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 nonemployee 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 postjudgment 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) wage order No. 9-2001; and that the award of attorney fees and class representative enhancements should be reversed. We find no merit in AB's preemption or other arguments and affirm.
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.
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 nonemployee 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.
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.
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 plaintiffs and two drivers, who had chosen to opt out of the class, for AB.
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 Nos. 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.
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 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.
AB maintains that the FAAAA preempts California law governing meal and rest breaks as applied to motor carriers. AB's preemption argument does
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 [172 Cal.Rptr.3d 480].) To the extent that evidence is required to support AB's preemption argument, we review for substantial evidence. (Cellphone Termination Fee Cases (2011) 193 Cal.App.4th 298, 311 [122 Cal.Rptr.3d 726].)
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."
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 paid 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 worktime 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).)
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.
"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)." (Villalpando v. Exel Direct Inc. (N.D.Cal., Mar. 28, 2014, No. 12-cv-04137 JCS) 2014 WL 1338297, p. *6 (Villalpando).) Deregulation of the interstate trucking industry was preceded by deregulation of air carriers in the Airline Deregulation Act of 1978 (ADA; Pub.L. No. 95-504 (Oct. 24, 1978) 92 Stat. 1705). (Morales v. Trans World Airlines, Inc. (1992) 504 U.S. 374, 378 [119 L.Ed.2d 157, 112 S.Ct. 2031] (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 Transp. Assn. (2008) 552 U.S. 364, 370 [169 L.Ed.2d 933, 128 S.Ct. 989] (Rowe).)
The United States Supreme Court has decided two cases in which the meaning of "related to a price, route or service" under the FAAAA was discussed, but none involving state regulation of employees' meal and rest breaks.
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, 569 U.S. at p. ___ [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." (569 U.S. at p. ___ [133 S.Ct. at p. 1779].)
Whether the FAAAA preempts California meal and rest break requirements as applied to motor carriers is a question of first impression in California
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.
AB contends that the meal and rest break laws have a significant impact on prices, routes and services in the following ways:
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
Further, AB's arguments are premised on a misreading of the regulations as requiring breaks at set times,
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 preemption must be tempered by the `presumption against the preemption of state police power regulations.'" (Tillison v. Gregoire (9th Cir. 2005) 424 F.3d 1093, 1098.)
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., 406 U.S. App. D.C. 312 [724 F.3d 243] (D.C.Cir.2013), cert. denied ___ U.S. ___ [187 L.Ed.2d 781, 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, supra, 2014 WL 4401243 at p. *8, fn. 2, italics added.)
In a concurring opinion, Judge Zouhary wrote: "[This case is not] about FAAAA preemption in the context of interstate trucking .... On this record,
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,
The Dilts defendants and AB may differ in being subject to federal hours-of-service regulations. The Federal Motor Carrier Safety Administration (FMCSA) has promulgated safety regulations governing motor carriers, including hours-of-service regulation. (49 C.F.R. § 395.3 (2014).) 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) (2014).) The Dilts drivers were not subject to the federal hours-of-service regulations because they were "shorthaul" drivers, who operated "within a 100 air-mile radius of the normal work reporting location." (49 C.F.R. § 395.1(e)(1)(i) (2014); see Dilts, supra, 2014 WL 4401243 at p. *8, fn. 2.)
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
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.
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)
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 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.
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 common questions predominated over individual issues, 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 [86 Cal.Rptr. 65, 468 P.2d 193].) AB bears the burden on appeal of affirmatively showing error. (Lennane v. Franchise Tax Bd. (1996) 51 Cal.App.4th 1180, 1189 [59 Cal.Rptr.2d 602].) 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.
Additionally, AB cannot show error without providing us with an adequate record. (Parker v. Harbert (2012) 212 Cal.App.4th 1172, 1178 [151 Cal.Rptr.3d 642].)
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.
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.
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 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 process
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 [171 Cal.Rptr.3d 714].) 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:
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
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 wage 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.
AB contends that IWC wage 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,
We agree with Cicairos and reject AB's argument.
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.
The judgment of the trial court and its postjudgment 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.
Kline, P. J., and Richman, J., concurred.
Moreover, plaintiffs requested and we granted judicial notice of an amicus curiae 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. 79204-79206 (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.
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.
