Charles Ward v. United Airlines, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CHARLES E. WARD, individually, and No. 16-16415
on behalf of all others similarly
situated, D.C. No.
Plaintiff-Appellant, 3:15-cv-02309-
WHA
v.

UNITED AIRLINES, INC.,
Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of California
William Alsup, District Judge, Presiding
2 WARD V. UNITED AIRLINES

FELICIA VIDRIO, individually, and on No. 17-55471
behalf of all others similarly situated;
PAUL BRADLEY, individually, and on D.C. No.
behalf of all others similarly situated, 2:15-cv-07985-
Plaintiffs-Appellants, PSG-MRW

v.
OPINION
UNITED AIRLINES, INC.,
Defendant-Appellee,

and

DOES, 1 through 50, inclusive,
Defendant.

Appeal from the United States District Court
for the Central District of California
Philip S. Gutierrez, Chief District Judge, Presiding

Argued and Submitted October 30, 2020
San Francisco, California

Filed February 2, 2021

Before: Paul J. Watford and Michelle T. Friedland, Circuit
Judges, and Jed S. Rakoff, * District Judge.

Opinion by Judge Watford

*
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
 WARD V. UNITED AIRLINES 3

SUMMARY **

California Labor Code / Preemption

The panel reversed the district courts’ summary
judgment in favor of United Airlines, Inc. in two
consolidated cases brought by certified classes of United
pilots and flight attendants who reside in California, alleging
that the wage statements they received from United failed to
comply with California Labor Code § 226.

The panel certified to the California Supreme Court the
question whether California Labor Code § 226 applied. In
response, the California Supreme Court held that the statute
applied “if the employee’s principal place of work is in
California.” Ward v. United Airlines, Inc., 466 P.3d 309,
325 (Cal. 2020). The Supreme Court then set forth a set of
principles defining § 226’s permissible reach – the “Ward
test”. United subsequently challenged the validity of
applying § 226 to these plaintiffs under the Ward test,
arguing that federal law precluded California from applying
its wage statement law to interstate transportation workers
who are based in California and do not perform a majority
of their work in any one State.

The dormant Commerce Clause limits the States’
authority to enact or enforce laws that burden interstate
commerce. Generally, state laws that discriminate against or
directly regulate interstate commerce are virtually per se
invalid, but non-discriminatory laws that have only
incidental effects on interstate commerce will generally be

**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4 WARD V. UNITED AIRLINES

upheld. The panel held that California Labor Code § 226, as
applied to these plaintiffs under the Ward test, did not fall
within either of the categories that are virtually per se
invalid. The panel rejected United’s argument that
application of the Ward test resulted in direct regulation of
interstate commerce. The panel also rejected United’s
argument that applying California Labor Code § 226 to these
plaintiffs under the Ward test violated the dormant
Commerce Clause because the burden imposed on interstate
commerce was clearly excessive in relation to the putative
local benefits.

The panel held that the Airline Deregulation Act of 1978
did not preempt application of California Labor Code § 226
to these plaintiffs where any connection between § 226 and
United’s prices, routes, and services was tenuous at best.

The panel held that plaintiffs’ claims under California
Labor Code § 226 were not preempted by the Railway Labor
Act. Applying the test in Alaska Airlines Inc. v. Schurke,
898 F.3d 904, 920–21 (9th Cir. 2018), the panel held that
plaintiffs’ claims survived the first step because they were
not grounded in collective bargaining agreements; nor were
they preempted under the second step, since resolution of
their claims did not require interpretation of the collective
bargaining agreements.

The panel declined to reach the merits of plaintiffs’
claims in the first instance, and remanded to the district
courts to determine whether United complied with § 226
and, if not, what relief should be awarded. The panel
directed the district courts to modify the class definitions in
both cases to conform to the California Supreme Court’s
definition of § 226’s permissible reach, and to modify the
class period in the Ward case to extend to the date of
judgment.
 WARD V. UNITED AIRLINES 5

COUNSEL

Kirk D. Hanson (argued) and Jeffrey C. Jackson, Jackson
Hanson LLP, San Diego, California; Stuart B. Esner and
Joseph S. Persoff, Esner Chang & Boyer, Pasadena,
California; for Plaintiffs-Appellants.

Adam P. KohSweeney (argued) and Susannah K. Howard,
O’Melveny & Myers LLP, San Francisco, California; Robert
Siegel, O’Melveny & Myers LLP, Los Angeles, California;
for Defendant-Appellee.

