Title: People ex rel. Harris v. Pac Anchor Transp., Inc.
Citation: N/A
Docket Number: S194388
State: California
Issuer: California Supreme Court
Date: July 28, 2014

Filed 7/28/14 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
THE PEOPLE ex rel. KAMALA D.  
) 
HARRIS, as Attorney General, etc.,  
) 
 
 
) 
 
Plaintiff and Appellant, 
) 
 
 
) 
S194388 
 
v. 
) 
 
 
) 
Ct.App. 2/5 B220966 
PAC ANCHOR TRANSPORTATION,  
) 
INC., et al.,  
) 
Los Angeles County 
 
) 
Super. Ct. No. BC397600 
 
Defendants and Respondents. ) 
____________________________________ 
 
 
The narrow question presented is whether an action under the unfair 
competition law (Bus. & Prof. Code, § 17200 et seq. (UCL)) that is based on a 
trucking company’s alleged violation of state labor and insurance laws is “related 
to a price, route or service” (49 U.S.C. § 14501 (c)(1)) of the company and, 
therefore, preempted by the Federal Aviation Administration Authorization Act of 
1994 (Pub.L. No. 103-305 (Aug. 23, 1994) 108 Stat. 1569) (FAAAA).  The 
FAAAA provides that a state “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 . . . with respect to the transportation of property.”  (49 U.S.C. 
§ 14501 (c)(1).)  The People, on behalf of the State of California, filed this action 
against defendants Pac Anchor Transportation, Inc. (Pac Anchor) and Alfredo 
Barajas (Barajas) for misclassifying drivers as independent contractors and for 
other alleged violations of California’s labor and unemployment insurance laws.  
2 
As we explain, we conclude that the FAAAA does not preempt the People’s UCL 
action against defendants.  We therefore affirm the Court of Appeal’s judgment. 
FACTUAL AND PROCEDURAL BACKGROUND 
Defendant Pac Anchor is a trucking company in Long Beach, California.  
Defendant Barajas is the company’s owner, manager, and truck dispatcher.  
Barajas also separately owns approximately 75 trucks.  He recruits drivers to drive 
his trucks for his independent company.  He also enters into lease agreements with 
Pac Anchor in order to utilize the trucks and drivers he supplies.  Both defendants 
classify these drivers as independent contractors, even though they invest no 
capital, own no trucks, and do not use their own tools or equipment.  The drivers 
rely instead on defendants to supply those items.  Drivers are often employed for 
extended time periods, but they can be discharged without cause, have no 
operational control, have no other customers, take all instruction from defendants, 
and have no Department of Transportation operating authority or permits to 
engage independently in cargo transport.  In addition, the drivers are an integrated 
part of defendants’ trucking business because they perform the core activity of 
delivering cargo. 
On September 5, 2008, the People filed a complaint against defendants for 
violating the UCL. The complaint alleged that defendants misclassified drivers as 
independent contractors and therefore illegally lowered their costs of doing 
business by engaging in acts of unfair competition including, but not limited to, 
failing to take the following statutorily mandated actions:  (1) pay unemployment 
insurance taxes (Unemp. Ins. Code, § 976); (2) pay employment training fund 
taxes (id., § 976.6); (3) withhold state disability insurance taxes (id., § 984); (4) 
withhold state income taxes (id., § 13020); (5) provide worker’s compensation 
(Lab. Code, § 3700); (6) provide employees with itemized written wage 
statements (id., § 226) and provide employees with certain records that 
3 
California’s Industrial Welfare Commission wage order No. 9-2001, section 7, 
requires (Cal. Code Regs., tit. 8, § 11090 (hereafter IWC Wage Order No. 9)); (7) 
reimburse employees for business expenses and losses (Lab. Code, § 2802); and 
(8) ensure payment at all times of California’s minimum wage (Lab. Code, § 
1194; IWC Wage Order No. 9, § 4).  The People specifically noted that as a result 
of failing to follow the above statutes, defendants obtained an unfair advantage 
over their competitors, deprived employees of benefits and protections to which 
they are entitled under California law, harmed their truck driver employees, 
harmed the general public, and deprived the state of payments for California state 
payroll taxes, all in violation of the UCL.  The People seek injunctive relief, civil 
penalties, and restitution. 
 
