Dilts v. Penske: A Victory for Workers and States' Rights

The tension between state and federal laws is nothing new. Generally speaking, federal law sets a threshold standard from which states are free to enact more protective health and safety regulations, laws governing the employer and employee relationship, and laws and regulations governing a myriad of other areas. However, there are limitations to a state's power to regulate, particularly in an industry that has undergone deregulation such as the motor carrier industry. When Congress passed the Federal Aviation Administration Authorization Act of 1994, it sought to ensure that states would 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. Section 14501(c)(1). If a state attempted to enact its own “patchwork” of regulations, then the federal law would preempt it and preclude enforcement, thereby preserving the deregulation of the motor carrier industry.

Despite the seemingly settled nature of the law in this area, some employees decided to challenge the scope of the application of the federal law. Mickey Dilts and his fellow employees (collectively referred to as “Dilts”) were employed as delivery drivers for motor carriers Penske Logistics, LLC and Penske Truck Leasing Co. L.P. (collectively referred to as “Penske”). Dilts filed a class action lawsuit against Penske in California state court, alleging repeated violations of state meal and rest break laws. Penske removed the case to federal district court and moved for summary judgment on the basis that the Federal Aviation Administration Authorization Act (“FAAAA”) preempted state laws on these issues. The district court agreed and granted summary judgment in favor of Penske. The plaintiff employees appealed that decision to the Ninth Circuit Court of Appeals.

The Ninth Circuit Court of Appeals reversed and remanded the case back to the district court. (Certiorari was denied by the United States Supreme Court on March 27, 2015).

The test for whether California's meal and rest break laws for motor carriers fall within the purview of the FAAAA and are thus preempted by the federal law hinges on whether the laws are “related to” Penske’s prices, routes, or services. Companies have favored an expansive interpretation of the “related to” test in order to allow as many state laws as possible to come within the FAAAA’s preemption. At the district court level, Penske argued that California’s meal and rest break laws were related to prices, routes, and services because compliance with the laws would have a significant impact on the types and lengths of feasible routes the company’s drivers could take.

The Ninth Circuit Court of Appeals disagreed. Looking to the legislative history of the FAAAA, the court noted that meal and rest break laws are not the sorts of laws that the law was intended to preempt. Rather, California meal and rest break laws are normal background rules for almost all employers doing business in the state of California. Furthermore, and perhaps more importantly for future preemption cases, the Ninth Circuit found that the FAAAA does not preempt state break laws because states retain their traditional power to regulate the employer-employee relationship, and to protect worker health and safety.

In its discussion of federal preemption of state laws, the Ninth Circuit stated that there is a presumption against preemption, and in the absence of instructions by Congress to the contrary, areas of power traditionally reserved to the state must be preserved. Employment is certainly one of those areas.

In addition to finding that states should and do retain the right to regulate employee health and welfare, the Ninth Circuit further limited the scope of the “related to” test. The court analyzed whether the state laws sought to be preempted would “meaningfully interfere” with the ability of a motor carrier to choose its routes or whether the laws would decrease in any significant way the availability of routes. The court found that although state laws requiring meal and rest breaks may affect the number of drivers and the allocation of resources, they would not force a carrier to change or suspend routes. Similarly, the requirements of rest and meal breaks would not interfere with a motor carrier’s choice of starting points, destinations, or routes. This lack of meaningful interference means that the state laws do not relate closely enough to price, route, or service of a motor carrier to fall within the preemption of the FAAAA.

The amicus brief filed by the Secretary of Transportation argued that the California laws were not preempted because they did not directly regulate prices, routes, or services, and they would have no significant effect on those either.

At the Nassiri law Group, we strive to protect the rights of employees. If you believe that your rights have been violated, contact the employment attorneys at the Nassiri Law Group as soon as possible. We practice in Orange County, Riverside, and Los Angeles. Call (949) 375-4734 today.