Court Opinion

ID: 3170660
Source: CourtListenerOpinion
Date Created: 2016-01-20 00:00:46.890918+00
Date Added: 2024-06-11T07:38:48.696724
License: Public Domain

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 cou-
riers as independent contractors instead of employees, Beav-
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 Authoriza-
tion 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 Plain-
tiffs’ motion to certify the class but granted their motion for
partial summary judgment, holding that Plaintiffs are em-
ployees under the IWPCA. This interlocutory appeal pre-
sents 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 af-
firm the district court’s denial of BeavEx’s motion for sum-
mary judgment, and we vacate its denial of class certification
and remand for further proceedings.
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 con-
tractors 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 Oc-
tober 1, 2002, to the present and were not treated as employ-
ees under the IWPCA.
    BeavEx classifies its couriers as independent contractors
under all state and federal labor laws. Some of BeavEx’s cou-
riers are incorporated, while others are not. Some couriers,
with BeavEx’s approval, use subcontractors to complete de-
liveries. 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’ com-
pensation and does not pay payroll taxes or unemployment
contributions for its couriers. In addition, BeavEx deducts
expenses from its couriers’ wages for occupational accident
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, al-
leging 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 judg-
ment 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.
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 sum-
mary 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 de-
cided. The district court held, however, that Plaintiffs did not
fulfill the predominance requirement of Rule 23(b)(3) be-
cause 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 de-
cided through common facts,” the district court concluded,
“would be the same as ruling on the merits,” which is im-
proper 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
6                                        Nos. 15-1109 & 15-1110

denial of class certification. This court granted leave to ap-
peal.
                          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 relat-
ed to a price, route, or service and is therefore preempted.
Plaintiffs’ cross-appeal seeks review of the district court’s re-
fusal to certify the proposed class. According to Plaintiffs,
the district court abused its discretion by finding that com-
mon 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 compensa-
tion, 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 employ-
ees’ 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
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 consti-
tutes an “employee” using a three-prong test commonly re-
ferred 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 employ-
ee 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 dis-
trict 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 “em-
ployees” 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 Com-
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 transpor-
tation industry was taking off. In 1978, Congress “deter-
min[ed] that ‘maximum reliance on competitive market forc-
es’” 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 in-
dustry. 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 car-
rier.” 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 govern-
ment’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 transpor-
tation of property.” Id. at 1606.
Nos. 15-1109 & 15-1110                                       9

   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 Mo-
rales, 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
10                                      Nos. 15-1109 & 15-1110

passengers who voluntarily yield their seats on overbooked
flights.” 504 U.S. at 379. The attorneys general sought to en-
force these “guidelines” through their states’ generally ap-
plicable 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 spe-
cifically 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 ac-
tion … for an airline’s failure to provide a particular adver-
tised 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 pro-
gram. 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, how-
ever, were not preempted because they are “privately or-
dered obligations” that “simply hold[] parties to their
agreements” and “thus do not amount to a State’s en-
act[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.
Nos. 15-1109 & 15-1110                                        11

364. In Rowe, Maine enacted a statute that required Maine-
licensed tobacco retailers to use a delivery service that veri-
fied the recipient’s identity, legal age, signature, and gov-
ernment-issued photo identification. Id. at 368–69. The Court
held that the Maine law was preempted because it “will re-
quire 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 North-
west, the plaintiff brought a state-law claim for breach of the
implied covenant of good faith and fair dealing after North-
west 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 obli-
gations that the parties voluntarily adopt[ed].” Id. If, howev-
er, 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 re-
solving 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,
12                                             Nos. 15-1109 & 15-1110

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. John-
son 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) fraudu-
lent 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 (empha-
sis 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).
Nos. 15-1109 & 15-1110                                        13

noting that changes to “minimum wage laws, worker-safety
laws, anti-discrimination laws, and pension regulations” af-
fect 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 employ-
ment 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 employ-
ment 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
14                                     Nos. 15-1109 & 15-1110

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 ser-
vices or pay employees to be “on call.” Id. at *4–6. All of
these changes, the district concluded, would have a signifi-
cant impact related to the company’s prices, routes, and ser-
vices, 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 purpos-
es. What our sister circuits do show is that the effect of a la-
bor 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 Massa-
chusetts law prohibiting an employer from keeping a pay-
ment advertised as a “service charge” was preempted. 646
F.3d 81, 88 (1st Cir. 2011). This was so because the law “di-
rectly regulates how an airline service is performed and how
its price is displayed to customers—not merely how the air-
line 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
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 dis-
crimination 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 re-
mote).
    Our opinion in S.C. Johnson and the decisions of our sister
circuits confirm that there is a relevant distinction for pur-
poses of FAAAA preemption between generally applicable
state laws that affect the carrier’s relationship with its cus-
tomers 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
16                                     Nos. 15-1109 & 15-1110

