Godfrey v. Oakland Port Services Corp. ( 2014 )

Filed 10/28/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
LAVON GODFREY, et al.,
Plaintiffs and Respondents,
A139274
v.
OAKLAND PORT SERVICES CORP., (Alameda County
Super. Ct. No. RG08379099)
Defendant and Appellant.
Named plaintiffs Lavon Godfrey and Gary Gilbert initiated this class action
lawsuit against Oakland Port Services Corp., doing business as AB Trucking (AB). They
alleged that AB did not pay its drivers for all hours worked, misclassified some drivers as
non-employee trainees and did not pay them at all, and failed to provide required meal
and rest breaks. Plaintiffs sought certification of the class of drivers who performed work
for AB out of its Oakland, California facility. The trial court granted the class
certification motion, and the case proceeded to a bench trial. Plaintiffs prevailed on most
of their causes of action and the court awarded the class a total of $964,557.08. In a post-
judgment order, the court awarded attorney fees, litigation expenses, and class
representative enhancements to plaintiffs.
On appeal, AB relies primarily on the argument that federal law preempts
application of California’s meal and rest break requirements to motor carriers. AB also
argues in passing that the court order granting class certification was unsupported by
substantial evidence, but without addressing the evidence presented on the motion; that
the court should have reserved individual determinations of damages for the claims
administration process; that AB’s drivers are expressly excluded from coverage under
Industrial Welfare Commission (IWC) Order No. 9-2001; and that the award of attorney
1
fees and class representative enhancements should be reversed. We find no merit in
AB’s preemption or other arguments and affirm.
BACKGROUND
Class members are employees of AB who drive trucks owned by AB between the
Port of Oakland and AB’s yard, located in the general port area. Drivers also drive loads
to customer locations within the San Francisco Bay Area and elsewhere in California.
On September 20, 2010, plaintiffs filed a second amended complaint (SAC) in
which they sought to represent the class of all drivers who performed work for AB out of
its Oakland facility between March 28, 2004, and November 1, 2010. The SAC stated
eight causes of action: (1) unfair business practices, in violation of Business and
Professions Code section 17200 et seq. (unfair competition law or UCL); (2) failure to
pay for all hours worked; (3) failure to pay for any hours worked due to misclassification
of employment status; (4) failure to pay overtime; (5) violation of the living wage
provision of the Oakland City Charter; (6) failure to provide all required meal and rest
breaks; (7) failure to pay wages owed at termination of employment; and (8) provision of
inaccurate wage statements.
When plaintiffs moved for class certification on October 29, 2010, they identified
the class as those drivers who performed work for AB out of the Oakland facility
between March 28, 2004, and December 3, 2010. They identified five subclasses: (1)
those who had not been paid for all hours worked; (2) those who were misclassified as
non-employee trainees and paid no wages; (3) those who were not paid for overtime
worked; (4) those who were paid less than Oakland’s living wage; and (5) those who had
not been provided the required meal and rest breaks.1 Following a hearing, the trial court
1
Plaintiffs had previously moved for class certification, but the record of those
previous motions is not before us. In granting plaintiffs’ final motion for class
certification, the court noted “that Plaintiffs’ earlier motions for class certification fell
short in various ways, as enumerated by the court in its interim orders.”
2
granted plaintiffs’ motion on December 3, 2010, identifying the time period defining the
class to be from March 28, 2004, “through the date of notice to the class.”2
Immediately prior to trial, AB moved for reconsideration of the class certification
order, seeking “modification or decertification of the class.” The court denied AB’s
motion.3
A bench trial took place over several days in February 2012. Eight drivers
testified (among other witnesses)—six class members, including Godfrey and Gilbert, for
the plaintiffs and two drivers, who had chosen to opt out of the class, for AB.
The court issued a notice of intended decision on October 2, 2012. AB requested
a written statement of decision on October 11, 2012. Plaintiffs filed a proposed statement
of decision and AB filed objections, among which it contended that California’s meal and
rest break requirements, as applied to motor carriers, are preempted by the Federal
Aviation Administration Authorization Act of 1994 (FAAAA). Following a hearing, the
court filed a statement of decision (SOD) and judgment on May 21, 2013.
The SOD noted that plaintiffs had dismissed the fourth cause of action, for failure
to pay overtime wages, during trial. For the remaining causes of action, the court found
in favor of plaintiffs on causes of action 1, 2, 3, 6, 7, and 8. It found in favor of AB on
the fifth cause of action, for violation of Oakland’s living wage ordinance, because AB
did not employ enough people to be covered by the ordinance.4 The SOD awarded the
class a total of $964,557.08.
The court’s primary factual findings in the SOD were: (1) AB failed to pay for all
hours worked because AB’s records showed that “it deducted one hour per day from each
employee. This deduction took place, even though the driver did not receive a one hour
2
The time period was later specified in the trial court’s statement of decision as
from March 28, 2004 through March 15, 2011.
3
The order denying the motion for reconsideration of class certification is not in
the record before us and is not addressed in AB’s appeal. We are aware of it because the
court noted its denial in the notice of intended decision, filed on October 2, 2012.
4
Plaintiffs do not appeal from that or any other ruling.
3
meal period.”; (2) “AB misclassified drivers who were suffered or permitted to work as
non-employees, or unpaid ‘trainees.’ . . . The evidence reflected these trainees were
suffered or permitted [to] work by AB and were not paid at all.”; and (3) plaintiffs had
“presented substantial and persuasive evidence that class members were routinely and
consistently precluded by AB from taking meal periods and rest breaks.” The court then
determined that these primary findings supported the derivative claims that AB had
engaged in unfair competition, had failed to pay all wages owed on termination of
employment, and had failed to provide accurate, itemized wage statements. The trial
court also rejected AB’s contention that the FAAAA preempts California’s meal and rest
break requirements.