Douglas W. Hall, Shay Dvoretzky, and Vivek Suri, Jones
Day, Washington, D.C., for Amicus Curiae Airlines for
America.

OPINION

WATFORD, Circuit Judge:

These consolidated cases involve pilots and flight
attendants who allege that their employer, United Airlines,
is violating a provision of California law regulating the wage
statements that employees must receive with each paycheck.
See Cal. Labor Code § 226. When we first heard this appeal,
we were uncertain whether California Labor Code § 226
applies to United’s pilots and flight attendants, given that
they spend most of their time working outside of California.
The California Supreme Court accepted our request for
clarification of this issue and held that § 226 applies to these
employees because they are based in California for work
purposes. Now that the cases are back before us, United
contends that federal law precludes California from applying
its wage-statement law to pilots and flight attendants who
6 WARD V. UNITED AIRLINES

spend most of their time working outside of California. We
reject that contention.

I. Background

These two consolidated cases were filed in different
district courts but are founded on the same allegations. In
one, plaintiff Charles Ward represents a certified class of
United pilots who reside in California; in the other, plaintiffs
Felicia Vidrio and Paul Bradley represent a certified class of
United flight attendants who also reside in California. In
both cases, plaintiffs allege that the wage statements they
receive from United fail to comply with California Labor
Code § 226. That statute requires an employer to provide its
employees with a wage statement containing nine items of
information, including, as relevant here, “the name and
address of the legal entity that is the employer,” and “all
applicable hourly rates in effect during the pay period and
the corresponding number of hours worked at each hourly
rate by the employee.” Cal. Labor Code § 226(a)(8)–(9).
Section 226 further provides that an employee must be able
to “promptly and easily determine” these items of
information “from the wage statement alone,” which means
that “a reasonable person would be able to readily ascertain
the information without reference to other documents or
information.” § 226(e)(2)(B)–(C).

Plaintiffs allege that United’s wage statements fail to
comply with § 226’s requirements. According to plaintiffs,
the wage statements do not provide the required address for
United because the statements list only a post office box
rather than the actual street address where United’s offices
are located. As for the hourly rates and hours worked, the
statements include the wages earned in general pay
categories such as “Regular Pay” and “Sick Pay,” but they
do not list the pay rates and number of hours worked in each
 WARD V. UNITED AIRLINES 7

category. United provides its employees with online access
to a separate “pay register,” which affords greater detail
about the employee’s work activities and potential
compensation during the relevant pay period. The parties
dispute whether the pay registers supply the information
required by California Labor Code § 226, but we need not
resolve that dispute here. Plaintiffs contend that, even if the
pay registers adequately describe the number of hours
worked at each applicable hourly rate, United’s wage
statements still violate § 226 because that information
cannot be readily ascertained by consulting the wage
statements alone.

In both cases, after the parties filed cross-motions for
summary judgment, the district courts granted summary
judgment for United. Both courts examined California case
law and held that California Labor Code § 226 applies only
to employees who work “principally” in California, which is
not true of either the pilots or the flight attendants. For
example, in 2014 and 2015, the pilots spent on average less
than 12% of their flight time within California, and in 2015
and 2016, the flight attendants spent on average less than
17% of their flight time within California. The nature of
their flight schedules is such that the pilots and flight
attendants typically do not work a majority of their time in
any State, let alone in California. In view of those facts, the
district court in the Ward case also held that applying § 226
to United’s pilots would violate the dormant Commerce
Clause of the United States Constitution. The plaintiffs in
both cases appealed.

As noted, we certified to the California Supreme Court
the question whether California Labor Code § 226 applies in
these circumstances. See Ward v. United Airlines, Inc.,
889 F.3d 1068 (9th Cir. 2018). In response, the California
8 WARD V. UNITED AIRLINES

Supreme Court held that the statute applies “if the
employee’s principal place of work is in California.” Ward
v. United Airlines, Inc., 466 P.3d 309, 325 (Cal. 2020). The
court concluded that California qualifies as an employee’s
principal place of work if: (1) the employee works a majority
of the time in California; or (2) with respect to interstate
transportation workers who do not work a majority of the
time in any one State, “the worker has his or her base of work
operations in California.” Id. The court further stated that
an employee is “based in” California for purposes of this test
if the employee performs at least some work in California
and “California serves as the physical location where the
worker presents himself or herself to begin work.” Id.
at 321; see also id. at 324 (“[I]f a pilot or flight attendant has
a designated home-base airport, section 226 would apply if
that airport is in California, and not if it is elsewhere.”). We
will refer to this set of principles defining § 226’s
permissible reach as the “Ward test” for short.

