Three petitions, Virgin America v. Bernstein, Delta Air Lines v. Oman, and California Trucking Association v. Bonta, challenge California’s regulatory authority over interstate carrier employees.  Interstate carrier regulations are primarily found in federal laws like the Airline Deregulation Act (ADA) and the Federal Aviation Administration Authorization Act (FAAAA).  The Bernstein, Oman, and Bonta petitioners request the Court find the ADA and FAAAA preempt several California labor laws which “relate[] to a price, route, or service” of interstate carriers.

The doctrine of preemption implements the Supremacy Clause.  The basic principle is that if Congress legislates intending to comprehensively regulate a specific field, federal law knocks out state law in the same area.  In these cases, courts evaluate the outer bounds of Congressional intent as encoded in the statutory text.  Congress’s deregulatory intent in the ADA and FAAAA—common in the 1970’s and 1980’s—is clear.  It responded to an economic crisis relating partly to rigid regulatory pricing by permitting airlines to have “maximum reliance on competitive market forces” and freeing motor carriers from regulations that “unreasonably burdened free trade.”  Congress limited its deregulation to preempting state laws “related to a[n interstate carrier] price, route, or service.”  The ADA and FAAAA only preempt state laws with “‘a connection with, or reference to’ carrier ‘rates, routes, or services,’” not those with a “tenuous, remote, or peripheral,” impact on “Congress’ deregulatory” goals.

Although all regulations affect a business’s economic calculus and can induce changes to prices, routes, or services, a court applying such a broad analysis to these statutes would make Congress’s express intent to limit preemption to state law effects on prices, routes, and services superfluous.  To ensure these words have meaning—and to heed the Court’s hesitation in preempting traditional state authority such as employment regulation—faithfully applying the ADA and FAAAA requires a more reasonable line: preempting only those state laws regulating customer-facing ventures but not state laws operating generally on all businesses “several steps removed” from the prohibited enumerated spheres of prices, routes, and services.  This line appears to protect both California’s wage-and-hour law in Oman and worker classification law (AB5) in Bonta from federal preemption.  Bernstein is a closer call.

Though primarily contesting extraterritoriality, the Oman petitioner argues that the ADA’s deregulatory policy preempts state laws with any connection to prices, routes, or services.  Expansive deregulation would preempt the wage-and-hour rules on formatting pay stubs and payment frequency.  But, if the ADA’s choice to preempt only certain state laws is to have meaning, these rules must survive—their effects on a carrier are too far removed from its customer-facing decisions. 

The Bonta petitioners argue AB5 is preempted by the FAAAA for its prohibited effects on motor carrier routes and services.  Because AB5 limits hiring independent contractors—owner-operators in industry parlance—the Bonta petitioners contend their need to hire more employees will affect which routes and services are cost-effective.  Though this argument appears grounded in the FAAAA’s text, it suffers from an attenuation problem.  The Bonta petitioners are arguing that a general labor law improperly regulates interstate carriers by making an analytical leap from increased employment costs to changes to the service options available to customers.  However, “a law increasing motor carriers’ employee costs, but not interfering at the point where the motor carrier provides a service to its customers, does not simply fall ‘into the field of laws’ that Congress intended to preempt.”  AB5 governs hiring practices, not motor carrier-customer relations.  If the FAAAA’s express concern about prices, routes, and services is to have meaning, AB5 must survive preemption—there are too many steps in between increasing employment costs and altering routes or services for it to regulate motor carriers impermissibly.

Bernstein petitioners’ challenge to the meal-and-rest-break law is a closer question since the law’s mandatory, periodic work-free breaks will substantially disrupt airline workflows.  Respondents argue California’s generally applicable labor law is out of the ADA’s preemptive reach because it just regulates workplace structure—any downstream effects are attributable to the airline’s recoupment of staffing costs.  This framing ignores key facts about the airline industry.  California’s off-duty requirement conflicts with federal rules requiring flight attendants be permanently on-call to respond to emergencies.  Mandating off-duty employees be free to leave the airplane would hamper the already logistical nightmare air traffic control faces in scheduling takeoffs and landings.  Hiring more flight attendants absorbs seats normally sold to customers, which greatly increases small intrastate flight prices such that some routes become unviable.  The airline industry’s unique logistical dance creates a factual context where run-of-the-mill workplace regulations can increase costs in such a way that they impermissibly affect prices, routes, and services.  While AB5 marginally affected trucking routes by increasing general costs, the meal-and-rest-break law upsets more than the airline workplace because it foreseeably alters seating arrangements, takeoffs and landings, and intrastate routes, all intimately connected to airline “prices, routes, and services.”  These effects bolster the conclusion that the ADA preempts California’s meal-and-rest-break law in Bernstein.

Because states traditionally regulate labor, the resolution of these cases charts the course for future ADA and FAAAA preemption lawsuits.  But they are worth following because the legal issue is emblematic of the question undergirding America’s federal structure: how do courts engaging in statutory interpretation balance federal supremacy against federalism-protected state police powers?  Given our Constitution’s unique dual sovereignty, this query underpins constitutional litigation.

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