In Re Conway Freight Petition For Writ of Mandamus
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UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Docket No. _________
IN RE CON-WAY FREIGHT INC. Defendant-Petitioner, vs. UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF CALIFORNIA Respondent, JORGE R. QUEZADA Real Party in Interest. From the United States District Court For the Northern District of California Case No. C 09-03670 JW
PETITION FOR WRIT OF MANDAMUS COMPELLING DETERMINATION THAT CON-WAY’S PIECE-RATE COMPENSATION POLICY IS LAWFUL
Barrett Green, Bar No. 145393 Littler Mendelson, P.C. 2049 Century Park East, 5th Floor Floor Los Angeles, California 90067 T: 310.553.0308 / F: 310.553.5583
Richard H. Rahm, Bar No. 130728 Angela J. Rafoth, Bar No. 241966 Littler Mendelson, P.C. 650 California Street, 20th Floor San Francisco, CA 94108.2693 T: 415.433.1940 / F: 415.399.8490
Attorneys for Defendant-Petiti Defendant-Petitioner oner CON-WAY FREIGHT INC.
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CORPORATE DISCLOSURE STATEMENT
Defendant-Petitioner Con-way Freight Inc. (“Con-way”) is a wholly owned subsidiary of Con-way Inc. No publicly held corpor corporation ation owns 10% or m more ore of the stocks of this entity.
Dated: April 2, 2013
Respectfully submitted,
/s/ Richard H. Rahm BARRETT GREEN RICHARD H. RAHM ANGELA J. RAFOTH LITTLER MENDELSON, P.C. Attorneys for Defendant-Petiti Defendant-Petitioner oner CON-WAY FREIGHT INC.
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TABLE OF CONTENTS PAGE
CORPORATE DISCLOSURE STATEMENT .............................. ............................................... .......................... .........0 I.
INTRODUCTION ................................. ................................................... ................................... ................................... ...................... ....1
II.
STATEMENT OF RELIEF SOUGHT .................. ................................... ................................... ....................... .....7
III.
STATEMENT OF ISSUES PRESENTED ................. ................................... ................................... .................8
IV.
STATEMENT OF RELEVANT FACTS................. ................................... .................................... .................... ..8
V.
A.
Con-way Compensates Drivers By The Trip, Which Contractually Covers Both Driving And Non-Driving Duties ............8
B.
The District Court Held That Con-way’s Con-way’s Piece Rate Could Not Legally Compensate Its Drivers For Non-Driving Activities ..............9
CON-WAY’S PETITION FOR A WRIT OF MANDATE SHOULD BE GRANTED ............... ................................. .................................... ................................... ................................... ......................... .......10 A.
Con-way Satisfies The Ninth Circuit’s Guidelines For Granting A Petition For A Writ Of Mandate ............................ .............................................. ........................ ......10
B.
Alternative Relief Is Not Available As There Is No Appeal From The District Court’s Summary JJudgment udgment Decision ................ ..................11
C.
Con-way Will Suffer Severe Prejudice That Cannot Be Remedied On Direct Appeal At The End Of The Case ................. ..................... ....11
D.
FAAAA Preemption Of California Minimum Wage Law As To Piece Rate Pay Is A Significant Issue Of First Impression ................13 1.
The FAAAA Preempts State Laws Having A Significant Impact On Prices, Routes And Services Of Motor Carriers ................ .................................. ................................... ................................... .................................. ................13
2.
Rowe Dictates That California’s Minimum Wage Laws As To Piece Rates Are Preempted By The FAAAA ...............15
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TABLE OF CONTENTS (CONTINUED) PAGE
E.
VI.
a.
California Courts Have Held That Each Hour Worked Must Be Separately Compensated ................. ................... ..15
b.
The FAAAA Preempts Preempts California’s Min Minimum imum Wage Laws Because They Directly Affect A Motor Carrier’s Services, Routes Or Prices .......... .................. ........17
Alternatively Alternatively,, The District Court Committed Clear Reversible Error By Holding A Piece Rate Could Not Cover Certain Duties................ .................................. .................................... ................................... ................................... ............................. ...........21 1.
As A Matter Of Contract, A Piece Rate May Legally
2.
Include Non-Driving Duties .................................... .................................................... ................21 The Cardenas and Quezada Decisions Are Contrary To Well-Established Suprem Supremee Court Precedent................. ............................ ...........25
CONCLUSION................. .................................. ................................... .................................... ................................... ....................... ......29
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TABLE OF AUTHORITIES PAGE CASES
Aguiar v. California California Sierra Express, Inc., 2012 U.S. Dist. LEXIS 63348 (E.D. Cal Cal.. May 4, 2012) ................ ................................. ................... ....20 Aguirre v. Genesis Genesis Logistics, 2012 U.S. Dist. LEXIS 186132 (C.D. Cal. November 5, 2012) ....................... .........................21 American Trucking Trucking Associati Associations, ons, Inc. v. Ci City ty of Los Angele Angeless, 660 F. 3d 384 (9th Cir. 2011) (“ ATA”) ................. ................................... ............................. .............3, 17 17,, 19, 19, 20 20 Angeles v. US Airways, Airways, Inc., 2013 U.S. Dist. LEXIS 22423 (N.D. Cal. Feb. 18, 2013) (ADA)................ ..................... .......21 Armenta v. Osmose, Osmose, Inc., 135 Cal. App. 4th 314 (2005) ..................... ...................................... ................................... ............................... ..............passim .passim Balasanyan v. Nordstrom, Nordstrom, Inc., 2012 U.S. Dist. LEXIS 181350 (S.D. Cal. Dec. 20, 2012) .................. .....................6, 7 7,, 8, 13 8, 13 Bauman v. U.S. Dist. Dist. Ct., 557 F. 2d 650 (9th Cir. 1977) ............ .............................. ................................... ................................... ............................. ............. 10 Bickley v. Schneider National Car Carriers, riers, Inc., 2013 U.S. Dist. LEXIS 8636 (N.D. Cal. Jan. 22, 2013).................. ................................ ................ 12, 12, 7 7 Blackwell v. Skywest Skywest Airlines, Airlines, Inc., 2008 U.S. Dist. LEXIS 97955 (S.D. Cal. Dec. Dec. 3, 2008) ................ ................................. ....................20 Campbell v. Vitran, 2012 U.S. Dist. LEXIS 85509 (C.D. Cal. June 8, 2012) (Ninth Circuit Case No. 12-56250) .................... ..................................... ................................... ................................... ................................ .................1, 1, 20 20 Cardenas v. McLane Foodservices, Inc., 796 F. Supp. 2d 1246 (C.D. Cal. 2011) ........................ ......................................... .............................. ..............passim .passim Christensen Christense n v. U.S. Dist. Ct.,
844 F.2d 694 (9th Cir. 1988) ................................ .................................................. ................................... ........................... ............11 i.
