NATIONAL RAILROAD PASSENGER CORPORATION, Amtrak; BNSF RAILWAY COMPANY; UNION PACIFIC RAILROAD COMPANY; LOS ANGELES JUNCTION RAILWAY; TTX COMPANY; CENTRAL CALIFORNIA TRACTION COMPANY v. JULIE A. SU, in her official capacity as Labor Commissioner, State of California Division of Labor Standards Enforcement
Nos. 21-15816, 21-15825
United States Court of Appeals for the Ninth Circuit
July 26, 2022
D.C. No. 2:15-cv-00924-KJM-JDP
FOR PUBLICATION
Plaintiffs-Appellees,
v.
Defendant-Appellant,
BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND TRAINMEN; BROTHERHOOD OF MAINTENANCE OF WAY EMPLOYEES; BROTHERHOOD OF RAILROAD SIGNALMEN; INTERNATIONAL ASSOCIATION OF SHEET METAL, AIR, RAIL AND TRANSPORTATION WORKERS; INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS; NATIONAL CONFERENCE OF FIREMEN & OILERS DISTRICT OF LOCAL 32BJ,
Intervenor-Defendants-Appellants-Intervenors.
Appeal from the United States District Court for the Eastern District of
Kimberly J. Mueller, Chief District Judge, Presiding
Argued and Submitted March 17, 2022
San Francisco, California
Filed July 26, 2022
Opinion by Judge Bress
* The Honorable Barbara M. G. Lynn, Chief United States District Judge for the Northern District of Texas, sitting by designation.
SUMMARY**
Railroad Unemployment Insurance Act / Preemption
Affirming the district court‘s summary judgment in favor of National Railroad Passenger Corporation and other railroad companies, the panel held that, as to railroad employees, the federal Railroad Unemployment Insurance Act preempts California‘s Healthy Workplaces, Healthy Families Act, which requires employers to provide employees with paid sick leave that they may use for specified purposes.
RUIA provides unemployment and sickness benefits to railroad employees, and it contains an express preemption provision disallowing railroad employees from having any right to “sickness benefits under a sickness law of any State.” Looking to the plain meaning of the statutory text, the panel concluded that the preemption provision broadly refers to compensation or other assistance provided to employees in connection with physical or mental well-being. The panel concluded that RUIA‘s statutory framework and stated purposes confirm the breadth of its preemptive effect.
The panel held that, as applied to railroad employees, the California Act falls within RUIA‘s preemption clause because, properly considered in light of RUIA‘s plain text and structure, the California Act is a “sickness law” that provides “sickness benefits.”
** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
Agreeing with the First Circuit, the panel found unpersuasive an argument by the California Labor Commissioner and union-intervenors that RUIA does not preempt the California Act as to railroad employees because the benefits the Act offers are different in kind than RUIA‘s benefits. The panel also found unpersuasive (1) an argument that RUIA should be interpreted as preempting only the kinds of state laws that existed at the time RUIA was amended to provide for sickness benefits; and (2) various textual arguments in support of a narrower interpretation of the preemption provision.
COUNSEL
Kristin A. Liska (argued), Deputy Attorney General; Heather Hoesterey and Anthony Hakl, Supervising Deputy Attorneys General; Thomas S. Patterson, Senior Assistant Attorney General; Rob Bonta, Attorney General; Office of the Attorney General, San Francisco, California; for Defendant-Appellant.
Lucas R. Aubrey, Sherman Dunn P.C., Washington, D.C.; Erika A. Diehl-Gibbons, Associate General Counsel, SMART-TD, North Olmsted, Ohio; Richard Edelman, Mooney Green Saindon Murphy and Welch PC, Washington, D.C.; Josh D. McInerney, Wentz McInerney Peifer & Petroff LLC, Powell, Ohio; for Intervenor-Defendants-Appellants-Intervenors.
