Mickey Lee Dilts v. Penske Logistics, LLC

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 paid meal

break for every five hours worked, Cal. Lab. Code § 512, and

DILTS V. PENSKE LOGISTICS, INC. 5

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.

1 Since Dilts was decided, eight other California district court decisions

have held that the FAAAA preempts California's meal and rest break

laws, while four have held that it does not. The other cases that followed

Dilts are: Rodriguez v. Old Dominion Freight Line, Inc., No. CV13-

891DSF(RZx), 2013 WL 6184432, at *4 (C.D. Cal. Nov. 27, 2013);

Parker v. Dean Transp. Inc., No. CV13-02621BRO(VBKx), 2013 WL

7083269, at *9 (C.D. Cal. Oct. 15, 2013); Ortega v. J.B. Hunt Transp.,

DILTS V. PENSKE 6 LOGISTICS, INC.

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.

Inc., No. CV07-08336(BRO)(FMOx), 2013 WL 5933889, at *7 (C.D. Cal.

Oct. 2, 2013); Burnham v. Ruan Transp., No. SACV12-0688AG(ANx),

2013 WL 4564496, at *5 (C.D. Cal. Aug. 16, 2013); Cole v. CRST, Inc.,

No. EDCV08-1570-VAP(OPx), 2012 WL 4479237, at *4–6 (C.D. Cal.

Sept. 27, 2012); Campbell v. Vitran Express, Inc., No. CV11-05029-

RGK(SHx), 2012 WL 2317233, at *4 (C.D. Cal. June 8, 2012); Aguiar v.

Cal. Sierra Express, Inc., No. 2:11-cv-02827-JAM-GGH, 2012 WL

1593202, at *1 (E.D. Cal. May 4, 2012); Esquivel v. Vistar Corp., No.

2:11-cv-07284-JHN-PJWx, 2012 WL 516094, at *4–6 (C.D. Cal. Feb. 8,

2012) (unpublished decisions); see also Miller v. Sw. Airlines Co., 923 F.

Supp. 2d 1206, 1212–13 (N.D. Cal. 2013) (holding California's break

laws preempted under the analogous provision of the Airline Deregulation

Act); Helde v. Knight Transp., Inc., 982 F. Supp. 2d 1189, 1195–96 (W.D.

Wash. 2013) (applying similar analysis to Washington's rest break

provisions and holding them preempted under the FAAAA). The cases

holding that California's meal and rest break laws are not preempted by

the FAAAA are: Villalpando v. Exel Direct Inc., No. 12-cv-04137JCS,

2014 WL 1338297, at *12 (N.D. Cal. Mar. 28, 2014); Brown v. Wal-Mart

Stores, Inc., No. C08-5221SI, 2013 WL 1701581, at *3–4 (N.D. Cal. Apr.

18, 2013); Mendez v. R+L Carriers, Inc., No. C11-2478CW, 2012 WL

5868973, at *4–7 (N.D. Cal. Nov. 19, 2012) (unpublished decisions);

Reinhardt v. Gemini Motor Transp., 869 F. Supp. 2d 1158, 1165–67 (E.D.

Cal. 2012).

This is the first time that the question is before us. It is also before us

in Campbell v. Vitran Express, Inc., No. 12-56250, which we decide in a

memorandum disposition issued this date.

DILTS V. PENSKE LOGISTICS, INC. 7

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., 274 P.3d

1160, 1168 (Cal. 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,

DILTS V. PENSKE 8 LOGISTICS, INC.

clarified that state laws allow some flexibility with respect to

the timing and circumstances of meal breaks. Brinker Rest.