preemption. Laws that merely govern a carrier’s relationship
with its workforce, however, are often too tenuously con-
nected to the carrier’s relationship with its consumers to war-
rant 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 defini-
tion 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
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 deduc-
tions. 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 lim-
ited, 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 back-
ground 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. John-
son, 697 F.3d at 558 (emphasis added). In other words, the
IWPCA regulates the motor carrier as an employer, and any
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 be-
tween the skycaps and the airline.”); Tobin v. Fed. Express
Corp., 775 F.3d 448, 456 (1st Cir. 2014) (distinguishing be-
tween 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 Beav-
Ex’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, includ-
       ing minimum wage, maximum hour, and overtime
       requirements, mandated payroll tax payments and
       withholding requirements, mandated workers’
       compensation and medical insurance, and mandat-
       ed 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 main-
       tain 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
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 em-
ployee, 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 cus-
tomers 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 of-
fered 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 pro-
fessional to oversee the Illinois workforce. BeavEx has of-
fered 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 prohibit-
ing deductions would have on BeavEx’s routes or services.
We agree with BeavEx that reclassifying its couriers as em-
ployees for all purposes could undermine its ability to con-
tinue 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 oth-
20                                     Nos. 15-1109 & 15-1110

er work opportunities during their on-call time. Such a re-
quirement 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 ap-
plies 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 in-
dependent-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 em-
ployer-employee relationship, has the status of an employ-
ee”); 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.” (Ap-
pellant’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 baf-
fling patchwork of rules, and the deregulatory aim of the
ADA will be frustrated.” Northwest, 134 S. Ct. at 1433. The
Nos. 15-1109 & 15-1110                                        21

Court rejected that argument, holding that a State’s implied-
covenant laws are not preempted if the State’s law “permits
an airline to contract around those rules.” Id. The Court add-
ed, “[w]hile the inclusion of such a provision may impose
transaction costs and presumably would not enhance the at-
tractiveness 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 con-
tracted 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 con-
sent. What is clear is that BeavEx has not demonstrated to
this court that preventing it from deducting from its couri-
ers’ 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 ser-
vice “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)).
22                                             Nos. 15-1109 & 15-1110

     B. Class Certification
   We turn now to Plaintiffs’ cross-appeal, which seeks re-
view 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 errone-
ous 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 favora-
ble 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 disposi-
tive 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) adviso-
ry 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)).
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 them-
selves 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 subject-
ing 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 incen-
tivized to remain in the lawsuit to take advantage of the fa-
vorable ruling. If an individual plaintiff got an unfavorable
ruling on the merits prior to class certification, class mem-
bers are incentivized to opt out of the class to avoid applica-
tion 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 un-
fair” 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.
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 in-
tervention may have precluded certification.
     We urge plaintiffs to exercise caution when seeking a rul-
ing 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. Hold-
ings, 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 mer-
its 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 Pro-
cedure 23(a): numerosity, typicality, commonality, and ade-
quacy. 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.
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) (empha-
sis added); Messner, 669 F.3d at 811.
    Predominance is satisfied when “common questions rep-
resent a significant aspect of [a] case and … can be resolved
for all members of [a] class in a single adjudication.” Mess-
ner, 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 predomi-
nate in a given case.” Mowbray, 208 F.3d at 298. Predomi-
nance analysis “begins, of course, with the elements of the
underlying cause of action.” Erica P. John Fund, Inc. v. Halli-
burton 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
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 “per-
form[ed] work which is … outside the usual course of busi-
ness … 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 individual-
ized 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 con-
cluded that “[f]ailure to acknowledge the individualized in-
quiry required by the first prong because the second prong
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 in-
correct.
    There is no requirement that the district court blind itself
to the conjunctive structure of the IWPCA’s test for employ-
ment. Rather, “[i]n conducting this preliminary [predomi-
nance] inquiry … the court must look only so far as to de-
termine 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). Un-
der 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 individu-
alized inquiry of prong one precluded a finding of predomi-
nance, 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
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 em-
ployees under the IWPCA, eliminating the need for any in-
dividualized factfinding. If answered in BeavEx’s favor, Bea-
vEx 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 proce-
dure. 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 con-
duct 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”). Regard-
less 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 adjudica-
tion.” 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 fac-
tual 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 evi-
Nos. 15-1109 & 15-1110                                                    29

dence.4 In fact, the Illinois Supreme Court in Carpetland eval-
uated the twenty-five factors as they applied to “measurers”
and “installers” based on common evidence, not to each in-
dividual 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 eve-
ry single courier would have to be reclassified from inde-
pendent 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 de-
fendant] believes its workers are in fact independent contrac-
tors 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 indi-
vidualized assessments, and therefore waive any argument for class cer-
tification 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). Be-
cause 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.
30                                    Nos. 15-1109 & 15-1110

classification is universally appropriate. That runs at cross-
purposes 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.