On August 9, 2013, the trial court awarded plaintiffs $487,810.50 in attorney fees,
$42,106.16 in litigation expenses, and $20,000 in class representative enhancements.
AB timely filed a notice of appeal on July 19, 2013.
DISCUSSION
I. Preemption
AB maintains that the FAAAA preempts California law governing meal and rest
breaks as applied to motor carriers. AB’s preemption argument does not apply to
plaintiffs’ other claims that do not involve meal and rest breaks. Also, AB does not argue
that plaintiffs’ UCL claim is preempted, but if AB were to prevail on its preemption
argument, then AB’s violation of California meal and rest break laws could not support
that portion of the UCL claim. Because we conclude that AB’s preemption argument
fails, we need not further consider the UCL claim.
A. Standard of Review
To the extent that we are called upon to interpret the FAAAA’s preemption
provision, discussed below, we apply a de novo standard of review. (People v. Petrilli
(2014) 226 Cal. App. 4th 814, 824.) To the extent that evidence is required to support
AB’s preemption argument, we review for substantial evidence. (In re Cellphone
Termination Fee Cases (2011) 193 Cal. App. 4th 298, 311.)
4
We also begin with a presumption that California’s meal and rest break laws are
not preempted by the FAAAA. In preemption cases “ ‘ “ ‘in which Congress has
“legislated . . . in a field which the States have traditionally occupied,” . . . we “start with
the assumption that the historic police powers of the States were not to be superseded by
the Federal Act unless that was the clear and manifest purpose of Congress.” ’ ”
[Citations.]’ [Citation.] This is known as the presumption against preemption, and its
role is to ‘ “ ‘provide[] assurance that “the federal-state balance” [citation] will not be
disturbed unintentionally by Congress or unnecessarily by the courts.’ ” [Citation.]’
[Citations.]” (People ex rel. Harris v. PAC Anchor Transportation, Inc. (July 28, 2014,
S194388) ___ Cal.4th ___, 2014 WL 3702674 at p. *3 (PAC Anchor)) Regulation of
wages and hours is, of course, an area of traditional state regulation. (California Div. of
Labor Standards Enforcement v. Dillingham Construction., N.A. (1997) 519 U.S. 316,
330-334.)
B. Meal and Rest Breaks—Legal Background
Labor Code section 226.7 provides, in relevant part: “(b) An employer shall not
require an employee to work during a meal or rest or recovery period mandated pursuant
to an applicable statute, or applicable regulation, standard, or order of the [IWC] . . . .
[¶] (c) If an employer fails to provide an employee a meal or rest or recovery period in
accordance with a state law, including, but not limited to, an applicable statute or
applicable regulation, standard, or order of the [IWC] . . ., the employer shall pay the
employee one additional hour of pay at the employee’s regular rate of compensation for
each workday that the meal or rest or recovery period is not provided.”
The transportation industry is covered by IWC Order No. 9-2001. (Cal. Code
Regs., tit. 8, § 11090.) Meal periods are covered in section 11 of the order, and rest
periods are covered in section 12.
An employer must provide a meal period of not less than 30 minutes for a work
period of more than five hours, unless a work period of not more than six hours will
complete the day’s work. (Cal. Code Regs., tit. 8, § 11090, subd. 11(A).) A second meal
period must be provided for a work period of more than 10 hours, unless the total number
5
of hours worked is no more than 12 hours. (Id., subd. 11(B).) The second meal period
may be waived by mutual consent only if the first meal period was not waived.5 (Ibid.)
A meal period is considered “on duty,” and must be counted as time worked,
unless the employee is relieved of all duty. (Cal. Code Regs., tit. 8, § 11090, subd.
11(C).) An “on duty” meal period is permitted “only when the nature of the work
prevents an employee from being relieved of all duty and when by written agreement
between the parties an on-the-job meal period is agreed to.” (Ibid.) The employer is
required to keep time records of meal periods, except those that coincide with time
“during which operations cease.” (Cal. Code Regs., tit. 8, § 11090, subd. 7(A)(3).)
An employer is required to “authorize and permit” rest periods of 10 minutes for
each four hours worked, unless the total daily work time is less than three and one-half
hours. (Cal. Code Regs., tit. 8, § 11090, subd. 12(A).) The rest periods, “insofar as
practicable,” are to be in the middle of each four-hour work period. (Ibid.) Rest periods
are “counted as hours worked for which there shall be no deduction from wages.” (Ibid.)
If an employer fails to provide a rest period, then “the employer shall pay the employee
one (1) hour of pay at the employee’s regular rate of compensation for each workday that
the rest period is not provided.” (Id., subd. 12(B).)
In Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal. 4th 1004 (Brinker),
our Supreme Court clarified that the law allows some flexibility with respect to the
timing and circumstances of meal breaks. Absent a waiver, the 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.” (Id. at p. 1041.) “[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 p. 1034.) When “off duty” breaks
are not feasible, IWC Order 9-2001 provides for “on duty” breaks by written agreement.
5
The length and frequency of meal breaks, as provided in California Code of
Regulations, title 8, section 11090, subdivision 11(A), conform to the requirements of
Labor Code section 512, subdivision (a), which also provides that the meal period may be
waived by mutual consent of both the employer and employee.
6
(See Brinker at p. 1035 [discussing similar provisions in IWC Order No. 5].) “[I]n the
context of an eight-hour shift, ‘[a]s a general matter,’ one rest break should fall on either
side of the meal break. [Citation.] Shorter or longer shifts and other factors that render
such scheduling impracticable may alter this general rule.” (Id. at p. 1032.)
C. The FAAAA’s Preemption Clause
The FAAAA contains an express preemption clause: “Except as provided in
paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2
or more States may not enact or enforce a law, regulation, or other provision having the
force and effect of law related to a price, route, or service of any motor carrier . . . or
any motor private carrier, broker, or freight forwarder with respect to the transportation
of property.” (49 U.S.C. § 14501(c)(1), italics added.) State regulation of specified
subjects, not including meal and rest break regulation, is exempted from the general
preemption rule.6 (49 U.S.C. § 14501(c)(2)-(3).)