Corp. v. Superior Court, 273 P.3d 513 (Cal. 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 offduty

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

DILTS V. PENSKE LOGISTICS, INC. 9

surrounding regulatory scheme to affect business, consumers,

and the law.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 486

(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

presumption against the pre-emption of state police power

regulations.” Tillison, 424 F.3d at 1098 (citation and internal

quotation marks omitted); Medtronic, Inc., 518 U.S. at 485;

see also Wyeth v. Levine, 555 U.S. 555, 565 (2009) (noting

that the presumption against preemption applies "in all

preemption cases” and is especially strong in areas of

traditional state regulation (internal quotation marks and

brackets omitted). Wage and hour laws constitute areas of

traditional state regulation, although that fact alone does not

"immunize” state employment laws from preemption if

Congress in fact contemplated their preemption. Cal. Div. of

Labor Standards Enforcement v. Dillingham Constr., N.A.,

519 U.S. 316, 330–34 (1997).

"Where, as in this case, Congress has superseded state

legislation by statute, our task is to identify the domain

expressly pre-empted. To do so, we focus first on the

statutory language, which necessarily contains the best

evidence of Congress' pre-emptive intent.” Dan's City Used

Cars, Inc. v. Pelkey, 133 S. Ct. 1769, 1778 (2013) (citation

and internal quotation marks omitted) (interpreting the

FAAAA). The FAAAA's preemption clause provides, in

relevant part: "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.”

DILTS V. PENSKE 10 LOGISTICS, INC.

49 U.S.C. § 14501(c)(1). The statutory "related to” text is

"deliberately expansive” and "conspicuous for its breadth.”

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383–84

(1992) (internal quotation marks omitted). That said, the

FAAAA does not go so far as to preempt state laws that affect

prices, routes, or services in "only a tenuous, remote, or

peripheral manner, such as state laws forbidding gambling.”

Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364, 371 (2008)

(internal quotation marks and alteration omitted). As the

Supreme Court recently observed, "the breadth of the words

'related to' does not mean the sky is the limit.” Dan's City

Used Cars, 133 S. Ct. at 1778.

Because "everything is related to everything else,”

Dillingham Constr., 519 U.S. at 335 (Scalia, J., concurring),

understanding the nuances of congressional intent is

particularly important in FAAAA preemption analysis. We

must draw a line between laws that are significantly "related

to” rates, routes, or services, even indirectly, and thus are

preempted, and those that have "only a tenuous, remote, or

peripheral” connection to rates, routes, or services, and thus

are not preempted. Rowe, 552 U.S. at 371. To better discern

congressional intent, we turn next to the legislative history

and broader statutory framework of the FAAAA. Lohr,

518 U.S. at 486.

Enacted in 1994, the FAAAA was modeled on the Airline

Deregulation Act of 1978. In 2008, the Supreme Court

summarized the history behind the FAAAA:

In 1978, Congress "determin[ed] that

'maximum reliance on competitive market

forces'” would favor lower airline fares and

better airline service, and it enacted the

DILTS V. PENSKE LOGISTICS, INC. 11

Airline Deregulation Act. Morales[, 504 U.S.

at 378] (quoting 49 U.S.C. App. § 1302(a)(4)

(1988 ed.)); see 92 Stat. 1705. In order to

"ensure that the States would not undo federal

deregulation with regulation of their own,”

th[e Airline Deregulation] Act "included a

pre-emption provision” that said "no State . . .

shall enact or enforce any law . . . relating to

rates, routes, or services of any air carrier.”

Morales, supra, at 378; 49 U.S.C. App.

§ 1305(a)(1) (1988 ed.).

In 1980, Congress deregulated trucking.

See Motor Carrier Act of 1980, 94 Stat. 793.

And a little over a decade later, in 1994,

Congress similarly sought to pre-empt state

trucking regulation. See Federal Aviation

Administration Authorization Act of 1994,

108 Stat. 1605–1606; see also ICC

Termination Act of 1995, 109 Stat. 899. In

doing so, it borrowed language from the

Airline Deregulation Act of 1978 and wrote

into its 1994 law language that says: "[A]

State . . . 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); see also § 41713(b)(4)(A)

(similar provision for combined motor-air

carriers).

Rowe, 552 U.S. at 367–68.

