Petition for Writ of Certiorari — Tidewater Marine Western, Inc. v. California Labor Commissioner

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~ 961496 mar 18 1997

OFFACE OF THE CL@RK

No.

In the Supreme Court

of the

United States

October Term, 1996

TIDEWATER MARINE WESTERN INC., ZAPATA GULF

PACIFIC INC., OFFSHORE MARINE SERVICE

ASSOCIATION, and METSON MARINE INC..,

Petitioners,

LABOR COMMISSIONER OF THE STATE OF

CALIFORNIA, INDUSTRIAL WELFARE COMMISSION OF

THE STATE OF CALIFORNIA, and ALVIN ALLEN et al.,

Respondenis.

On Writ of Certiorari to the

Supreme Court of the State of California

PETITION FOR WRIT OF CERTIORARI

MICHAEL M. JOHNSON

Counsel of Record

RALPH ZAREFSKY

LISA F. HINCHLIFFE

BAKER & HOSTETLER LLP

600 Wilshire Boulevard

Los Angeles, California 90017-3212

(213) 624-2400

Attorneys for Petitioners |

MAR 2 0 1997

SLERK

OFFICE OF THE CLER

AA,

Lorraine Mitchell Legal Briefs

732 E. WASHINGTON BOULEVARD

LOS ANGELES. CALIFORNIA 90021-3088

(213) 747-5631 © FAX (213) 747-5843

CONTENTS REPRODUCED FROM FURNISHED PRETYPED COPY

QUESTIONS PRESENTED

Respondents, labor law enforcement officials for the State of

California, have attempted to regulate the maximum working

hours of seamen serving on petitioners’ United States documented

vessels operating on the high seas and within state territorial

waters off the coast of California. There are no California statutes

which authorize wage and hour jurisdiction at sea, but the

California Supreme Court has held that respondents may apply

wage and hour administrative regulations within the state’s

territorial boundaries. In so doing, it has defined the state

territorial seas as extending beyond the three-mile limits

established by federal law. The questions for review are:

1. Are respondents’ regulatory actions preempted by federal

admiralty law, as set forth in the express exemption of seamen

from land-based maximum hour standards in the Fair Labor

Standards Act, 29 U.S.C. § 213(b)(6), seamen’s maximum

working hours set by the Shipping Act, 46 U.S.C. § 8104, and the

constitutional requirement of uniform federal admiralty law

established by Southern Pacific Co. v. Jensen, 244 U.S. 205

(1917), and its progeny?

2. Can the State of California define its seaward boundaries

beyond the three-mile iimits set by United States v. California,

381 U.S. 139 (1965), and the Submerged Lands Act, 43 U.S.C.

§ 1311, in order to regulate working conditions on federally

documented vessels operating on the high seas?

LIST OF PARTIES

The parties in the trial and appellate proceedings below were

Tidewater Marine Western Inc., Zapata Gulf Pacific Inc., and

Offshore Marine Service Association (plaintiffs at trial and

respondents on appeal); Metson Marine Inc. and San Pedro

Offshore Marine Inc. (plaintiff-intervenors at trial and respondents

on appeal); and Labor Commissioner of the State of California,

Division of Labor Standards Enforcement, Industrial Welfare

Commission of the State of California, and Alvin Allen, et al.

(defendants at trial and appellants on appeal).

Petitioners in this Court are Tidewater Marine Western Inc.,

Zapata Gulf Pacific Inc., Offshore Marine Service Association,

and Metson Marine Inc. (collectively “Petitioners"). Respondents

are Labor Commissioner of the State of California, Industrial

Welfare Commission of the State of California, and Alvin Allen

et al. San Pedro Offshore Marine Inc. has been omitted because

petitioners believe it is no longer operating.

RULE 28.1 LIST OF RELATED CORPORATIONS

Petitioner Tidewater Marine Western Inc. has at all times

relevant to this petition been a subsidiary of Tidewater Inc., a

corporation whose stock is publicly traded. Petitioner Zapata Gulf

Pacific Inc. is currently a subsidiary of Tidewater Inc., although

it was an independently owned corporation during earlier legal

proceedings. Tidewater Inc. has a number of other subsidiary

corporations, but they are all wholly-owned subsidiaries.

Petitioner Offshore Marine Service Association is a non-profit

corporation which acts as a trade association representing the

interests of owners and operators of vessels engaged in offshore

maritime services. Petitioner Metson Marine Inc. is not a

publicly-traded corporation.

QUESTIONS PRESENTED ....................

tbe ro eh are oa Ce ee Rea

RULE 28.1 LIST OF RELATED CORPORATIONS

oo hie pee egies

a PERSIE eRe Etre ae

mE ars oe ee etek

Ill. THE LEGAL PROCEEDINGS ...........___.

ee I is

Oi I Ne

I. THE CALIFORNIA SUPREME COURT HAS

APPLIED AN ADMIRALTY PREEMPTION

ANALYSIS THAT CONFLICTS WITH THIS

eens vob ES Sine ees ee

with Jensen’s Requirement of Maritime

Page

B. The California Supreme Court’s Decision

Incorrectly Requires Express Congressional Intent

to Preclude State Regulation ............. 16

C. The California Supreme Court’s Decision

Incorrectly Elevates the State’s Interest in

Regulating Local Employment Over the Federal

Interest in Uniform Operation of Vessels and their

CE io ee PRR ees eee 19

Il. THE CALIFORNIA SUPREME COURT HAS

REDEFINED THE BOUNDARIES OF STATE

TERRITORIAL SEAS, PERMITTING EXPANSIVE

REGULATION OF MARITIME ACTIVITY ON THE

NE DN ke RG EN ee as 21

Ill. REVIEW BY THIS COURT IS APPROPRIATE AND

Nee. Se aoe We keene eee ee 24

A. The Case is Ripe for Supreme Court Review... 24

B. State Regulation of Seamen’s Overtime Will Have

Great Impact in the Maritime Industry ....... 25

C. This Court’s Guidance is Needed .......... 27

COMLIAIOION bcs Ceres OF eee Eras be ee ee 29

APPRER 66 be ew ae eee ee ee ee A-1-75

Cases

American Dredging Co. v. Miller,

deinen tis Wado ck csc, EEE 14, 15, 27

Anderson v. Manhattan Lighterage Corp.,

148 F.2d 971 (2d Cir.),

cert. denied, 326 U.S. 722 (1945) .............. 5

Askew v. American Waterways Operators Inc.,

OT UR Ses CNN og wo 20, 24

Bender v. Waterman S.S. Corp.,

69 F.Supp. 15 (E.D.Penn. 1946) ............... 6

Bethlehem Steel Co. v. New York State

Labor Relations Board,

330 U.S. 767 EE eae Wel Uae ye hice an 17

Bunn v. Global Marine, Inc.,

428 F.2d 40 (Sth Cir. WNT ee ries a

C.M. Rousseau, Jr. v. Ti eledyne Movable Offshore, Inc.,

619 F.Supp. 1513 (D. La. 1985),

rev'd in part on other grounds,

805 F.2d 1245 (Sth Cir. 1986),

cert. denied, 484 U.S. 827 ( PFE a Se eee 6

Calif. Federal S. & L. v. Guerra,

wae SR EE COE oS Ver ooo ee a ee © 16

Page(s)