“The FAAAA was enacted by Congress in 1994 as part of an ongoing effort to
deregulate the interstate trucking industry. Pub.L. No. 103305, 108 Stat. 1569 (codified
as amended in scattered sections of Title 49 of the U.S. Code) . . . .” (Villapando v. Exel
Direct Inc. (N.D.Cal. Mar. 28, 2014, Nos. 12-cv-04137 JCS, 13-cv-03091 JCS) 2014 WL
1338297 at p. *6 (Villapando).) Deregulation of the interstate trucking industry was
preceded by deregulation of air carriers in the Airline Deregulation Act of 1978 (ADA).
(Morales v. Trans World Airlines, Inc. (1992) 504 U.S. 374, 378 (Morales).) The ADA
also preempts state law “related to a price, route, or service of an air carrier.” (49 U.S.C.
§ 41713(b)(1).) In interpreting the FAAAA, the Supreme Court has followed Morales
because of the similarity in language. (Rowe v. New Hampshire Motor Transport Assn.
(2008) 552 U.S. 364, 370 (Rowe).)
6
Excepted from preemption are “the safety regulatory authority of a State.” (49
U.S.C. § 14501(c)(2)(A).) Plaintiffs argue that the meal and rest break laws, as applied to
the transportation industry, are “ ‘genuinely responsive to motor vehicle safety’ ” and
even if they were otherwise preempted by the FAAAA, they would be saved from
preemption by the safety exemption. The trial court did not reach this argument. Nor do
we.
7
Turning to the preemption clause itself, the use of “related to” renders its scope
“ ‘deliberately expansive’ ” and “ ‘conspicuous for its breadth.’ ” (Morales, supra, 504
U.S. at pp. 383-384.) “At the same time, the breadth of the words ‘related to’ does not
mean the sky is the limit.” (Dan’s City Used Cars, Inc. v. Pelkey (2013) ___ U.S. ___
[133 S. Ct. 1769, 1778] (Dan’s City).) The preemption clause “does not preempt state
laws affecting carrier prices, routes, and services ‘in only a “tenuous, remote, or
peripheral . . . manner.” ’ ” (Ibid.)
The United States Supreme Court has decided two cases in which the meaning of
“related to a price, rate or service” under the FAAAA was discussed, but none involving
state regulation of employees’ meal and rest breaks.7 Rowe concerned a Maine statute
that required a licensed retailer of tobacco products to use a delivery service that provides
a special kind of recipient-verification service. (Rowe, supra, 552 U.S. at p. 368.) The
Supreme Court found that the law was preempted: “[I]t focuses on trucking and other
motor carrier services . . ., thereby creating a direct ‘connection with’ motor-carrier
services.” (Id. at p. 371.)
In contrast, Dan’s City concerned a New Hampshire law regulating the disposal of
stored vehicles in which defendant towing company had disposed of plaintiff’s car after
towing it rather than allowing plaintiff to pay towing and storage charges. (Dan’s City,
supra, 133 S.Ct. at p. 1777.) The Supreme Court, noting the FAAAA preemption clause
is limited to laws that relate to price, route, or service concerning the transportation of
property, held that the law was not preempted because it regulated “the disposal of
vehicles once their transportation—here, by towing—has ended.” (Id. at p. 1779.)
7
Two other Supreme Court cases have decided other preemption issues under the
FAAAA. In American Trucking Associations, Inc. v. City of Los Angeles, Cal. (2013)
___ U.S. ___ [133 S. Ct. 2096], the parties agreed that the requirements at issue relate to a
motor carrier’s price, route, or service with respect to transporting property; the only
disputed issue was whether the requirements “ ‘hav[e] the force and effect of law.’ ” (Id.
at p. 2102.) In City of Columbus v. Ours Garage and Wrecker Service, Inc. (2002) 536
U.S. 424 (Ours Garage), the Supreme Court held that the FAAAA “does not bar a State
from delegating to municipalities and other local units the State’s authority to establish
safety regulations governing motor carriers of property.” (Id. at p. 428.)
8
D. The FAAAA Does Not Preempt California Meal and Rest Break Laws
Whether the FAAAA preempts California meal and rest break requirements as
applied to motor carriers is a question of first impression in California courts.8 However,
while this case has been pending, two important decisions, Pac Anchor and Dilts v.
Penske Logistics, LLC (9th Cir. Sept. 8, 2014, No. 12-55705) ___ F.3d___, 2014 WL
4401243, superseding opinion at 2014 WL 4401243, amended after denial of rehearing
en banc (Dilts), were made which are instructive, if not wholly determinative, of the
outcome here.9 Initially, our Supreme Court held in Pac Anchor that claims under the
UCL based upon wage and hour regulations—not including meal and rest break rules—
are not preempted by the FAAAA. In that case, the People filed a complaint alleging that
the defendants had violated the UCL by committing various labor violations, including
violations under IWC Order No. 9-2001 sections 4 and 7. (PAC Anchor, supra, 2014 WL
3702674 at p. *1.) In rejecting defendant’s preemption argument, the court held:
“Although IWC Wage Order No. 9 regulates wages, hours, and working conditions ‘in
the transportation industry,’ the sections on which the People rely do not refer to prices,
routes, or services. Section 4 governs minimum wage requirements, and section 7
governs employer recordkeeping. If sections 4 and 7 have an effect on defendants’
8
Fitz-Gerald v. SkyWest Airlines, Inc. (2007) 155 Cal. App. 4th 411 dealt with
labor issues under IWC Order No. 9-2001, including meal and rest breaks, and a UCL
claim predicated on the labor violations. (Fitz-Gerald at p. 415.) The court determined
that the labor claims were preempted by the Railway Labor Act (RLA) (45 U.S.C. § 181)
which regulates labor relations between common interstate air carriers and their
employees. (Fitz-Gerald at pp. 418-422.) The court was unconvinced that the labor
claims were also preempted by the ADA. (Id. at p. 423.) Because the court had already
found the labor issues to be preempted under the RLA, the court’s rejection of
preemption under the ADA was perhaps dictum, but we note that the court said:
“Although the ADA has been broadly interpreted as preempting state ‘enforcement
actions having a connection with, or reference to, airline “rates, routes, or services” ’ it
has its limits. [Citation.] If the rule was otherwise, ‘any string of contingencies is
sufficient to establish a connection with price, route, or service, [and] there will be no end
to ADA preemption. [Citations.]’ ” (Ibid, fn. omitted.)
