Recently, a federal district court in California determined that motor carriers that transport property are not subject to California's meal and rest break laws, reasoning such laws are preempted by the Federal Aviation Administration Authorization Act ("FAAAA"). For those interested, the case is Dilts v. Penske Logistics, LLC, 2011 U.S. Dist. LEXIS 122421 (S.D. Cal. Oct. 19, 2011). The case is particularly interesting because it illustrates the supremacy of federal law where Congress has expressed its desire to legislate in a particular substantive area—here, the body of law governing motor carriers' routes, prices and services with respect to the transportation of property.

Through the FAAAA, Congress sought to preempt (effectively nullify) certain state-level trucking regulations, consistent with its deregulation of the trucking industry in 1980, through the enactment of the Motor Carrier Act. To that end, the FAAAA preempts state laws and regulations that have a direct or indirect connection with, or reference to, motor carriers' prices, routes or services with respect to the transportation of property. Motor carriers have successfully invoked the FAAAA to avoid the application of various state laws that create an unlevel playing field for motor carriers—e.g., state tobacco laws. The FAAAA may also preempt the application of certain state unemployment compensation statutes where such laws presumptively treat independent-contractor drivers as employees for purposes of eligibility for state unemployment compensation benefits.

In Penske Logistics, 349 hourly appliance delivery drivers and installers filed a class action against Penske, claiming, among other things, that Penske failed to provide required meal and rest breaks. Significantly, the Court held that the FAAAA preempted the application of California's meal and rest break laws, after it evaluated "whether the [meal and rest break law], directly or indirectly, binds the…carrier to a particular price, route or service and thereby interferes with competitive market forces within the…industry." According to the Court, the meal and rest break law did interfere with competitive market forces. Specifically, the laws related to "routes" because they deprive delivery drivers 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." The laws also related to motor carrier "services" because they imposed conditions that affected the "frequency and scheduling of transportation." Finally, the laws impacted Penske's "prices" because of the increased cost of additional drivers, helpers, tractors, and trailers necessary to ensure off-duty breaks under California law.

The plaintiffs in Penske Logistics may elect to appeal the decision to a higher federal court—it's worth monitoring!

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