Donovan v. Nekton, Inc.,

703 F.2d 1148 (Oth Cir. 1983)... 1. ee ees 18

Fuller v. Golden Age Fisheries,

14 F.3d 1405 (9th Cir. 1996) 2... cc cece eee 28

Huror. v. Portland Cement Co. v. Detroit,

SS U0. GUID ike ewe ee ee he ae hw 24

Jones v. American Export Isbrandtsen Lines, Inc.,

285 F.Supp. 345 (S.D.N.Y. 1968) ..........-+-: 6

Kane v. American Tankers Corporation of Delaware,

219 F.26 GST C6 Cie. TFGS) ov cc cece eee 6

Knickerbocker Ice Co. v. Stewart,

253 Th5. OP Cie koe i'n oe 10, 15, 17

Kossick v. United Fruit Co.,

365 15.5. TSECTOORD aks kno ee be Ca eee 16, 20

London Co. v. Industrial Commission,

290 US. VE TID ike ee es ees pe eee 20

Long v. F/V Melanie,

918 F.Supp. 323 (W.D. Wash. 1996) ........... 28

Lord v. Goodall,

103 US. SAE CTR nk orc a ie eee 16, 20

Page(s)

Lowrimoore v. Union Bag & Paper Co.,

30 F.Supp. 647 (S.D. Ga. 1939),

aff'd, 116 F.2d 27 (Sth Cir. 1940),

cert. denied, 313 U.S. $99 (1941) .............. 5

Miles v. Apex Marine Corp.,

ee Ate SE so Kos fs Sa whe yh Ge 15

Moragne v. States Marine Lines, Inc.,

FN EE EEE abs oS ihe 6 Se a a ee 19

Napier v. Atlantic Coast Line,

Fe Sr ESE Sis GU Ga ey Ss ee toe 17

Norfolk & Western Ry. v. Pub. Utilities Comm.,

Wee ee Gs Ek wk oe 17

Offshore Logistics, Inc. v. Tallentire,

RET SO OE CU a hb BN ei ck ewe. 10, 16, 23

Oil Workers v. Mobil Oil Corp..,

oe ee Et | UIE PNG i eae mS 10, 23

Pacific Merchant Shipping Assn. v. Aubry,

709 F.Supp. 1516 (C.D. Cal. 1989),

reversed, 918 F.2d 1409 (9th Cir. 1990) ......... 10

Pacific Merchant Shipping Assn. v. Aubry,

918 F.2d 1409 (9th Cir. 1990),

cert. denied, 504 U.S. 979 (1992) ..... 10, 11, 16, 28

Vii

Page(s)

Ray v. Atlantic Richfield Co..,

Cae ee 2 RE 6 NK ee ae Le 16, 17, 24

Rice v. Santa Fe Elevator Corp..,

S58 Ai Eh 6 a NER Ee Oe 16

Secretary of Interior v. California,

BON AF Oe es a eS eR EN Ras 22

Skiriotes v. Florida,

Soe Ws ERED 5 Wik a aes A Be ee oe 24

Smith v. Reinauer Oil Transport,

SO eC Ge BD 8 he obs he RE 6

Southern Pacific Co. v. Jensen,

Be te eer ec ee ee ee i, 10, 14-17, 27

Southern Steamship Co. v. N.L.R.B.,

ee Gis OE SEE baie ce ce a wae pe 19

Stanton v. Bayliner Marine Corp.,

Oe Foe UB CM BOGS ve eRe a ew 8 28

State of Washington v. W. C. Dawson & Co.,

DON Sa RET ee eee a ees 15

The Carrier Dove,

Oe © SO ees Se AE sw kc NaN ee kee eee 6

The Lakme,

Pe ie ae el A ek xe as eR ee 6

Vili

TABLE OF AUTHORITIES (cont’d)

Page(s)

The Lottawanna,

derbled oe ceceath \achinc’ AEE oN IN el a aE 15

The Youngstown,

28 F.Supp. 197 (E.D. La. 1939),

aff'd, 110 F.2d 968 (Sth Cir. 1940).............. 6

Toomer v. Witsell,

er RO oe eee re eee 24

Union Fish Co. v. Erickson,

Pe i EE GAs nS eee as 16, 26

United States v. Alaska,

Fee PU NE oe ee Se eee bees he 22

United States v. Alaska,

Se ES eo oo gsc ha oy eos 22

United States v. California,

Dee Mas MOP fo oe ‘, 43, 21, 22, 24

Walling v. Keansburg Steamboat Co..,

er ee Ce Ge, SO eS oe ee ee 5

Weaver v. Pittsburgh Steamship Co.,

153 F.2d 597 (6th Cir.),

cert. denied, 328 U.S. 858 (1946) .............. 5

BLE OF RITI ont’

Page(s)

Worthington v. Icicle Seafoods, Inc.,

774 F.2d 349 (9th Cir. 1984),

vacated on other grounds,

OF5 SS, Fee 8 ha ee al ea ee eA 18

Yamaha Motor Corp., U.S.A. v. Calhoun,

__US.__, 116 S.Ct. 619 (1996) ............ 15

Statutes

S$ Cal. Code Rams. © TIGRO ww ck cece ess 3, 7, 8, 27

poh 2 ee | Ree re eee Se Se a A

, fae 2 Mk °F errr CL ree wee 4, 18

at 2 2 CR tere a eee ese ee rr ae 23

RR 8 oli % GR Aare errs wre eure eS oer on 18

PURE. BAe ae oo Ca VRS EI i, 2, 4, 5, 18

Gb ia 3) eee ee se Se ea is eee 3

ORES OSS oo. eh Re eee eT eee i, 21

gt Leas T >: SERegtree me mere generar eae a foe ge ar ee a 6

8k ae earner eee Sr ea 6

Page(s)

ey ep ties SUI 56 ok 6 5a ek i, 3, 6, 26, 27

ROG Fis oo HAS OR oe oa a 6

Pe Pe ED CE k= 6. oS oR EOS ir RR 4

Se PRES tk CPR eke eee ReaD eS 4

i hd S&S ey oe erie air hans a et Re ee 4d

SE AE I I Ses ee ce ee oe 5

Re Ts RU Ro oe ae ee ee eo 3

Ra Ss IN i i os on Sos cee eae 8, 21

Ge le GE OE PPI 6 oi ok cea bs koe. 7

Cal. Lab. Code §§ 1173 - 1182.1 ............. re es

Ren SEA, BOD 6 i ks bes eke 5

District of Columbia

Ee NED oP SSihc sb ads ae eee 5

SE Me ES Se ee ne pe ets oe us 5

ee aa, BOON) We ek ee eee: 5

Wath SRD hw ds ov okie bk vk veka 5

PN lbs © BETES ok 6 ka kk Sah eae. 5

F TI nt’