9
We issued a focus letter, asking that the parties be prepared to address these two
cases at oral argument. They were.
9
prices, routes, or services, that effect is indirect, and thus falls outside the scope of the
test set forth in Morales. For this reason, we also reject defendants’ argument that the
FAAAA facially preempts sections 4 and 7 of IWC Wage Order No. 9.” (PAC Anchor at
p. *8.)
In addition, while this case has been pending, the Ninth Circuit has specifically
addressed the question of FAAAA preemption of California meal and rest break rules and
concluded that the “FAAAA does not preempt” them.10 (Dilts, supra, 2014 WL 4401243
at p. *10.) Dilts resolved a split among California federal district courts, nine of which
had determined that the FAAAA preempts California meal and rest break laws11 while
four had found no preemption.12
AB contends that the meal and rest break laws have a significant impact on prices,
routes and services in the following ways:
(1) Drivers must deviate from their routes in order to find a legal place to pull over
and park, changing the driver’s route and adding to the break time itself. This acts to
“deprive motor carriers of the ability to follow any route that does not offer adequate
10
Federal circuit court opinions do not bind California courts, but they “may
serve as persuasive authority.” (People v. Memro (1995) 11 Cal. 4th 786, 882.)
11
Dilts v. Penske Logistics LLC (S.D.Cal. 2011) 819 F. Supp. 2d 1109; Rodriguez
v. Old Dominion Freight Line, Inc. (C.D.Cal. Nov. 27, 2013, No. CV13-891 DSF (RZx))
2013 WL 6184432; Parker v. Dean Transportation, Inc. (C.D.Cal. Oct. 15, 2013, No. CV
13-02621 BRO (VKBx)) 2013 WL 7083269; Ortega v. J.B. Hunt Transportation, Inc.
(C.D.Cal. Oct. 2, 2013, No. CV 07-08336 (BRO) (FMOx)) 2013 WL 5933889; Burnham
v. Ruan Transportation (C.D.Cal. August 16, 2013, No. SACV 12-0688 AG (ANx)) 2013
WL 4564496; Cole v. CRST, Inc. (C.D.Cal. Sep. 27, 2012, No. EDCV 08-1570-VAP
(OPx)) 2012 WL 4479237; Campbell v. Vitran Express, Inc. (C.D.Cal. June 8, 2012, No.
CV 11-05029-RGK (SHx)) 2012 WL 2317233; Aguiar v. California Sierra Express, Inc.
(E.D.Cal. May 4, 2012, No. 2:11-cv-02827-JAM-GGH) 2012 WL 1593202; and Esquivel
v. Vistar Corp. (C.D.Cal. Feb. 8, 2012, No. 2:11-cv-07284-JHN-PJWx) 2012 WL
516094.
12
Villapando, supra, 2014 WL 1338297; Brown v. Wal-Mart Stores, Inc.
(N.D.Cal. Apr. 18, 2013, No. C 08-5221 SI) 2013 WL 1701581; Mendez v. R+L
Carriers, Inc. (N.D.Cal. Nov. 19, 2012, No. C 11-2478 CW) 2012 WL 5868973; and
Reinhardt v. Gemini Motor Transport (E.D.Cal. 2012) 869 F. Supp. 2d 1158.
10
locations for stopping, or force them to take different or fewer routes.” “In essence, the
laws bind motor carriers to a subset of all possible routes, in plain violation of the
preemptive language . . . .”
(2) The “impact on routes . . . affects the number of deliveries a driver can make in
a day.” This results in a lower level of service.
(3) “[R]educing a driver’s work time by at least 15% per day to account for state-
mandated break periods will inevitably affect the prices a motor carrier can charge,
driving up the cost of a given set of deliveries because it requires more employee time
and fuel to accomplish.”
AB’s arguments here are essentially the same as the arguments made by the
defendant in Dilts—arguments that the Dilts court rejected. (Dilts, supra, 2014 WL
4401243 at pp *8-*9.) In addition, the trial court here found that “AB presented no
evidence of any imposed conditions or costs, let alone rising to the level of creating ‘a
significant impact’ upon its prices. No showing was made regarding the number of
routes, costs of additional drivers, tractors, trailers, or other such factors that AB could
have claimed it would face should it have to comply with state law. To the contrary, AB
has made no showing of interference with competitive market forces within the industry.”
AB does not dispute this assessment or cite to us any evidence in the record supporting its
factual contentions as to the impact on its rates, routes or services. For this reason alone,
AB has failed to sustain its burden on this appeal from the trial court’s rejection of its
preemption defense.13 (Farm Raised Salmon Cases (2008) 42 Cal. 4th 1077, 1088 [“It is
well established that the party who asserts that a state law is preempted bears the burden
of so demonstrating.”].)
13
AB noted at oral argument that there is evidence in the record to support its
preemption defense, but the evidence to which counsel cited shows only that AB’s routes
vary daily and that “[a] driver’s geographic location at the time one of these breaks must
occur is contingent upon a whole host of variables.” However, the trial court found that
any impact of such variables on rates, routes, and service is “mere speculation.” AB
points to no evidence in the record casting doubt on the trial court’s finding.
