Dilts v. Penske Logistics, LLC

• Decision Date: 09 July 2014
• Docket Number: No. 12–55705.,12–55705.
• Citation: 769 F.3d 637
• Parties: Mickey Lee DILTS; Ray Rios; and Donny Dushaj, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants, v. PENSKE LOGISTICS, LLC; and Penske Truck Leasing Co., L.P., a Delaware corporation, Defendants–Appellees, and Does 1–125, inclusive, Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

769 F.3d 637

Mickey Lee DILTS; Ray Rios; and Donny Dushaj, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants

v.PENSKE LOGISTICS, LLC; and Penske Truck Leasing Co., L.P., a Delaware corporation, Defendants–AppelleesandDoes 1–125, inclusive, Defendants.

No. 12–55705.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 3, 2014.

Filed July 9, 2014.

Amended Sept. 8, 2014.

Deepak Gupta (argued), Brian Wolfman, Gregory A. Beck, and Jonathan E. Taylor, Gupta Beck PLLC, Washington, D.C.; Michael D. Singer and J. Jason Hill, Cohelan Khoury & Singer, San Diego, CA, for Plaintiffs–Appellants.

James H. Hanson (argued), Scopelitis, Garvin, Light, Hanson & Feary, P.C., Indianapolis, IN; and Adam C. Smedstad, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Chicago, IL, for Defendants–Appellees.

Jeffrey Clair (argued) and Stuart F. Delery, Assistant Attorneys General, Civil Division, United States Department of Justice; Kathryn B. Thomson, Acting General Counsel, Paul M. Geier, Assistant General Counsel for Litigation, and Peter J. Plocki, Deputy Assistant General Counsel for Litigation, United States Department of Transportation; and T.F. Scott Darling, III, Chief Counsel, and Debra S. Straus, Senior Attorney, Federal Motor Carrier Safety Administration, Washington, D.C., for Amicus Curiae United States of America.

Richard Pianka, ATA Litigation Center, and Prasad Sharma, American Trucking Associations, Inc., Arlington, VA; Paul DeCamp, Jackson Lewis LLP, Reston, VA; Douglas J. Hoffman, Jackson Lewis LLP, Boston, MA; and Robin S. Conrad and Shane B. Kawka, National Chamber Litigation Center, Inc., Washington, D.C.; Guillermo Marrero, International Practice Group, P.C., San Diego, CA; and Andrew J. Kahn and Richard G. McCracken, Davis, Cowell & Bowe, LLP, San Francisco, CA, for Amici Curiae.

Before: ALEX KOZINSKI, Chief Judge, SUSAN P. GRABER, Circuit Judge, and JACK ZOUHARY,^* District Judge.

Opinion by Judge GRABER.

Concurrence by Judge ZOUHARY.

ORDER AND AMENDED OPINIONORDER

The opinion filed on July 9, 2014, and published at 757 F.3d 1078, 2014 WL 3291749, are amended by the opinion and concurrence filed concurrently with this order.

With these amendments, Chief Judge Kozinski and Judge Graber have voted to deny the petition for rehearing en banc, and Judge Zouhary has so recommended.

The full court has been advised of the petition for rehearing en banc, and no judge of the court has requested a vote on it.

The petition for rehearing en banc is DENIED. No further petitions for rehearing may be filed.

OPINION

GRABER, Circuit Judge:

Plaintiffs, a certified class of drivers employed by Defendants Penske Logistics, LLC, and Penske Truck Leasing Co., L.P., appeal from a judgment dismissing their claims under California's meal and rest break laws. The district court held on summary judgment that the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”) preempts those state laws as applied to motor carriers. Reviewing de novo the interpretation and construction of the FAAAA and the question of federal preemption, Tillison v. Gregoire, 424 F.3d 1093, 1098 (9th Cir.2005), we hold that the state laws at issue are not “related to” prices, routes, or services, and therefore are not preempted by the FAAAA. Accordingly, we reverse.

FACTUAL AND PROCEDURAL HISTORY

Plaintiffs Mickey Lee Dilts, Ray Rios, and Donny Dushaj brought this class action against Defendants, which are motor carriers, alleging that Defendants routinely violate California's meal and rest break laws, Cal. Lab.Code §§ 226.7, 512 ; Cal.Code Regs. tit. 8, § 11090. Plaintiffs represent a certified class of 349 delivery drivers and installers, all of whom are assigned to the Penske Whirlpool account. Plaintiffs work exclusively on routes within the state of California, typically work more than 10 hours a day, and frequently work in pairs, with one driver and one deliverer/installer in each truck.