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TABLE OF AUTHORITIES (CONTINUED) PAGE
Cole v. CRST, Inc.,
2012 U.S. Dist. LEXIS 144944 (C.D. Cal. Sept. 27, 2012) .................... ......................5, 21, 21, 25 25 Cole v. CRST, Inc., 2013 U.S. Dist. LEXIS 32793 (C.D. Cal. Mar. 5, 2013) ................ ..................... .......2, 3 3,, 17, 18 17, 18 Credit Suisse v. U.S. Dist. Ct., 130 F.3d 1342 (9th Cir. 1997) ....................................... ......................................................... .............................. ..............10, 10, 11 11 Dannenberg v. Software Software Toolw Toolworks, orks, Inc., 16 F.3d 1073 (9th Cir. 1 1994) 994) ............... ................................. ................................... ................................... ........................... ...........11 Deleon v. Verizon Verizon Wireless, LLC ,
207 Cal.App.4th 800 (2012) ................. .................................. ................................... ................................... .......................... ...........24 Dilts v. Penske, 819 F.Supp.2d 1109 (S.D. Cal. 2011) (Ninth Circuit Case No. 12-55705) ........... ................................... .................. ................................... .................................... ................................... ................................... ...................... ......1, 4 4,, 20, 21 20, 21 Equivel v. Vistar Vistar Corp., 2012 U.S. Dist. LEXIS 26686 (C.D. Cal. Feb. 8, 2012) ................ .................................. .....................20 Gentry v. Superior Court, 42 Cal.4th 443 (2007) ............ .............................. .................................... ................................... ................................... ....................... ....... 29 Gonzalez v. Downtown LA LEXIS Motors,1728, LP , *20-22 (Cal. Ct. App. Mar. 6, 2013 Cal. App. Unpub. 2013) ............... ................................. ................................... ................................... .................................... ................................... ...................2, 16, 16, 28 28 Hopkins v. City of Sierra Vista Vista, 931 F.2d 5 524 24 (9th Cir. 1991) ................ ................................. ................................... .................................... .......................... ..........11 Jasper v. C.R. England, Inc., 2012 U.S. Dist. LEXIS 186607 (C.D. Cal. Aug. 30, 2012) .............................. ................................20 Koehl v. Verio, Inc., 142 Cal.App.4th 1313 (2006) ......... ........................... ................................... ................................... .......................... ..........24, 24, 29 29
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TABLE OF AUTHORITIES (CONTINUED) PAGE
Marlo v. United Parcel Parcel Service, IInc nc.,
2009 U.S. Dist. LEXIS 41948 (C.D. Cal., May 5, 2009) .................................. ....................................24 Medhekar v. U.S. Dist. Ct., 99 F.3d 325 ................. ................................... .................................... ................................... ................................... .................................. .................. 11 Miller v. Southwest Southwest Airlines, Co., 2013 U.S. Dist. LEXIS 18835 (N.D. Cal. Feb. 12, 2013) (ADA)................ ..................... ....... 21 Morales v. TransWorld TransWorld Airlines, 504 U.S. 374, 378 (1992)................ .................................. ................................... ................................... ................................ ................ 13 Nein v. Hostpro, Hostpro, Inc.,
174 Cal.App.4th 833 (2009) ............... ................................ ................................... ................................... ...................... .......23, 23, 28 28 Ortega v. J.B. Hunt Transport, Inc., Case No. 2:07-CV-08336-FM 2:07-CV-08336-FMC-JCx C-JCx ............. ............................... ................................... .............................. ...............7, 7, 12 12 Quezada v. Con-way Freight, Inc., 2012 U.S. Dist. LEXIS 98639 (N.D. Cal. July 11, 2012) (hereafter Appendix to Petition (“AP”) at AP004-017) ............... ................................. .................................. ..................3, 3, 25 25 Rowe v. New Hampshire M Motor otor Transp Transport ort Assn., 552 U.S. 364 (2008)................ .................................. .................................... ................................... ................................ ................passim .passim Schachter v. Citigroup, Inc ., .................................... 47 Cal.4th 610 (2009) .......... ............................ ................................... ................................... .....................22, 22, 24 24 Steinhebel v. Los Angeles Times Communications, LLC , 126 Cal.App.4th 696 (2005) ............................. ............................................... .................................... ......................... .........24, 24, 29 29 STATUTES
8 Cal. Code Regs. § 11090(4)(B) 11090(4)(B)................. ................................... .................................... ................................... ...................22, 22, 25 25 28 U.S.C. § 1292 ..... ....................... .................................... ................................... ................................... ................................... ......................... ..........10 49 U.S.C. § 14501(c) .............................. ................................................ .................................... ................................... .............................. ............... 1 iii.
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TABLE OF AUTHORITIES (CONTINUED) PAGE Airline Deregulation Act ("ADA") ..................... ...................................... ................................... ............................. .............13, 13, 20 20
Cal. Lab. Code § 200 ............................ ............................................. ................................... .................................... ............................... ............... 22 Cal. Lab. Code § 200(a) .................. ................................... ................................... .................................... ................................... ................... .... 23 Cal. Lab. Code § 221 ............................ ............................................. ................................... .................................... ............................... ............... 26 Cal. Lab. Code § 222 ............................ ............................................. ................................... .................................... ............................... ............... 26 Cal. Lab. Code § 223 ............................ ............................................. ................................... .................................... ............................... ............... 26 FLSA ................ .................................. ................................... ................................... ................................... ................................... ................................. .................15 Motor Carrier Act of 1980 .............. ................................ ................................... ................................... ................................... ................... .... 13 ................ 13 Pub. L. No. 103-305, Title VI, § 601(a)(1), 108 Stat. 1569, 1605 (1994) .............. OTHER AUTHORITIES
49 C.F.R. § 395.3 ................ ................................. ................................... .................................... ................................... ............................... ................19 49 C.F.R. § 395.8 ................ ................................. ................................... .................................... ................................... ........................... ............4, 4, 19 19 DLSE Manual § 2.5.1 ................................ .................................................. ................................... ................................... .......................... ..........23 DLSE Manual § 34.2 ............... ................................. .................................... ................................... ................................... .................... ....27, 27, 28 28 DLSE Manual § 49.2.1.2 ........................... ............................................. ................................... ................................... .......................... ..........27 DLSE Manual §§ 2.4.4 ................................................ ................................................................. ................................... .......................... .......... 23 DLSE Op. Letter 2002.01.29 ......... ........................... .................................... ................................... ................................... .................... .... 26 http://appellatecases.courtinfo.ca.gov http://appellatecases. courtinfo.ca.gov ................. .................................. ................................... ................................... ................... 16 Wage Order 9-2001 ..... ....................... ................................... ................................... .................................... ................................... ..................... ......22 Wage Order No. 9-2001(4)(B)................. ................................... ................................... ................................... ............................ ............22
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INTRODUCTION
Currently before this Court are two appeals concerning the scope of preemption under the Federal Aviation Administrati Administration on Authorization Act (“FAAAA”), 49 U.S.C. § 14501(c). See Dilts v. Penske, 819 F.Supp.2d 1109, 1116-20 (S.D. Cal. 2011) (Ninth Circuit Case No. 12-55705), and Campbell v. Vitran, 2012 U.S. Dist. LEXIS 85509, *8-10 (C.D. Cal. June 8, 2012) (Ninth
Circuit Case No. 12-56250). The district courts in both of these cases correctly correctly held that the FAAAA preempts California’s meal and rest break laws because these laws dictate when and for how long a motor carrier must stop its services and leave its route in order to comply with Calif California ornia law. Moreover, for ““federal federal law to permit these, and similar, state requirements could easily lead to a patchwork of state service-determining laws, rules and regulations” that is inconsistent with Congressional intent to leave such decisions “to the competitive marketplace.” Rowe v. New Hampshire Mo Motor tor Transpo Transport rt Assn., 552 U.S. 364, 373 (2008).
As with the Dilts and Campbell appeals, the instant Petition of Defendant-Petitioner Con-way Freight, Inc. (“Con-way”) concerns the scope of FAAAA preemption.