Following the California Supreme Court’s decision, we
asked the parties to submit supplemental briefs assessing its
impact on the outcome of this appeal. The parties in both
cases agree that most of the class members satisfy the Ward
test, as they do not perform a majority of their work in any
one State and they have their “base of work operations” in
California. United’s pilots and flight attendants are assigned
to a designated home-base airport, which is where they are
based for purposes of bidding on assignments and where
they begin and end their assignments in each bid period.
Most, if not all, of the class members are assigned to a home-
base airport in California.

United argues that, even though the California Supreme
Court has now clarified that California Labor Code § 226
applies in these cases, we should still affirm the judgments
 WARD V. UNITED AIRLINES 9

in its favor. Although United does not challenge the validity
of § 226 itself, it does challenge the validity of applying
§ 226 to these plaintiffs under the Ward test. In United’s
view, federal law precludes California from applying its
wage-statement law to interstate transportation workers who
are based in California and do not perform a majority of their
work in any one State. United’s argument rests on three
sources of federal law: the dormant Commerce Clause, the
Airline Deregulation Act, and the Railway Labor Act. We
reject United’s reliance on each of these potentially
preemptive sources of federal law, before turning to several
issues that will need to be addressed on remand. 1

II. Dormant Commerce Clause

The dormant Commerce Clause limits the States’
authority to enact or enforce laws that burden interstate
commerce, even in the absence of legislative action by
Congress. American Trucking Associations, Inc. v.
Michigan Public Service Commission, 545 U.S. 429, 433
(2005); Raymond Motor Transportation, Inc. v. Rice,
434 U.S. 429, 440 (1978). Those limits are delineated by
two general rules. On one hand, state laws that discriminate
against or directly regulate interstate commerce are virtually
per se invalid. Department of Revenue of Kentucky v. Davis,
553 U.S. 328, 338 (2008); Brown-Forman Distillers Corp.
v. New York State Liquor Authority, 476 U.S. 573, 579
(1986). On the other hand, non-discriminatory laws that
have only incidental effects on interstate commerce will
1
Although principles of constitutional avoidance require us to
consider the statutory preemption arguments before the constitutional
dormant Commerce Clause arguments, we address the dormant
Commerce Clause issue first because that issue was the only one of the
preemption questions decided by the district court in Ward and was the
focus of the parties’ supplemental briefs.
10 WARD V. UNITED AIRLINES

generally be upheld “unless the burden imposed on such
commerce is clearly excessive in relation to the putative
local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137,
142 (1970).

A

The first question is whether California Labor Code
§ 226, as applied to these plaintiffs under the Ward test, falls
within either of the categories of state laws that are virtually
per se invalid.

We can quickly dismiss any suggestion that application
of the Ward test results in discrimination against interstate
commerce. Discrimination in this context means treating
similarly situated in-state and out-of-state economic
interests differently in a way that favors the in-state interests.
Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070,
1087 (9th Cir. 2013). The Ward test is non-discriminatory
because it imposes burdens on private employers
evenhandedly, whether they are based in-state or out-of-
state. See CTS Corp. v. Dynamics Corp. of America,
481 U.S. 69, 87 (1987); Association des Eleveurs de
Canards et d’Oies du Quebec v. Harris, 729 F.3d 937, 948
(9th Cir. 2013). United is incorporated in Delaware and has
its headquarters in Illinois, but it would be subject to the
same burdens imposed under the Ward test even if it were
based in California.

Nor do we find merit in United’s argument that
application of the Ward test results in direct regulation of
interstate commerce. United’s argument hinges on a line of
Supreme Court cases invalidating state laws that had the
practical effect of directly regulating commerce occurring
wholly outside the enacting State’s borders. See Healy v.
Beer Institute, 491 U.S. 324, 336 (1989); Brown-Forman,
 WARD V. UNITED AIRLINES 11

476 U.S. at 578–79, 582–83; Edgar v. MITE Corp., 457 U.S.
624, 641–43 (1982) (plurality opinion); Baldwin v. G. A. F.
Seelig, Inc., 294 U.S. 511, 521–22 (1935). United contends
that, by permitting application of California Labor Code
§ 226 to pilots and flight attendants who perform most of
their work outside of California, the Ward test allows
California to regulate commerce occurring wholly outside its
borders.