In August 2009, defendants filed a motion for judgment on the pleadings. 
After a hearing in September 2009, the trial court concluded that the FAAAA 
preempted the People’s action.  It issued an order granting judgment on the 
pleadings in defendants’ favor on three grounds.  First, it cited Fitz-Gerald v. 
SkyWest, Inc. (2007) 155 Cal.App.4th 411, 423 (Fitz-Gerald).  That case held that 
the similar provision of the earlier Airline Deregulation Act of 1978 (ADA) (49 
U.S.C. § 41713(b)(1), now the FAAAA) preempted UCL causes of action against 
an airline for alleged wage and rest/meal break violations because they related to 
the airline’s “price, route, or service.”  Second, the court found that requiring 
defendants to treat truck drivers as employees would increase their operational 
costs.  Therefore, the action also related to their price, route, or service.  Third, the 
court concluded that the action threatened to interfere with the forces of 
competition by discouraging independent contractors from competing in the 
trucking market.  The People filed a timely notice of appeal.  The Court of Appeal 
reversed the trial court judgment, holding that because the People’s UCL action is 
not related to Pac Anchor’s price, route, or service as a motor carrier, the FAAAA 
4 
does not preempt this action against defendants.  We granted defendants’ petition 
for review. 
DISCUSSION 
A.  Standard of Review 
“A judgment on the pleadings in favor of the defendant is appropriate when 
the complaint fails to allege facts sufficient to state a cause of action.  (Code Civ. 
Proc., § 438, subd. (c)(3)(B)(ii).)  A motion for judgment on the pleadings is 
equivalent to a demurrer and is governed by the same de novo standard of 
review.”  (Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672.)  “All 
properly pleaded, material facts are deemed true, but not contentions, deductions, 
or conclusions of fact or law . . . .”  (Ibid.)  Courts may consider judicially 
noticeable matters in the motion as well.  (Ibid.) 
B.  Federal Preemption Principles 
The supremacy clause of the United States Constitution establishes that 
federal law “shall be the supreme law of the land . . . , any thing in the 
Constitution or laws of any state to the contrary notwithstanding.”  (U.S. Const., 
art. VI, cl. 2.)  Consequently, the supremacy clause vests Congress with the power 
to preempt state law.  “Congress may exercise that power by enacting an express 
preemption provision, or courts may infer preemption under one or more of three 
implied preemption doctrines:  conflict, obstacle, or field preemption.”  (Brown v. 
Mortensen (2011) 51 Cal.4th 1052, 1059 (Brown); see Viva! Internat. Voice for 
Animals v. Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929, 
935.)  Express preemption occurs when Congress defines the extent to which its 
enactments preempt state law.  (Viva!, at p. 936.)  Conflict preemption is found 
when it is impossible to comply with both state and federal law simultaneously.  
(Ibid.)  Obstacle preemption occurs when state law stands as an obstacle to the full 
accomplishment and execution of congressional objectives.  (Ibid.)  Field 
5 
preemption applies when federal regulation is comprehensive and leaves no room 
for state regulation.  (Ibid.)  Here, all parties agree that our review is limited to the 
express preemption provision of the FAAAA.  (Rowe v. New Hampshire Motor 
Transp. Assn. (2008) 552 U.S. 364, 368 (Rowe); see American Airlines, Inc. v. 
Wolens (1995) 513 U.S. 219, 222-223 (Wolens) [construing similar express 
preemption clause of the ADA]; Morales v. Trans World Airlines, Inc. (1992) 504 
U.S. 374, 383-384 (Morales) [same].) 
We recently observed that “[t]he United States Supreme Court has 
identified ‘two cornerstones’ of federal preemption analysis.  [Citation.]  First, the 
question of preemption ‘ “fundamentally is a question of congressional intent.” ’  
[Citations.]  If a statute ‘contains an express pre-emption clause, our “task of 
statutory construction must in the first instance focus on the plain wording of the 
clause, which necessarily contains the best evidence of Congress’s pre-emptive 
intent.” ’  [Citations.]  ‘ “Also relevant, however, is the ‘structure and purpose of 
the statute as a whole,’ [citation] as revealed not only in the text, but through the 
reviewing court’s reasoned understanding of the way in which Congress intended 
the statute and its surrounding regulatory scheme to affect business, consumers, 
and the law.” ’  [Citation.]”  (Brown, supra, 51 Cal.4th at pp. 1059-1060; see 
Wyeth v. Levine (2009) 555 U.S. 555, 565 (Wyeth); Morales, supra, 504 U.S. at p. 
383; In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1265 (Tobacco Cases II).) 
“ ‘Second, “[i]n all pre-emption cases, and particularly in those in which 
Congress has ‘legislated . . . in a field which the States have traditionally 
occupied,’ . . . we ‘start with the assumption that the historic police powers of the 
States were not to be superseded by the Federal Act unless that was the clear and 
manifest purpose of Congress.’ ” ’  [Citations.]”  (Brown, supra, 51 Cal.4th at p. 
1060.)  This is known as the presumption against preemption, and its role is to “ ‘ 
“provide[] assurance that ‘the federal-state balance’ [citation] will not be disturbed 
6 
unintentionally by Congress or unnecessarily by the courts.” ’  [Citation.]”  (Ibid.; 
see Wyeth, supra, 555 U.S. at p. 565; Tobacco Cases II, supra, 41 Cal.4th at p. 
1265.)  The high court, however, in response to a state’s argument for a “ ‘public 
health’ ” exception to FAAAA preemption, has stated that the FAAAA creates no 
exemption for state  “laws that it would otherwise pre-empt.”  (Rowe, supra, 552 
U.S. at p. 374; accord, DiFiore v. American Airlines, Inc. (1st Cir. 2011) 646 F.3d 
81, 86 [neither Rowe, nor Morales, nor Wolens “adopted [the] position . . . that we 
should presume strongly against preempting in areas historically occupied by state 
law”].) 
With these principles in mind, we turn to the FAAAA’s express preemption 
provision.  In analyzing the provision, we rely on the analytical framework 
provided by the high court’s jurisprudence on the subject.  
C.  The FAAAA 
The United States Supreme Court recently explained the history and 
purpose of the FAAAA:  “In 1978, Congress ‘determin[ed] that “maximum 
reliance on competitive market forces” ’ would favor lower airline fares and better 
airline service, and it enacted the [ADA].”  (Rowe, supra, 552 U.S. at pp. 367-
368.)  “In order to ‘ensure that the States would not undo federal deregulation with 
regulation of their own,’ that Act ‘included a pre-emption provision’ that said ‘no 
State . . . shall enact or enforce any law . . . relating to rates, routes, or services of 
any air carrier.’ ” 1  (Rowe, at p. 368.) 
                                              