Page(s)

Rae CG Be GEE ck vs ks eo ek eh eee eee 7

eee Su. eso vw bee beens 5

Massachusetts G.L.A., ch. 151, § 1A(10)............. 5

a et fg ee ere 5

North Carolina G.S. § 95-25.14(c)(3) ..............-. 5

Pennsylvania Stat. § 333.10S(OM1) .. ec ew ee 5

Wan EL. BSP 8 ov bak besneuee ewes 5

Other

1 NORRIS, THE LAW OF SEAMEN (4th ed. 1985) .......... 6

Comment, "Uniformity--State Wage and Hour Laws,"

23 J. MARITIME LAW & COMMERCE 635

RE 5 vo hike ble Ree a eee 28

Currie, Federalism and the Admiralty:

"The Devil’s Own Mess,"

ee ON Ce A Se ee bn a oh oe dees 28

FRIEDELL, BENEDICT ON ADMIRALTY, § 112

ee, WUE; See osc eos oo ee eee 17, 18

xii

FA TI nt’d

Page(s)

G. GILMORE AND C. BLACK,

The Law of Admiralty (2d ed. eo a 19

Hearings on S. 256, S. 879, S. 895 and Bills Amending the

FLSA Before the Subcomm. on Labor of the Senate

Comm. on Labor and Public Welfare,

eo Me Ceie 4

Hearings on S. 2475 and H.R. 7200 Before the Senate

Comm. on Education and Labor and the House Comm.

on Labor,

eee ee 4

Ruhl, Finding Federalism in the Admiralty:

‘The Devil’s Own Mess’ Revisited,

12 TUL. MARITIME L.J. 263 (1988) .............. 28

S. REP. No. 145, 87th Cong., Ist Sess. (1961) ....... 4, 18

ce 14

U.S. Dept. of Labor, Bureau of Labor Statistics,

Employment & Wages Annual Averages 1994

(Bull. 2467, November 1995) ................ 26

xiii

No.

In the Supreme Court

of the

United States

October Term, 1996

TIDEWATER MARINE WESTERN INC., ZAPATA GULF

PACIFIC INC., OFFSHORE MARINE SERVICE

ASSOCIATION, and METSON MARINE INC.,

Petitioners,

LABOR COMMISSIONER OF THE STATE OF

CALIFORNIA, INDUSTRIAL WELFARE COMMISSION OF

THE STATE OF CALIFORNIA, and ALVIN ALLEN et al.,

Respondents.

On Writ of Certiorari to the

Supreme Court of the State of California

PETITION FOR WRIT OF CERTIORARI

Petitioners Tidewater Marine Western Inc. (Tidewater Western),

Zapata Gulf Pacific Inc. (Zapata Pacific), Offshore Marine Service

Association (OMSA), and Metson Marine Inc. (Metson Marine)

pray that a writ of certiorari issue to review the December 19,

1996, judgment and opinion of the Supreme Court of the State of

California.

OPINIONS BELOW

The opinion of the Supreme Court of the State of California is

reported at 14 Cal.4th 557, 927 P.2d 296 (1996) and is reprinted

in the Appendix at A-1. The opinions of the Court of Appeal of

the State of California and the Superior Court of the County of

Santa Barbara are not reported, but are reprinted in the Appendix

at A-27 and A-41, respectively.

JURISDICTION

The judgment of the Supreme Court of the State of California

was entered on December 19, 1996, reversing the trial court’s

judgment entered February 23, 1994, and affirming the unreported

decision of the Court of Appeal, Second Appellate District,

entered August 1, 1995. Petitioners invoke this Court’s

jurisdiction under 28 U.S.C. § 1257 by praying for a writ of

certiorari to review the judgment of the California Supreme Court.

STATUTES AND REGULATIONS INVOLVED

The Fair Labor Standards Act exempts seamen from land-based

maximum hour and overtime standards. It reads in relevant part:

"The provisions of section 7 of this title [relating to

maximum hours and overtime compensation] shall not apply

with respect to * * *

"(6) any employee employed as a seaman ... ." 29 U.S.C.

§ 213(b)(6).

The Shipping Act prescribes a 12-hour maximum workday for

seamen on federally documented vessels. It reads in relevant part:

"On an oceangoing or coastwise vessel of not more than 100

gross tons (except a fishing, fish processing or fish tender

vessel), a licensed individual may not be required to work

more than ... 12 of 24 hours at sea, except in an emergency

when life or property are endangered." 46 U.S.C.

§ 8104(b).

California Wage Order 9-90 prescribes an 8-hour maximum

workday for employees in the transportation industry, which

includes seamen. It reads in relevant part:

"[E]mployees shall not be employed more than eight (8)

hours in any workday or more than forty (40) hours in any

workweek unless the employee receives one and one-half

(1 1/2) times such employee’s regular rate of pay ... ."

8 CAL. CODE REGs. § 11090.3.

The Submerged Lands Act establishes a state’s seaward

boundaries at a point three miles from the mainland and all

offshore islands, excluding all waters between the islands and

mainiand. It reads in relevant part:

"[{I]n no event shall the term ‘boundaries’ or the term ‘lands

beneath navigable waters’ be interpreted as extending from

the coast line more than three geographical miles into the

Atlantic Ocean or the Pacific Ocean ... ." 43 U.S.C.

§ 1301(b).

The California Government Code establishes the state’s seaward

boundaries at a point three miles beyond the outermost islands,

including all waters between the islands and mainland. It reads in

relevant part:

"All waters between the mainland and the outermost of the

islands, reefs and rocks along and adjacent to the coast of

the State of California ... are declared to be and to have

been in the past inland waters of the State." CAL. GovT.

CopE § 171.

STATEMENT OF THE CASE

This case involves a direct clash between federal and state laws

regulating maritime employment off the coast of California.

Federal and California law adopt entirely different approaches

toward the maximum work day of seamen, entitlement to overtime

compensation, and even the limits of the state’s territorial waters.

Petitioners, who are at the intersection of these conflicting laws,

seek review because the case involves important questions of

federal maritime and constitutional law.

I. BACKGROUND

Since the beginning of minimum wage, maximum hour and

overtime laws sixty years ago, federal law has expressly exempted

seamen from statutory overtime requirements. This principle is

embodied in Section 13(b)(6) of the Fair Labor Standards Act

("FLSA"), 29 U.S.C. § 213(6)(6), a provision which Congress

examined twice in extensive legislative hearings conducted in 1937

and 1961." The seamen’s exemption has been refined by

interpretive regulations issued by the Department of Labor, 29

C.F.R. §§ 783.29 et seq., and by federal case law.