DILTS V. PENSKE 12 LOGISTICS, INC.

By using text nearly identical to the Airline Deregulation

Act's, Congress meant to create parity between freight

services provided by air carriers and those provided by motor

carriers. Californians for Safe & Competitive Dump Truck

Transp. v. Mendonca, 152 F.3d 1184, 1187 (9th Cir. 1998).

Therefore, the analysis from Morales and other Airline

Deregulation Act cases is instructive for our FAAAA analysis

as well. The one difference between the Airline Deregulation

Act and the FAAAA is that the latter contains the additional

phrase "with respect to the transportation of property,” which

is absent from the Airline Deregulation Act and which

"massively limits the scope of preemption ordered by the

FAAAA.” Dan's City Used Cars, 133 S. Ct. at 1778 (internal

quotation marks omitted). Here, the parties do not dispute

that the transportation of property is involved, so our analysis

turns on the "related to price, route, or service” element of the

FAAAA preemption test.

The principal purpose of the FAAAA was "to prevent

States from undermining federal deregulation of interstate

trucking” through a "patchwork” of state regulations. Am.

Trucking Ass'ns v. City of Los Angeles, 660 F.3d 384, 395–96

(9th Cir. 2011). The sorts of laws that Congress considered

when enacting the FAAAA included barriers to entry, tariffs,

price regulations, and laws governing the types of

commodities that a carrier could transport. H.R. Conf. Rep.

No. 103-677, at 86 (1994), reprinted in 1994 U.S.C.C.A.N.

1715, 1758. The FAAAA expressly does not regulate a

state's authority to: enact safety regulations with respect to

motor vehicles; control trucking routes based on vehicle size,

weight, and cargo; impose certain insurance, liability, or

standard transportation rules; regulate the intrastate transport

of household goods and certain aspects of tow-truck

operations; or create certain uniform cargo or antitrust

DILTS V. PENSKE LOGISTICS, INC. 13

immunity rules. 49 U.S.C. § 14501(c)(2), (3). This list was

"not intended to be all inclusive, but merely to specify some

of the matters which are not 'prices, rates or services' and

which are therefore not preempted.” H.R. Conf. Rep. No.

103-677, at 84, reprinted in 1994 U.S.C.C.A.N. at 1756.

Accordingly, Congress did not intend to preempt generally

applicable state transportation, safety, welfare, or business

rules that do not otherwise regulate prices, routes, or services.

Consistent with that instruction, we have held that the

FAAAA does not preempt a state's prevailing wage law,

Mendonca, 152 F.3d at 1189, or a state law requiring that

towing services obtain express authorization to tow from

private property, Tillison, 424 F.3d at 1099–1100, and that

the Airline Deregulation Act does not preempt a generally

applicable city anti-discrimination law, Air Transp. Ass'n of

Am. v. City of San Francisco, 266 F.3d 1064, 1071 (9th Cir.

2001).

In 2008, after reviewing the relevant statutory text,

legislative history, and jurisprudence, the Supreme Court

identified four principles of FAAAA preemption: (1) "'state

enforcement actions having a connection with, or reference

to,' carrier 'rates, routes or services' are pre-empted”;

(2) "such pre-emption may occur even if a state law's effect

on rates, routes or services 'is only indirect'”; (3) "it makes

no difference whether a state law is 'consistent' or

'inconsistent' with federal regulation”; and (4) "pre-emption

occurs at least where state laws have a 'significant impact'

related to Congress' deregulatory and pre-emption-related

objectives.” Rowe, 552 U.S. at 370–71 (brackets and

emphasis omitted) (quoting the Airline Deregulation Act

analysis in Morales, 504 U.S. at 384, 386–87, 390).

DILTS V. PENSKE 14 LOGISTICS, INC.