11
Further, AB’s arguments are premised on a misreading of the regulations as
requiring breaks at set times,14 ignoring the flexibility, emphasized by Brinker, that
employers have in scheduling breaks. AB’s mischaracterization of the break
requirements extends to statements such as “[s]tate meal and rest break laws . . .
require . . . that motor carrier services cease at certain times of the day . . . .” This
improperly applies what is a mandate affecting individual workers to the operation of the
business as a whole. Nothing in the meal and rest break laws suggests that all workers
must take their breaks at the same time, causing a business to cease providing services or
that individual workers must take their breaks at any specific time. Brinker makes clear
that is not the case.
Returning to the recent Dilts decision of the Ninth Circuit, after considering
essentially the same arguments made by AB here, the court concluded that California
meal and rest break laws are not preempted by the FAAAA. That conclusion was
reached after careful, thorough, and, we believe, correct analysis. There is no need for us
to reinvent the wheel by repeating or adding to that analysis here, except to note that the
meal and rest break requirements are quite different from any laws the United States
Supreme Court has found preempted under the FAAAA and “the scope of the pre-
emption must be tempered by the ‘presumption against the pre-emption of state police
power regulations.’ ” (Tillison v. Gregoire (9th Cir. 2005) 424 F.3d 1093, 1098.)
Accordingly, we are in full agreement with the Dilts summation: “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
14
AB states in its opening brief: “At a macro-level, application of [the meal and
rest break] regulations to the trucking industry has the effect of superimposing a rigid
daily break regimen onto the natural ebb and flow of daily drayage deliveries . . . .”
12
indirectly. They are ‘broad law[s] applying to hundreds of different industries’ with no
other ‘forbidden connection with prices[, routes,] and services.’ [Citation.] 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, [citation,] or speed limits and weight restrictions,
[citation]—the laws do not ‘bind’ motor carriers to specific prices, routes, or services,
[citation]. 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,’
[citation].” (Dilts, supra, 2014 WL 4401243 at p. *7.)
At oral argument, AB also invited us not to follow Dilts by arguing that its case
was distinguishable, relying on footnote 2 of that opinion as well as a concurring opinion.
AB’s reliance on these passages is of no avail.
In footnote 2, the Dilts majority wrote: “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.’ [Citation.] 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-of-service regulations, 49
C.F.R. § 395.3, and would be without any hours-of-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, ___ U.S. ___, 134 S. Ct. 914 (2014)). Consequently, Defendants in
13
particular are not confronted with a ‘patchwork’ of hour and break laws, even a
‘patchwork’ permissible under the FAAAA.” (Dilts, supra, 2014 WL 4401243 at p. *8,
fn. 2.)
In a concurring opinion, Judge Zouhary wrote: “[This case is not] about FAAAA
preemption in the context of interstate trucking . . . . On this record, and in the intrastate
context, California’s meal and rest break requirements are not preempted.” (Dilts, supra,
2014 WL 4401243 at p. *11 [conc. opn. of Zouhary, J.].)
AB maintains that, unlike the Dilts defendants, it is involved in interstate
commerce because it transports goods from the Port of Oakland. Even if we were willing
to analyze AB’s preemption challenge on an “as applied” basis,15 AB has failed to
differentiate its case from Dilts in a meaningful way. It is clear from the context of Dilts
that the terms “interstate” and “intrastate” are used in the footnote and concurring opinion
in their purely geographical sense. The Dilts defendants did not send their drivers across
state lines, and neither does AB. Nothing in Dilts suggests that the Dilts defendants did
not participate in interstate commerce, despite their operations being confined
geographically to California.16 Like the Dilts defendants, AB is subject to the laws of no
other state with respect to the drivers in the class before us.
The Dilts defendants and AB may differ in being subject to federal hours-of-
service regulations. The Federal Motor Carrier Safety Administration (FMCSA) has
15
In its opening brief, AB explicitly eschewed an “as applied” challenge,
maintaining that the question of federal preemption is not subject to a case-by-case
factual inquiry.
16
Despite operating solely within California, the Dilts defendants and AB are
equally subject to regulation under the Commerce Clause. (U.S. Const., art. I, § 8, cl. 3.)
“This court has previously recognized that [motor vehicles] are instrumentalities of
commerce even when used solely for intrastate purposes. [Citation.] That view seems to
be shared universally among federal courts. [Citation.] Because a motor carrier is
defined under the [FAAAA] as ‘a person providing motor vehicle transportation for
compensation,’ [citation], [49 U.S.C.] section 14501 is within Congress’ Commerce
power because it regulates an instrumentality of commerce.” (Tocher v. City of Santa
Ana (9th Cir. 2000) 219 F.3d 1040, 1052, fn. omitted, overruled on other grounds by
Ours Garage, supra, 536 U.S. at p. 432.)
14
promulgated safety regulations governing motor carriers, including hours-of-service
regulation. (49 C.F.R. § 395.3.) These regulations require no specific meal break and
require that a driver be permitted to drive no more than eight hours before having a break
of at least 30 minutes. (49 C.F.R. § 395.3(a)(3)(ii).) The Dilts drivers were not subject to
the federal hours-of-service regulations because they were “short-haul” drivers, who
operated “within a 100 air-mile radius of the normal work reporting location.” (Dilts,
supra, 2014 WL 4401243 at p. *8, fn. 2; 49 C.F.R. § 395.1(e)(1)(i).)
At trial, AB did not attempt to prove that its drivers were not also short-haul
drivers—that was not an issue—nor has it attempted to demonstrate that the record
supports that proposition on appeal. The SOD described AB’s operations as including
deliveries “in the greater San Francisco Bay Area, and, on occasion, to locations
throughout California.” In its opening brief, in support of its own description of
operations taking place outside of the Bay Area, AB cites the testimony of one driver
who made three trips to Eureka and a trip to “someplace up in Shasta.” Evidence that one
driver made infrequent trips outside the Bay Area does not establish that, to a more than
de minimis degree, AB’s drivers are not short-haul drivers and that they differ from the
Dilts drivers in this respect.
