Ninth Circuit Holds FAAAA Does Not Preempt California’s Meal And Rest Break Laws

Last week the U.S. Court of Appeals for the Ninth Circuit concluded, in Dilts v. Penske Logistics, LLC,1 that the Federal Aviation Administration Authorization Act of 19942 (FAAAA) does not preempt the application of California's meal and rest break laws to motor carriers because these state laws are not sufficiently "related to" prices, routes, or services. The decision is contrary to the decisions of approximately a dozen district court cases holding that such laws were preempted. Moreover, if the Ninth Circuit's decision goes unchallenged, trucking companies that have operations in California will be required to comply with California's meal and rest break laws instead of the Department of Transportation regulations.

Background of the FAAAA

Congress passed the FAAAA for the purpose of preempting state trucking regulations following the deregulation of the trucking industry. The FAAAA preempts state laws or regulations or any other provision having the force and effect of law "related to a price, route, or service any motor carrier."3 The purpose of the preemption clause in the FAAAA, similar to the Airline Deregulation Act (ADA), was to prevent states from enacting, either directly or indirectly, "a patchwork of state service-determining laws, rules, and regulations," so as to "leave such decisions, where federally unregulated, to the competitive marketplace."4 Expressly excluded from preemption is the ability of a state's motor vehicle "safety regulatory authority" to impose various motor vehicle safety regulations, such as highway route controls or limitations based on the size and weight of the motor vehicle or the hazardous nature of the cargo, in addition to, inter alia, a state's ability to set minimum amounts of financial responsibility relating to insurance requirements.5

Nevertheless, these express exclusions from FAAAA preemption still leave the scope of the term "related to" extremely broad and, as noted by Justice Scalia in a concurrence concerning the same term used in ERISA, "everything is related to everything else."6 The Supreme Court has held that the term "related to" means "having a connection with, or reference to," prices, routes and services, regardless of whether that connection is direct or indirect, and that preemption "occurs at least where state laws have a 'significant impact' related to Congress' deregulatory and pre-emption related objectives."7 Conversely, the FAAAA does not preempt state laws that affect prices, routes and services only in a "tenuous, remote, or peripheral ... manner, such as state laws forbidding gambling."8 Although the Supreme Court has never said where, or how, "it would be appropriate to draw the line" in borderline situations,9 the Ninth Circuit has held that when 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."10

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