satisfied the requirements of numerosity, typicality, 

and commonality, and we agree with its assessment.

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 25

In addition, the class must satisfy the requirements of 

one of the three alternatives contained in Federal Rule of 

Civil Procedure 23(b). In this case, Plaintiffs have chosen to 

proceed with a class action pursuant to Rule 23(b)(3), which 

requires that they show “that the questions of law or fact 

common to class members predominate over any questions 

affecting only individual members, and that a class action is 

superior to other available methods for fairly and efficiently 

adjudicating the controversy.” Fed R. Civ. P. 23(b)(3) (emphasis added); Messner, 669 F.3d at 811. 

Predominance is satisfied when “common questions represent a significant aspect of [a] case and ... can be resolved 

for all members of [a] class in a single adjudication.” Messner, 669 F.3d at 815 (quotation marks omitted and alterations 

in original). We have said that “[t]he court should evaluate 

the evidence pragmatically ... [to] decide whether classwide 

resolution would substantially advance the case.” Suchanek v. 

Sturm Foods, Inc., 764 F.3d 750, 761 (7th Cir. 2014). This 

pragmatic review may warrant the court “tak[ing] a peek at 

the merits.” Schleicher v. Wendt, 618 F.3d 679, 685 (7th Cir. 

2010). In other words, “a district court must formulate some 

prediction as to how specific issues will play out in order to 

determine whether common or individual issues predominate in a given case.” Mowbray, 208 F.3d at 298. Predominance analysis “begins, of course, with the elements of the 

underlying cause of action.” Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179, 2184 (2011). 

Under the IWPCA, all individuals are considered to be 

employees of an employer, unless the employer can prove all 

three prongs of the independent-contractor exemption. To 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
26 Nos. 15-1109 & 15-1110 

satisfy the exemption, the employer must show that the 

worker is an individual: 

(1) who has been and will continue to be free from 

control and direction over the performance of his 

work, both under his contract ... and in fact; and 

(2) who performs work which is either outside the 

usual course of business or is performed outside all 

of the places of business of the employer ...; and 

(3) who is in an independently established trade, 

occupation, profession or business. 

820 ILCS 115/2. Because the test is conjunctive, if BeavEx 

cannot satisfy just one prong of the test, its couriers must be 

treated as employees. Novakovic, 820 N.E.2d at 973–74; cf. 

Carpetland U.S.A., Inc. v. Ill. Dep’t of Emp’t Sec., 776 N.E.2d 

166, 169–70 (Ill. 2002) (noting the conjunctive nature of the 

same independent-contractor exemption contained in the 

Unemployment Insurance Act, 820 ILCS 405/212). 

There is no doubt that common evidence will satisfy the 

second prong of the test—whether the individuals “perform[ed] work which is ... outside the usual course of business ... of the employer.” 820 ILCS 115/2. Prong two only 

requires common evidence about BeavEx’s business model, 

which is applicable to all class members. BeavEx argues, and 

the district court found, however, that because individualized inquiries would be necessary to resolve prongs one and 

three of the IWPCA’s test for employment, common issues 

cannot predominate. 

The district court committed a legal error when it concluded that “[f]ailure to acknowledge the individualized inquiry required by the first prong because the second prong 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 27

can be decided through common facts would be the same as 

a ruling on the merits.” Costello v. BeavEx, Inc., 303 F.R.D. 295, 

308 (N.D. Ill. 2014). The district court thought that it could not

find that common questions predominate because the first 

prong contemplates individualized factfinding. That is incorrect. 

There is no requirement that the district court blind itself 

to the conjunctive structure of the IWPCA’s test for employment. Rather, “[i]n conducting this preliminary [predominance] inquiry ... the court must look only so far as to determine whether, given the factual setting of the case, if the 

[plaintiff’s] general allegations are true, common evidence 

could suffice to make out a prima facie case for the class.” 

Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005). Under the IWPCA, if the employer cannot satisfy just one prong

of the test, the inquiry into employment status ends. Because 

Plaintiffs have shown that common evidence will resolve 

prong two, they have made a prima facie showing that they 

can win their case based on evidence common to the class. 

That conclusion is not the same as saying, as the district 

court thought, that Plaintiffs do win their case, which is the 

merits determination. Plaintiffs have demonstrated that 

common questions predominate by making out a prima facie 

claim under the IWPCA based on evidence common to the 

class. Because the district court based its certification ruling 

on the erroneous assumption that the hypothetical individualized inquiry of prong one precluded a finding of predominance, it abused its discretion in denying class certification. 