Our circuit’s law casts doubt on the continued viability
of the broad extraterritoriality principle on which United
relies. In Pharmaceutical Research and Manufacturers of
America v. Walsh, 538 U.S. 644 (2003), the Supreme Court
suggested that the rule applied in Healy and Baldwin is
limited to cases involving “price control or price affirmation
statutes.” Id. at 669. We have read the Court’s decision in
Pharmaceutical Research as holding that the
extraterritoriality principle derived from the Healy line of
cases now applies only when state statutes have the practical
effect of dictating the price of goods sold out-of-state or
tying the price of in-state products to out-of-state prices. See
Association des Eleveurs de Canards, 729 F.3d at 951.
Under that narrow understanding, United’s extraterritoriality
challenge obviously fails.

But even under a broad understanding of the
extraterritoriality principle, United’s challenge lacks merit.
California Labor Code § 226 dictates the information that
must be disclosed to employees regarding their hours and
pay. The statute thus regulates an incident of the
employment relationship between employer and employee,
and the relationship itself is best viewed as the aspect of
“commerce” being regulated here. In this context, as in the
context of state taxation of interstate transactions, the
analysis required under the dormant Commerce Clause
12 WARD V. UNITED AIRLINES

largely tracks the analysis that would be required under the
Fourteenth Amendment’s Due Process Clause. See South
Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2093 (2018). The
salient question, then, is whether California’s ties to the
employment relationship are sufficiently strong to justify its
assertion of regulatory authority over the contents of an
employee’s wage statements. See Sam Francis Foundation
v. Christies, Inc., 784 F.3d 1320, 1323 (9th Cir. 2015) (en
banc) (holding that residency of the seller alone was an
insufficient nexus to support regulation of out-of-state art
sales and implying that a stronger connection could justify
regulation); cf. Phillips Petroleum Co. v. Shutts, 472 U.S.
797, 818 (1985) (concluding that, to assert legislative
jurisdiction over a matter in accordance with the Due
Process Clause, a “State must have a significant contact or
significant aggregation of contacts, creating state interests,
such that choice of its law is neither arbitrary nor
fundamentally unfair”).

Under the Ward test, California’s ties to the employment
relationship are sufficiently strong to justify application of
§ 226’s disclosure requirements. Notably, in devising the
Ward test, the California Supreme Court rejected the
argument that application of § 226 should depend on
residency of the employee alone. See Ward, 466 P.3d
at 323–24. Instead, employees covered by the Ward test
must be based for work purposes in California and perform
at least some work in California. Id. at 324. Those contacts
with the employment relationship are significant enough to
give the State an interest in ensuring that employees who
belong to this subset of its workforce receive the information
they need to determine whether they have been paid
correctly. The nexus between the State and the employment
relationship is not so “casual” or “slight”—as would be true
if California were attempting to regulate commerce
 WARD V. UNITED AIRLINES 13

occurring wholly outside its borders—as to render
application of California’s wage-statement law arbitrary or
unfair. Clay v. Sun Insurance Office, Ltd., 377 U.S. 179, 182
(1964).

Our decision in S.D. Myers, Inc. v. City and County of
San Francisco, 253 F.3d 461 (9th Cir. 2001), supports this
conclusion. There, we rejected a dormant Commerce Clause
challenge to a San Francisco ordinance requiring city
contractors to provide certain benefits to their employees,
including employees who performed all of their work in
another State. Id. at 469–71. We construed the ordinance to
apply to out-of-state employees only if they worked directly
on a city contract, and held that with respect to such
employees the city had a sufficient nexus to the employment
relationship to permit regulation of the employees’ benefits.
Id. Here, the nexus between the employment relationship
and California is at least as strong, since employees covered
by the Ward test must perform some of their work in-state
and be based for work purposes in California. As in S.D.
Myers, the fact that most of the employees’ work is
performed outside of California does not render regulation
of an incident of their employment relationship with United
violative of the dormant Commerce Clause.