' The FLSA originally exempted seamen from both minimum wage and

overtime provisions. 52 STAT. 1067 § 13(a)(3), c. 676 (1938). In 1961

Congress amended the FLSA to apply the minimum wage to seamen but to

continue their overtime exemption. 75 STAT. 71, §§ 9 & 10 (1961). During

both legislative sessions, Congress recognized the overtime exemption was

appropriate because of the variable and unscheduled working hours of seamen

and the existing regulation of seamen’s working conditions by federal maritime

agencies. E.g., Hearings on S. 2475 and H.R. 7200 Before the Senate Comm.

on Education and Labor and the House Comm. on Labor, 75th Cong., ist Sess.

544-549 (1937); Hearings on S. 256, S. 879, S. 895 and Bills Amending the

FLSA Before the Subcomm. on Labor of the Senate Comm. on Labor and Public

Welfare, 87th Cong., 1st Sess. 376-379 (1961); S. REP. No. 145, 87th Cong.,

Ist Sess. 32-33 (1961). See also, 29 C.F.R. § 783.0 et seq. (discussing the

FLSA legislative history).

jue Lakes tA Air ae aa

Federal cases and the FLSA legislative history have described

two reasons for the longstanding exemption for seamen: (1) the

pervasive degree of federal regulation which already exists over

seamen’s working conditions, hours of work, compensation and

benefits, and (2) the variable and unpredictable nature of a

seaman’s workday, which does not lend itself to the rigid eight

hour a day work standards inherent in land-based overtime

regulations.”

Because of this extensive body of federal law, the seamen’s

exemption from maximum hour and overtime standards has

become a firmly established fixture of admiralty law. With the

exception of California, every state has followed and respected the

federal overtime exemption for seamen. Twelve of the states have

done so by express statutory provisions which largely incorporate

Section 13(b)(6) of the FLSA.?

2 E.g., Lowrimoore v. Union Bag & Paper Co., 30 F.Supp. 647, 652 (S.D.

Ga. 1939), aff'd, 116 F.2d 27 (Sth Cir. 1940), cert. denied, 313 U.S. 559 (1941)

("A valid reason which seems to justify leaving seamen out of the effects of this

Act is the practical difficulty of establishing by any satisfactory evidence what

were their hours of work, when they as employees were always or nearly always

subject to call, though a large and indeterminate portion of their time was

not occupied with work."); Walling v. Keansburg Steamboat Co., 162 F.2d 405,

407 n.6 (3d Cir. 1947) ("Seamen were exempted from operation of the Fair

Labor Standards Act of 1938 so as to avoid conflict of jurisdiction and confusion

of labor relations."); Anderson v. Manhattan Lighterage Corp., 148 F.2d 971,

973 (2d Cir.), cert. denied, 326 U.S. 722 (1945) (same holding); Weaver v.

Pittsburgh Steamship Co., 153 F.2d 597 (6th Cir.), cert. denied, 328 U.S. 858

(1946) (noting that maritime unions strongly advocated the seamen’s exemption

to avoid confusion in jurisdiction and labor relations concerning maritime

employees).

> ALASKA STAT. § 23.10.060; CONNECTICUT G.S.A. § 31-76(b); DisTRICT

OF COLUMBIA CODE § 36-220.3(b)(1); HAWAm R.S. § 387-1(7); KANSAS S.A.

§ 44-1204(c)(1); KENTUCKY S.A. §§ 337.285 & 337.050(2)(b); MAINE R.S.

§ 664(3)(C); MASSACHUSETTS G.L.A., ch. 151, § 1A(10); MINNESOTA STAT.

§ 177.23(7)(17); NORTH CAROLINA G.S. § 95-25.14(c)(3); PENNSYLVANIA

STAT. § 333.105(b)(1); WASHINGTON R.C. § 49.46.130(c).

Although seamen’s overtime compensation has been expressly

excluded from labor law statutes, the subject has long been

addressed by federal admiralty law. From the very beginning of

our nation’s history, the terms and conditions of seafaring work

have been governed by the employment agreement between master

and seaman, as enforced and interpreted by federal law.‘

Seamen’s overtime compensation has accordingly been treated as

a matter of contract between master and seaman.’ And when a

seaman performs duties beyond the working period specified by

contract, admiralty law recognizes an absolute right to fair

compensation for the overtime performed.°

In addition, the Coast Guard regulates the maximum hours of

work and specific working conditions of seamen serving on United

States documented vessels. Following the standards set forth in

the Shipping Act, the Coast Guard issues Certificates of Inspection

which specify crewing requirements and the maximum hours of

work at sea and in harbor conditions.’ In the proceedings below,

* E.g., Bunn v. Global Marine, Inc., 428 F.2d 40, 46 (Sth Cir. 1970); 1

NorRIS, THE LAW OF SEAMEN § 6:1 (4th ed. 1985).

* The Youngstown, 28 F.Supp. 197, 199 (E.D. La. 1939), aff'd, 110 F.2d

968, 970 (Sth Cir. 1940); Jones v. American Export Isbrandtsen Lines, Inc., 285

F.Supp. 345, 346-47 (S.D.N.Y. 1968); Kane v. American Tankers Corporation

of Delaware, 219 F.2d 637, 639 (2d Cir. 1955); C.M. Rousseau, Jr. y. T. eledyne

Movable Offshore, Inc., 619 F.Supp. 1513, 1518-19 (D. La. 1985), rev'd in part

on other grounds, 805 F.2d 1245 (Sth Cir. 1986), cert. denied, 484 U.S. 827

(1987); see also, Smith v. Reinauer Oil T, ransport, 256 F.2d 646, 652 (ist Cir.

1958).

° The Lakme, 93 F. 230, 231-32 (D. Wash. 1899); Bender v. Waterman

S.S. Corp., 69 F.Supp. 15, 19 (E.D.Penn. 1946); The Carrier Dove, 98 F. 313,

314 (D. Wash. 1899).

” 46 U.S.C. §§ 8101 & 8104, quoted at pp. 2-3, supra. Section 8104 is a

recodification of 46 U.S.C. § 673, which was first enacted in 1915. See ch.

153, § 2, 38 Stat. 1164 (1915).

it Rg ah Te BN tae 8 pF RIES,

roo hey

ity ee uae

the Coast Guard Officer formerly in charge of the Southern

Califoraia area submitted an undisputed declaration which

described the Coast Guard’s concern for the working conditions

and maximum hours of work for seamen serving on all United

States documented vessels.®

Il. THE FACTS

This case arose in 1987, when California’s labor law

enforcement officials departed from the nation’s uniform practice

of excluding seamen from overtime regulation.° Using an internal

interpretation of wage and hour regulations. respondents began

applying California’s general Wage Orders” to maritime

employers operating off the coast of California.