1 
“Reenacting Title 49 of the U.S. Code in 1994, Congress revised this clause 
to read: [¶] ‘. . . related to a price, route, or service . . . .’  Congress intended the 
revision to make no substantive change.  Pub.L. 103-272, § 1(a), 108 Stat. 745.”  
(Wolens, supra, 513 U.S. at p. 223, fn. 1.)  The terms “rates” and “prices” will be 
used interchangeably. 
7 
“In 1980, Congress deregulated trucking.”  (Rowe, supra, 552 U.S. at p. 
368, citing Motor Carrier Act of 1980 (Pub.L. No. 96-296 (July 1, 1980) 94 Stat. 
793).)  “[I]n 1994, Congress similarly sought to pre-empt state trucking 
regulation.”  (Rowe, at p. 368, citing FAAAA, 108 Stat. 1569, 1605-1606 & 
Interstate Commerce Com. Termination Act of 1995 (Pub.L. No. 104-88 (Dec. 29, 
1995) 109 Stat. 803, 899).)  “In doing so, it borrowed language from the [ADA] 
and wrote into its 1994 law language that says:  ‘[A] State . . . may not enact or 
enforce a law . . . related to a price, route, or service of any motor carrier . . . with 
respect to the transportation of property.’ ”  (Rowe, at p. 368, quoting 49 U.S.C. 
§ 14501(c)(1); see ibid., citing 49 U.S.C. § 41713(b)(4)(A) [similar provision for 
combined motor-air carriers)].)2  Specifically, the FAAAA was intended to 
prevent state regulatory practices including “entry controls, tariff filing and price 
regulation, and [regulation of] types of commodities carried.”  (H.R. Conf. Rep. 
No. 103-677, 2d Sess., p. 86 (1994), reprinted at 1994 U.S. Code Cong. & Admin. 
News, p. 1758.)    
In Morales, the Supreme Court set out fundamental principles that define 
the scope of ADA preemption.  (Morales, supra, 504 U.S at pp. 388-390.)  
                                              