Donald J. Munro (argued), Anthony J. Dick, and H. Hunter Bruton, Jones Day, Washington, D.C.; Kelsey A. Israel-Trummel, Jones Day, San Francisco, California; for Plaintiffs-Appellees.
OPINION
BRESS, Circuit Judge:
The Railroad Unemployment Insurance Act (RUIA) is a federal law that provides the exclusive source of unemployment and sickness benefits to railroad employees. RUIA also contains an express preemption provision disallowing railroad employees from having any right to “sickness benefits under a sickness law of any State.”
I
A
Owing to its interstate nature, the railroad industry has long been subject to extensive and often exclusive federal regulation. In 1938, Congress passed RUIA to provide unemployment benefits for railroad employees. See
In 1946, Congress amended RUIA to also provide railroad employees with “sickness benefits.” See
The benefits available under RUIA are funded by a special tax on railroad employers “equal to 4 percent of the total rail wages.” See Railroad Unemployment Repayment Tax Act,
RUIA‘s preemption provision, which is at the center of this case, reads in relevant part:
By enactment of this chapter the Congress makes exclusive provision for the
payment of unemployment benefits for unemployment occurring after June 30, 1939, and for the payment of sickness benefits for sickness periods after June 30, 1947, based upon employment (as defined in this chapter). No employee shall have or assert any right to unemployment benefits under an unemployment compensation law of any State with respect to unemployment occurring after June 30, 1939, or to sickness benefits under a sickness law of any State with respect to sickness periods occurring after June 30, 1947, based upon employment (as defined in this chapter). The Congress finds and declares that by virtue of the enactment of this chapter, the application of State unemployment compensation laws after June 30, 1939 or of State sickness laws after June 30, 1947, to such employment, except pursuant to section 362(g) of this title, would constitute an undue burden upon, and an undue interference with the effective regulation of, interstate commerce.
B
In 2014, the California legislature passed the Healthy Workplaces, Healthy Families Act, which we will refer to as the “California Act” or the “Act.”
Under the California Act, employees may use their paid sick leave for “the following purposes“:
- Diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee‘s family member.
- For an employee who is a victim of domestic violence, sexual assault, or stalking, the purposes described in subdivision (c) of Section 230 and subdivision (a) of Section 230.1.
- To seek medical attention for injuries caused by crime or abuse.
- To obtain services from a domestic violence shelter, program, rape crisis center, or victim services organization or agency as a result of the crime or abuse.
- To obtain psychological counseling or mental health services related to an experience of crime or abuse.
- To participate in safety planning and take other actions to increase safety from future crime or abuse, including temporary or permanent relocation.
The California legislature enacted the Act to promote health and employee well-being, which the legislature believed would in turn improve worker retention rates and productivity. This legislative goal is articulated in findings passed in conjunction with Act. See A.B. 1522, 2014 Leg., Reg. Sess.
In this way, the California legislature found, the Act would “[e]nsure that workers in California can address their own health needs and the health needs of their families,” “[d]ecrease public and private health care costs in California,” and “[s]afeguard the welfare, health, safety, and prosperity of the people of and visitors to California.” Id. at § 2(a), (b), (e). The California legislature also found that domestic violence similarly “impacts productivity, effectiveness, absenteeism, and employee turnover in the workplace,” and thus also warranted sick leave coverage. Id. at § 1(m)-(o); see also id. § 2(d).
C
After the California Act went into effect, six railroad companies brought this suit against the California Labor Commissioner. The railroads alleged that the California Act was invalid as applied to their employees because it was preempted by RUIA and the Employee Retirement Income Security Act of 1974 (ERISA), and unconstitutional under the “dormant” Commerce Clause. The railroads sought declaratory and injunctive relief that would prohibit the Labor Commissioner from enforcing the Act against them. Several unions representing railroad employees intervened to defend the Act.