The state statutes which regulate wages and hours of work

explicitly limit jurisdiction to employment activities within the

State of California; they do not grant authority over workers

* Declaration of Captain Robert A. Janecek, USCG (Ret.), C.T. at 278-82.

The declaration is reprinted in the Appendix at A-71.

* Under California law, the Labor Commissioner is the chief officer of the

Division of Labor Standards Enforcement. The Labor Commissioner has

authority to investigate employee complaints concerning wages, hours and

working conditions, and to resolve the complaints through informal

administrative hearings. CAL. LAB. CODE $§ 79-105.

The state’s minimum wage and maximum hour regulations, called "Wage

Orders," are adopted by respondent Industrial Welfare’ Commission through

public rulemaking proceedings. CAL. LAB. CODE §§ 1173 - 1182.1. The Wage

Orders cover a number of industries and occupations, and Wage Order 9-90

applies to employees working in the transportation industry. 8 CAL. CODE REGs.

§ 11090.

employed at sea or beyond state boundaries." Like the Statutes,

the Wage Orders do not address jurisdiction over workers

employed at sea or beyond state boundaries.” Nevertheless,

respondents used an internal manual to define the scope of the

State’s wage and hour jurisdiction at sea. That manual was not

adopted through public rulemaking or officially published among

the state’s formal rules and regulations.

Respondents applied these internal standards to petitioners, who

are all involved in maritime activities off the coast of California.

Petitioners Tidewater Western, Zapata Pacific and Metson Marine

are traditional maritime firms that have operated in California for

many years. Petitioner OMSA is a trade association representing

the interests of owners and operators of vessels engaged in

offshore maritime services.

Petitioners operate seagoing vessels which regularly travel more

than three nautical miles off the coast of California. In the Santa

Barbara Channel, the vessels principally transport crews and

supplies to and from offshore oil drilling platforms lying from one

" The statutes provide that the Labor Commissioner has enforcement

authority over the hours and working conditions of all employees employed in

any occupation “in the state," and they give the IWC regulatory authority over

workers “emploved in this state." CAL. LAB. CODE §§ 1193.5(a) & 1173.

? The transportation industry Wage Order simply states that it covers

employees who work on "water," without any description of its territorial reach.

8 CAL. CODE REGS. § 11090.1 & .2(C).

'* The manual provided that state wage and hour jurisdiction extended to

vessels “operating exclusively between California ports, or returning to the same

port, if the employees in question entered into employment contracts in

California and are residents of California." C.T. at 356-58. The Labor

Commissioner applied the provision expansively, believing thai its maritime

jurisdiction extended to any vessel operating between ports in California, without

regard to how far off the coast the vessel travels, how long it is at sea, or how

large it may be.

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to twelve nautical miles off the coast. This involves traditional

seafaring activity and travel between the platforms and local

harbors. Petitioners perform these operations with large seagoing

vessels that range from 65 to 217 feet in length, each equipped

with a galley and living quarters for the crew. They operate 24

hours a day and may be called to duty at any time.

Crew members on petitioners’ vessels are traditional seamen,

performing maritime duties associated with Navigation and

operation of the vessels. They work on schedules that include

duty or watch periods of 12 hours in 24-hour periods. Work is

not constant during the watch periods, as vessels are frequently

inactive and crews may Sleep, eat or engage in their own pursuits

during periods of inactivity. Although they are on watch for

longer periods, crew members generally engage in work for no

more than 8 hours in a 24-hour period.

Petitioners’ vessels and crew are subject to pervasive and

uniform federal regulations. All of the vessels are federally

documented, all masters are licensed by the Coast Guard, and all

crew members have Merchant Mariner documents issued by the

Coast Guard. The Coast Guard inspects and issues a separate

Certificate of Inspection for each vessel, which specifies the

manning requirements for 24-hour operation, including the number

of crew and their maximum hours of work.

Crew members on the vessels have always had employment

agreements which provided for a flat daily rate of pay without

Overtime compensation. This is the traditional method of

compensating seamen engaged in offshore Maritime activity

throughout the United States, reflecting their variable hours of

work and prolonged periods of inactivity. This method of

compensation — as well as the overall work patterns on offshore

vessels — developed in response to the maximum working hours

established by the Shipping Act and the seamen’s overtime

exemption under the FLSA.

lil. THE LEGAL PROCEEDINGS

A. Federal Court

Because respondents’ assertion of overtime jurisdiction

threatened to disrupt the traditional maritime work patterns

sanctioned by federal law, Tidewater Western, OMSA and other

maritime employers initially challenged respondents’ actions in a

lawsuit based on federal grounds.”

In 1989, the District Court for the Central District of California

declared that respondents’ jurisdiction over maritime employees

was preempted by federal maritime law and issued a permanent

injunction prohibiting the enforcement of state overtime

regulations. Pacific Merchant Shipping Assn. v. Aubry, 709

F.Supp. 1516 (C.D. Cal. 1989). In reaching this result, the

District Court followed the constitutional requirement of a uniform

system of admiralty law, citing this Court’s decisions in Southern

Pacific Co. v. Jensen, 244 U.S. 205 (1917), Knickerbocker Ice

Co. v. Stewart, 253 U.S. 149 (1920), Oil Workers v. Mobil Oil

Corp., 426 U.S. 407 (1976), and Offshore Logistics, Inc. v.

Tallentire, 477 U.S. 207 (1986). The District Court found that

uniformity was impossible because state and federal law "produce

widely differing results" when applied to seamen. 709 F.Supp. at

1524.

In 1990, a three-judge panel of the Ninth Circuit Court of }

Appeals reversed the District Court’s decision, with one judge

dissenting. Pacific Merchant Shipping Assn. v. Aubry, 918 F.2d

1409 (9th Cir. 1990). The Ninth Circuit majority also considered .

whether the conflict between state and federal overtime standards :

violated the requirement of maritime uniformity, but concluded E

that the federal scheme of maritime regulation and interest in

Petitioners Zapata Pacific and Metson Marine were not parties to that

action.

maritime uniformity were outweighed by California’s interest in

regulating seamen. 918 F.2d at 1425.

In July 1991, Tidewater Western and other parties in the federal

case filed separate petitions in this Court for a writ of certiorari to

review the Ninth Circuit’s decision. Tidewater Marine Service

Inc. v. Aubry, No. 91-142 and Pacific Merchant Shipping Assn.

v. Aubry, No. 91-349. During extended consideration of the

petitions, the Court asked the Solicitor General to express the

views of the United States. 502 U.S. 1002.

The Solicitor General responded with a brief which described

the case as one presenting "difficult and novel issues concerning

a State’s exercise of its traditional powers to regulate the minimum

wages of its citizens in the context of maritime employment."

App. at A-56."° The Solicitor General nevertheless concluded

that “although this Court may ultimately need to resolve the issues

presented, we do not believe that review is necessary at this time.

