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May 4 — Denying a trucking firm's petition, the U.S. Supreme Court May 4 declined to review whether a federal transportation statute preempts California's meal and rest break laws as applied to Penske Logistics LLC drivers who deliver and install residential appliances.
The justices left undisturbed a U.S. Court of Appeals for the Ninth Circuit decision that state laws prescribing meal and rest breaks for covered workers aren't “related to” transportation prices, routes or services and therefore aren't preempted by the Federal Aviation Administration Authorization Act (757 F.3d 1078, 22 WH Cases2d 1636 (9th Cir. 2014)).
The federal statute provides “states may not enact or enforce” a law “related to a price, route or service of any motor carrier” regarding the “transportation of property.”
Supported by amicus groups including the American Trucking Associations Inc. and the U.S. Chamber of Commerce, Penske said the Ninth Circuit's misreading of the preemption clauses in the 1994 FAAA Act and its predecessor, the Airline Deregulation Act, is “hopelessly out of step” with Supreme Court precedent.
The Ninth Circuit has “applied a preemption analysis that has no basis in the statutes' texts, conflicts with this Court's precedents and severely curtails the acts' intended preempted scope,” Penske said in its petition for review.
But the Penske drivers said the Ninth Circuit “faithfully applied” Supreme Court precedent in ruling that “century-old” California labor laws mandating employee meal and rest breaks aren't sufficiently “related to” prices, routes or services of motor carriers to fall within federal preemption, as applied to “short haul” drivers operating entirely within state lines.
The Department of Transportation, in a brief submitted to the Ninth Circuit, said the state laws at issue, in the context of purely intrastate trucking, have no preempted effects, the drivers said. The DOT's Motor Carrier Safety Administration in 2008 had rejected Penske's petition for preemption of the California meal and rest break laws, the drivers said in their brief opposing review.
In reversing summary judgment for Penske, the Ninth Circuit revived a class action on behalf of 349 Penske delivery drivers in California. The drivers allege the company violated state laws by automatically programming an unpaid 30-minute meal break into employees' schedules without ensuring they actually take such breaks and by discouraging drivers from taking the statutorily required meal and rest breaks.
In 2011, the U.S. District Court for the Southern District of California had ruled that because the state's meal and rest break laws impose “fairly rigid” timing requirements on “exactly” when and for how long drivers must take breaks and effectively restrict the routes a motor carrier can select, the federal statute preempts the state's regulations (819 F. Supp. 2d 1109, 18 WH Cases2d 403 (S.D. Cal. 2011)).
According to Penske, the Ninth Circuit applied an “impermissibly demanding standard,” with the court saying a generally applicable state law must “affirmatively regulate” and “bind” carriers to specific prices, routes or services to trigger preemption under the federal transportation statute.
That analysis contradicts the Supreme Court decisions in Rowe v. New Hampshire Motor Transport Ass'n, 552 U.S. 364 (U.S. 2008), and Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (U.S. 2014), and conflicts with other federal appeals courts' rulings, Penske said.
The Ninth Circuit's “anomalous” test finding no preemption unless a state law provision “binds” the carrier to “a particular price, route or service” finds no support in the FAAA Act's text and “directly conflicts” with the Supreme Court precedents, the company said.
In contrast, the Supreme Court consistently has held the federal statutory phrase “related to” encompasses state laws that have “a connection with” or “reference to” a carrier's prices, routes or services, even if it's an indirect connection, Penske said.
“Far from demanding that the state law bind a motor carrier to a specific rate, route or service to trigger preemption, this [Supreme] Court has found preemption based on the practical impact of [state] laws on rates, routes or services,” Penske said. “This practical approach accounts for the ‘real-world consequences' of state laws, as Congress intended.”
The Ninth Circuit's approach to FAAA Act preemption also is “starkly out of sync” with the analysis applied by other federal circuits, Penske said. The Ninth Circuit is the only circuit to apply a “heightened standard” for federal preemption of “so-called” state laws of general applicability, Penske said.
In contrast, other federal appeals courts apply the Supreme Court's “connection with” or “reference to” tests even to state laws of general applicability, resulting in more consistent federal preemption of state laws that affect motor carriers' rates, routes and services, Penske said.
The Ninth Circuit's decision has “widespread ramifications” for any motor carrier or airline operating within the circuit's jurisdiction, Penske said. “Each time a carrier seeks to conduct operations in California, it risks exposure” to the state's meal and rest break laws, the company said. By denying federal preemption, the Ninth Circuit allows California to impose its public policies on motor carriers operating within the state, “thereby displacing competitive forces that would otherwise operate,” Penske said.
“The Ninth Circuit's decision therefore subjects carriers to a patchwork of state regulation, precisely what the [FAAA Act's] preemption provision was designed to guard against,” Penske said. “The importance of this issue to transportation carriers in California is illustrated by the sheer number of class actions brought against transportation companies under the [California meal and rest break statutes], resulting in more than a dozen district court decisions.”
“More broadly, the Ninth Circuit's decision effectively insulates laws of general applicability from the preemptive reach of the [FAAA Act], directly contrary to Congress's intent and this Court's precedent,” the company said.
Unless the Supreme Court intervenes to address and correct the Ninth Circuit's flawed preemption analysis, the problem “is not going away,” Penske said.
Gregory Garre of Latham & Watkins LLP in Washington was counsel of record for Penske.
In opposing review, the drivers said the Ninth Circuit decision is consistent with Supreme Court precedent stating that FAAA Act preemption, though broad, doesn't reach state laws that affect a carrier's prices, routes or services “in only a tenuous, remote or peripheral manner.”
Penske “mischaracterizes” the Ninth Circuit decision by claiming the appeals court would find FAAA Act preemption only if a state law “directly or indirectly binds the carrier to a particular price, route or service.”
But the Ninth Circuit opinion “never applies such a test,” the drivers said. Rather, the appeals court just discussed the possibility a state law could “bind” carriers to specific services in order to give an example of what laws would “undoubtedly have an ‘impermissible effect' and therefore be preempted,” the drivers said.
The purported circuit conflict doesn't exist because the First Circuit decision on which Penske relies to show a conflict actually cites the Ninth Circuit's opinion with approval, the drivers said.
“The problem for Penske here is that it simply failed to ‘offer specific evidence' that ‘the actual effects of the California law on [its] own routes or services' were significant,” the drivers said. “That case-specific finding does not warrant this Court's review.”
Deepak Gupta of Gupta Beck PLLC in Washington was counsel of record for the Penske drivers.
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Summaries of labor and employment law cases denied Supreme Court review appear in Section E.
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