The district court granted summary judgment to the railroads. It concluded that RUIA partially preempts the California Act, and that the remainder of the Act is invalid under the dormant Commerce Clause. The Commissioner and union-intervenors appealed. We review the district court‘s grant of summary judgment de novo and may affirm on any ground supported by the record. Miranda v. City of Casa Grande, 15 F.4th 1219, 1224 (9th Cir. 2021).
II
A
The Supremacy Clause provides that the laws of the United States “shall be the supreme Law of the Land... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
When, as here, a federal statute includes an express preemption provision, “the task of statutory construction must in the first instance focus on the plain wording of the clause.” Cal. Trucking Ass‘n v. Bonta, 996 F.3d 644, 654 (9th Cir. 2021) (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993)). We consider also “the surrounding statutory framework” and “Congress‘s stated purposes in enacting the statute” to “identify the domain expressly pre-empted by that language.” Chae v. SLM Corp., 593 F.3d 936, 942 (9th Cir. 2010) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 484 (1996)). Once we have
RUIA‘s express preemption provision is set forth in
Through its definition of the phrase “day of sickness,” RUIA treats the notion of “sickness” expansively, encompassing calendar days “on which because of any physical, mental, psychological, or nervous injury, illness, sickness, or disease [the employee] is not able to work.”
RUIA‘s “statutory framework” and “stated purposes” confirm the breadth of its preemptive effect. Chae, 593 F.3d at 942; see also Pac. Gas & Elec. Co. v. California, 350 F.3d 932, 947-48 (9th Cir. 2003), as amended (Dec. 9, 2003) (relying on “the overall structure of the Code” to determine a statute‘s “express preemptive scope“). The preemption provision emphasizes that RUIA is to be the “exclusive” source for the payment of sickness benefits provided to railroad employees. See
Turning now to the California Act, we hold that as applied to railroad employees, the Act falls within RUIA‘s preemption clause. Properly considered in light of RUIA‘s plain text and structure, the California Act is a “sickness law” that provides “sickness benefits.” This conclusion follows quite clearly from the text and operation of California‘s law. The Act itself describes the benefit it provides as “paid sick days,” “paid sick leave,” and “paid sick time.” See generally
That the California Act is a “sickness law” providing “sickness benefits” is additionally demonstrated in the enumerated purposes for which an employee may use the paid sick leave available under the Act. These purposes are centered on “sickness,” as RUIA broadly conceives it. Most critically, under the California Act employees may take sick leave for the “[d]iagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee‘s family member.”
The permissible purposes of sick leave listed in the next section of the California Act,
It is true that for employees who are the victims of domestic violence, sexual assault, and stalking, the California Act also allows them to take paid sick days to obtain certain social services, “[t]o participate in safety planning and take other actions to increase safety,” and “to obtain or attempt to obtain any [legal] relief.”
Because RUIA states that federal law confers the “exclusive” “sickness benefits” for railroad employees,
B
Notwithstanding these points, the Labor Commissioner and union-intervenors ask us to take a narrower view of RUIA‘s preemption provision. We now explain why we find their arguments unpersuasive.
The appellants principally argue that RUIA does not preempt the California Act as to railroad employees because the benefits the Act offers are different in kind than RUIA‘s benefits. The Labor Commissioner claims that RUIA provides “leave akin to short-term disability insurance,” whereas the California Act covers “absences of a single day (or even a few hours).” Likewise, the unions argue that the California Act “deals with paid time off for occasional and routine short-term employee medical conditions,” which they argue is distinct from RUIA‘s protections for “economic loss due to inability to work for lengthy periods.” Appellants contend that, based on these differences, a railroad employee may qualify for benefits under the California Act and not under RUIA.