Contrary to Defendants' argument, Rowe did not

represent a significant shift in FAAAA jurisprudence. Nor

did it call into question our past FAAAA cases, such as

Mendonca, 152 F.3d at 1187–89. See also Miller v. Gammie,

335 F.3d 889, 892–93 (9th Cir. 2003) (en banc) (holding that

a three-judge panel may ignore binding circuit precedent only

if it is "clearly irreconcilable with the reasoning or theory of

intervening higher authority”). Rowe instructs us to apply to

our FAAAA cases the settled preemption principles

developed in Airline Deregulation Act cases, including the

rule articulated in Morales that a state law may "relate to”

prices, routes, or services for preemption purposes even if its

effect is only indirect, 504 U.S. at 385–86, but that a state law

connected to prices, routes, or services in "too tenuous,

remote, or peripheral a manner” is not preempted, id. at 390

(internal quotation marks omitted). See also H.R. Conf. Rep.

No. 103-677, at 83, reprinted in 1994 U.S.C.C.A.N. at 1755

(noting that the drafters of the FAAAA did "not intend to

alter the broad preemption interpretation adopted by the

United States Supreme Court in Morales”). We applied

precisely that rule in Mendonca, 152 F.3d at 1187–89. Rowe

simply reminds us that, whether the effect is direct or

indirect, "the state laws whose effect is forbidden under

federal law are those with a significant impact on carrier

rates, routes, or services.” 552 U.S. at 375 (internal quotation

marks omitted).

Rowe concerned a Maine law requiring tobacco retailers

to use a delivery service that provided recipient verification.

The Supreme Court held that the verification requirement

interfered with the de-regulatory goals behind the FAAAA's

preemption clause because it would "require carriers to offer

a system of services that the market does not provide[,] . . .

would freeze into place services that carriers might prefer to

DILTS V. PENSKE LOGISTICS, INC. 15

discontinue in the future,” and would directly substitute

Maine's "own governmental commands for competitive

market forces in determining (to a significant degree) the

services that motor carriers will provide.” 552 U.S. at 372

(internal quotation marks omitted). The Maine statute also

required that carriers provide a special checking system to

receive any shipment originating from a known tobacco

retailer. Id. at 373. The Supreme Court held that requiring

the carriers to check packages in this way would "regulate a

significant aspect of the motor carrier's package pickup and

delivery service” and, again, could freeze into place services

that the market would not otherwise provide. Id.

In short, the Maine statute required carriers to provide or

use certain special services in order to comply with the law.

The statute was, as we have described other preempted laws,

one in which "the existence of a price, route or service [was]

essential to the law's operation.” Air Transp. Ass'n, 266 F.3d

at 1071 (internal quotation marks and brackets omitted). In

an Airline Deregulation Act case following Rowe, we held

that, in "'borderline' cases” in which a law does not refer

directly to rates, routes, or services, "the proper inquiry is

whether the provision, directly or indirectly, binds the carrier

to a particular price, route or service and thereby interferes

with the competitive market forces within the industry.” Am.

Trucking, 660 F.3d at 397 (emphasis added) (internal

quotation marks and alterations omitted). Thus, laws

mandating motor carriers' use (or non-use) of particular

prices, routes, or services in order to comply with the law are

preempted.

Laws are more likely to be preempted when they operate

at the point where carriers provide services to customers at

specific prices. In Northwest, Inc. v. Ginsberg, 134 S. Ct.

DILTS V. PENSKE 16 LOGISTICS, INC.

1422, 1431 (2014), the Supreme Court held that an airline

customer's claim against the airline for breach of an implied

covenant, stemming from the termination of his frequent flyer

account, was "related to” prices, routes, and especially

services. The Court held that, because frequent flyer credits

could be redeemed for services offered for free or at reduced

prices, the state law contract claim met the "related to” test,

id., and, because the state law claim sought to enlarge the

contractual relationship that the carrier and its customer had

voluntarily undertaken, was preempted under the Airline

Deregulation Act, id. at 1433; see also S.C. Johnson & Son v.