Rather, it would be appropriate to defer judgment on the

constitutional question ... at least until potentially dispositive state

law issues have been addressed by the California state courts." Jd.

The Court denied the petitions for certiorari in June 1992, 504

U.S. 979, and in July 1992 the District Court’s injunction was

vacated.

B. State Court

After the federal proceedings ended, respondents resumed their

assertion of wage and hour jurisdiction over maritime employees.

In addition, individual seamen filed 24 lawsuits in state court for

recovery of overtime compensation against Tidewater Western,

Zapata Pacific, Metson Marine, and seven other maritime firms.

'S The Solicitor General's brief is included in the Appendix at A-48.

The seamen claimed overtime compensation equal to millions of

dollars in back pay liability.

Petitioners filed their own action against respondents for

declaratory and injunctive relief, raising the state law issues which

the Solicitor General identified as an impediment to this Court’s

review during the 1991 term. Petitioners’ complaints alleged that

the respondents were asserting wage and hour jurisdiction which

exceeded statutory and administrative authorization under state

law. Zapata Pacific and Metson Marine, which had not

participated in the earlier federal case, also alleged that

respondents’ actions were preempted by federal admiralty law.

C.T. at 13, 113 & 132.

In November 1993, the trial court granted summary judgment

in favor of petitioners and enjoined the enforcement of state wage

and hour laws at sea. Although following the Ninth Circuit’s

earlier determination that respondents’ actions were not preempted

by federal admiralty law, App. at A-42, the trial court struck

down respondents’ actions on state law grounds. In particular, the

trial court concluded that there was no statutory or regulatory

authority for state wage and hour jurisdiction to extend beyond the

three-mile coastal boundaries established by federal law. /d. at

A-42-43. The trial court ruled that the only source of such

maritime jurisdiction was respondents’ internal manual, which had

not been adopted publicly and was therefore invalid and

unenforceable under the California Administrative Procedures Act.

Id. at A-43-46.

In August 1995, the Court of Appeal reversed the trial court in

an unreported opinion. It followed the Ninth Circuit’s earlier

decision finding no preemption, and it held that state law permitted

respondents to exercise maritime jurisdiction. App. at A-27.

The California Supreme Court granted discretionary review in

November 1995 and issued its decision on December 19, 1996.

The court’s opinion fully analyzed federal admiralty preemption.

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Like the Ninth Circuit, it concluded that California could exercise

wage and hour jurisdiction over seagoing vessels because Congress

had not expressed a “clear and manifest” intent to foreclose state

regulation of seamen. App. at A-5-8 & 23-25.

On state law issues the court struck down respondents’ internal

manual defining the scope of wage and hour jurisdiction at sea,

but nevertheless held that respondents could apply the Wage

Orders to the fullest extent of the state’s territorial seas. In

defining California’s seaward boundaries, the court rejected

petitioners’ contention that federal interests required the court to

follow the three-mile limits set by United States v. California, 381

U.S. 139 (1965). The court instead applied the seaward

boundaries defined by state law, which include the high seas

between offshore islands and the mainland. With the benefit of

this expansive state law boundary, the court held that respondents

could regulate seamen’s maximum hours of work on petitioners’

vessels operating on federally-defined high seas. App. at A-5-7 &

21-23.

REASONS FOR GRANTING THE WRIT

I, THE CALIFORNIA SUPREME COURT HAS APPLIED

AN ADMIRALTY PREEMPTION ANALYSIS THAT

CONFLICTS WITH THIS COURT’S DECISIONS”

As we have explained, the subject of maximum hours and

overtime compensation for seamen has not been excluded from

federal admiralty law. It has instead been addressed in three

ways: (1) seamen’s overtime has historically been a matter of

contract between master and seaman, (2) seamen’s maximum

hours of work have been regulated by the Shipping Act and the

Coast Guard’s manning standards and Certificates of Inspection,

'* This preemption argument is made by petitioners Zapata Pacific and

Metson Marine, which were not parties to the Pacific Merchant Shipping case.

and (3) on two separate occasions Congress has specifically

excluded seamen from the land-based overtime standards of the

FLSA.”

The California Supreme Court has permitted respondents to

supersede this body of federal admiralty law by regulating the

maximum hours and overtime compensation of seamen. It has

done so by applying a land-based Wage Order which is expressly

limited to employment within the state’s territorial boundaries and

does not even address jurisdiction at sea. The court has reached

this anomalous result with a preemption analysis that directly

conflicts with decisions of this Court and establishes new standards

for state regulation of maritime employment at sea. The end result

is a decision of enormous importance and widespread impact

within the maritime industry. Certiorari is accordingly proper and

should be granted.

A. The California Supreme Court’s Opinion Conflicts

with Jensen’s Requirement of Maritime Uniformity

This Court has long emphasized the need for uniformity in

federal admiralty law, based upon the federal courts’ responsibility

for “all cases of admiralty and maritime jurisdiction." U. S.

Const., art. Ill, §2, cl. 1. As the Court recently declared in

American Dredging Co. v. Miller, 510 U.S. 443, 451 (1996):

"One thing, however, is unquestionable: the

Constitution must have referred to a system of law

coextensive with, and operating uniformly in, the whole

country. It certainly could not have been the intention to

place the Rules and limits of maritime law under the

disposal and regulation of the several States, as that would

have defeated the uniformity and consistency at which the

Constitution aimed ... .”

” See discussion, supra, at pages 4-7.

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quoting The Lottawanna, 88 U.S. 558, 575 (1874). Accord, Miles

v. Apex Marine Corp., 498 U.S. 19, 27 (1990).

In the seminal case of Southern Pacific Co. v. Jensen, supra,

244 U.S. at 217, the Court made it clear that maritime uniformity

is a requirement of constitutional dimensions. Jensen held that

federal admiralty law preempted application of state workers’

compensation laws to maritime employees working in New York

Harbor, because "“[t]he mecessary consequence would be

destruction of the very uniformity in respect to maritime

matters which the Constitution was designed to establish; and

freedom of navigation between the states and with foreign

countries would be seriously impeded." Accord, Yamaha Motor

Corp., U.S.A. v. Calhoun, U.S. __, 116 S.Ct. 619, 628 n.

13 (1996) ("Permissible state regulation, we have recognized, must

be consistent with federal maritime principles and policies.");

Knickerbocker Ice Co. v. Stewart, supra, 253 U.S. at 166; State

of Washington v. W. C. Dawson & Co., 264 U.S. 219, 227-28

(1924).

The Court recently applied the Jensen requirement of maritime

uniformity in American Dredging Co. v. Miller, supra, 510 U.S.

at 447. There the Court drew the distinction between state actions

that are procedural, and unlikely to affect maritime uniformity,

and those which are substantive, and “establish a rule upon which

maritime actors rely in making decisions about primary conduct —

how to manage their business and what precautions to take.” 510

U.S. at 454.

