Dan’s City Used Cars, Inc., v. Pelkey: SCOTUS Issues FAAAA Preemption Decision

One of the big issues in wage and hour law in the last few years has been what has become known as "F-quad-A preemption." The Federal Aviation Administration Authorization Act of 1994 (FAAAA) preempts state laws "related to a price, route, or service of any motor carrier . . . with respect to the transportation of property." The question is whether state wage and hour laws fall within the preemptive scope of the FAAAA when applied to employees in the transportation industry. 

This issue is before the California Supreme Court in People ex rel. Harris v. Pac Anchor Transportation, Inc. (Case No. S194388) (discussed here and here).  See also Dilts v. Penske Logistics LLC, 819 F.Supp.2d 1109 (2011) (FAAAA preempts meal period and rest period claims by delivery drivers).  

In Dan’s City Used Cars, Inc., v. Pelkey, 569 U. S. ____ (5/13/13), a unanimous Supreme Court has decided a related issue, holding that the FAAAA does not preempt state law claims stemming from the storage and disposal of a towed vehicle.  

Pelkey’s state-law claims escape preemption because they are “related to” neither the “transportation of property” nor the “service” of a motor carrier. Although §14501(c)(1) otherwise tracks the ADA’s air-carrier preemption provision, the FAAAA formulation’s one conspicuous alteration— addition of the words “with respect to the transportation of property”— significantly limits the FAAAA’s preemptive scope. It is not sufficient for a state law to relate to the “price, route, or service” of a motor carrier in any capacity; the law must also concern a motor carrier’s “transportation of property.” Title 49 defines “transportation,” in relevant part, as “services related to th[e] movement” of property, “including arranging for . . . storage [and] handling.” §13102(23)(B). Pelkey’s Consumer Protection Act and negligence claims are not “related to th[e] movement” of his car. Chapter 262 regulates the disposal of vehicles once their transportation— here, by towing—has ended. Pelkey seeks redress only for conduct occurring after the car ceased moving and was stored. Dan’s City maintains that because §13102(23)(B)’s definition of “transportation” includes “storage” and “handling,” Pelkey’s claims fall within §14501(c)(1)’s preemptive ambit. But “storage” and “handling” fit within §13102(23)(B)’s definition only when those services “relat[e] to th[e] movement” of property. Thus temporary storage of an item in transit en route to its final destination qualifies as “transportation,” but permanent storage does not. Here, no storage occurred in the course of transporting Pelkey’s vehicle.   

Pelkey’s claims are also unrelated to a “service” a motor carrier renders its customers. The transportation service Dan’s City provided — removal of Pelkey’s car from his landlord’s parking lot — did involve the movement of property, but that service ended months before the conduct on which Pelkey’s claims are based. Because chapter 262, on which Pelkey relies, addresses “storage compan[ies]” and “garage owner[s] or keeper[s],” not transportation activities, it has neither a direct nor an indirect connection to transportation services a motor carrier offers its customers. 

The conclusion that state-law claims regarding disposal of towed vehicles are not preempted is in full accord with Congress’ purpose in enacting §14501(c)(1), which was to displace “a State’s direct substitution of its own governmental commands for ‘competitive market forces’ in determining . . . the services that motor carriers will provide.” Id., at 372. The New Hampshire prescriptions Pelkey invokes hardly constrain participation in interstate commerce by requiring a motor carrier to offer services not available in the market. Nor do they “freez[e] into place services that carriers might prefer to discontinue in the future.” 

Slip op. 8-11.  

Although this does not tell us whether the FAAAA preempts state wage and hour laws, lawyers on both sides of the issue will want to read it carefully.  

Dan’s City Used Cars, Inc., v. Pelkey  is available here.  The SCOTUSblog page for the case, which includes the opinion below and the parties' briefing, is here.