Transp. Corp. of Am., 697 F.3d 544, 558 (7th Cir. 2012)

(noting that Morales and Mendonca both stand for the

proposition that the Airline Deregulation Act and FAAAA do

not preempt "laws that regulate . . . inputs [that] operate one

or more steps away from the moment at which the firm offers

its customer a service for a particular price”); DiFiore v. Am.

Airlines, Inc., 646 F.3d 81, 88 (1st Cir. 2011) (the preempted

law "directly regulates how an airline service is performed

and how its price is displayed to customers—not merely how

the airline behaves as an employer or proprietor”).

On the other hand, generally applicable background

regulations that are several steps removed from prices, routes,

or services, such as prevailing wage laws or safety

regulations, are not preempted, even if employers must factor

those provisions into their decisions about the prices that they

set, the routes that they use, or the services that they provide.

Such laws are not preempted even if they raise the overall

cost of doing business or require a carrier to re-direct or reroute

some equipment. Mendonca, 152 F.3d at 1189. Indeed,

many of the laws that Congress enumerated as expressly not

related to prices, routes, or services—such as transportation

safety regulations or insurance and liability rules, 49 U.S.C.

DILTS V. PENSKE LOGISTICS, INC. 17

§ 14501(c)(2)—are likely to increase a motor carrier's

operating costs. But Congress clarified that this fact alone

does not make such laws "related to” prices, routes, or

services. Nearly every form of state regulation carries some

cost. The statutory text tells us, though, that in deregulating

motor carriers and promoting maximum reliance on market

forces, Congress did not intend to exempt motor carriers from

every state regulatory scheme of general applicability.

49 U.S.C. § 14501(c); see also, e.g., Rowe, 552 U.S. at 375

(holding that a state law is not preempted when it "prohibits

certain forms of conduct and affects, say, truckdrivers, only

in their capacity as members of the public”).

Nor does a state law meet the "related to” test for

FAAAA preemption just because it shifts incentives and

makes it more costly for motor carriers to choose some routes

or services relative to others, leading the carriers to reallocate

resources or make different business decisions. For example,

a San Francisco city ordinance requiring equal protection for

domestic partners did not "compel or bind the Airlines to a

particular route or service,” even though it might increase the

cost of doing business at the San Francisco airport relative to

other markets. Air Transp. Ass'n, 266 F.3d at 1074. Despite

the potential cost increase associated with using the San

Francisco airport as a result of the city ordinance, carriers

could still "make their own decisions about where to fly and

how many resources to devote to each route and service.” Id.

In short, even if state laws increase or change a motor

carrier's operating costs, "broad law[s] applying to hundreds

of different industries” with no other "forbidden connection

with prices[, routes,] and services”—that is, those that do not

directly or indirectly mandate, prohibit, or otherwise regulate

DILTS V. PENSKE 18 LOGISTICS, INC.

certain prices, routes, or services— are not preempted by the

FAAAA. Id. at 1072.

C. California's Meal and Rest Break Laws are Not

Preempted

Although we have in the past confronted close cases that

have required us to struggle with the "related to” test, and

refine our principles of FAAAA preemption, we do not think

that this is one of them. In light of the FAAAA preemption

principles outlined above, California's meal and rest break

laws plainly are not the sorts of laws "related to” prices,

routes, or services that Congress intended to preempt. They

do not set prices, mandate or prohibit certain routes, or tell

motor carriers what services they may or may not provide,

either directly or indirectly. They are "broad law[s] applying

to hundreds of different industries” with no other "forbidden

connection with prices[, routes,] and services.” Air Transp.

Ass'n, 266 F.3d at 1072. They are normal background rules

for almost all employers doing business in the state of

California. And while motor carriers may have to take into

account the meal and rest break requirements when allocating

resources and scheduling routes—just as they must take into

account state wage laws, Mendonca, 152 F.3d at 1189, or

speed limits and weight restrictions, 49 U.S.C.

