Craig v. Fedex Ground Package System, Inc.
19 Wage & Hour Cas.2d (BNA) 544, 2012 WL 2862030, 686 F. 3d 423 (2012)
Rule of Law:
A federal appellate court may certify a question of state law to that state's highest court when it finds itself genuinely uncertain about a controlling question of state law that is vital to the correct disposition of the case, is of great public importance, and where the state supreme court has not yet illuminated a clear path on the issue.
Facts:
- FedEx Ground Package System, Inc. (FedEx) provides small package pick-up and delivery services.
- FedEx utilizes a network of pick-up and delivery drivers.
- Carlene M. Craig and other current and former drivers for FedEx entered into form 'Operating Agreements' with FedEx to provide delivery services.
- The plaintiff drivers worked out of FedEx terminals located in the state of Kansas.
- The drivers paid various costs and expenses during their time providing services under the Operating Agreements.
- The drivers alleged that they were improperly classified as employees, rather than independent contractors, under the Kansas Wage Payment Act (KWPA).
- As alleged employees, the drivers sought repayment of all costs and expenses they paid and payment of overtime wages.
Procedural Posture:
- Current and former FedEx drivers from various states filed lawsuits alleging they were employees, not independent contractors, under state and federal law, including ERISA.
- The Judicial Panel on Multidistrict Litigation consolidated these actions and transferred them to the U.S. District Court for the Northern District of Indiana.
- The District Court designated Carlene M. Craig, et al., which included claims under ERISA and Kansas law, as its 'lead' case.
- The District Court certified a nationwide class under ERISA and statewide classes under Federal Rule of Civil Procedure Rule 23(b)(3), including a Kansas class of 479 members.
- Cross motions for summary judgment were filed in the District Court by both the plaintiff drivers and FedEx to determine whether the FedEx drivers were employees or independent contractors under the KWPA.
- The District Court granted FedEx's motion for summary judgment and denied the plaintiffs' motion for summary judgment, ruling that the drivers were independent contractors and thus could not prevail on their claims.
- The District Court then drew on its decision in Craig and ruled in FedEx's favor on summary judgment regarding the plaintiffs' employment status in other related cases.
- Judgments and amended judgments were entered in the District Court.
- Twenty-one cases, including Craig, were appealed to the U.S. Court of Appeals for the Seventh Circuit, with the plaintiffs being the appellants and FedEx the appellee.
- The parties proposed that the Seventh Circuit begin with the Craig appeal and stay the remaining appeals, and the Seventh Circuit suspended briefing in the other appeals pending further order.
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Issue:
Does the Seventh Circuit, sitting in diversity and applying Kansas law, have sufficient guidance to determine as a matter of law whether FedEx Ground drivers are employees or independent contractors under the Kansas Wage Payment Act, such that it should not certify the question to the Kansas Supreme Court?
Opinions:
Majority - Per Curiam
No, the Seventh Circuit does not have sufficient guidance to determine as a matter of law whether FedEx Ground drivers are employees or independent contractors under the Kansas Wage Payment Act, and therefore certifies the question to the Kansas Supreme Court. The court found itself genuinely uncertain as to how the Kansas Supreme Court would apply its law to the facts, noting that Kansas courts typically look to the workers' compensation statute when construing the KWPA, and the primary consideration is the 'right of control' test. However, the court identified tension and ambiguity in Kansas precedent, particularly regarding whether the reasons for the employer's right to control matter (comparing Knoble and Crawford), and how to weigh various factors when some favor employee status and some favor independent contractor status. The court also observed that other federal and state courts have reached different conclusions regarding FedEx drivers' employment status under various state laws, adding to the uncertainty. Given the expansive and comprehensive nature of the KWPA and Kansas's public policy of protecting wage earners, the issue is of vital public concern, outcome-determinative, and will likely recur across many industries. The Kansas Supreme Court is in a far better position to provide a definitive answer on this controlling question of state law than is a federal court. The court thus respectfully requested the Kansas Supreme Court to answer two specific certified questions regarding the employment status of the plaintiff drivers under the KWPA.
Analysis:
This case highlights the challenges federal courts face when interpreting unsettled state law, particularly in areas with significant public policy implications like employment classification. By certifying the question, the Seventh Circuit underscored the importance of cooperative federalism, ensuring that the highest state court has the opportunity to definitively shape its own law on a matter that will have broad precedential significance for employers and workers in Kansas and potentially influence similar cases in other jurisdictions. It demonstrates judicial restraint and a commitment to accurate application of state law rather than making an educated guess on an issue where state precedent is ambiguous or conflicting, especially when the issue is of vital public concern.