Plaintiff and Real Party in Interes Interestt Jorge R. Queza Quezada da
(“Plaintiff”), a former driver for Con-way, sued Con-way on a class-wide basis alleging that its piece rate compensation formula does not comply with California’s minimum wage statutes because it does not separately compensate its drivers for
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non-driving duties, even if the total compensation from the driver’s piece rate activities averages far far more than minimum w wage age for all hours worked. Con-way compensates its linehaul drivers by the trip, which, by contract, includes many duties – not just just driving – associated with the trip. Because Califor California nia state and federal courts have recently interpreted the state’s piece-rate compensation laws as incompatible with “averaging,” a motor carrier must monitor each hour a driver works for purposes of determining whether the driver was able to earn at least minimum wage for any particular hour. See Cardenas v. McLane Foodservices, Inc., 796 F.Supp.2d 1246, 1253 (C.D. Cal. 2011) (if piece rate does not separately
compensate a driver for each duty performed, the time to complete the duty is unpaid time and violates minimum wage law, regardless of whether piece-rate compensation averages above minimum wage for all hours worked); Gonzalez v. Downtown LA Motors, LP , 2013 Cal. App. Unpub. LEXIS 1728, *20-22 (Cal. Ct.
App. Mar. 6, 2013) (even if piece rate compensation for mechanics averages above minimum wage for all hours worked, it does not cover “down time,” which must be separately compensated). compensated). The rejection of “averaging” in determining compliance with minimum wage requirements means that such compliance must be determined on an hour-by-hour basis. See Cole v. CRST, Inc., 2013 U.S. Dist. LEXIS 32793, *12-13 (C.D. Cal. Mar. Mar. 5, 2013). Specifically, because a driver’s driver’s minimum wage
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cannot be “averaged,” i.e., be determined by dividing the driver’s total compensation from the piece rate by the total number of hours worked, each hour a driver works must be analyzed as to whether that driver earned at least minimum wage. For instance, if because of traf traffic fic congestion, it took a driver one hour to drive a mile, the motor carrier would be required to adjust the driver’s compensation for that hour up to minimum wage, because it must show that the driver earned at least minimum wage in each particular hour. hour. See id. In this case, the Respondent District Court (“District Court”) followed Cardenas in rejecting “averaging” and held that Con-way’s piece-rate cannot legally compensate drivers for all hours worked in performing both driving and non-driving duties.
See
Quezada v. Con-way Freight, Inc. , 2012 U.S. Dist. LEXIS 98639, *9-19 (N.D. Cal.
July 11, 2012) (hereafter Appendix to Petition (“AP”) at AP004-017). It is thus difficult to imagine a better example of state requirements leading “to a patchwork of state service-determining laws, rules and regulations” than California’s piece-rate compensation laws. See Rowe, 552 552 U.S U.S.. aatt 373. This Court has defined “service” as “such things as the frequency and scheduling of transportation, and to the selection of markets to or from which transportation is provided.” American Trucking Associations, Associations, Inc. v. City of Los Angeles, 660 F. 3d 384, 396 (9th Cir. 2011) (“ ATA”) (emphasis supplied). As a matt matter er of logic, it is undeniable that such requirements must directly impact “rates, routes and services”
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of a motor carrier. For example, when a driver enters California, the motor carrier would be required to separately track, verify, and provide additional, separate compensation each time a driver failed to earn minimum wage for each hour driven in that state. To accomplish th this, is, each hour a driver driver would be required required to cease services and drive off route to stop and fill in an activity log for the previous hour (to ensure any non-driving activities performed in that hour could be separately compensated), and to record the mileage for the hour (to monitor whether the driver earned earned minimum wage for that hour). The motor carrier’s payroll and computer systems would need to be redesigned to capture the additional information required by California law, necessitating the hiring of additional personnel to monitor, review, and process the collected data, and drivers would need to be retrained and monitored to ensure that they are complying with the additional logging requirements. requirements. Department of Transpor Transportation tation (“DOT”) H Hours ours of Service (“HOS”) logging requirements, however, make no such demands. See 49 C.F.R. § 395.8 (requirin (requiring g only change of duty statuses). Yet, “to allow Califor California nia to insist” on such requirements “would allow other States to do the same, but differently.” Dilts, 819 F.Supp.2d F.Supp.2d at 1 1120. 120. Accordingly, although prese presented nted with an issue of first impression with respect to the exact question of the FAAAA’s preemption of California’s piece-rate rules for calculating minimum wage, based
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on existing relevant precedent, the District Court committed clear and reversible error in its July 11, 2012 order (“Order”) denying Con-way’s motion for summary judgment and ruling that California’s piece-rate compensation laws are not preempted by the FAAAA. FAAAA. See AP014. Alternatively, Con-way petitions this Court on the ground that the District Court committed reversible error by rejecting “averaging” and wrongly interpreting California’s minimum wage laws, as applied to piece rate compensation, to require the separate compensation of duties, regardless of the actual contract. See AP013. Under California law, employers may compensate employees on a piece-rate basis and, provided the employee earns at least minimum wage for the hours worked, it is a matter of contract as to what duties are covered by the compensat compensation ion for the piece. Again, Con-w Con-way ay compensates its linehaul drivers by the trip, which, by contract, includes all driving and many nondriving duties associated with that trip, based on the approximate number of miles between the supplier and the consignee. Such piece-rate compensation is both legal and the industry standard. See, e.g., Cole v. CRST, Inc., 2012 U.S. Dist. LEXIS 144944, *19-22 (C.D. Cal. Sept. 27, 2012) (non-driving duties compensated by mileage-based piece rate); Carson v. Knight Transportation, Inc., Tulare County Superior Court Case No. VCU234186 (Aug. 30, 2012) (decertification based on piece rate being a matter of contract), RJN, Exh. 1.
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Again, following Cardenas , the District Court granted Plaintiff’s motion, even though there is no California statute or regulation or even Labor Commissioner ruling requiring a piece rate to separately compensate each duty required in the completion of the piece. Con-way accordingly peti petitions tions for a writ of m mandamus andamus directing the District Court to reverse its summary judgment order (“Order”). The District Court’s decision in this case is an issue of first impression, insofar as FAAAA preemption of California’s minimum wage as applied to piece rates has never been addressed by an appellate court. Alternatively, the District Court’s decision constitutes clear and reversible error with respect to holding that California minimum wage law prohibits a piece rate from covering both driving and non-driving duties, as that decision lacks any statutory or regulatory basis. 1 See AP008 (“neither party has identified any binding authority which directly addresses this question, and the Court is aware o off none”). Relief is imperati imperative ve so that Con-way, and every other trucking company compensating its California drivers by piece rate, will have appellate clarification whether or not it is legal error to require motor carriers to comply with California’s 1
Incentive-based compensation is under attack in California both with respect to piece-rate compensation and commission-based compensation. See Balasanyan v. Nordstrom Nordstrom,, Inc., 2012 U.S. Dist. LEXIS 181350, *20 (S.D. Cal. Dec. 20, 2012) (following Armenta and Cardenas , district court held that commissions could not compensate sales assistants for activities unrelated to selling). On April 2, 2013, the defendant in Balasanyan has also filed a petition to this Court for a writ of mandate as to the district court’s ruling on commissions.