B

United next contends that applying California Labor
Code § 226 to these plaintiffs under the Ward test violates
the dormant Commerce Clause because the burden imposed
on interstate commerce is “clearly excessive in relation to
the putative local benefits.” Pike, 397 U.S. at 142. United
asserts that compliance with the Ward test will require it to
track every employee’s hours on a pay-period-by-pay-period
basis to determine whether each employee spent more than
50% of his or her time working in another State and thus was
14 WARD V. UNITED AIRLINES

exempt from § 226’s coverage. The increased cost United
will incur to develop this tracking system, the argument runs,
constitutes the sort of substantial burden on interstate
commerce that the dormant Commerce Clause forbids.

United’s argument is flawed in at least two respects.
First, while we do not doubt that United would incur
additional costs if forced to track employee time in the way
that it describes, it has offered no evidence of what the
magnitude of those costs might be. See Pacific Northwest
Venison Producers v. Smitch, 20 F.3d 1008, 1015 (9th Cir.
1994). The mere fact that a firm engaged in interstate
commerce will face increased costs as a result of complying
with state regulations does not, on its own, suffice to
establish a substantial burden on interstate commerce.
Raymond Motor, 434 U.S. at 445 n.21. Second, we think
United has greatly exaggerated the burden of complying
with the Ward test in any event. United can easily comply
with California law by issuing § 226-compliant wage
statements to all pilots and flight attendants whose home-
base airport is located in California. Adopting that policy
would obviate any need to track the hours each employee
spends working in different States, and would (at worst)
result in rare instances in which United over-complies with
California law by issuing a § 226-compliant wage statement
to a California-based employee when it was not required to
do so.

United also contends that if we uphold application of the
Ward test here, it will inevitably be subjected to a patchwork
of inconsistent regulations imposed by other States. To
prevail on this contention, United must show that § 226, as
applied under the Ward test, regulates in an area that requires
national uniformity. See Association des Eleveurs de
Canards, 729 F.3d at 952. It has not done so. Even if there
 WARD V. UNITED AIRLINES 15

are aspects of the interstate transportation industry that
require national uniformity, employee wage statements are
not among them. State-by-state regulation of the wage
statements provided to pilots and flight attendants may
increase operating costs, but United has not demonstrated
that such regulation will impair the free flow of commerce
across state borders or impede operation of the national
airline industry. For example, United has presented no
evidence to support the conclusion that requiring it to
comply with California law that differs from the wage-
statement laws of other States will prove so cost-prohibitive
as to disrupt the interstate service of its flights. Thus, as
applied under the Ward test, § 226 is not comparable to the
regulations found to impose a significant burden on
interstate commerce in cases like Bibb v. Navajo Freight
Lines, Inc., 359 U.S. 520, 527–28 (1959) (invalidating state
regulation of truck mudflaps), and Southern Pacific Co. v.
Arizona ex rel. Sullivan, 325 U.S. 761, 773–74 (1945) (same
as to state law regulating train lengths). In those cases, the
challengers demonstrated that inconsistent state regulations
would severely disrupt operation of interstate transportation
and shipping, such that nationally uniform regulations were
“practically indispensable to the operation of an efficient and
economical” system. Southern Pacific, 325 U.S. at 771.
United has not made a showing of that sort here.

Since United has not shown that the Ward test regulates
in an area that requires national uniformity, or that the cost
of compliance otherwise impairs the free flow of goods or
services across state borders, it has not shown a significant
burden on interstate commerce. See National Association of
Optometrists & Opticians v. Harris, 682 F.3d 1144, 1154–
55 (9th Cir. 2012). As a result, any burden imposed by the
Ward test cannot be deemed “clearly excessive” in relation
16 WARD V. UNITED AIRLINES

to the putative local benefits of applying California Labor
Code § 226 to the employees involved here. Id. at 1155.

III. Airline Deregulation Act

United argues that application of California Labor Code
§ 226 to pilots and flight attendants covered by the Ward test
is preempted by the Airline Deregulation Act of 1978
(ADA). As relevant here, the ADA 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 an air carrier that may provide air
transportation under this subpart.” 49 U.S.C. § 41713(b)(1).
United contends that requiring it to comply with California
Labor Code § 226 would affect its prices, routes, and
services by increasing its costs and influencing its decisions
about flight routes.