The state regulations in this case go to the heart of business

management and other “primary conduct." Respondents are

regulating the working conditions of seamen who serve on

petitioners’ United States documented vessels, and they are doing

so in a manner that imposes prohibitive financial penalties for

conduct that meets federal standards. Maritime uniformity is

destroyed by a system of fragmented and conflicting laws which

differ greatly from federal admiralty law and which are subject to

change from one state to another. This case is accordingly no

different from Jensen and other decisions by this Court which

have preempted fragmented state regulation of maritime

activity. '*

B. The California Supreme Court’s Decision

Incorrectly Requires Express Congressional Intent

to Preclude State Regulation

The California Supreme Court’s opinion conflicts with decisions

of this Court not only in its overall holding, but also as to the

particular form of preemption analysis which was applied. In

analyzing preemption, the court said "our sole task is to ascertain

the intent of Congress." App. at A-9, quoting Calif. Federal S.

& L. v. Guerra, 479 U.S. 272, 280 (1987). The court also held

that Congressional intent to preempt state regulation must be

"clear and manifest." App. at A-9, quoting Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947).°

'* E.g., Offshore Logistics, Inc. v. Tallentire, supra, 477 U.S. 207 (refusing

to apply state law to oil platform workers killed on the high seas); Ray v. Atlantic

Richfield Co., 435 U.S. 151 (1978) (refusing to apply Washington design

standards for oil tankers); Kossick v. United Fruit Co., 365 U.S. 731 (1961)

(refusing to apply New York statute of frauds to seaman’s oral contract

concerning medical care); Union Fish Co. v. Erickson, 248 U.S. 308 (1919)

(refusing to apply California’s statute of frauds to a seaman’s oral contract of

employment); Lord v. Goodall, 102 U.S. 541 (1881) (refusing to apply California

contract law in place of admiralty rules limiting a vessel owner's liability in a

breach of contract action for damage to cargo).

'° This was the same preemption analysis employed by the Ninth Circuit's

decision in Pacific Merchant Shipping, where that court held that “the historic

powers of the States were not to be superseded by [federal legislation] unless that

was the clear and manifest purpose of Congress." 918 F.2d at 1416 (emphasis

in original).

Taner eeeeree ee ee nye eee me |

This exclusive focus on Congressional intent misses the critical

test for maritime preemption.” It is true that this Court has held

that state regulation of maritime conduct may be preempted —

through the familiar test of Congressional intent applied below by

the California Supreme Court. E.g., Ray v. Atlantic Richfield

Co., supra, 435 U.S. at 157-58. But in the context of maritime

operations this Court’s decisions have also emphasized a second

dimension to preemption: the practical consequences of

fragmented state regulation. Indeed, in Jensen and Knickerbocker,

the Court refused to permit enforcement of workers’ compensation

laws in the face of express Congressional intent to permit state

regulation — simply because the practical consequence would

produce fragmentation and confusion.

The approach taken by the California Supreme Court also

ignores the concept of “negative preemption" which this Court

described in Ray v. Atlantic Richfield Co., supra, 435 U.S. at 178:

"The Court has previously recognized that ‘where failure of

. federal officials affirmatively to exercise their full

authority takes on the character of a ruling that no such

regulation is appropriate or approved ...’ States are not

permitted to use their police power to enact such a

regulation."

quoting Bethlehem Steel Co. v. New York State Labor Relations

Board, 330 U.S. 767, 774 ( 1947). Accord, Napier v. Atlantic

Coast Line, 272 U.S. 605 (1926); Norfolk & Western Ry. v. Pub.

Utilities Comm., 926 F.2d 567, 570 (6th Cir. 1991); FRIEDELL,

BENEDICT ON ADMIRALTY, § 112 (7th ed. rev. 1996), p. 7-37 ("As

* The court’s test also demands extraordinary foresight on the part of

Congress. Because there were no states which even attempted to regulate

overtime compensation for seamen in 1937 and 1961, Congress hardly had

reason to consider the question of state preemption and express its views in

"clear and manifest" language.

the Supreme Court has long recognized, the absence of a federal

right of recovery may suggest a strong federal interest, and when

a state ‘supplements’ the federal law by adding a cause of action

it thereby deprives the defendant of a substantive right to be free

of an obligation.").

This holding is certainly applicable here. Congress has

expressly declared in Section 13(b)(6) of the FLSA that seamen

Should be exempt from land-based maximum hour and overtime

Standards. This was the product of legislative hearings in 1937 at

which Congress accepted testimony about the peculiar and variable

working hours of seamen and the dangers of confusion between

maritime and labor regulations." Congress reexamined the issue

in 1961, concluding that only the FLSA minimum wage provisions

s* ~ald be extended to seamen.” In short, Congress did not leave

out seamen because of oversight or neglect — it carefully and

deliberately drew a line that excludes seamen from land-based

overtime regulations.”

*! See legislative materials, supra, notes 1 & 2.

2 When applying the minimum wage to seamen, Congress was careful to

enact special provisions which recognize the unique working hours of seamen.

Section 6(a)(4) of the FLSA accordingly prescribes a special minimum wage

computation for seamen, based upon the hours they are “actually on duty” and

not just on call. 29 U.S.C. § 206(a)(4). See also, S.REP. No. 145, 87th Cong.,

Ist Sess. 32-33 (1961) (explaining legislative intent).

* That line has been extended by a substantial body of law, consisting of

federal regulations and court decisions, which define the precise scope of the

seaman’s exemption. Following the intent of Congress, they distinguish land-

based and traditional seafaring activity by applying the seamen’s exemption only

to "one who performs service primarily to aid in the operation of a vessel as a

means of transportation." Worthington v. Icicle Seafoods, Inc., 774 F.2d 349,

353 (9th Cir. 1984), vacated on other grounds, 475 U.S. 709 (1986); Donovan

v. Nekton, Inc., 703 F.2d 1148 (9th Cir. 1983); 29 C.P.R. § 783.29.

The underlying rationale for Congress’ exclusion of seamen

from the FLSA applies with even greater force to state overtime

laws. Land-based labor Standards, whether state or federal, are

equally inappropriate for the variable workday of a seaman.

There is much greater opportunity for confusion between labor and

4 maritime regulations when multiple state jurisdictions are involved.

E Seagoing vessels are moving worksites, which regularly travel

3 between territorial waters and the high seas and from one state’s

g jurisdiction to another. Allowing states to regulate working

a conditions on vessels will necessarily cause fragmentation and

conflict.

C. The California Supreme Court’s Decision

Incorrectly Elevates the State’s Interest in

Regulating Local Employment Over the Federal

Interest in Uniform Operation of Vessels and their

Crews

q In upholding respondents’ regulation of maximum hours of work

for seamen, the California Supreme Court emphasized that state

regulation was appropriate because the affected employees were

California residents who worked on vessels operating in local

waters off the California coast. App. at A-24-25. This aspect of

the state court’s preemption analysis is a sharp departure from this

Court’s decisions.