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piece rate law l aw when their drivers are in California – either because such laws h have ave been held not to be preempted by the FAAAA or because motor carriers must now separately compensate each “duty” performed by a driver in completing the hauling of goods, regardle regardless ss of the pa parties’ rties’ intent intentions. ions. Absent mandam mandamus us relief, the parties in this class action, as well as the parties p arties in numerous other class actions in this state – potentially affecting thousands of other drivers – will unnecessarily incur the time and expense of preparing for and conducting class trials, only to have those decisions later reversed.2 II.
STATEMENT OF RELIEF SOUGHT
Con-way seeks an order directing the District Court to vacate its July 11, 2012 Order and (1) to enter summary judgment in favor of Con-way because the FAAAA preempts California’s minimum wage law as applied to piece-rate compensation; or, alternatively, (2) enter summary judgment in favor of Con-way because a piece rate may legally cover both both driving and non-driving non-driving duties and still comply with California’s minimum wage requirements.
2
See, e.g., Ortega v. J.B. Hunt Transport, Inc., Case No. 2:07-CV-08336FMC-JCx, ¶ 29 (C.D. Cal. Nov. 7, 2008) (Complaint filed Nov. 19, 2007); Anderson v. Andrus Transp. Servs., Inc., San Bernardino Superior Court Case No. CIV DS 915878 (Complaint filed Nov. 4, 2009); Bickley v. Schneider National Carriers, Inc., 2013 U.S. Dist. LEXIS 8636 (N.D. Cal. Jan. 22, 2013); RJN Exs. 24 (attaching true and correct copies of these complaints). See also Balasanyan v. Nordstrom, Inc., 2012 U.S. Dist. LEXIS 181350 (S.D. Cal. Dec. 20, 2012) (petition for writ of mandate to this Court filed on April 2, 2013 as to whether commissions can cover non-sales activities).
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STATEMENT OF ISSUES PRESENTED
(1) Does the FAAAA preempt preempt Califor California’s nia’s minim minimum um wage law if that law requires a motor carrier to determine on an hour-by-hour basis whether each driver working in California has earned minimum wage as to that driver’s piece-rate compensation? compensation? (2) Does Califor California’s nia’s minim minimum um wage law require motor motor carriers to compensate each duty entailed in a piece rate separately, regardless of the agreement between the driver and the motor carrier, such that a piece rate may not cover both driving and non-driving duties? IV. A.
STATEMENT OF RELEVANT FACTS
Con-way Compensates Drivers By The Trip, Which Contractually Contractually Covers Both Driving And Non-Driving Duties.
The District Court found that Con-way employs truck drivers, known as linehaul drivers, to transport freight.
See AP005.
The linehaul drivers
compensation is calculated by multiplying a pre-set mileage rate by the number of miles in a trip. See id. The District Court also found that, although Con-way also pays its drivers a separate hourly rate for work perform performed ed at its facilities, such as loading and unloading freight, it does not pay its drivers an hourly rate for pre-trip and post-trip vehicle inspections, or for the first hour of waiting time over the course of a shift.
See id. at *3 (AP005).
Instead, Con-way considers such
activities to be built into the per-mile rate. See id. Plaintiff was employed by Con-
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3 way as a linehaul driver and was paid according to this system. See id .
B.
The District Court Held That Con-way’s Piece Rate Could Not Legally Compensate Its Drivers For Non-Driving Activities.
Plaintiff brought a putative class action against Con-way contending that Con-way’s practice of paying its drivers by the trip, without providing additional compensation for certain non-driving tasks, violates the minimum wage provisions of the California California Labor Code. See AP004. On March 22, 2012, the District Court ordered Plaintiff and Con-way to file cross-motions for partial summary judgment regarding “whether California law allows an employer to ‘build-in’ time for non-driving activities into its trip pay, or whether such time must be compensated separately.” See AP006; AP001002 (Mar. 22, 2012 Order).
On July 11, 2012, the Distri District ct Court granted
Plaintiff’s, and denied Con-way’s, cross-motions for partial summary judgment, noting that there was no binding authority on point. See AP007-008. In particular, the District Court held that “California law does not allow an employer to ‘build in’ time for non-dri non-driving ving tasks into a piece-rate compensation system.” AP013. The District Court also held that because Con-way “already has established an hourly rate that it pays employees for performing tasks other than driving,” not allowing piece-rate compensation that includes both driving and non-driving tasks
3
Plaintiff Quezada earned over $70,000 per year and was discharged for falsification of his federal DOT logs.
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“is not preempted by the F FAAAA.” AAAA.” AP011. On July 27, 2012, Con-way moved to certify the District Court’s July 11, 2012 order for interlocutory appeal pursuant to 28 U.S.C. § 1292, which was denied on January 7, 2013. See AP017-018 (July 27, 2012 Motion); AP026-027 (Jan. 7, 2013 Order). V.
CON-WAY’S PETITION FOR A WRIT OF MANDATE SHOULD BE GRANTED. A.
Con-way Satisfies The Ninth Circuit’s Guidelines For Granting A Petition For A Writ Of Mandate.
The Ninth Circuit employs five guidelines in determining the appropriateness of granting a petition for writ of mandate such as this: (1) whether the petitioner has no other adequate means, such as a direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3) whether the district court’s order o rder is clearly erroneous as a matter of law; (4) whether the district court’s order is an oft-repeated error, or manifests a persistent disregard of the federal rules; and (5) whether the district court’s order raises new and important problems, or issues of law of first impression. See Bauman v. U.S. Dist. Ct. , 557 F.2d 650, 654-55 (9th Cir. 1977). “None of these guidelines is determinative and all five guidelines need not be satisfied at once for a writ to issue.” Credit Suisse v. U.S. Dist. Ct. , 130 F.3d 1342, 1345 (9th Cir. 1997) (granting writ of mandamus from the district court’s denial of
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the bank’s motion to dismiss where first three factors were present). B.
Alternative Relief Is Not Available As There Is No Appeal From The District Court’s Summary Judgment Decision.
Although the court of appeals has jurisdiction over “final decisions,” neither an order granting partial summary judgment nor an order denying summary judgment is an appealable final order. See Dannenberg v. Software Toolworks, Inc., 16 F.3d 1073, 1074 (9th Cir. 1994); Hopkins v. City of Sierra Vista, 931 F.2d
524, 529 (9th Cir. 1991). Thus, the July 11, 2012 Order is not directly directly appealable. Furthermore, because the District Court denied Con-way’s motion for certification for interlocutory appeal, Con-way has no other means of obtaining immediate review of the District Court’s July 11, 2012 Order. See AP026-027; Christensen v. U.S. Dist. Ct., 844 F.2d 694, 696 (9th Cir. 1988) (mandamus relief
where district court refused to certify question for immediate appeal). C.
Con-way Will Suffer Severe Prejudice That Cannot Be Remedied On Direct Appeal At The End Of The Case.