Even if AB’s drivers in the class were subject to federal hours-of-service
regulation, compliance with California meal and rest break laws will not conflict with the
federal requirements. As with the Dilts drivers, AB would not be confronted with an
unworkable “patchwork” of regulation.17 We conclude that AB has not differentiated its
17
In its opening brief, AB argued that “[i]f California can ‘insist exactly when
and for how long’ carriers must provide breaks for drivers, other states could ‘do the
same, and . . . do so differently,’ ” leading to “ ‘a patchwork of state service-determining
laws, rules and regulations,’ in direct contravention of Congressional intent.” In support
of this proposition, AB asserted that “when the FMCSA revised its hours of service rules
in 2005, it considered and rejected imposing meal and rest break requirements akin to the
state regulations at issue here, concluding that requirements of that type ‘would
significantly interfere with the operational flexibility motor carriers and drivers need to
manage their schedules.’ ” (Quoting Hours of Service of Drivers, 70 Fed. Reg. 49978,
50011 (Aug. 25, 2005).) We have consulted the Federal Register and find that the
15
case from Dilts. In any case, the Dilts majority made clear in footnote 2 that its decision
did not rely in the intrastate nature of defendants’ operations or on the fact that the routes
were short-haul.
Our conclusion, in agreement with Dilts, that the FAAAA does not preempt
California state law regarding meal and rest breaks is reinforced by our Supreme Court’s
recent decision in PAC Anchor. Although the meal and rest break claims at issue here are
in different sections of IWC Wage Order No. 9 than the provisions at issue in PAC
Anchor, we believe that the court’s conclusion applies to them equally. We also note that
although the PAC Anchor court did not rely on Dilts (and did not need to reach its
holding), both the PAC Anchor and Dilts courts relied extensively on Californians for
Safe & Competitive Dump Truck Transportation v. Mendonca (9th Cir. 1998) 152 F.3d
1184) (holding that the FAAAA does not preempt California’s prevailing wage law when
enforced against transportation companies). (PAC Anchor, supra, 2014 WL 3702674 at
pp. *7-*10; Dilts, supra, 2014 WL 4401243 at pp. *4-*8, *11.)
Hence, while the district court decision in Dilts and the federal trial courts which
followed it reached a different conclusion, our holding that the FAAAA does not preempt
FMCSA was commenting specifically on “a mandatory rest period (break) to mitigate
any possible fatigue related to the 11th hour of driving,” not on meal and rest breaks in
general. (Ibid.) The Hours of Service of Drivers document in the Federal Register is a
93-page document and AB provides no citation within the document to a specification of
what the FMCSA considered in 2005 and the specific findings it made, in violation of
California Rules of Court rule 8.204(a)(1)(C).
Moreover, plaintiffs requested and we granted judicial notice of an amicus brief
filed by the United States in Dilts. This brief notes that in 2008, the FMCSA determined
that California meal and break laws were not regulations on motor vehicle safety and,
thus, the California laws are not within the scope of the power of the Secretary of
Transportation to declare them preempted. (Department of Transportation Notices, 73
Fed. Reg. 79204-01 (Dec. 24, 2008); see 49 U.S.C. § 31141.) The United States took the
position in its brief that, at least in the intrastate context, California meal and break laws
were preempted neither by the FAAAA nor federal safety regulations.
16
California wage and hour regulations is entirely consistent with the jurisprudence of the
United States Supreme Court, the California Supreme Court, and the Ninth Circuit.18
II. Class Certification
AB contends that the trial court erred when it certified the class because plaintiffs
failed to fulfill their burden of showing that the claims of the putative class
representatives were typical of those of the class as a whole, that individual issues
predominated over common questions, and that it was probable that class members would
come forward to prove their separate claims. In its order granting class certification,
much of the evidence upon which the court relied came from AB’s records and the
deposition testimony of AB witnesses. The trial court specifically found that the
proposed class was sufficiently numerous and ascertainable, that commonality was
“adequately supported,” that plaintiffs’ claims were typical and that plaintiffs’ counsel
could adequately represent the interests of the proposed class. The court noted that AB
“does not identify any individual issues, much less argue that individual issues will
predominate over common ones.”
“ ‘A judgment or order of the lower court is presumed correct.’ ” (Denham v.
Superior Court (1970) 2 Cal. 3d 557, 564.) AB bears the burden on appeal of
affirmatively showing error. (Lennane v. Franchise Tax Bd. (1996) 51 Cal. App. 4th 1180,
1189.) Despite this burden, AB, in its briefing, discusses none of the evidence presented
in support of plaintiffs’ motion for certification (no evidence was submitted in opposition
to the motion). Instead, AB briefly provides its own assessment of evidence presented at
trial—evidence that is irrelevant to a determination of whether the trial court erred at the
time of class certification.
18
The court has also considered Massachusetts Delivery Assn. v. Cookley (1st Cir.
Sept. 30, 2014, No. 13-2307) ___ F.3d ___, 2014 WL 4824976, which was decided after
this case was submitted. Massachusetts Delivery is neither binding on this court nor, to
the extent that it may differ in its analysis from that of the Ninth Circuit in Dilts and from
our anlaysis, persuasive.
17
Additionally, AB cannot show error without providing us with an adequate record.
(Parker v. Harbert (2012) 212 Cal. App. 4th 1172, 1178.) AB has presented a record that
is inadequate for review of evidence presented in support of class certification. Plaintiffs
submitted numerous exhibits with their motion for class certification, including excerpts
from the reporter’s transcript (RT) of the deposition of William Aboudi, AB’s president;
excerpts from the RT of the deposition of Jovi Aboudi (the individual identified by AB as
its person most knowledgeable regarding its payroll system and payment of wages);
documents produced by AB during discovery, as well as AB’s responses to
interrogatories and requests for production; and excerpts from the RT’s of the depositions
of Godfrey and Gilbert. This evidence is included in the record on appeal.
