United States Court of Appeals For the Seventh Circuit ____________________ No. 21-2886 TIMOTHY JOHNSON and DARRYL MOORE, on behalf of a class, Plaintiffs-Appellants,

v. DIAKON LOGISTICS, INC., and WILLIAM C. JARNAGIN, JR., Defendants-Appellees. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 16-cv-06776 — Andrea R. Wood, Judge. ____________________

ARGUED JUNE 1, 2022 — DECIDED AUGUST 17, 2022 ____________________

Before EASTERBROOK, WOOD, and SCUDDER, Circuit Judges. EASTERBROOK, Circuit Judge. Diakon Logistics, Inc., coordi- nates delivery and installation of merchandise for retailers across the nation. It is incorporated in Delaware and has its principal place of business in Virginia. Diakon provided ser- vices to Innovel Solutions, Inc., a former subsidiary of Sears, Roebuck and Co. Innovel hired Diakon to get furniture and appliances from warehouses to customers’ homes. Diakon, in turn, hired truck drivers to perform these deliveries. 2 No. 21-2886

Plaintiffs are two of those drivers, Timothy Johnson and Darryl Moore. Johnson and Moore were citizens of Illinois who drove for Diakon out of Innovel’s warehouse in Romeo- ville, Illinois, which is about 30 miles southwest of Chicago. Innovel operated a second warehouse in Granite City, Illinois, just across the Mississippi River from St. Louis. Drivers work- ing out of both warehouses delivered merchandise to custom- ers of Sears in Illinois, Indiana, and Missouri. Plaintiffs and Diakon signed contracts called “Service Agreements”. Two versions of the Service Agreement—one signed before 2015 and one that governed the relations from 2015 onward—are potentially relevant. They classify the driv- ers as independent contractors yet include terms that set out detailed expectations for the drivers—among other things what uniforms to wear, what business cards to carry, what decals to put on their trucks, and how to perform deliveries and installations. The Service Agreements also contain choice- of-law provisions that select Virginia law to govern the par- ties’ relations. The clause in the pre-2015 version reads: “This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia without re- gard to conflict of law rules.” The later-signed agreements are more expansive: “The law of the Commonwealth of Virginia shall govern all interpretations of this Agreement or any rights or liabilities stemming from it or related to it in any such action. The obligations in this paragraph shall survive termination of the Agreement.” The Service Agreements authorize Diakon to deduct fees and penalties from the drivers’ pay. They allow deductions for truck rental fees, the cost of insurance, workers’ No. 21-2886 3 compensation coverage, and customers’ refused deliveries. As an example, one section of the Service Agreement pro- vides: Contractor will be liable for loss or damage to items intended for transport occurring while such items are in Contractor’s posses- sion or under his dominion and control. Before making deduc- tions from seIlements with Contractor … to reflect such loss or damage, Company shall provide Contractor with a wriIen expla- nation and itemization of such deductions.

In 2016 Johnson and Moore sued Diakon in federal court alleging violations of Illinois labor law. Plaintiffs allege that Diakon misclassified them as independent contractors when they were employees under Illinois law. Plaintiffs’ allegation rests on the definition of “employee” in the Illinois Wage Pay- ment