2 
The full text of title 49 United States Code section 14501(c)(1) provides: 
“(1) General rule.—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 (other than a carrier 
affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor 
private carrier, broker, or freight forwarder with respect to the transportation of 
property.”  Paragraph (2) discusses three exempt matters: (1) state regulation of 
motor vehicle safety, highway controls, and minimum amounts of insurance; (2) 
household goods; and (3) tow trucks.  (Id., § 14501(c)(2).)  Paragraph (3) deals 
with “Continuation” of “State standard transportation practices,” such as “uniform 
bills of lading or receipts” and “antitrust immunity for joint line rates . . . .”  (Id., 
§ 14501(c)(3).) 
8 
Morales called for an analysis of the underlying state regulations on advertising to 
determine if they related to carrier prices.  After finding that “every one” of the 
state guidelines on advertising at issue bore a “ ‘reference to airfares,’ ” the court 
held that the ADA preempted the claims of a coalition of state attorneys general 
who threatened to use consumer protection laws to enforce state advertising 
regulations against airlines.  (Morales, at p. 388.)  Morales did not address 
whether the advertising guidelines derived from the enactment or enforcement of 
state law.  Instead, the court found that the state advertising regulations were 
preempted because they required that advertisements referencing airfares clearly 
state any applicable “variations in fares” as well as any “material restrictions on 
the fares’ availability,” and that airlines make advertised fares “available in 
sufficient quantities to ‘meet reasonably foreseeable demand.’ ”  (Id. at p. 387.)  
“[V]iolations of these requirements would give consumers a cause of action . . . 
for an airline’s failure to provide a particular advertised fare — effectively 
creating an enforceable right to that fare . . . .”  (Id. at p. 388.)     
In addition, the state regulations had a “forbidden significant effect on 
fares” (Morales, supra, 504. U.S. at p. 388, italics added) because the restrictions 
on fare advertising increased consumer difficulty in determining the lowest cost.  
“ ‘[W]here consumers have the benefit of price advertising, retail prices often are 
dramatically lower than they would be without advertising.’ ”  (Id. at p. 388.)  
Morales did suggest that “ ‘[s]ome state actions may affect [airline fares] in too 
tenuous, remote, or peripheral a manner’ to have pre-emptive effect.”  (Id. at p. 
390.)  But the court expressed “ ‘no views about where it would be appropriate to 
draw the line’ ” because the case before it did “not present a borderline question.”  
(Ibid.)  
The Supreme Court’s “second encounter with the ADA’s preemption 
clause” arose in the context of a consumer fraud claim that sought to enjoin 
9 
American Airlines from devaluing the benefits associated with its frequent flyer 
program.  (Wolens, supra, 513 U.S. at p. 223.)  Wolens decided whether a claim 
brought under the Illinois consumer fraud act fell within the ADA’s proscription 
that “ ‘[N]o State . . . shall enact or enforce any law’ ” relating to price, route, or 
service.  (Wolens, at pp. 222-223.)  The court held that the consumer fraud act 
constituted state enforcement of a law relating to price, because it “serve[d] as a 
means to guide and police the marketing practices of airlines.”  (Wolens, at p. 228; 
see Northwest, Inc. v. Ginsberg (2014) 572 U.S. ___ [134 S.Ct. 1422] [ADA 
preempts state law claim for Northwest Airlines’s breach of implied covenant of 
good faith and fair dealing regarding changes to its frequent flyer program].)   
The Supreme Court incorporated the holdings of Morales and Wolens in the 
FAAAA context when it decided Rowe, supra, 552 U.S. 364.  Because in Morales 
the high court had previously interpreted the same language as contained in the 
1978 ADA, and Congress endorsed this interpretation, the Rowe court followed 
Morales’s interpretation of the ADA in order to interpret the FAAAA.  (Rowe, 
supra, 552 U.S. at pp. 370-371.)  Initially, Rowe observed that FAAAA 
preemption applies only to claims that (1) derive from the enactment or 
enforcement of state law, and (2) relate to a motor carrier’s prices, routes, or 
services with respect to the transportation of property.  (Rowe, supra, 552 U.S. at 
pp. 370-372.)  Rowe held that the FAAAA preempted a provision of Maine’s 
tobacco delivery law that required tobacco distributors to utilize a delivery service 
that would verify whether “the person to whom the package [was] addressed [was] 
of legal age to purchase tobacco.”  (Rowe, at p. 368.)  The court conceded that an 
initial review of the regulation might make it appear applicable to shippers rather 
than carriers.  However, the court observed that the effect of Maine’s law would 
be substantial because “carriers will have to offer tobacco delivery services that 
10 
differ significantly from those that, in the absence of the regulation, the market 
might dictate.”  (Id. at p. 372.)   
More recently, in Dan’s City Used Cars, Inc. v. Pelkey (2013) 569 U.S. ___ 
[133 S.Ct. 1769] (Dan’s City), the plaintiff brought suit under various state laws, 
including the New Hampshire Consumer Protection Act, to recover damages from 
a defendant who towed the plaintiff’s car and traded it to a third party without 
compensating the plaintiff.  (Dan’s City, supra, 569 U.S. at p.___ [133 S.Ct. at p. 