§ 14501(c)(2)—the laws do not "bind” motor carriers to

specific prices, routes, or services, Am. Trucking, 660 F.3d at

397. Nor do they "freeze into place” prices, routes, or

services or "determin[e] (to a significant degree) the [prices,

routes, or] services that motor carriers will provide,” Rowe,

552 U.S. at 372.

Further, applying California's meal and rest break laws to

motor carriers would not contribute to an impermissible

DILTS V. PENSKE LOGISTICS, INC. 19

"patchwork” of state-specific laws, defeating Congress'

deregulatory objectives. The fact that laws may differ from

state to state is not, on its own, cause for FAAAA

preemption. In the preemption provision, Congress was

concerned only with those state laws that are significantly

"related to” prices, routes, or services. A state law governing

hours is, for the foregoing reasons, not "related to” prices,

routes, or services and therefore does not contribute to "a

patchwork of state service-determining laws, rules, and

regulations.” Rowe, 552 U.S. at 373 (emphasis added). It is

instead more analogous to a state wage law, which may differ

from the wage law adopted in neighboring states but

nevertheless is permissible. Mendonca, 152 F.3d at 1189.2

2 We recently noted that it was an "open issue” "whether a federal law

can ever preempt state law on an 'as applied' basis, that is, whether it is

proper to find that federal law preempts a state regulatory scheme

sometimes but not at other times, or that a federal law can preempt state

law when applied to certain parties, but not to others.” Cal. Tow Truck

Ass'n v. City of San Francisco, 693 F.3d 847, 865 (9th Cir. 2012). We

need not resolve that issue here. For the reasons discussed in this section,

we hold that California's meal and rest break laws, as generally applied to

motor carriers, are not preempted.

Were we to construe Defendant's argument as an "as applied”

challenge, we would reach the same conclusion and, if anything, find the

argument against preemption even stronger. Plaintiff drivers work on

short-haul routes and work exclusively within the state of California.

They therefore are not covered by other state laws or federal hours-ofservice

regulations, 49 C.F.R. § 395.3, and would be without any hoursof-

service limits if California laws did not apply to them. See Hours of

Service of Drivers, 78 Fed. Reg. 64,179-01, 64,181 (Oct. 28, 2013)

(amending 49 C.F.R. § 395.3 to exclude short-haul drivers, in compliance

with Am. Trucking Ass'ns v. Fed. Motor Carrier Safety Admin., 724 F.3d

243 (D.C. Cir. 2013), cert. denied, 134 S. Ct. 914 (2014)). Consequently,

Defendants in particular are not confronted with a "patchwork” of hour

and break laws, even a "patchwork” permissible under the FAAAA.

DILTS V. PENSKE 20 LOGISTICS, INC.

Defendants argue that California's meal and rest break

laws are "related to” routes or services, "if not prices too,” in

six specific ways. None of those examples convinces us that

California's laws are "related to” prices, routes, or services in

the way that Congress intended.

First, Defendants argue that the state break laws

impermissibly mandate that no motor carrier service be

provided during certain times because the laws require a

cessation of work during the break period. But the state law

requires only that each individual employee take an off-duty

break at some point within specified windows—not that a

motor carrier suspend its service. Defendants are at liberty to

schedule service whenever they choose. They simply must

hire a sufficient number of drivers and stagger their breaks

for any long period in which continuous service is necessary.

Second, Defendants argue that mandatory breaks mean

that drivers take longer to drive the same distance, providing

less service overall. But that argument equates to nothing

more than a modestly increased cost of doing business, which

is not cause for preemption, Air Transp. Ass'n, 266 F.3d at

1071; Mendonca, 152 F.3d at 1189. Motor carriers may have

to hire additional drivers or reallocate resources in order to

maintain a particular service level, but they remain free to

provide as many (or as few) services as they wish. The law

in question has nothing to say about what services an

employer does or does not provide.