However, plaintiffs’ motion was also based on the declarations of Godfrey and
Gilbert, which they had previously filed with the trial court. The memorandum of points
and authorities in support of the motion relied on these declarations extensively.19 AB
failed to include these declarations when designating the clerk’s transcript on appeal.
Accordingly, we reject AB’s attack on the trial court’s order certifying the class
because AB has manifestly failed to affirmatively show error by accounting for all of the
evidence presented in support of class certification and because the record provided by
AB is inadequate for review of that evidence.
III. The Damages Award
AB contends that the evidence at trial “showed that some AB trucking drivers took
meal and rest breaks which complied with California regulations, while others did not. It
also showed that some were encouraged to take the requisite breaks under state law,
while others were not.” AB notes the court’s finding that “ ‘class members were
routinely and consistently precluded by AB Trucking from taking meal periods and rest
19
AB objected to the plaintiffs’ reliance on the declarations, arguing that
plaintiffs had not requested that the court take judicial notice of them. In reply, plaintiffs
noted that a prior case management order allowed incorporation by reference of materials
previously filed in the case. In its order granting class certification, the court overruled
AB’s objection, stating that the “objection to the Godfrey and Gilbert declarations on the
basis of the date of filing is not well taken.”
18
breaks,’ ” but finds it significant that “this does not say that ‘all’ class members were so
precluded, or that it happened most of the time.” AB asserts that the court should have
reserved individual determinations of damages for a claims administration process20
rather than granting “a maximum damage award to each and every member of the
plaintiff class, based upon an assumption that all of them had the same experience as the
handful of drivers who testified on plaintiffs’ behalf at trial (and unlike those who
testified on behalf of AB Trucking.)” AB claims that as a result of this error, “many if
not most of the plaintiffs received a windfall damage award.”
We review the trial court’s damages award for substantial evidence. (Altavion,
Inc. v. Konica Minolta Systems Laboratory Inc. (2014) 226 Cal. App. 4th 26, 43.) In order
to evaluate the evidence with respect to damages, we must first understand the evidence
with respect to liability.
At trial, the court heard testimony from six drivers who testified for plaintiffs and
two drivers, James Francis and Erik Gaines, who testified for AB. We quote the trial
court’s findings in the SOD concerning meal and rest periods, which AB does not dispute
were supported by substantial evidence:
“The Class presented substantial and persuasive evidence that class members were
routinely and consistently precluded by AB from taking meal periods and rest breaks.
Under the California Supreme Court’s decision in [Brinker, supra,] 53 Cal. 4th 1004, AB
failed to comply with its obligation to afford drivers meal periods because Brinker holds
an employer’s duty ‘is an obligation to provide a meal period to its employees. The
employer satisfies this obligation if it relieves its employees of all duty, relinquishes
control over their activities and permits them a reasonable opportunity to take an
uninterrupted 30-minute break, and does not impede or discourage them from doing so.’
(See Id. at p. 1040.) An employer does not satisfy its obligation if it ‘impedes’ or
‘discourages’ employees from taking an ‘uninterrupted 30-minute break.’ (Id.) An
20
AB does not contend that it sought a claims administration process for
determining damages, nor can we find that it did so in the record.
19
employer may not undermine a formal policy of providing meal breaks by pressuring
employees to perform their duties in ways that omit breaks. (Cicairos v. Summit
Logistics, Inc. (2005) 133 Cal. App. 4th 949, 962-963 [(Cicairos)] . . . .)
“The recent Brinker decision provides two examples of unlawful
discouragement—a scheduling policy that makes taking breaks ‘extremely difficult’ and
creating an anti-meal-break policy enforced through ridicule or reprimand. The Class
established both unlawful scenarios exist here. . . .
“In addition, the evidence shows AB neither maintained, nor provided drivers,
any ‘formal’ meal period policy. The first example of unlawful discouragement provided
in Brinker presumes the existence of a formal meal period policy. AB does not meet the
‘provide’ standard because it provided no evidence showing drivers were, at a minimum,
informed in any meaningful or consistent way that they could take a meal period, or the
definition of any such meal period. As AB had no meal period policy to ‘undermine,’
and the evidence presented shows that, beyond that, AB regularly discouraged the taking
of legally protected breaks, AB has not shown it provided meal periods to the Class.
“The evidence reflects AB knew drivers were stuck in line to enter the Port, once
inside the Port, and in order to exit the Port, every single day. Yet it did not provide for
the relief of its employees’ duties during this ‘waiting’ time. Waiting, even in a
comfortable location, is ‘on-duty’ by definition: here, drivers were waiting to complete a
task assigned by their employer. (See [Morillion v. Royal Packing (2000) 22 Cal. 4th 575,
582].) While waiting to complete an assigned task, drivers were not free to leave to
engage in personal activities. [Citation.] Instead, AB discouraged off-duty meal periods,
and instructed drivers to eat while in line and ‘on-duty.’
“Despite evidence drivers did not receive meal periods as required by law, AB
presented no evidence that it created or entered into written agreements between AB and
drivers for on-the-job paid meal periods. AB’s [person most qualified] on payroll and
payroll processing admitted that AB automatically deducted one hour’s pay from each
driver per each shift worked based on a presumption that one hour meal periods were
taken.”
20
As for rest breaks, the Court found: “Drivers testified that AB did not authorize
and permit ten minute rest breaks. Moreover, the evidence reflected AB typically
encouraged drivers not to take, or prevented drivers from taking, rest breaks. AB
provided no evidence of any formal policy on rest breaks. As with meal periods, there is
no indication drivers were, at a minimum, informed in any meaningful or consistent way
that they could take rest breaks, or the definition of any such rest breaks.”