We do not think these arguments can carry the day. The primary problem with the appellants’ theory is that preemption does not turn on whether the state law at issue operates congruently with the federal law containing the preemption clause. Rather, in interpreting an express preemption provision we look to the “substance and scope of Congress’ displacement of state law,” based on the language the preemption provision employs. Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008). Congress is free to design that displacement to be either broader or narrower than the protections that the federal law confers. See, e.g., Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 146-47 (2001) (explaining that ERISA‘s “expansive” preemption clause covers any state law that “has a connection with or reference to [an ERISA] plan” (quotations omitted)); Morales v. Trans World Airlines, Inc., 504 U.S. 374, 386 (1992) (rejecting the claim that “only state laws specifically addressed to the airline industry are pre-empted” under the Airline Deregulation Act).
Here, there is no basis to conclude that Congress in § 363(b) intended to preempt only those sickness laws structured like RUIA, or only those state benefit schemes providing what could be described as short-term disability insurance. The text of RUIA‘s preemption provision does not impose that limitation. And implying such a condition into RUIA would be inconsistent with Congress‘s stated aim of preventing multiple sickness benefit schemes for railroad companies, which Congress believed “would constitute an undue burden upon, and an undue interference with the effective regulation of, interstate commerce.”
The First Circuit in CSX Transportation, Inc. v. Healey, 861 F.3d 276 (1st Cir. 2017), rejected substantially the same
Next, the Commissioner asserts that RUIA should be interpreted as preempting only the kinds of state laws that existed at the time RUIA was amended to provide for sickness benefits. According to the Commissioner, only California and Rhode Island provided sickness benefits to employees in 1946, and both did so through short-term disability insurance programs that allowed employees to access benefits for longer periods of time. This argument fails for substantially the same reasons we have already given. Nothing in RUIA‘s text, structure, or stated objectives suggests that Congress meant to displace only the specific kinds of sickness laws already in place in 1946. See CSX Transp., 861 F.3d at 285 (rejecting this same argument).
The appellants also offer various textual arguments in support of a narrower interpretation of § 363(b). The Commissioner notes that RUIA defines “benefits” as “money payments payable to an employee as provided in this chapter, with respect to his unemployment or sickness,” and that elsewhere, RUIA provides railroad employees with “benefits” equal to sixty percent of daily compensation, administered by the Railroad Retirement Board, once an employee has been sick for four consecutive days.
This argument is unavailing. RUIA‘s definition of “benefits” reads in full: “The term ‘benefits’ (except in phrases clearly designating other payments) means the money payments payable to an employee as provided in this chapter with respect to his unemployment or sickness.”
The text of the preemption clause further demonstrates that “benefit” for purposes of RUIA preemption may be interpreted more broadly than merely the “benefits” provided by RUIA. On several different occasions, § 363(b) expressly constrains the meaning of certain terms in the preemption clause to their statutory definitions. For example, § 363(b) specifically preempts only benefits “based upon employment (as defined in this chapter).”
For their part, the union-intervenors advance other textual arguments that fare no better. The unions first contend that “the limited scope of RUIA preemption of state laws is evident from the title of the statute‘s preemption clause,” which reads “Effect on State unemployment compensation laws.” See
The unions next cite what they describe as “authoritative sources” establishing that “sickness benefits” means something other than “sick leave” or “paid sick days.” But the unions’ reliance on these sources is misplaced. For example, the unions rely on a booklet published by the Railroad Retirement Board which states that “you cannot claim benefits for any day on which you worked or otherwise earned... sick pay (excluding supplemental sickness benefits).” According to the unions, this proves that “benefits” and “sick pay” are two different things, and that the preempted “sickness benefits” therefore cannot include the “paid sick leave” that the California Act confers. But this section of the booklet merely explains RUIA‘s requirements for eligibility, see
Finally, the unions cite Haynes v. United States, 353 U.S. 81 (1957), claiming that there the Supreme Court “recognized that sickness benefits and sick leave are different concepts.” But in Haynes, the Court was interpreting the Internal Revenue Code, and specifically the Code‘s exemption for “amounts received through accident or health insurance as compensation for personal injuries or sickness.” Id. at 83 (quoting
AFFIRMED.