Moreover, certifying the class for purposes of prong two 

would substantially advance the litigation, regardless of 

whether the common evidence on prong two turns out in 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
28 Nos. 15-1109 & 15-1110 

Plaintiffs’ or BeavEx’s favor. If answered in Plaintiffs’ favor, 

all of BeavEx’s couriers would have to be classified as employees under the IWPCA, eliminating the need for any individualized factfinding. If answered in BeavEx’s favor, BeavEx would not have to litigate its satisfaction of prong two 

against every individual plaintiff, promoting efficiency. We 

have looked favorably upon the use of such a hybrid procedure. See, e.g., In Re Allstate Ins. Co., 400 F.3d 505, 508 (7th Cir. 

2005) (approving a procedure where the district court would 

decide whether a company-wide policy exists and then conduct individual hearings to determine whether an employee 

was affected by that policy as a “more efficient procedure 

than litigating the class-wide issue of [the defendant’s] policy 

anew in more than a thousand separate lawsuits”). Regardless of which party wins, the common answer on prong two 

“represent[s] a significant aspect of [a] case and ... can be 

resolved for all members of [a] class in a single adjudication.” Messner, 669 F.3d at 815 (quotation marks omitted and 

alterations in original). 

The district court also mistakenly found that prong one 

could not be decided by common evidence. The district 

court thought that the first prong “so clearly requires a factual inquiry into the circumstances of each driver." That is 

not true. The independent-contractor exemption requires 

that the individual be free from control “in fact,” which is 

evaluated by looking at twenty-five factors. See Carpetland, 

776 N.E.2d at 374–83 (evaluating the same employment test 

under the Unemployment Insurance Act). The existence of 

factors to evaluate, however, does not defeat the ability of 

Plaintiffs to satisfy those factors by offering common eviCase: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
Nos. 15-1109 & 15-1110 29

dence.4 In fact, the Illinois Supreme Court in Carpetland evaluated the twenty-five factors as they applied to “measurers” 

and “installers” based on common evidence, not to each individual measurer or installer. Id.; see also Cohen Furniture Co. 

v. Ill. Dep’t Emp’t Sec., 718 N.E.2d 1058, 1062–63 (Ill. App. Ct. 

1999) (evaluating control under same employment test of 

“carpet installers,” not each individual carpet installer). 

Finally, we find it telling that there is an inherent tension 

in BeavEx’s position on class certification and its position on 

the merits of preemption. On one hand, BeavEx argues that 

class treatment is not warranted for its couriers because it 

must individually evaluate and classify each courier as an 

independent contractor “in fact.” On the other hand, for 

purposes of preemption, BeavEx takes the position that every single courier would have to be reclassified from independent contractor to employee, revealing the more likely 

proposition that BeavEx thinks that uniform treatment of its 

couriers is appropriate. See Norris-Wilson v. Delta-T Grp., Inc., 

270 F.R.D. 596, 602 (S.D. Cal. 2010) (“[I]t may be that [the defendant] believes its workers are in fact independent contractors for reasons unique to each individual, but it’s more likely 

the case [the defendant] believes the independent contractor 

 

4 Plaintiffs attempt to “concede that control ‘in fact’ may require individualized assessments, and therefore waive any argument for class certification as to BeavEx’s control ‘in fact.’” (Appellee’s Br. at 52.) “[A] 

court is not bound to accept a concession when the point at issue is a 

question of law.” Deen v. Darosa, 414 F.3d 731, 734 (7th Cir. 2005). Because the question of whether common evidence could ever satisfy an 

inquiry “in fact” is a question of law, we reject Plaintiffs’ concession. An 

inquiry as to control in fact could still be satisfied by the presentation of 

common evidence. 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30
30 Nos. 15-1109 & 15-1110 

classification is universally appropriate. That runs at crosspurposes with the reason for objecting to class certification, 

which is that it’s impossible to reach general conclusions 

about the putative class as a whole.”). 

Because the district court committed legal error when it 

thought that finding that prong two could be decided by 

common evidence was an improper decision on the merits, it 

abused its discretion in denying class certification on those 

grounds. Accordingly, we vacate the district court’s denial of 

class certification and remand for further consideration. 

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s 

denial of BeavEx’s motion for summary judgment. We 

VACATE the district court’s order denying class certification 

and REMAND for further proceedings consistent with this 

opinion. 

Case: 15-1110 Document: 59 Filed: 01/19/2016 Pages: 30