Con-way will suffer “severe prejudice that [cannot] be remedied on direct appeal.” Credit Suisse, 130 F.3d at 1346 (finding severe prejudice district court’s order forced the bank to choose between contempt of court and violation of Swiss laws); Medhekar v. U.S. Dist. Ct., 99 F.3d 325, 326-27 (finding irreparable harm where order compelled defendants to undergo the burden and expense of initial disclosures prior to the district district court ruling on a motion to dismiss). dismiss). Further, and even more prejudicial, Con-way will be required to implement costly new
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recordkeeping procedures and revisions to its existing piece-rate compensation structure – just in California – in order to avoid liability under the District Court’s Order while the case continues to trial. This Petition raises two issues, each of which is potentially case dispositive. If the F FAAAA AAAA preem preempts pts California’s m minimum inimum wage as it applies to piece-rate compensation, Plaintiff no longer has a basis to go forward with a class. Alternatively, if this Court determines that California law allows parties the freedom to agree that a piece rate covers both driving and non-driving duties, then, again, Plaintiff no no longer has a basis to go forward forward with a class. Thus, if this action proceeds without immediate relief, Con-way will suffer severe prejudice by being required to expend substantial human and financial resources to litigate and try a class action where the case-dispositive core legal issues could be reversed on appeal. Moreover, there are several other class actions pending involving essentially the identical issue. See, e.g., Ortega v. J.B. Hunt Transport, Inc. , Case No. 2:07-CV-083362:07-CV-08336-FMC-JCx, FMC-JCx, ¶ 29 (C.D. Cal. Nov. 7, 2008) (Complaint filed Nov. 19, 2007); Anderson v. Andrus Transp. Servs., Inc. , San Bernardino Superior Court Case No. CIV DS 915878 (Complaint filed Nov. 4, 2009); Bickley v. Schneider National Carriers, Inc., 2013 U.S. Dist. LEXIS 8636 (N.D. Cal. Jan. 22,
2013) RJN Exs. 2-4 (attaching true and correct copies of these complaints);. See
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also Balasanyan v. Nordstrom, Inc. , 2012 U.S. Dist. LEXIS 181350 (S.D. Cal.
Dec. 20, 2012) (petition for writ of mandate to this Court filed on April 2, 2013 as to whether commissions can cover non-sales activities). D.
FAAAA Preemption Of California Minimum Wage Law As To Piece Rate Pay Is A Significant Issue Of First Impression. 1.
The FAAAA Preempts State Laws Having A Significant Impact On Prices, Routes And Services Of Motor Carriers.
Congress enacted the Airline Deregulation Act (“ADA”) in 1978 to ensure “that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision, prohibiting the States from enforcing any law ‘relating to rates, routes, or services’ of any air carrier.”. Morales v. TransWorld TransWorld Airlines, 504 U.S. 374, 378-79 (1992).
In 1980, Congress
deregulated trucking in the Motor Carrier Act of 1980, and enacted the FAAAA in 1994 after finding that the regulation of intrastate transportation of property by the States “imposed an unreasonable burden on interstate commerce.” Pub. L. No. 103-305, Title VI, § 601(a)(1), 108 Stat. 1569, 1605 (1994). In enacting the FAAAA, Congress adopted the same preemption language as in the ADA. See Rowe, 552 552 U U.S. .S. at 370. In Rowe, the Supreme Court confirmed that the Morales holdings also applied to FAAAA preemption: (1) that “[s]tate enforcement actions having a connection with, or reference to, ” carrier prices, routes, or services are pre-empted; (2) that such preemption may occur
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even if a state law’s effect on prices, routes, or services “is only indirect”; (3) that with respect to preemption, it does not matter whether a state law is consistent or inconsistent with federal regulation; and (4) that preemption occurs “at least where state laws have a ‘significant impact’ related to Congress’ deregulatory and preemption related objectives.” Id. at 370-71 (emphasis in original). At issue in Rowe was a law passed by the State of Maine providing that only licensed retailers could accept deliveries of tobacco products; that the retailer must “utilize a delivery service” verifying that the tobacco is being delivered to the person who bought the tobacco; who is of legal age to purchase tobacco; who signs for the package; and who must produce identification if under the age of 27. See Rowe, 552 U.S. U.S. at 370. Maine arg argued ued before the Supre Supreme me Court that its tobacco regulation would “impose no significant costs upon carriers,” and therefore the effect of its regulation on prices, routes and services was not “significant” for purposes of FAAAA preemption analysis. See Rowe, 552 U.S. at 373. The Suprem Supremee Court found Ma Maine’s ine’s argument argument to be “of “offf the mark” b because ecause “significant impact” is not limited to those state laws that would impose a significant cost. Id. Rather, a state’s law has a ““significant significant impact” on prices, routes or services if its “‘effect ’ is ‘forbidden’ under federal law.” Id. at 375 (emphasis supplied). supplied). As such, becau because se Maine’s law forced carriers to provide a service that they “do not (or in the future might not) wish to provide,” which is
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contrary to the purpose of the FAAAA, the effect of Maine’s law was “significant” 4
and, for that reason, preempted. Id. at 373. The Court also held that to allow Maine to pass such laws would mean that other states could do the same. And to interpret the federal law to permit these, and similar, state requirements could easily lead to a patchwork of state service-determining service-determ ining laws, rules, and regulations. That state regulatory patchwork is inconsistent with Congress’ major legislative effort to leave such decisions, where federal unregulated, to the competitive marketplace. Id. at 373 (emphasis (emphasis supplied). The Supreme Supreme Court thus held that, even if it did
not directly regulate carriers, and even if the costs it imposed on the transportation industry were insignificant, the law was still s till preempted. Id. at 376. 2.
Rowe Dictates That California’s Minimum Wage Laws As To Piece Rates Are Preempted By The FAAAA.
a.
California Courts Have Held That Each Hour Worked Must Be Separately Compensat Compensated. ed.
In Armenta v. Osmose, Inc., 135 Cal.App.4th 314, 324 (2005), the California Court of Appeal held that “the FLSA model of averaging all hours worked ‘in any work week’ to compute an employer’s minimum wage obligation under California law is inappropriate,” and, therefore, the “minimum wage 4
The Supreme Court also acknowledged that “federal law might not preempt state laws that affect fares in only a ‘tenuous, remote, or peripheral ... manner,’ such as state laws forbidding gambling.” Rowe, 552 U.S. at 371 (emphasis supplied). supplied). Likewise, a “state regulation that that broadly prohibits certain forms of conduct and affects, say, truckdrivers, only in their capacity as members of the public (e.g., a prohibition on smoking in certain public places),” might not be preempted.
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standard applies to each hour worked ” for which they were not separately paid. (Emphasis supplied.) In Gonzalez , 2013 Cal. App. Unpub. LEXIS 1728 at *17, a California Court of Appeal recently found that the anti-averaging principle in Armenta also applied to piece-rate compensation for auto mechanics and that “the 5 minimum wage [must be paid] for each hour worked.” worked.” (Emphasis in original.)
In Cardenas , a California district court held that Armenta’s antiaveraging principle applied to piece-rate compensation in the motor carrier industry. See Cardenas, 796 F.Supp.2d at 1249-53. 6 In that case, the district cour courtt held that because “averaging” is not allowed, a motor carrier’s piece rate had to separately compensate a driver for each duty performed, as otherwise the work was uncompensated. See id. at 1253. Moreover, the distric districtt court held that “it iiss irrelevant whether the pay formula was intended to to compensate pre- and post-trip duties, or even if employees believed it covered those duties, if its formula did not actually directly compensate those pre- and post-trip duties.” Id. (emphasis in original). The District Cour Courtt in the present action also followe followed d Cardenas , holding 5
Although the Court of Appeal issued Gonzalez as an unpublished opinion, to date, there have been six requests filed with the Court of Appeal to publish the opinion, with two of the requests being made by attorneys representing “truck drivers.” See Court of Appeal website: website: http://appellatecases.courtinfo.ca.gov. http://appellatecases.courtinfo.ca.gov. 6
Cardenas , which was also decided on a motion for summary judgment, was settled between the parties prior to trial, and, therefore, the district court’s ruling never received appe appellate llate review. This outcom outcome, e, not unusual iin n high-value class actions, illustrates how this issue, while important and recurring, is appropriate for issuance of a writ such that it does not indefinitely become case dispositive while evade appellate review.