Although the ADA has a “broad pre-emptive purpose,”
it does not preempt state laws that affect airline rates, routes,
or services in only a “tenuous, remote, or peripheral”
manner. Morales v. Trans World Airlines, Inc., 504 U.S.
374, 383, 390 (1992). Laws that apply to airline employees
only as they apply to all members of the general public
typically fall into this non-preempted category. See Rowe v.
New Hampshire Motor Transport Association, 552 U.S. 364,
375–76 (2008). 2

2
Rowe assessed whether provisions of Maine’s Tobacco Delivery
Law were preempted by the Federal Aviation Administration
Authorization Act (FAAAA). Because that statute includes the same
language used in the ADA, both the Supreme Court and our court rely
on FAAAA preemption precedent in ADA preemption cases and vice
versa. See, e.g., Rowe, 552 U.S. at 370–71; California Trucking
Association v. Su, 903 F.3d 953, 960 (9th Cir. 2018).
 WARD V. UNITED AIRLINES 17

Our most on-point application of this preemption
standard came in Dilts v. Penske Logistics, LLC, 769 F.3d
637 (9th Cir. 2014). There, we held that provisions of the
California Labor Code that regulate rest and meal breaks
were not “related to” prices, routes, or services—and thus
were not preempted by the FAAAA—when applied to motor
carriers. Id. at 640. Recounting the history of the Supreme
Court’s and our court’s interpretations of ADA and FAAAA
preemption, we noted that those laws preempt state
regulations that bind carriers to specific prices, routes, or
services, but they do not preempt “generally applicable
background regulations that are several steps removed from
prices, routes, or services.” Id. at 646. Wage laws and safety
regulations are examples of these generally applicable
regulations, and they are not preempted “even if employers
must factor those provisions into their decisions about the
prices that they set” or “if they raise the overall cost of doing
business.” Id. The meal and rest break laws at issue in Dilts
were the sort of background rules that apply to almost all
employees. Even though those laws may have required
employers to take their requirements into account when
scheduling routes, they did not bind motor carriers to
specific prices, routes, or services. Thus, they were not the
sorts of laws that the FAAAA or ADA preempt. Id. at 647.

For the same reasons, the ADA does not preempt
application of California Labor Code § 226 to these
plaintiffs. United again asks us to assume that application of
§ 226 will increase the overall cost of doing business by
requiring it to track the amount of time pilots and flight
attendants spend working in each State. Even accepting that
assumption, however, what proves dispositive here is that
United has presented no evidence that these increased costs
would have a “significant impact” on its prices, routes, or
services. Rowe, 552 U.S. at 375. That United must apply
18 WARD V. UNITED AIRLINES

§ 226 to employees whose work crosses state lines does not
distinguish this case from Dilts, which upheld application of
the laws at issue to all motor carriers, not just the intrastate
drivers employed by the defendant. See Dilts, 769 F.3d
at 648 n.2. Even as applied to the interstate transportation
workers involved here, any connection between § 226 and
United’s prices, routes, and services is tenuous at best. See
Air Transport Association of America v. City and County of
San Francisco, 266 F.3d 1064, 1072 (9th Cir. 2001) (holding
that a city ordinance regulating employee benefits was not
preempted by the ADA even if it would increase airlines’
cost of doing business at an airport in that city).

IV. Railway Labor Act

Finally, United argues that the Railway Labor Act
(RLA), 45 U.S.C. § 151 et seq., preempts plaintiffs’ claims.
The RLA establishes a mandatory dispute-resolution
mechanism for resolving certain classes of labor disputes
that arise in the rail and airline industries, including what are
known as “major” and “minor” disputes. See Hawaiian
Airlines, Inc. v. Norris, 512 U.S. 246, 252–53 (1994). Minor
disputes, the sort potentially implicated here, “involve
controversies over the meaning of an existing collective
bargaining agreement in a particular fact situation.” Id.
at 253; see 45 U.S.C. § 151a(5). If such a dispute is covered
by the RLA, it must be resolved through the procedures
established under the Act; it may not be resolved by pursuing
state-law claims in court. Hawaiian Airlines, 512 U.S.
at 253.

Both the pilots and flight attendants are covered by
existing collective bargaining agreements (CBAs) that
contain detailed provisions governing, among other things,
the manner in which their pay is determined. United
contends that the wage-statement dispute at issue here
 WARD V. UNITED AIRLINES 19

constitutes a “minor” dispute under the RLA, thereby
triggering RLA preemption.