Third, Defendants argue that break laws require carriers

to alter "the frequency and scheduling of transportation,”

which directly relates to services under Charas v. Trans

World Airlines, Inc., 160 F.3d 1259, 1265–66 (9th Cir. 1998)

(en banc). Charas held that, under the Airline Deregulation

DILTS V. PENSKE LOGISTICS, INC. 21

Act, services include "such things as the frequency and

scheduling of transportation, and . . . the selection of markets

to or from which transportation is provided.” Id. Again, this

argument conflates requirements for individual drivers with

requirements imposed on motor carriers. Motor carriers may

schedule transportation as frequently or as infrequently as

they choose, at the times that they choose, and still comply

with the law. They simply must take drivers' break times into

account—just as they must take into account speed limits or

weight restrictions, 49 U.S.C. § 14501(c), which are not

preempted by the FAAAA.

Fourth, Defendants argue that California break laws

require motor carriers to schedule services in accordance with

state law, rather than in response to market forces, thereby

interfering with the FAAAA's deregulatory objectives. But

the mere fact that a motor carrier must take into account a

state regulation when planning services is not sufficient to

require FAAAA preemption, so long as the law does not have

an impermissible effect, such as binding motor carriers to

specific services, Am. Trucking, 660 F.3d at 397, making the

continued provision of particular services essential to

compliance with the law, Rowe, 552 U.S. at 372; Air Transp.

Ass'n, 266 F.3d at 1074, or interfering at the point that a

carrier provides services to its customers, Nw., Inc., 134 S.

Ct. at 1431. Moreover, all motor carriers in California are

subject to the same laws, so all intrastate carriers like

Defendants are equally subject to the relevant market forces.

Turning to routes, Defendants' fifth argument is that the

requirement that drivers pull over and stop for each break

period necessarily dictates that they alter their routes. To the

extent that compliance with California law requires drivers to

make minor deviations from their routes, such as pulling into

DILTS V. PENSKE 22 LOGISTICS, INC.

a truck stop, we see no indication that this is the sort of "route

control” that Congress sought to preempt. "'[R]outes'

generally refer[s] to . . . point-to-point transport . . . [and]

courses of travel.” Charas, 160 F.3d at 1265. The

requirement that a driver briefly pull on and off the road

during the course of travel does not meaningfully interfere

with a motor carrier's ability to select its starting points,

destinations, and routes. Indeed, Congress has made clear

that even more onerous route restrictions, such as weight

limits on particular roads, are not "related to” routes and

therefore are not preempted. 49 U.S.C. § 14501(c).

Sixth, and relatedly, Defendants argue that finding routes

that allow drivers to comply with California's meal and rest

break laws will limit motor carriers to a smaller set of

possible routes. But Defendants, who bear the burden of

proof in establishing the affirmative defense of preemption,

PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2587 (2011),

submitted no evidence to show that the break laws in fact

would decrease the availability of routes to serve the

Whirlpool accounts, or would meaningfully decrease the

availability of routes to motor carriers in California. Instead,

Defendants submitted only very general information about

the difficulty of finding parking for commercial trucks in

California. Although compliance with California's meal and

break laws may require some minor adjustments to drivers'

routes, the record fails to suggest that state meal and rest

break requirements will so restrict the set of routes available

as to indirectly bind Defendants, or motor carriers generally,

to a limited set of routes, Am. Trucking, 660 F.3d at 397, or

make the provision or use of specific routes necessary for

compliance with the law, Air Transp. Ass'n, 226 F.3d at

1074. Moreover, drivers already must incorporate into their

schedule fuel breaks, pick ups, drop offs and, in some cases,

DILTS V. PENSKE LOGISTICS, INC. 23

time to install products or wait for their partner to complete

an installation.

