Green v. RXO Last Mile, Inc.

1

LEON GREEN and WALDO TEJADA, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. RXO LAST MILE, INC., Defendant-Appellee.^[*]

No. 23-1239

United States Court of Appeals, Second Circuit

September 27, 2024

UNPUBLISHED OPINION

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 27^th day of September, two thousand twenty-four.

Appeal from a judgment of the United States District Court for the District of Connecticut (Meyer, J.).

FOR PLAINTIFFS-APPELLANTS: Harold L. Lichten (Zachary L. Rubin Benjamin L. Weber, Olena Savytska, Jack Bartholet, on the briefs), Lichten & Liss-Riordan, P.C., Boston, MA.

FOR DEFENDANT-APPELLEE: Adam L. Lounsbury (David R. Golder Jackson Lewis P.C., Hartford, CT, on the brief), Jackson Lewis P.C., Richmond, VA.

PRESENT: GERARD E. LYNCH, MYRNA PÉREZ, SARAH A. L MERRIAM, Circuit Judges.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the district court's judgment is AFFIRMED.

Plaintiffs-Appellants Leon Green and Waldo Tejada are drivers whom Defendant-Appellee RXO Last Mile, Inc. ("RXO") hired to perform deliveries. They allege in this diversity class action that the standard Delivery Service Agreement ("Agreement") into which they entered with RXO illegally provided for deductions from their wages earned.^[2] We affirm the district court's grant of summary judgment to RXO because those Agreements merely set forth the bargained-for wages RXO would pay Appellants.

BACKGROUND

RXO is a logistics company that arranges "last mile" deliveries of large items such as furniture for companies like Lowes and Amazon. RXO in turn contracts with Delivery Service Providers ("DSPs"), including Green's LG Family LLC and Tejada's Tejada Express LLC, to perform the deliveries. The terms of the Agreement between DSPs and RXO provide that DSPs may earn revenue on either a per-delivery-stop or a flat, daily rate basis, with add-on fees for certain additional services provided. According to the Agreement, before RXO pays DSPs, it will engage in a "reconciliation" process to offset the amount due by the amount of any loss or damage to product or property that occurred during the DSP's delivery process. Additionally, the Agreement requires DSPs to bear their own operational expenses, including the wages of any employees, employment taxes, and certain types of insurance coverage that the Agreement specifies. The Agreement explains that RXO contracts with the DSP entity only and that the DSP retains absolute control and direction over its employees.

In 2019, Green and Tejada filed a putative class complaint alleging two causes of action. First, they alleged that the deductions from their income for which the Agreement provides violate Connecticut's Minimum Wage Act, Conn. Gen. Stat. § 31-71e, which prohibits "withhold[ing] or divert[ing]" wages. Second, they contended that RXO misclassifies drivers as independent contractors rather than employees and on that basis illegally shifts business expenses to DSPs, giving rise to their unjust enrichment claim.

The district court certified a class of about 275 delivery drivers limited to "[a]ll individuals who personally or on behalf of their business entity[] signed a Delivery Service Agreement with [RXO] and who personally performed deliveries for [RXO] full-time in Connecticut between November 2017 and the present." Green v. XPO Last Mile, Inc., No. 3:19-cv-1896 (JAM), 2022 WL 4380959, at *1-2 (D. Conn. Sept. 22, 2022). RXO moved for summary judgment, and Plaintiffs-Appellants cross-moved for partial summary judgment, seeking a finding that class members were employees rather than independent contractors. The District Court determined that "there is no genuine issue of fact . . . to support the plaintiffs' claim that they were subject to unlawful wage deductions in violation of Conn. Gen. Stat. §31-71e," because the deductions were permitted by agreement and thus legal under Connecticut law. Green v. RXO Last Mile, Inc., No. 3:19-cv-1896 (JAM), 2023 WL 5486250, at *7 (D. Conn. Aug. 24, 2023).^[3] The District Court also "declined to certify to the Connecticut Supreme Court questions concerning the issue of how to define wages and lawful deductions under Connecticut law." Id. at *7 n.33. Accordingly, it granted RXO's motion for summary judgment.

Green and Tejada timely appealed. They ask this Court to certify to the Connecticut Supreme Court the question of the definition of wages, and what constitutes illicit deductions therefrom, under the Minimum Wage Act, or alternately to address the interpretive question itself and reverse. We assume the parties' familiarity with the remaining underlying facts, the procedural history, and the issues on appeal.

