Posts belonging to Category Government & Regulation

U.S. Gov’t: FAAAA Does Not Preempt CA Meal and Rest Break Law

The federal government filed nearly-identical amicus curiae briefs in two cases pending before the U.S. Court of Appeal for the Ninth Circuit, arguing that the Federal Aviation Administration Authorization Act (“FAAAA”) does not preempt California’s meal and rest break law. See United States Amicus Brief, Dilts v. Penske Logistics, LLC, 9th Cir., No. 12-55705 (available here) and United States Amicus Brief, Campbell v. Vitran Express, 9th Cir., No. 12-56250 (available here). At issue is an FAAAA provision which provides that 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.” 49 U.S.C. § 14501(c)(1).

The plaintiffs, delivery drivers for Penske Logistics LLC and Vitran Express, had appealed their respective district court orders holding that the FAAAA preempted their California meal and rest break claims. The Ninth Circuit invited attorneys from the Department of Transportation, the Federal Motor Carrier Safety Administration, and the Department of Justice to state their views on the preemption issue. In amicus briefs filed on February 18, 2014, the government argued that California’s meal and rest break law has no significant effect on motor carrier prices, routes, or services, taking the position that it is “squarely within the states’ traditional power to regulate the employment relationship and to protect worker health and safety. Moreover, it is a law of longstanding, general applicability and does not reflect any state effort to regulate motor carriers directly.” Vitran Amicus Brief at 10-11.

The government further argued that California’s meal and rest break law does not conflict with and is not otherwise preempted by federal regulations because it does not specifically address commercial motor vehicle safety and is not incompatible with federal safety standards. Moreover, because plaintiffs were short-haul commercial drivers operating exclusively in intrastate commerce, federal regulations governing the number of hours a commercial motor vehicle carrier may drive without a break were inapplicable and not in conflict with state law. Finally, the government argued that its views on preemption should be accorded deference.

Oral argument in both cases is set for March 3, 2014.

US v. Apple: eBook Antitrust Ruling Reveals Conspiracy Between Apple and Publishers, Efficacy of Antitrust Enforcement

In a particularly vivid exemplar of the renewed potency of antitrust enforcement, District Judge Denise Cote, of the influential Southern District of New York, recently ruled that Apple had violated antitrust law by conspiring with publishers to raise retail prices of eBooks and to eliminate retail price competition. See United States v. Apple, Inc., No. 12-2826, Opinion & Order (S.D.N.Y. July 10, 2013) (available here).

As Judge Cote summarizes, “Apple and the Publisher Defendants shared one overarching interest — that there be no price competition at the retail level,” and the plan was largely successful. Opinion at 11. The crux of the problem, as Apple viewed it, was that Amazon’s pricing was too low for Apple to make a profit. “Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50% or more for an individual title. Virtually overnight, Apple got an attractive, additional feature for its iPad and a guaranteed new revenue stream, and the Publisher Defendants removed Amazon’s ability to price their e-books at $9.99.” Opinion at 12.

Apple thus set in motion a plan to conspire with publishers to force Amazon to raise its prices. To do so, Apple proposed that publishers adopt the “agency model” for eBooks, by which a publisher sets the retail price of the book, and the eBook store would then take 30 percent of that price. The agency model is reflected in the frequent apology seen at eBook sites such as Apple’s, noting that “prices are set by publishers” — a statement that is stunningly disingenuous in light of the close, conspiratorial relationship between Apple and the publishers.

After negotiating deals with Apple, five major publishers approached Amazon simultaneously with an offer it couldn’t refuse — either Amazon could move over to the new, higher-priced agency model, or it would have to wait months to begin selling best-selling titles in its store. See Opinion at 64-72. Only by colluding could the play work, because if any single publisher approached Amazon, Amazon could have balked and removed that publisher’s titles from the Kindle Store. Id.

The opinion documents Apple’s plan to undermine the dominance of Amazon and its Kindle in the emerging e-book technology, and with reference to astonishingly candid evidence including internal Apple emails and memos. In its initial meeting with publishers to discuss the conspiracy to fix prices, Apple outlined a strategy categorically at odds with U.S. antitrust laws, stating that the company “cannot tolerate a market where the product is sold significantly more cheaply elsewhere.” Opinion at 33.

Originally, the federal government had sued Apple along with the five other publishers — Lagardere SCA’s Hachette Book Group Inc and Macmillan, News Corp’s HarperCollins Publishers LLC, Pearson Plc’s Penguin Group (USA) Inc and CBS Corp’s Simon & Schuster Inc —in April of 2012. However, while the publishers settled with the government, Apple insisted they had done nothing wrong—a stance that Apple continues to hold in the wake of this week’s ruling, vowing to appeal to the Second Circuit.

Proposed Overtime Legislation Passes House, Faces Uphill Battle in Senate

Republicans in Congress are pushing a bill that would amend a cornerstone provision of the Fair Labor Standards Act of 1938: overtime pay for more than 40 hours of work in a week. Under the proposal, private sector employees would have the same flexibility as do most government workers in choosing between the familiar time-and-a-half overtime pay or converting overtime hours into time off, known as “comp time.”

Republicans advocating for the bill’s passage have argued that the choice between comp time and overtime pay makes sense in a modern economy in which parents often struggle to spend more time with their children, and would value the chance to do so more than additional pay. The bill is seen as an attempt by Republicans to apply free-market principles that optimize individual choice and benefit average working people, following an election in which a substantial proportion of swing voters were alienated by the party’s perceived indifference to middle-class workers and close relationship with “the 1%.”

Democrats largely oppose the bill, contending that it would create an incentive for employers to pressure workers to opt against overtime pay, and would provide no assurance that workers would or could actually use the time off. President Obama has indicated that he would veto the bill if it is passed without sufficient protections for workers who prefer traditional overtime pay to comp time. The Republican-controlled House of Representatives has passed the bill by a 223-204 margin, which now faces a steep challenge in the Democrat-controlled Senate. Indeed, it is not even clear if the measure will be taken up on the Senate floor.

NPR Exposes Widespread “Wage Theft” in Texas Construction Industry

Identifying a convergence of factors, including a large and eager supply of immigrant labor and a $54 billion-per-year construction industry, NPR has documented widespread “wage theft” in Texas, with many workers being paid about half of the federal minimum wage or even less.

The NPR story references an extensive University of Texas, Austin report (available here) that examined Texas’ working conditions and found low wages and serious safety risks to be a staple of the state’s construction projects. The safety findings are especially stark. Though often assailed for its excessive regulation (and thereby used as a counterpoint in Texas’ marketing campaigns), California has an exceptionally low workplace fatality rate: 5.2 per deaths per 100,000 workers, well below the national average of 8.8. Texas (going big, as it often does) has the highest death rate in the country at 10.7 per 100,000, more than double that of California.

While NPR and the UT report cited numerous forms of malfeasance, the most popular appears to be misclassifying ordinary workers as “subcontractors,” which allows employers to essentially treat workers like they are independent companies rather than employees. Employers use this tactic to circumvent labor and employment laws (which provide workers with basic entitlements such as overtime, meal breaks and rest breaks), and avoid paying Social Security and payroll taxes. Thus, in addition to robbing vulnerable workers of their hard-earned wages, these fraudulent transactions cost Texas and the federal government billions in revenue every year.