1775].)  The court initially noted that where Congress has superseded state 
legislation by statute, its duty is to focus on the statutory language in order to 
“ ‘identify the domain expressly pre-empted.’ ”  (Id. at p. __ [133 S.Ct. at p. 
1778].)  The court observed that “it is not sufficient that a state law relates 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.’  [Citation.]  [¶] Title 49 
defines ‘transportation,’ in relevant part, as ‘services related to th[e] movement’ of 
property, ‘including arranging for . . . storage [and] handling . . . .’ ”  (Dan’s City, 
at p. __ [133 S.Ct. at pp. 1778-1779].)  These fall within the FAAAA’s ambit 
“only when those services ‘relat[e] to th[e] movement” of property.”  (Id. at p. __ 
[133 S.Ct. at p. 1779].)  Because the FAAAA preempts only state laws that relate 
to motor carrier “ ‘price, route, or service . . . with respect to the transportation of 
property,’ ” a unanimous court held that the plaintiff’s state law claims, including 
his claim under New Hampshire’s consumer protection act, were unrelated to the 
transportation or service of a motor carrier.  (Id. at p. __ [133 S.Ct. at p. 1775], 
italics omitted.) 
Dan’s City determined that the New Hampshire law did not run afoul of the 
congressional purpose behind the FAAAA, namely, to prevent individual states 
from substituting their “ ‘own governmental commands for competitive market 
forces in determining . . . the services that motor carriers will provide.’ ”  (Dan’s 
11 
City, supra, 569 U.S. at p. __ [133 S.Ct. at p. 1780].)  The law in question did not 
“constrain participation in interstate commerce by requiring a motor carrier to 
offer services not available in the market.  Nor [did it] ‘freez[e] into place services 
that carriers might prefer to discontinue in the future.’ ”  (Ibid.)     
Morales, Wolens, Rowe, and Dan’s City each establish when a claim is 
expressly preempted.  (See, e.g., Tanen v. Southwest Airlines Co. (2010) 187 
Cal.App.4th 1156, 1166-1167.)  Based on these cases, in order to find FAAAA 
preemption here, defendants must show that the People’s UCL claim (1) derives 
from the enactment or enforcement of state law, and (2) relates to Pac Anchor’s 
prices, routes, or services with respect to the transportation of property.  (Rowe, 
supra, 552 U.S. at pp. 370-372.)  Because the People concede the UCL claim 
against Pac Anchor derives from the enforcement of state law, the issue narrows to 
whether the People’s claim “relate[s] to” Pac Anchor’s price, route, or service 
“with respect to the transportation” of property.  (49 U.S.C. § 14501(c)(1).) 
Defendants make two preemption arguments:  First, they assert that the 
FAAAA facially preempts all claims against motor carriers brought under 
California’s UCL; second, they argue that the People’s particular UCL claim is 
preempted as applied to this case.  We turn to the facial preemption argument first.   
D.  Facial Preemption of California’s UCL  
Defendants contend that UCL claims against motor carriers are facially 
preempted because they regulate the effect that unfair business practices have on 
the quality and price of goods and services.  They rely on Fitz-Gerald, which held 
that the ADA preempted a UCL claim based on state minimum wage laws because 
Morales and Wolens “held that claims under a state unfair business practices 
statute are preempted.”  (Fitz-Gerald, supra, 155 Cal.App.4th at p. 423.)  The 
Court of Appeal here rejected the argument, holding that when a cause of action is 
based on allegations of unlawful violations of the state’s labor and employment 
12 
laws, there is no reason to find preemption simply because the pleading raises 
these issues under the UCL, as opposed to separate causes of action.  The People 
add that the UCL’s application here does not interfere with the FAAAA’s 
regulations because that act preempts only state regulations that are specifically 
“related to” the “price, route, or service” of motor carriers for violations involving 
the “transportation of property.”  (See 49 U.S.C. § 14501(c)(1).)  As we explain, 
the Court of Appeal and the People have the better interpretation. 
The UCL’s “scope is broad,” and its coverage is “ ‘sweeping.’ ”  (Cel-Tech, 
supra, 20 Cal.4th at p. 180; see Zhang v. Superior Court (2013) 57 Cal.4th 364 
[analyzing a UCL claim against an insurance company].)  It defines unfair 
competition to “mean and include any unlawful, unfair or fraudulent business act 
or practice and unfair, deceptive, untrue or misleading advertising.”  (Bus. & Prof. 
Code, § 17200.)  The UCL does not mention motor carriers, or any other industry 
for that matter; it is a law of general application.  In Tobacco Cases II, we held 
that, as a general matter, the UCL is not subject to preemption on its face by the 
Federal Cigarette Labeling and Advertising Act (15 U.S.C. § 1331 et seq.), which 
governs cigarette sales to minors, because it “is a law of general application, and it 
is not based on concerns about smoking and health.”  (Tobacco Cases II, supra, 41 
Cal.4th at p. 1272; see Dan’s City, supra, 569 U.S. at pp. __ [133 S.Ct. at pp. 
1778-1779] [FAAAA does not preempt state consumer protection law of general 
application].)  Similarly, here the FAAAA embodies Congress’s concerns about 
regulation of motor carriers with respect to the transportation of property; a UCL 
action that is based on an alleged general violation of labor and employment laws 
does not implicate those concerns.   