AB’s contention that the SOD did not apply to “all” class members and that it did
not say that deprivation of meal and rest breaks happened “most of the time” is not well
taken. A fair reading of the court’s factual findings shows that with respect to the class as
a whole, the court determined that AB had no policy of providing rest and meal breaks,
that breaks the drivers were able to take were usually on-duty breaks, and that AB
consistently discouraged or prevented the taking of off-duty breaks. The court’s finding
of liability applied to the class as a whole, and to its members individually.
As to damages, the court heard extensive testimony from Andrea Don, who
presented the damages model that the court adopted in its damage award. Don prepared
her model from AB’s payroll and employment records that were produced during
discovery. The model presents a damage calculation for each individual class member
and Don’s testimony detailed the assumptions and calculations that contributed to the
individual damages presented to the court. AB identifies no evidence in its brief that
would undermine the validity of these calculations.21 AB identifies no individual factor
affecting damages that was supported by evidence at trial and was not accounted for in
21
AB does argue that “some AB Trucking drivers took meal and rest breaks
which complied with California regulations,” but the record does not bear this out.
Francis stated that he “always” took his lunch break, but we find no testimony that these
were off-duty breaks, in conformance with IWC Order No. 9-2001. Indeed, Francis
testified that he would “put [his] lunch off” if he was dispatched on a “hot” job. This
implies that when he took a meal break he was not relieved of all duties, and was
expected to, and did, respond to dispatch calls.
Gaines said that he took rest breaks, but it appears that he counted time in his
truck, waiting in line at the Port—time that was not off duty—as break time.
21
Don’s calculations. We reject AB’s characterization of the damages as based on
“speculation.”
It was the court’s finding that AB did not provide for conforming breaks and
actively and consistently impeded or discouraged drivers from taking them. AB points to
no substantial evidence that, despite AB’s actions, drivers still managed to take off-duty
breaks, in conformance with the requirements of IWC Order No. 9-2001, and thus has
failed to undermine the damages model upon which the court based its award. The
damages model was supported by ample evidence and we conclude that substantial
evidence supported the court’s damage award.22
IV. The IWC Wage Order 9-2001 Exclusion does not Apply
AB contends that IWC Order No. 9-2001 does not apply to them because its
drivers are expressly excluded from coverage. In support of this contention, AB cites
subdivision 3(L) of the Order, which provides, in relevant part: “The provisions of this
section are not applicable to employees whose hours of service are regulated by: [¶] (1)
The United States Department of Transportation Code of Federal Regulations, Title 49,
Sections 395.1 to 395.13, Hours of Service of Drivers . . . .” (Cal. Code Regs., tit. 8,
§ 11090, subd. 3(L).) Assuming that AB’s drivers are governed by the applicable federal
regulations,23 AB can prevail in its argument only if “this section” refers to the entire
order and not just to subdivision 3, which covers “Hours and Days of Work.”
“When [IWC Order] No. 9[-2001] refers to itself in its entirety, the phrase ‘this
order’ or ‘this wage order’ is used.” (Cicairos, supra, 133 Cal.App.4th at p. 958.) “The
22
In the final paragraph of its brief in the section attacking the damage award, AB
states that the damage calculation was “based upon little more than guesswork as to
causation” and “must be reversed for this reason alone.” This is a wholly frivolous
argument. The court clearly concluded that class members were deprived of conforming
meal and rest breaks because of AB’s lack of a policy authorizing and providing such
breaks, and AB’s acts impeding or discouraging the taking of breaks.
23
AB asserts that its drivers are subject to the federal regulations “[a]s holders of
commercial vehicle licenses for trucks in excess of 33,000 pounds,” citing 49 United
States Code sections 31502, 31136, and 49 Code of Federal regulations sections 395.1-
395.13. We need not decide whether AB is correct.
22
‘order’ is . . . broken down into 22 ‘sections.’ The difference between the entire ‘order’
and its individual ‘sections’ is clear.” (Ibid.) “Basic rules of statutory construction . . .
require that the phrase ‘this section’ in [California Code of Regulations, title 8, section
11090, subdivision 3(L)] be read to encompass only the provisions of section 3 ‘Hours
and Days of Work’ of which it is a part. Therefore, truck drivers are not exempted from
the other requirements of wage order No. 9.” (Id. at p. 959.)
We agree with Cicairos and reject AB’s argument.24
V. Attorney Fees and Class Representative Enhancements
AB contends that we must set aside the award of attorney fees and class
representative enhancements, but this contention is predicated entirely on our having
found that the court erred, as asserted in AB’s other arguments. Because we have found
no error, we affirm the award of attorney fees and class representative enhancements.
DISPOSITION
The judgment of the trial court and its post-judgment order awarding attorney fees,
litigation expenses, and class representative enhancements are affirmed. Plaintiffs are
awarded their costs on appeal. The matter is returned to the trial court for an award of
attorney fees on appeal.
24
In its reply brief, AB relies on Collins v. Overnite Transportation Co. (2003)
105 Cal. App. 4th 171, in which the court considered only overtime claims. Cicairos
explicitly rejected an expansive reading of Collins that would apply to meal and rest
break claims. (Cicairos, supra, 133 Cal.App.4th at pp. 956-957.)
23
_________________________
Brick, J.*
We concur:
_________________________
Kline, P.J.
_________________________
Richman, J.
* Judge of the Alameda County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
24
Trial Court: Superior Court of Alameda County
Trial Judge: Honorable Robert B. Freedman
Attorney for Defendant and Appellant: Ronald C. Chauvel
Kenneth M. Weinfield
Chauvel & Glatt, LLP
Attorneys for Plaintiffs and Respondents: David A. Rosenfeld
Theodore Franklin
Caren P. Spencer
Lisl R. Duncan
Weinberg, Roger & Rosenfeld
25