16.
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that any duties that are not separately compensated by the piece-rate formula constituted unpaid work. See AP013. b.
The FAAAA Preempts California’s Minimum Wage Laws Because They Directly Affect A Motor Carrier’s Services, Routes Or Prices.
“[S]tate enforcement actions having a connection with, or reference to [motor] carrier rates, routes or services are pre-empted.” Rowe, 552 U.S. at 37071. In ATA, the Ninth Circuit confirmed that the terms “rates, routes, and services” were “used by Congress in the public utility sense; that is, service refers to such things as the frequency and scheduling of transportat transportation ion, and to the selection of markets to or from which transportation is provided. ... Rates indicates price; routes refers to courses of travel.” ATA, 660 F.3d F.3d at 396 (emphasis supplied). The Ninth Circuit further confirmed that “[i]n determining whether a provision has a connection to rates, routes, or services, we must examine the actual or likely effect of a State’s action.” Id. (emphasis (emphasis supp supplied). lied). For iinstance, nstance, iin n Rowe, it was of no
consequence that the Maine law was directed towards shippers instead of the carriers because the “effect of the regulation is that carriers will have to offer tobacco delivery services that differ significantly from those that, in the absence of the regulation, the market might dictate.” Rowe, 552 U.S. at 372. In Cole, a district court drew the logical consequences for the motor carrier industry if no “averaging” is allowed. See Cole, 2013 U.S. Dist. LEXIS
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32793 at *8-13. The drivers in tthat hat case argued that that because their w wage age statements did not show the total hours they worked, they were “injured” insofar as they were unable to determine whether they were earning at least minimum wage. See id. at *9. But if there is no “a “averaging,” veraging,” the total hour hourss worked does not all allow ow a driver to know whether he or she was paid mini minimum mum wage for each hour worked. For instance, the driver may have arguably engaged in activities not covered by the piece rate for which the driver should be separately compensated on an hourly basis of at least minimum wage. Likewise, if the driver is paid $.50 a mile and, because of traffic, only drives one mile in that hour, then the motor carrier could arguably be required to compensate the driver separately for that hour to bring up his hourly compensation compensation to the m minimum inimum wage. Finally, the “total “total hours” do not tell the driver which hours were driven in California, thereby subjecting the driver to California’s minimum wage laws. See id. at *10. Based on Cole, the logical effect of California’s minimum wage laws on rates, routes and and services is unde undeniable. niable. In order to comply comply with Califor California’s nia’s minimum wage laws, once a driver has driven into California, the motor carrier would be required to separately track and verify the driver’s activities each hour to determine whether the driver must be provided with separate payment for particular hours of work in the state. To accomplish this, the driver would be required to cease services and drive off route each hour to stop and fill in an
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activity log for the previous hour so that non-driving activities could be separately compensated. The driver would would also be required to recor record d the mileage for the hour to ensure that the he or she was being paid m minimum inimum wage for tthat hat hour. These additional logging activities are not required by the HOS regulations.
See 49
C.F.R. § 395.8 (requiring (requiring only chan change ge in duty statuses). Yet, they would take tim timee away from the driver’s DOT-regulated maximum working time, thus reducing the driver’s productivity, which would result in less capacity to complete scheduled deliveries. See 49 C.F.R. § 395.3 (maxim (maximum um driving time). Furthermore, tthe he motor carrier would need to develop a new n ew payroll system, and with it, new payroll hardware and software systems. systems. Consequently, the motor motor carrier would would need to recruit and hire more payroll personnel to administer the new system. “[P]re-emption occurs at least where state laws have a ‘significant impact’ related to Congress’ deregulatory and pre-emption-related objectives[.]” Rowe, 552 U. U.S. S. at 371. 371. In Rowe, Maine’s preempted law “required motor carrier
operators to perform certain services,” which they provided, not as a result of competition, but “simply because the State seeks to enlist the motor-carrier operators as allies in its enforcement efforts.” Id. at 376. In ATA, this Court held that the Port of Los Angeles’ concession agreement that required drivers to be “employees” instead of “independent owner-operators” was FAAAA-preempted because of the prohibited effect on “services,” where the Port sought to impose
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conditions on the “contractual relationships between motor carriers and third parties.” ATA, 660 F.3d at 407-08. In this respect, respect, it is difficul difficultt to im imagine agine a greater significant impact than every time a driver drives into a new state, the motor carrier is obligated to change its method of paying the driver, is obligated to change the contract between the motor carrier and the driver, and is forced to monitor the driver on an hour-by-hour ba basis. sis. Again, the motor ccarrier arrier must do this, not because of competition but “simply because the State seeks to enlist the motorcarrier operators as allies in its enforcement efforts” of California’s minimum wage laws. See Rowe, 552 U.S. at at 376. Moreover, if California can enact suc such h laws, “other States could do the same,” leading to a “patchwork of state servicedetermining laws, rules and regulations.” Id. at 373. California’ California’ss minim minimum um w wage age laws as to piece-rate compensation are thus preempted by the FAAAA. Ten district courts in California have held that either the FAAAA or the ADA preempts California’s meal and rest break laws because of the impact that such laws have on services and routes, and the Dilts and Campbell cases are presently before this Court to address the scope of FAAAA preemption.7 In Dilts,
7
In addition to the Dilts and Campbell cases, the other district court cases finding either FAAAA or ADA preemption of California meal and rest break laws are: Blackwell v. Skywest Airlines, Inc., 2008 U.S. Dist. LEXIS 97955, *42-54 (S.D. Cal. Dec. 3, 2008) (ADA); Equivel v. Vistar Corp., 2012 U.S. Dist. LEXIS 26686, *18 (C.D. Cal. Feb. 8, 2012) (FAAAA); Aguiar v. California Sierra Express, Inc., 2012 U.S. Dist. LEXIS 63348, *3 (E.D. Cal. May 4, 2012) (FAAAA); Jasper v. C.R. England, Inc., 2012 U.S. Dist. LEXIS 186607, *9-26
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the district court held that, as a matter of “simple mathematics,” complying with California’s meal and rest break laws “bind motor carriers to a smaller set of possible routes,” and reduce the number of h hours ours services can be provided. Dilts, 819 F.Supp.2d at 1118-19. Applying the Dilts analysis, California’s minimum wage laws, as applied to drivers’ piece-rate compensation, are likewise preempted because of the effect they have on a motor carrier’ carrier’ss services and routes, if not their prices. Con-way accordingly rrequests equests that this Court grant its petition so that these FAAAA preemption issues may be decided together, and so that Con-way will not 8 be forced to try a class action before these issues are decide decided. d.
E.
Alternatively, The District Court Committed Clear Reversible Error By Holding A Piece Rate Could Not Cover Certain Duties. 1.
As A Matter Of Contract, A Piece Rate May Legally Include Non-Driving Duties.