Indeed, defendants have conceded, as they must, that the FAAAA does not 
preempt generally applicable employment laws that affect prices, routes, and 
services.  (See, e.g., Californians for Safe Dump Truck Transp. v. Mendonca (9th 
13 
Cir. 1998) 152 F.3d 1184, 1190 (Mendonca) [holding that the FAAAA does not 
preempt California’s prevailing wage law when enforced against transportation 
companies].)  Mendonca emphasized that in drafting the FAAAA, Congress 
observed that 10 jurisdictions had not enacted laws to regulate intrastate prices, 
routes, or services, despite the fact that seven of those states had wage and hour 
provisions similar to California’s.  (Mendonca, at p. 1187.)  Mendonca concluded 
that Congress’s observation that those seven states did not regulate prices, routes, 
or services “constitute[d] indirect evidence that Congress did not intend to 
preempt” the regulations there at issue.  (Id. at p. 1188.)  We observe that all 10 of 
the jurisdictions identified in Mendonca had unfair competition laws or deceptive 
trade practices statutes in force at the time Congress passed the FAAAA and that 
Congress did not perceive these laws as implicating regulation of prices, routes, or 
services. (See Alaska Stat. § 45.50.471 [prohibiting “unfair methods of 
competition” and “unfair or deceptive acts or practices]; Ariz. Rev. Stat. § 44-
1522 [prohibiting deceptive practices in employment]; see also Del. Code Ann. tit. 
6, § 2513 [prohibiting deceptive practices in employment]; D.C. Code § 28-3904 
[enacting a broad deceptive practices prohibition]; Fla. Stat. § 501.204 [broadly 
prohibiting deceptive and unconscionable trade practices]; Me. Rev. Stat. Ann. tit. 
5, § 207 [prohibiting unfair or deceptive practices in competition]; Md. Code 
Ann., Com. § 13-303 [restricting unfair or deceptive trade practices]; N.J. Stat. 
Ann. § 56:8-2 [prohibiting fraud and deceptive trade practices]; Vt. Stat. Ann. tit. 
9, § 2453 [prohibiting unfair trade practices in commerce]; Wis. Stat. § 100.20 
[providing that business methods and competition in business must be fair].)   
Dan’s City impliedly approved Mendonca’s reasoning on this point.  Like 
Mendonca, Dan’s City expressly incorporated an earlier federal employee 
retirement income security act (ERISA) preemption case into its FAAAA analysis.  
(Dan’s City, supra, 569 U.S. at p. __ [133 S.Ct. at p. 1778], citing New York State 
14 
Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. (1995) 514 
U.S. 645, 655-656 (Travelers); see Mendonca, supra, 152 F.3d at pp. 1188-1189.)  
As Mendonca noted, Travelers rejected the notion that under ERISA’s broad 
preemption provision, Congress intended to preempt “basic regulation of 
employment conditions” even though such regulation “will invariably affect the 
cost and price of services.”  (Travelers, supra, 514 U.S. at p. 660.)  Thus, we hold 
that the FAAAA does not facially preempt the People’s UCL action in this case.  
To the extent Fitz-Gerald v. SkyWest, Inc., supra, 155 Cal.App.4th 411, is 
inconsistent with the above analysis and conclusion, we disapprove it. 
E.  The People’s UCL Action as Applied 
Defendants also challenge the People’s action as applied under the 
FAAAA.  They note that the People assert a single cause of action under the UCL, 
premised on violations of the Unemployment Insurance Code, the Labor Code, 
and IWC Wage Order No. 9.  Defendants contend that under the facts of this case, 
the People’s action actually seeks to regulate motor carrier competition (i.e., 
prices, routes, or services) directly, by coupling the UCL with various provisions 
of Unemployment Insurance Code, Labor Code, and IWC Wage Order No. 9.  The 
People counter that they filed the UCL claim because defendants sought to evade 
the financial and administrative responsibilities of these laws, and compete 
unfairly, by misclassifying their truck drivers as independent contractors.  The 
UCL action, the People argue, is independent of  defendants’ prices, routes, or 
services with respect to the transportation of property.  We agree.   
In Morales, the high court held that state airline advertising guidelines 
related to airfares, because the guidelines required airlines to disclose material 
restrictions on price, and “effectively creat[ed] an enforceable right to that fare 
when the advertisement fail[ed] to include the mandated . . . disclaimers.”  
(Morales, supra, 504 U.S. at p. 388.)  Morales calls for an analysis of the 
15 
underlying state regulations to see if they relate to motor carrier prices, routes, or 
services when enforced through the UCL.   
The sections of the Labor Code and the Unemployment Insurance Code 
that anchor the People’s UCL claim make no reference to motor carriers, or the 
transportation of property.  Rather, they are laws that regulate employer practices 
in all fields and simply require motor carriers to comply with labor laws that apply 
to the classification of their employees.  In fact, defendants concede “that those 
state employment laws . . . are laws of general application whose effects on the 
carriers’ prices, routes, and services is remote.”  Defendants do not concede the 
point with respect to IWC Wage Order No. 9.  Although IWC Wage Order No. 9 
regulates wages, hours, and working conditions “in the transportation industry,” 
the sections on which the People rely do not refer to prices, routes, or services.  
Section 4 governs minimum wage requirements, and section 7 governs employer 