Our court applies a two-step test to determine whether
the RLA preempts a state-law claim. First, we determine
whether the claim is “grounded in” a CBA by asking whether
the claim “seeks purely to vindicate a right or duty created
by the CBA itself.” Alaska Airlines Inc. v. Schurke, 898 F.3d
904, 920–21 (9th Cir. 2018) (en banc). The RLA preempts
state-law claims under this first step if the CBA is the only
source of the right the plaintiff asserts; claims that merely
refer to a CBA-defined right or that rely only in part on a
CBA’s terms are not preempted. Id. at 921. Second, if a
claim is not preempted under the first step, we ask whether
adjudicating the state-law claim requires “interpretation of a
CBA, such that resolving the entire claim in court threatens
the proper role of grievance and arbitration.” Id.
Interpretation in this context “means something more than
‘consider,’ ‘refer to,’ or ‘apply.’” Id. State-law claims are
preempted under this second step only “to the extent there is
an active dispute over the meaning of contract terms.” Id.

Applying the Schurke test here, we conclude that
plaintiffs’ claims under California Labor Code § 226 are not
preempted by the RLA. Plaintiffs’ claims survive under the
first step because they are not “grounded in” the CBAs:
They seek to vindicate a right created by California law, not
one created by the CBAs themselves. Nor are plaintiffs’
claims preempted under the second step, since resolution of
their claims does not require interpretation of the CBAs. In
assessing whether plaintiffs should prevail on the merits of
their claims, a court will simply need to examine the wage
statements plaintiffs received from United to determine if the
statements comply with the requirements of § 226. A court
will not need to interpret the meaning of any terms of the
20 WARD V. UNITED AIRLINES

CBAs to determine whether the wage statements include
United’s name and address or an itemized statement of the
hours worked and the applicable hourly rates. Cal. Labor
Code § 226(a). Because no interpretation of the CBAs will
be required to resolve plaintiffs’ claims, the claims are not
preempted under the second step of the Schurke analysis
either.

V. Remaining Issues

Given their rulings that California Labor Code § 226 did
not apply in these cases, neither of the district courts reached
the merits of plaintiffs’ claims. Plaintiffs nonetheless urge
us to resolve the merits of their claims and to hold that
United’s wage statements violate § 226. We do not think it
would be prudent for us to issue a ruling on liability in the
first instance. That is a matter the district courts are best
positioned to decide, after receiving whatever further
briefing and evidentiary submissions from the parties may
be appropriate. Accordingly, we remand to the district
courts to determine whether United complied with § 226
and, if not, what relief should be awarded.

On remand, the class definitions in both cases will need
to be modified to take account of the California Supreme
Court’s intervening decision in Ward. Under the Ward test,
United’s pilots and flight attendants are entitled to the
protections of § 226 if their “designated home-base airport”
is in California and if they do not work more than half the
time in another State. Ward, 466 P.3d at 324. Most of the
class members in these cases will likely meet this test.
However, the certified classes are currently defined not by
the requirements of the Ward test, but instead by whether the
employees reside in California. We remand for the district
courts in both cases to modify the class definitions so that
 WARD V. UNITED AIRLINES 21

they conform to the California Supreme Court’s definition
of § 226’s reach.

A further modification of the class definition in the Ward
case is also warranted. The district court in that case denied
without explanation plaintiffs’ request to modify the class
period so that it will extend until the date that judgment is
entered, rather than ending on the date that the complaint
was filed. We see nothing in the record to support the court’s
refusal to grant plaintiffs’ request. Ending the class period
on the date that the complaint was filed would thwart judicial
efficiency by leaving open the potential need for a second
lawsuit asserting identical claims covering the period
between the complaint’s filing and the date final judgment is
entered in this litigation. We remand to the district court in
the Ward case with instructions to modify the class period to
extend to the date of judgment.

* * *

We reverse the district courts’ entry of summary
judgment in favor of United and hold that (1) California
Labor Code § 226 applies to the class members in both cases
provided they meet the requirements of the Ward test; and
(2) applying § 226 in accordance with the Ward test does not
violate the dormant Commerce Clause, the Airline
Deregulation Act, or the Railway Labor Act. We remand to
the district courts to consider in the first instance whether
United’s wage statements violate § 226, to modify the class
definitions in both cases to conform to the California
Supreme Court’s definition of § 226’s permissible reach,
and to modify the class period in the Ward case to extend to
the date of judgment.

REVERSED and REMANDED.