The District Court, relying on Armenta and Cardenas , committed clear and reversible error when it held that “California law does not allow an (C.D. Cal. Aug. 30, 2012) (FAAAA); Cole v. CRST, Inc., 2012 U.S. Dist. LEXIS 144944, *11-17 (C.D. Cal. Sept. 27, 2012) (FAAAA); Aguirre v. Genesis Logistics, 2012 U.S. Dist. LEXIS 186132, *12-21 (C.D. Cal. November 5, 2012) (FAAAA); Miller v. Southwest Airlines, Co., 2013 U.S. Dist. LEXIS 18835, *1217 (N.D. Cal. Feb. 12, 2013) (ADA); Angeles v. US Airways, Inc., 2013 U.S. Dist. LEXIS 22423, *25-30 (N.D. Cal. Feb. 18, 2013) (ADA). 8
The District Court’s analysis also conflicts with the analysis in Rowe when it uses a “compliance” standard for FAAAA preemption, i.e., because Con-way already compensates certain non-driving tasks on an hourly basis, there can be no preemption. See AP014. That standard standard is contrary to Rowe, which rejected as “off the mark” the Stateadditional of Maine’s argument that the Rowe regulation at issue would not impose “significant costs upon carriers.” , 552 U.S. at 373.
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employer to ‘build in’ time for non-driving tasks into a piece-rate compensation system.” AP013. In so holding, the Dist District rict Court Court ignore ignored d Califor California nia law, which allows an employer and an employee to contractually define what duties a piece rate covers. Indeed, as the California Supreme Court has held, “[i]t cannot cannot be questioned that employers and employees are free to prospectively and bilaterally alter the terms of employment,” and “[s]traight-time wages (above the minimum wage) are a matter of private contract between the employer and employee.” See Schachter v. Citigroup, Inc., 47 Cal.4th Cal.4th 610, 620 (2009). Consequently, there can
be no dispute that a piece rate that covers bot both h driving and nonnon-driving driving duties is not only industry standard but patently legal. California Labor Code section 200 allows an employer to pay an employee a wage that can be “fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation .”
Lab. Co Code de § 200
(emphasis supplied). Likewise, IIndustrial ndustrial Welfare Commission (“IWC”) Wage Order No. 9-2001(4)(B) provides that a transportation employer must pay “not less than the applicable minimum wage for all hours worked in the payroll period , whether the remuneration is measured by time, piece, commission, or otherwise.” See 8 Cal. Code Regs. § 11090(4)(B). Neither these pro provisions visions of the Labor Code
and Wage Order 9-2001, nor any other provisions, restrict an employer from paying non-exempt employees on a piece-rate basis, provided they earn at least
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minimum wage for all hours worked in the pay period. It is also clear from section 200’s definition of “wages” that an employee paid an hourly rate is treated as equal to an employee paid by “piece rate.” The Labor Com Commissioner missioner requires requires only that a piece rate ““must must be based upon an ascertainable figure for completing a particular task ,” ,” or “a fixed sum which is paid for a specified piece of work (e.g., ‘piecework’).” ‘piecework’).” DLSE Manual §§ 2.4.4, 2.5.1, RJN, Exh. 5 (emphasis supplie supplied). d). In addition to listing examples of piece rates such as a nurse paid on the basis of the number of procedures performed, or a carpet layer p paid aid by the yard of carpet laid, or a carpenter paid by the linear foot on a framing job – all of which involve numerous duties – the Labor Commissioner specifically recognizes that a valid piece rate includes a “[t]ruck driver paid by the number of loads hauled.” hauled.” DLSE Glossary (“piece rate”), rate”), RJN, Exh. 6 (emphasis supplied). The case law concerning c oncerning commissions is instructive as it confirms that an employee’s entitlement to “wages” is ccontractual. ontractual.
As noted above,
“commissions,” like “piece work,” are considered “wages” pursuant to Labor Code section 200(a), and “for purposes of enforcing provisions of the Labor Code, ‘[t]he right of a salesperson or any other person to a commission depends on the terms of the contract for for compensation.’” Nein v. Hostpro, Inc., 174 Cal.App.4th 833, 853
(2009) (emphasis supplied) (employee’s entitlement to commissions is defined by
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the employment agreement). agreement). Thus, for exam example, ple, where a comm commission ission plan defines the conditions under which an employee will receive a commission, those conditions will be enforced, and a commission will not be paid until those conditions are met. See, e.g., Steinhebel v. Los Angeles Times Communications, LLC , 126 Cal.App.4th 696, 705 (2005) (pursuant to commission plan, employee
did not “earn” commission until subscriber remained a customer for 28 days); Koehl v. Verio, Inc., 142 Cal.App.4th 1313, 1335 (2006) (no entitlement to a
commission if the employee fails to meet specific conditions of the compensation agreement). “In sum, cases ha have ve long recogn recognized, ized, and enforce enforced, d, commission plans plans agreed to between employer and employee, applying fundamental contract principles to determine whether a salesperson has, or has not, earned a commission.” Id. at 1331.
See also Deleon v. Verizon Wireless, LLC , 207
Cal.App.4th 800, 808 (2012) (because commissions are a type of wages, “the right to commissions depends upon the terms of the contract for compensation” [emphasis supplied]); Schachter , 47 47 Cal.4t Cal.4th h at 620 (pursuant to com compensation pensation agreement, employee contractually forfeited portion of his salary used to purchase company stock because he left the company before it vested); Marlo v. United Parcel Service, Inc., 2009 U.S. Dist. LEXIS 41948, *10 (C.D. Cal., May 5, 2009)
(matter of contract as to what duties were compensated by a salaried position). An employer and an employee can thus enter into a contract to be paid
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by the “piece” whereby the parties can specify what duties will be required to complete the “piece,” and how much compensation will be paid for each “piece,” provided that the employee’ employee’ss compensation for the piece or pieces will be at least equal to an hourly minimum wage for the pay period. See 8 Cal. Code Regs. § 11090(4)(B) (m (minimum inimum wage applies to piece rrate). ate). Therefore, as a matter of contract, there is no legal obstacle to Con-way having a piece rate that covers both driving and non-driving duties, where the compensation is determined by the approximate number of miles driven. See, e.g., Cole v. CRST, Inc., 2012 U.S. Dist. LEXIS 144944, *17-22 (C.D. Cal. Sept. 27, 2012) (“[plaintiff] fails to demonstrate that non-driving duties are not adequately compensated vis-à-vis [trucking employer’s] mileage-based compensation system”). 2.
The Cardenas and Quezada Decisions Are Contrary To Well-Established Supreme Court Precedent.
In Cardenas, the employer had a piece-rate system that paid its delivery drivers based on values assigned to three components: (1) the number of cases of product delivered on a route; (2) the number of miles driven on a route; and (3) the number of delivery stops made on the route. See 796 F.Supp.2d at 1249. The dr drivers ivers sued, al alleging, leging, inter alia, that the piece rate did not compensate them for their their pre-trip and post-trip duties. In response, the employer submitted declarations from employees that they had always known and understood that the piece rate compensated compensated them for the their ir pre- and post-shift post-shift activities. Id. at 1252.
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The Cardenas district court relied primarily on Armenta and a DLSE Opinion Letter, both of which held that hourly employees must be paid their contractual hourly rate for each ho hour ur they work. For insta instance, nce, in Armenta, the
Court of Appeal found that Labor Code sections 221, 222, and 223 “articulate the principal that all hours must be paid at the statutory or agreed rate , which is contravened by “averaging” paid and unpaid hours because it “effectively reduces respondents’ contractual hourly rate.”
Armenta, 135 Cal.App.4th at 323.
Likewise, the DLSE opined that “averaging” of hours for hourly employees was not allowed because employees “ must be compensated precisely in accordance with the provisions of the CBA or contract [.]” [.]” DLSE Op. Letter 2 2002.01.29 002.01.29 aatt 11 (emphasis supplied).