recordkeeping.  If sections 4 and 7 have an effect on defendants’ prices, routes, or 
services, that effect is indirect, and thus falls outside the scope of the test set forth 
in Morales.  For this reason, we also reject defendants’ argument that the FAAAA 
facially preempts sections 4 and 7 of IWC Wage Order No. 9.  
Defendants next argue that the People’s UCL claim, will significantly 
affect motor carrier prices, routes, and services because its application will prevent 
their using independent contractors, potentially affecting their prices and services. 
Defendants claim that if the People’s UCL action is successful, they will have to 
reclassify their drivers as employees, driving up their cost of doing business and 
thereby affecting market forces. 
The defendants’ assertion that the People may not prevent them from using 
independent contractors is correct, but its characterization of the People’s UCL 
claim is not.  Nothing in the People’s UCL action would prevent defendants from 
using independent contractors.  The People merely contend that if defendants pay 
16 
individuals to drive their trucks, they must classify these drivers appropriately and 
comply with generally applicable labor and employment laws.   
Dan’s City observed that the “target at which [Congress] aimed” the 
FAAAA was “ ‘a State’s direct substitution of its own governmental commands 
for competitive market forces in determining (to a significant degree) the services 
that motor carriers will provide.’ ”  (Dan’s City, supra, 569 U.S. at p. __ [133 
S.Ct. at p. 1780]; see Columbus v. Ours Garage & Wrecker Service, Inc. (2002) 
536 U.S. 424, 449 (dis. opn. of Scalia, J.) [recognizing FAAAA preemption is 
limited to laws and regulations that single out for special treatment motor carriers 
of property; states remain free to enforce general regulations not targeting motor 
carriers regarding transportation of property].) 
Dan’s City emphasized the FAAAA limiting phrase “with respect to the 
transportation of property,” which strongly supports a finding that California labor 
and insurance laws and regulations of general applicability are not preempted as 
applied under the FAAAA, even if they form the basis of the People’s UCL action.  
(See California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., 
Inc. (1997) 519 U.S. 316, 334 [relying on Travelers to conclude that ERISA does 
not preempt California’s prevailing wage law].)  The laws invoked here apply to 
all employers, not just trucking companies.  As we noted earlier, Mendonca 
concluded that California’s generally applicable prevailing wage laws were not 
preempted by the FAAAA in part because several states Congress identified as not 
having laws regulating interstate trucking had prevailing wage laws in place at the 
time the FAAAA was enacted.  (Ante, at p. 13.)  Similarly, eight out of the 10 
jurisdictions identified in Mendonca had generally applicable laws governing 
when a worker is an independent contractor (or the equivalent) and when a worker 
is an employee.  (See Alaska Stat. § 23.20.525; Ariz. Rev. Stat. § 23-902; Del. 
Code Ann. tit. 19, § 3302; Fla. Stat. § 440.02; Me. Rev. Stat. Ann. tit. 26, § 1043; 
17 
N.J. Stat. Ann. § 43.21-19; Vt. Stat. Ann. tit. 21, § 1301; Wis. Stat. §§ 102.07, 
108.02.)  Thus even though the People’s UCL action may have some indirect 
effect on defendants’ prices or services, that effect is “ ‘too tenuous, remote, [and] 
peripheral . . . to have pre-emptive effect.’ ”  (Morales, supra, 504 U.S. at p. 390.)  
Defendants also contend that the People’s UCL claim should be preempted, 
even if its effect on motor carrier transportation is remote, because it threatens 
Congress’s deregulatory purpose.  In Rowe, the high court stated that “pre-emption 
occurs at least where state laws have a ‘significant impact’ related to Congress’s 
deregulatory and pre-emption-related objectives.”  (Rowe, supra, 552 U.S. at p. 
371.)  Congress passed the FAAAA in order to end a patchwork of state 
regulations.  However, nothing in the congressional record establishes that 
Congress intended to preempt states’ ability to tax motor carriers, to enforce labor 
and wage standards, or to exempt motor carriers from generally applicable 
insurance laws.  (See Mendonca, supra, 152 F.3d at pp. 1187-1188 [Congress did 
not intend ADA to preempt Cal. prevailing wage law]; see also Rice v. Santa Fe 
Elevator Corp. (1947) 331 U.S. 218, 230 [matters traditionally within state’s 
police powers not preempted unless Congress’s intent to do so is manifest].) 
Defendants argue additionally that the People’s UCL claim conflicts with 
Congress’s deregulatory purpose because it erects the very entry control that 
Congress intended to dismantle.  The congressional record does show that 
Congress disapproved of a California law that denied advantageous regulatory 
exemptions to motor carriers who used a large proportion of independent 
contractors.  (See H.R. Conf. Rep. No. 103-677, 2d Sess., p. 87, supra, reprinted at 
1994 U.S. Code Cong. & Admin. News, p. 1759.)  As we have noted, however, 
defendants’ claim is factually inaccurate because the People’s UCL action does 
not encourage employers to use employee drivers rather than independent 
contractors.  Defendants are free to use independent contractors as long as they are 
18 
properly classified.  The People’s sole premise for invoking the UCL is to ensure 
that employers properly classify their employees or independent contractors in 
order to conform to state law. 
 