California law generally requires a 30–minute meal break for every five hours worked, Cal. Lab.Code § 512, and a paid 10–minute rest break for every four hours worked, Cal.Code Regs. tit. 8, § 11090. Plaintiffs allege that Defendants automatically program 30–minute meal breaks into employees' shifts while failing to ensure that employees actually take those breaks and that Defendants create a working environment that discourages employees from taking their meal and rest breaks.

Plaintiffs initially filed this action in state court. Defendants removed the case to federal district court under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d)(2), 1441(b), 1453. Following removal, Defendants moved for summary judgment, claiming a preemption defense. Defendants argued that the state meal and rest break laws as applied to motor carriers are preempted under the FAAAA, which provides that “States may not enact or enforce a law ... related to a price, route, or service of any motor carrier ... with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Concluding that California's meal and rest break laws impose “fairly rigid” timing requirements, dictating “exactly when” and “for exactly how long” drivers must take breaks, and restricting the routes that a motor carrier may select, the district court held that California's meal and rest break laws meet the FAAAA preemption standard and granted summary judgment for Defendants. Dilts v. Penske Logistics LLC, 819 F.Supp.2d 1109, 1119–20 (S.D.Cal.2011).¹ Plaintiffs timely appeal.

DISCUSSION

A. California's Meal and Rest Break Laws

California Labor Code sections 226.7 and 512, and the related regulations for the transportation industry promulgated by California's Industrial Welfare Commission as California Code of Regulations title 8, section 11090, together constitute the state's meal and rest break laws.

Employers must provide a meal break of 30 minutes for an employee who works more than five hours a day, plus a second meal break of 30 minutes for an employee who works more than 10 hours a day. Cal. Lab.Code § 512(a). For employees who work no more than six hours, the meal break may be waived by mutual consent of the employer and employee; for employees who work no more than 12 hours, one of the two meal breaks may be waived by mutual consent. Id. If the nature of the work prevents an employee from taking an off-duty meal break, the employer and employee may agree to an on-duty meal break by mutual consent.Id. For transportation workers whose daily work time is at least three and one-half hours, employers must provide a paid rest period of 10 minutes for every four hours “or major fraction thereof.” Cal.Code Regs. tit. 8, § 11090(12)(A). The regulations governing transportation workers are consistent with those governing workers in other industries. See id. §§ 11010–11170.

An employer may not require an employee to work during any meal or rest period. Cal. Lab.Code § 226.7(b). An employer must pay an employee for an additional hour of work at the employee's regular rate for each workday for which a meal or rest period is not provided. Cal. Lab.Code § 226.7(c). “[S]ection 226.7 does not give employers a lawful choice between providing either meal and rest breaks or an additional hour of pay.... The failure to provide required meal and rest breaks is what triggers a violation of section 226.7.” Kirby v. Immoos Fire Prot., Inc., 53 Cal.4th 1244, 140 Cal.Rptr.3d 173, 274 P.3d 1160, 1168 (2012). “The ‘additional hour of pay’ ... is the legal remedy....” Id.

The California Supreme Court, in an opinion published after the order on summary judgment issued in this case, clarified that state laws allow some flexibility with respect to the timing and circumstances of meal breaks. Brinker Rest. Corp. v. Superior Court, 53 Cal.4th 1004, 139 Cal.Rptr.3d 315, 273 P.3d 513 (2012). In the absence of a waiver, California law “requires a first meal period no later than the end of an employee's fifth hour of work, and a second meal period no later than the end of an employee's 10th hour of work,” but “does not impose additional timing requirements.” Id. at 537. “[A]n employer must relieve the employee of all duty for the designated [meal] period, but need not ensure that the employee does no work.” Id. at 532. When the nature of the work makes off-duty meal breaks infeasible, the employer and employee may, by mutual written agreement, waive the off-duty meal break requirement. Id. at 533 (citing California's Industrial Welfare Commission Wage Order No. 5). Finally, “as a general matter, one rest break should fall on either side of the meal break. [But s]horter or longer shifts and other factors that render such scheduling impracticable may alter this general rule,” and employers have flexibility in scheduling breaks according to the nature of the work. Id. at 531 (citation, brackets, and internal quotation marks omitted).

B. The “Related to” Test for FAAAA Preemption

In considering the preemptive scope of a statute, congressional intent “is the ultimate touchstone.” Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. Dist., 498 F.3d 1031, 1040 (9th Cir.2007) (internal quotation marks omitted). “Congress' intent ... primarily is discerned from the language of the pre-emption statute and the statutory framework surrounding it. Also relevant, however, is the structure and purpose of the statute as a whole, as revealed ... through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 486, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (citations and internal quotation marks omitted).

“Preemption analysis begins with the presumption that Congress does not intend to supplant state law. Although Congress clearly intended FAAAA to preempt some state regulations of motor carriers who transport property, the scope of the pre-emption must be tempered by the...