Court Washes Out Meal and Rest Break Claims for Class of Whirlpool Drivers and Installers

Tired of the stains those pesky meal and rest break requirements leave on your California operations? If your business is a motor carrier covered by the Federal Aviation Administration Authorization Act of 1994 (“FAAA Act”), some power to help clean up that mess just bubbled up in the Southern District of California.

In Dilts v. Penske Logistics LLC, Southern District of California Case No. 08-CV-318 JLS (BLM) (Oct. 19, 2011), after a class of hourly appliance delivery drivers and installers who were assigned to its Whirlpool account was certified, Penske Logistics LLC filed a motion for partial summary judgment in an effort to eliminate the plaintiffs' meal and rest break claims. Penske did not try to establish that it had not violated California's meal and rest break laws, but rather, it argued that the laws were preempted by the FAAA Act.

The parties did not dispute that the duties of the employees at issue included loading Whirlpool appliances from warehouses in California onto their trucks, transporting the appliances to other locations within California, and installing the appliances. However, the plaintiffs disputed that these activities fell within the scope regulated by the FAAA.

In concluding that the plaintiffs’ activities do fall within the scope regulated by the FAAA, the Court relied upon Subtitle IV of Title 49 of the United States Code which regulates interstate transportation. Specifically, the Court cited subsection (c)(1) which states:

Except as provided in paragraphs (2) and (3), a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property. 49 U.S.C. § 14501(c)(1).

The Court found that intrastate activity is covered by the FAAA Act and that Penske qualifies as a “motor carrier . . . with respect to the transportation of property” in this case.

The plaintiffs argued that Penske’s purely intrastate operations in this case brought them outside of the FAAA Act’s regulatory scope. However, the Court disagreed, citing to the text of the statute and Congressional findings that “the regulation of intrastate transportation of property by the States has imposed an undue burden on interstate commerce . . . and certain aspects of the State regulatory process should be preempted.” Pub. L. No. 103-305, § 601(a), 108 Stat. 1569, 1605 (1994). The Court also found that Penske’s activities qualified as those of a “motor carrier” under the definition of the FAAA Act, which broadly defines the term as “a person providing commercial motor vehicle . . . transportation for compensation.” 49 U.S.C. § 13102(14). The Court also noted that “transportation” includes “services related to that movement.” 49 U.S.C. § 13102(23). Because plaintiffs, as Penske drivers/installers, operated commercial motor vehicles which transported property and conducted services related to that movement, the Court found their activities were regulated under the FAAA Act.

After confirming that Penske’s activities fell within the scope regulated by the FAAA Act, the Court then analyzed the issue of whether California’s meal and rest break laws fell within the “preemptive scope” of the FAAA Act. The plaintiffs argued that the FAAA Act did not preempt the meal and rest break laws because, according to the plaintiffs, they do not impose substantive standards “related to” the price, route or service of a motor carrier. The Court found, however, that the history of the FAAA Act and its preemption provision, as well as binding authority from case law led to the conclusion that California’s meal and rest break laws are preempted by the FAAA. Because the preemption language of the FAAA Act did not expressly encompass state regulation of meal and rest breaks, the Court considered the legislative history of Section 14501 and found that it reflects Congress’ “clear and manifest purpose” that the California meal and rest breaks be preempted.

To determine whether California’s meal and rest break laws were within the scope of the FAAA Act’s preemption provisions, the Court analyzed whether the laws, which do not directly target the motor carrier industry, “‘bind’ Penske’s prices, routes or services and thereby ‘interfere with competitive market forces within the industry,’” and found that they do. Penske argued, and the court agreed, that the “fairly rigid meal and break requirements impact the types and lengths of routes that are feasible” and that while “the laws do not strictly bind Penske’s drivers to one particular route, they have often the same effect by depriving them of the ability to take any route that does not offer adequate locations for stopping, or by forcing them to take shorter or fewer routes. In essence the laws bind motor carriers to a smaller set of possible routes.” Penske also asserted that the meal and rest break laws have a significant impact on Penske’s services, in that scheduling off-duty meal periods for drivers would require one or two less deliveries per day per driver, and the mandatory breaks reduce driver flexibility, interfere with customer service, and, “by virtue of simple mathematics,” reduce the amount of on-duty work time allowable to drivers and thus reduce the amount and level of service Penske can offer its customers without increasing its workforce and investment equipment. Accepting these undisputed facts as true, the Court found that the length and timing of meal and rest breaks seemed “directly and significantly related to such things as the frequency and scheduling of transportation” and that the “connection to ‘schedules, origins, and . . . destinations’ is far from tenuous.” The key issue, the Court found, is “that to allow California to insist exactly when and for how long carriers provide breaks for their employees would allow other States to do the same, and to do so differently” and (quoting the Supreme Court in Rowe v. New Hampshire, 552 U.S. 364, 373 (2008)) that “‘to interpret the federal law to permit these, and similar, state requirements could easily lead to a patchwork of state service-determining laws, rules and regulations.’’’ Ultimately, the Court found that “state regulation of details significantly impacting the routes or services of the carrier’s transportation” is “itself preempted by the FAAA Act.”

In their attempts to persuade the Court that the California meal and rest break laws were not preempted by the FAAA Act, the plaintiffs characterized the laws as “simply the requirement to pay one hour of wages” in order to analogize their case to other cases in which courts have found that wage hours are not preempted. The Court found that this was a “mischaracterization,” because the meal and rest break laws “are not simply wage laws which require employers to pay employees a certain wage and thus indirectly affect the prices of a service.” Rather, they prescribe events “that must occur over the course of the driver/installer’s day.” The Court was also not persuaded by the plaintiffs’ argument that the California meal and rest break laws come within the safety exception of the FAAA Act. While the Court acknowledged that the public health concerns addressed by the meal and rest break laws are serious, it held that they are not directly connected to motor vehicle safety and that therefore, the motor vehicle safety exception to the FAAA Act’s preemptive scope does not apply, and California’s meal and rest break laws are preempted by the FAAA Act.

The Bottom Line: If you are a transportation company and your employees’ work is regulated by the FAAA, you may have a “clean” defense to assert against claims for California meal and rest break violations.