Finally, in an amicus brief filed at our invitation, the

Secretary of Transportation argued that: (1) state laws like

California's, which do not directly regulate prices, routes, or

services, are not preempted by the FAAAA unless they have

a "significant effect” on prices, routes, or services; (2) in the

absence of explicit instructions from Congress, there is a

presumption against preemption in areas of traditional state

police power, including employment; and (3) there is no

showing of an actual or likely significant effect on prices,

routes, or services, and so the California laws at issue are not

preempted. See also Meal Breaks and Rest Breaks for

Commercial Motor Vehicle Drivers, 73 Fed. Reg. 79,204-01,

79,206 (Dec. 24, 2008) (determining, in an order issued by

the Department of Transportation, that the agency lacked

jurisdiction to preempt California's meal and rest break laws

under another statute, 49 U.S.C. § 31141, because those state

laws are not "laws [or] regulations on commercial motor

safety”).

The government's position is not controlling, because it

does not concern a statute that the Department of

Transportation is tasked with implementing, Chevron, U.S.A.,

Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984),

nor does it concern regulations on which the agency has

issued past reasoned, consistent opinions, Auer v. Robbins,

519 U.S. 452, 461–62 (1997). But three factors specific to

this issue lead us to "place some weight upon DOT's

interpretation,” Geier v. Am. Honda Motor Co., 529 U.S. 861,

883 (2000): (1) the agency's general expertise in the field of

transportation and regulation, (2) the fact that the position

taken in the brief represents the agency's reasoned

DILTS V. PENSKE 24 LOGISTICS, INC.

consideration of the question, and (3) the fact that the

government's position is generally consistent with its

approach to other preemption questions concerning

California's meal and rest break laws (although this is the

first time that the government has taken a position on

FAAAA preemption specifically).

For the reasons discussed above, we agree with the

government's position. We find it particularly persuasive that

the Department of Transportation, which has great familiarity

with transportation regulations, sees no evidence that

California's meal and rest break laws will significantly affect

the prices, routes, or services of motor carriers.

CONCLUSION

The FAAAA does not preempt California's meal and rest

break laws as applied to Defendants, because those state laws

are not "related to” Defendants' prices, routes, or services.

The district court dismissed this action on summary judgment

because of Defendants' preemption defense, so it has not yet

considered the merits of Plaintiffs' claims. Accordingly, we

reverse and remand for further proceedings consistent with

this opinion.

REVERSED and REMANDED.

DILTS V. PENSKE LOGISTICS, INC. 25

ZOUHARY, District Judge, concurring:

I write separately to emphasize one aspect of this case.

As the Majority notes, Penske bears the burden of proof on its

preemption defense. See supra, at 22. But Penske did not

offer specific evidence of (for example) the actual effects of

the California law on Penske's own routes or services.

Instead, Penske relied on a general hypothetical likelihood

that a Penske delivery driver, with limited flexibility in

traveling from point A to point B, is further restricted to

certain routes that would allow a driver to park his or her

truck and enter "off-duty” status.

Penske failed to carry its burden. I consequently express

no opinion, for example, that the possibility a "driver [must]

briefly pull on and off the road during the course of travel

does not meaningfully interfere with a motor carrier's ability

to select its starting points, destinations, and routes.” Id.

(emphases added). Maybe so. Maybe not.

Further, the Majority incorrectly posits that Defendants

are at liberty to schedule as they choose, tempered only by

hiring more drivers and staggering breaks. Customer

demands and practicalities must also be considered. As in air

and train transportation, substitution crews may now be

needed when hours of service are reached with some expense,

delay, and impact on service. With respect to costs-of-labor,

Penske did produce specific evidence, reflecting an estimated

3.4 percent increase in annual pricing to service a relevant

account. But, without more, that minimal increase in pricing

is an insufficient basis for preempting the decades-old meal

and rest break requirement. Mendonca, 152 F.3d at 1189

(finding California's prevailing wage requirement, which

increased a motor-carrier defendant's prices by 25 percent,

DILTS V. PENSKE 26 LOGISTICS, INC.

"in a certain sense . . . 'related to' [the motor carrierdefendant's]

prices, routes and services,” but had an effect

that was "no more than indirect, remote, and tenuous”).

In short, Penske failed to demonstrate the impact of the

California law that would support a finding of preemption.

Reversed and Remanded