Thus, aver averaging aging of pa paid id and unpaid hours of hourly
employees is not permitted because “to do so would result in the employer paying the employees less than the contract rate for those activities.” Id. (emphasis supplied); Cardenas, 796 F.Supp.2d at 1252 (quoting same). After acknowledging that “averaging” is prohibited for hourly employees based on contract, the Cardenas court extended Armenta’s holding to piece-rate compensation, placing it outside of the realm of contract law and concluding: “Even if [the employ employer] er] comm communicated unicated to its employ employees ees that th this is piece-rate formula was intended to compensate for pre- and post-shift duties, the fact that it did not separately compensate for those duties violates California law.”
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Cardenas, 796 F.Supp.2d at 1253. The Cardenas court, however, cited to no
section of the Labor Code, the California Code of Regulations, or any DLSE Opinion Letter or publication limiting a piece rate to a single “duty.” There is simply no basis in law or logic for the Cardenas court’s conclusion. An hourly employee contracts to work at an hourly rate, and must be paid the contractual rate for each h hour our worked.
But a piece-r piece-rate ate em employee ployee
contracts to be paid a rate by the “ piece,” as agreed and defined by the parties,
which can require the performance of any number of separate duties to accomplish, and the employee is paid the contractual rate for each piece completed. Indeed, while the DLSE prohibits “averaging” with respect to hourly-paid employees, it embraces it as to all other forms of non-hourly payment as there would otherwise
be no method of calculating whether the compensation meets minimum wage standards. See, e.g., DLSE Manual § 49.2.1.2 (“regular rate” for piece worker determined by dividing total amount paid by number of hours worked in a week); § 34.2 (“If an employee receives a draw against commissions to be earned at a future date, the “draw” must be equal at least to the minimum wage and overtime due the employee for each pay p ay period ...”). The District Court, in following Cardenas , makes the same mistake in assuming that the definition of a “duty” can exist outside of the parties’ employment contract. contract. For instance, the Di District strict Court notes tha thatt the DLSE Manual
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provides that piece-rate employees must be separately paid for time they are required to work but unable to earn compensation at the piece rate, e.g., attending meetings that prevent the employee from earning his or her piece rate. See AP010. The District Court then concludes that the DLSE Manual “does not appear to allow for the possibility of simply building extra compensation into the piece-rate amount for mandatory work time in which the piece-rate cannot be earned.” Id . As such, “when employees are required to perform a task that precludes them from earning piece-rate compensation, they must be directly compensated for that time,” and that “‘building in’ compensation for non-driving tasks on a per-mile rate is not permissible under the California Labor Labor Code.” AP013, 015. As in Cardenas, because the District Court fails to make reference to the compensation agreement, it assumes that the only duty that is being compensated is that of “driving.” 9 However, if drivers are pai paid d to haul a load from the supplier to the consignee, which involves the completion of many duties, it then becomes illogical to state that the “non-driving tasks” prevent the driver from “earning piece-rate compensation.”
As discussed above in cconnection onnection with
commission contracts, the right to compensation “depends on the terms of the contract for compensation.” Nein, 174 Cal.App. 4th at 853. Thus, perform performing ing a 9
The Gonzalez decision commits the same error as Cardenas when it assumes, without discussion, that a piece rate for auto mechanics could not compensate them See for down time, 2013 between even ifLEXIS the parties agreed to such a condition. Gonzalez Cal.repairs, App. Unpub. 1728 had at *3-5.
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pre-trip inspection, fueling, waiting at the consignee to have the goods off-loaded, and completing the required paperwork are not duties that prevent an employee from earning his or her piece-rate compensation; instead, they are duties that the compensation agreement requires a driver to complete in order to earn the piecerate compensation. See, e.g., Koehl , 142 Cal.App.4th at 1335 (no entitlement to commission if the employee fails to meet specific conditions of the compensation agreement). Similarly, when a com commissioned missioned sales employee makes makes a “sale,” if the contract provides that the employee will not be paid unless the customer keeps the product for over thirty days, the employee has not “earned” a commission until this condition is satisfied. See Steinhebel , 126 Cal.App.4th at 705. As in Cardenas, the District Court holds that Con-way’s piece rate does not compensate for each hour worked because it assumes that a piece rate cannot cover certain certain duties. Duties, however, d do o not exist in nature and must be defined by the parties’ parties’ agreement. agreement. If the parties con contract tract to define a piece rate to include both driving and non-driving duties, provided the driver receives minimum wage for all hours worked, the piece rate is legal. See Gentry v. Superior Court, 42 Cal.4th 443, 456 (2007) (“Straight-time wages (above minimum wage) are a matter of private contract between the employer and the employee”). VI.
CONCLUSION
Application of California’s minimum wage law to piece rates is
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preempted by the FAAAA or, alternatively, the District Court in holding that a piece rate may not n ot cover non-driving activities is following a line of decisions that are contrary to California Supreme Court precedent in holding that a piece rate may not cover non-driving activities.
The exact FAAAA preemption issue
presented here is one of first impression, and the District Court’s decision misinterpreting the nature ofas piece rates is clear and a now recurring error. The scope of FAAAA preemption is now before this Court and, applying the Dilts analysis, California’s minimum wage laws are preempted. Balasanyan an v. Nordstrom action is also petitioning Likewise, the defendant in the Balasany
this Court for a writ of mandate to put the minimum wage issue squarely before this Court. A ruling on either aalternative lternative ccould ould dispose of the pre present sent action. Unless its Petition is granted, Con-way will be required to expend substantial time and resources in response to the Dsitrict Court’s erroneous ruling below and defending itself against a class action that ultimately concerns an issue of law. Con-way accordingly petitions this Court for a writ of mandamus. Dated: April 2, 2013 /s/ Richard H. Rahm RICHARD H. RAHM LITTLER MENDELSON, P.C. Attorneys for Defendant-Petiti Defendant-Petitioner oner CON-WAY FREIGHT INC.
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STATEMENT OF RELATED CASES
Pursuant to Local Circuit Rule 28-2.6, Con-way states that it is not aware of any related cases in this Court. Dated: April 2, 2013 /s/ Richard H. Rahm RICHARD H. RAHM LITTLER MENDELSON, P.C. Attorneys for Defendant-Petiti Defendant-Petitioner oner CON-WAY FREIGHT INC.
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CERTIFICATE OF SERVICE I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system on April 2, 2013. Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I further certify that some of the participants in the case are not registered CM/ECF users. users. I have mailed tthe he foregoing doc document): ument): •
PETITION FOR WRIT OF MANDAMUS COMPELLING DETERMINATION THAT CON-WAY’S PIECE-RATE COMPENSATION POLICY POLIC Y IS LA LAWFUL WFUL
by First-Class Mail, postage prepaid, or have dispatched it to a third party commercial carrier for delivery within 3 calendar days to the following nonCM/ECF participants: Lawrence R. Cagney, Esq. Westrup Klick 444 West Ocean Blvd., Suite 1614 Long Beach, CA 90802-4524 Fax: 562.435.4856
Michael L. Carver Law Offices of Michael L. Carver 1395 Ridgewood Drive, Ste. 300 Chico, CA 95973 Fax: 530.891.8512
Jonathan Che Gettleman Law Office of Jonathan Che Gettleman 223 River Street, Ste. D Santa Cruz, CA 95060
Honorable Jeffrey S. White United States District Court Northern District District of California 450 Golden Gate Avenue San Francisco, CA 94102
Dated: April 2, 2013 /s/ Stephanie Ferrell Stephanie Ferrell Firmwide:119288621.3 012187.1046