 
 
 
CONCLUSION 
For the reasons stated, we hold that 49 U.S.C. section 14501(c) does not 
preempt the People’s UCL action.  We therefore affirm the Court of Appeal’s  
judgment.  We leave it to that court to decide how to address the remaining issues 
on remittitur.  (On remand, the trial court will have to address the merits of the 
case, i.e., whether the defendants actually misclassified their employees as 
independent contractors.)  
 
CHIN, J. 
WE CONCUR: 
 
CANTIL-SAKAUYE, C. J. 
BAXTER, J. 
WERDEGAR, J. 
CORRIGAN, J. 
LIU, J. 
ARONSON, J.* 
 
 
 
 
 
 
 
 
 
 
 
 
 
_____________________________ 
* Associate Justice of the Court of Appeal, Fourth Appellate District, Division 
Three, assigned by the Chief Justice pursuant to article VI, section 6 of the 
California Constitution.
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion People ex rel. Harris v. Pac Anchor Transportation, Inc. 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 195 Cal.App.4th 765 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S194388 
Date Filed: July 28, 2014 
__________________________________________________________________________________ 
 
Court: Superior 
County: Los Angeles 
Judge: Elizabeth Allen White 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Edmund G. Brown, Jr., and Kamala D. Harris, Attorneys General, Dane R. Gillette and Mark J. Breckler, 
Chief Assistant Attorneys General, Martin Goyette, Assistant Attorney General, Jon M. Ichinaga, Amy J. 
Winn and Satoshi Yanai, Deputy Attorneys General, for Plaintiff and Appellant. 
 
Davis Cowell & Bowe, Richard G. McCracken and Andrew J. Kahn for Los Angeles Alliance for a New 
Economy and International Brotherhood of Teamsters as Amici Curiae on behalf of Plaintiff and Appellant. 
 
Sands Lerner, Cox Wootton Lerner Griffin Hansen & Poulos, Neil S. Lerner; Trident Law and Arthur A. 
Severance for Defendants and Respondents. 
 
Fred J. Hiestand for the Civil Justice Association of California as Amicus Curiae on behalf of Defendants 
and Respondents. 
 
Law Offices of Stephen Glick, Stephen Glick and Anthony Jenkins for Salvador Rodriguez as Amicus 
Curiae on behalf of Defendants and Respondents. 
 
Holland & Knight and Linda Auerach Allderdice for California Trucking Association as Amicus Curiae on 
behalf of Defendants and Respondents. 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Satoshi Yanai 
Deputy Attorney General 
300 South Spring Street, Suite 1702 
Los Angeles, CA  90013 
(213) 897-0015 
 
Neil S. Lerner 
Cox Wootton Lerner Griffin Hansen & Poulos 
12400 Wilshire Boulevard, Suite 1300 
Los Angeles, CA  90025 
(310) 979-9144