STANDARD OF REVIEW

"We review de novo a district court's decision to grant summary judgment, construing the evidence in the light most favorable to the party against whom summary judgment was granted and drawing all reasonable inferences in that party's favor." Covington Specialty Ins. Co. v. Indian Lookout Country Club, Inc., 62 F.4th 748, 752 (2d Cir. 2023) (internal quotation marks and citation omitted). Summary judgment is proper when, viewing all facts in the light most favorable to the non-moving party, the district court finds there is no genuine dispute of material fact for a jury to resolve. See Union Mut. Fire Ins. Co. v. Ace Caribbean Mkt., 64 F.4th 441, 445 (2d Cir. 2023).

DISCUSSION

Connecticut's Minimum Wage Act provides that employers may not "withhold or divert any portion of an employee's wages" save in specific, enumerated cases not relevant here.^[4]Conn. Gen. Stat. § 31-71e. The Connecticut Supreme Court has construed this provision to exclude so-called "deductions" taken as part of a bargained-for formula for determining wages. Applying this rule to Appellants' pay, we conclude that the Agreement between RXO and the DSPs did not violate either statute.

I. Connecticut Supreme Court Precedent Determines the Case

As this Court has previously explained, "the Connecticut Supreme Court . . . authoritatively determined that" the Minimum Wage Act protects agreements to calculate wages according to specific formulas. Mujo v. Jani-King Int'l, Inc., 13 F.4th 204, 216 (2d Cir. 2021). In Mytych v. May Dep't Stores Co., department store salespersons alleged that deductions from their commission-based pay for items customers eventually returned violated Sections 31-71e and a related anti-kickback statute in the same chapter, Conn Gen. Stat. § 31-73(b), whose text similarly prohibits "deduction[s]" from "wages" paid. 793 A.2d 1068, 1070-71 (Conn. 2002). Under the anti-kickback statute, employers may not require such deductions as a condition of employment. See Conn Gen. Stat. § 31-73(b). The court interpreted the two wage statutes in tandem.^[5] It held that the statutory scheme allows parties to agree to use formulas to determine wages. Rather than "dictat[ing] the means by which . . . wages are calculated," it explained that the legislature meant only to "protect the sanctity of the wages earned by an employee pursuant to the agreement she or he has made with her or his employer." Mytych, 793 A.2d at 1073-74. The Connecticut Supreme Court reasoned that an agreed-upon subtraction from wages is not an illegal "deduction"-it is encompassed within the very definition of "wages." See id. 1072-1073; id. at 1072 (explaining that Section 31-71e "does not purport to define the wages due; it merely requires that those wages agreed to will not be withheld for any reason"); see also id. (discussing the parallel anti-kickback statute's protection of "any part of the wages agreed to be paid" (quoting Conn. Gen. Stat. § 31-73(b))).

This Circuit applied Mytych in Mujo, where a franchisor contracted with franchisees to pay them the revenue earned from customers, less certain fees. 13 F.4th at 207. We concluded that the "agreement expressly provides for the deductions" and that they were therefore lawful under Sections 31-71e and the related anti-kickback statute. Id. at 211-14; see also id. at 211 ("[T]here is a strong public policy in Connecticut favoring freedom of contract." (quoting Geysen v. Securitas Sec. Servs. USA, Inc., 142 A.3d 227, 234 (2016))).

Green and Tejada similarly agreed to a formula for determining the compensation their DSPs would receive. Their Agreement with RXO provides that their wages are subject to a "reconciliation" process that accounts for damaged and lost property. Appellants' "wages" are the net amount following application of this formula. See Mytych, 793 A.2d at 1073-74.

Moreover this case differs from others that Connecticut courts have determined do violate the wage statutes. The Connecticut Supreme Court distinguished Lockwood v. Professional Wheelchair Transportation, Inc., 654 A.2d 1252 (Conn. App. Ct. 1995), in its Mytych opinion. See Mytych, 793 A.2d at 1075-76. Lockwood, a state appellate court case, involved an employer's demand that an employee pay a $1000 deductible on the employer's insurance policy following an accident. Lockwood, 654 A.2d at 1255-56. The employee had...