Federal admiralty jurisdiction includes all navigable waters

which may be used in commerce. This Court’s decisions have

recognized the need for maritime uniformity wherever admiralty

jurisdiction extends, with equal attention to state territorial waters

and the high seas. E.g., Moragne v. States Marine Lines, Inc.,

* Southern Steamship Co. v. N.L.R.B., 316 U.S. 31, 41 (1942) ("It has

long been settled that the admiralty and maritime jurisdiction of the United States

includes all navigable waters within the country.”); G. GILMORE AND C. BLACK,

THE LAW OF ADMIRALTY § 1-11 at 31 (2d ed. 1975).

398 U.S. 375 (1970) (establishing a uniform federal maritime

remedy for wrongful death within state territorial waters).

This Court has recognized no lesser standard of preemption for

vessels operating in local waters. Lord v. Goodall, supra, 102

U.S. 541, held that federal admiralty law preempted state statutes

concerning a vessel which operated an exclusive route between

San Francisco and San Diego off the coast of California. London

Co. v. Industrial Commission, 279 U.S. 109 (1929), found

preemption of state laws concerning an accident which occurred

only 3/4 mile off the coast of California.

By the same token, the Court has applied preemption even when

there are strong local contacts between a maritime transaction and

a particular state. In Union Fish Co. v. Erickson, supra, 248 U.S.

308, the Court refused to apply California’s statute of frauds to a

seaman’s oral contract of employment made within the state,

holding that maritime uniformity would have been defeated by

fragmented state regulation. The Court reaffirmed that holding

more than forty years later in the face of even stronger local

contacts in Kossick v. United Fruit Co., supra, 365 U.S. 731.

The federal interest in the uniform operation of maritime law

has found its greatest expression in cases involving “suits relating

to the relationship of vessels, plying the high seas and our

navigable waters, and to their crews." Askew v. American

Waterways Operators Inc., 411 U.S. 325, 344 (1973). This

certainly applies here, for this is a case involving matters which

go to the heart of the relationship between a vessel and its crew.

Respondents are directly regulating working conditions on board

petitioners’ vessels, by imposing maximum working hours for

crew members.”

2S The state interests in this case are also weak and poorly defined. The

California Legislature has not authorized respondents’ activities, as the relevant

statutes do not authorize jurisdiction at sea and are in fact limited to working

a eee

ll. THE CALIFORNIA SUPREME COURT HAS

REDEFINED THE BOUNDARIES OF STATE

TERRITORIAL SEAS, PERMITTING EXPANSIVE

REGULATION OF MARITIME ACTIVITY ON THE

HIGH SEAS

In United States v. California, supra, 381 U.S. at 165-66, this

Court held that a state’s seaward boundaries extend three miles

from its shoreline under the terms of the Submerged Lands Act,

43 U.S.C. §§ 1311 et seq. Applying the Act specifically to

California, the Court held that the high seas between the three-

mile belt around offshore islands and the mainland are federal

waters beyond the state’s boundaries. Jd.

The location of California’s seaward boundary is a critical issue

in this case. The statutes which establish respondents’ regulatory

powers only authorize jurisdiction within the state’s territorial

boundaries. CAL. Lab. CopE §§ 1173 & 1193.5(a). All of the

courts below therefore concluded that the state territorial seas

defined the limits of respondents’ regulatory authority. App. at

A-23-25, 33-35, & 42-44. While the courts all agreed with that

proposition, they adopted entirely different locations for the State’s

seaward boundaries and territorial seas.

The trial court followed the three-mile seaward boundaries

established by federal law, concluding that respondents had no

power to regulate working conditions on vessels operating on the

high seas between offshore islands and the California coastline.

App. at A-42-43. The California Supreme Court (like the Court

of Appeal, see App. at A-35) declined to follow the federal

boundaries. It applied the boundaries defined by state law, which

include the high seas between the offshore islands and mainland.

conditions "in the state." Similarly, the relevant Wage Order does not address

ships or jurisdiction at sea. The only explicit standard for maritime Jurisdiction

was an internal manual, which the California Supreme Court has struck down.

The court accordingly held that respondents could regulate

working conditions on the high seas — no differently than

worksites on shore or on inland lakes and rivers. App. at A-6-8

& 23-25. There can be no justification for the California

Supreme’s refusal to follow and apply the state’s federally defined

boundaries.

The three-mile limit is a firmly-established principle of law,

which this Court has applied without exception to establish the

location of a state’s seaward boundaries and the limits of state

territorial seas. E.g., United States v. Alaska, 503 U.S. 569, 584

(1992); Secretary of Interior v. California, 464 U.S. 312, 315

(1984); United States v. Alaska, 422 U.S. 184, 188 (1975). In

United States v. California, supra, 381 U.S. at 171-72, the Court

specifically held that the high seas of the Santa Barbara Channel

— the precise area where this case arose — were federal waters

beyond California’s seaward boundaries.

The three mile limit is an accepted and widely followed

demarcation between state and federal jurisdictions. In the lower

courts, respondents themselves agreed that California’s seaward

boundaries were governed by federal law and excluded the high

seas between the mainland and offshore islands. C.T. at 646;

DLSE Ct. App. Br. at 4. The California Supreme Court's

departure from this federal demarcation is totally at odds with the

accepted and traditional rules that govern maritime affairs.

This Court has repeatedly recognized that federal interests are

paramount and exclusive on the high seas beyond the three mile

territorial limits. In the United States v. California decisions, the

Court held that "national interests, responsibilities, and therefore

national rights are paramount in waters lying to the seaward in the

three-mile belt," 332 U.S. at 36, and the Court decreed that the

seas beyond three miles "have appertained and now appertain to

the United States, and have been and now are subject to its

exclusive jurisdiction,” 382 U.S. at 449 (emphasis added). The

California Supreme Court | ias disregarded these federal interests,

by redefining the high seas as its own territorial waters in order to

permit state regulation of shipboard activity.

The California Supreme Court’s disregard of federal interests is

particularly wrong in this case. Petitioners Operate commercial

seagoing vessels whose working hours and other operations are

subject to pervasive federal regulations. The vessels are all

documented under the laws of the United States, all crew are

licensed by the Coast Guard, all shipboard operations are regulated

by the Coast Guard, and the vessels operate daily in federal

waters. With such strong federal interests involved, there is

simply no basis to employ state-defined boundaries to permit state

regulatory activities on the high seas.

In deciding issues involving the relations between crew members

and federally documented vessels operating on the high seas, this

Court has consistently applied federal rather than State law. For

example, in Oil Workers v. Mobil Oil Corp., supra, 426 U.S. 407,

this Court decided whether the National Lavor Relations Act

Savings clause, 29 U.S.C. § 164(b), permitted application of the

Texas right-to-work laws to seamen employed on United States

documented oil tankers operating principally on the high seas.

The lower courts held that Texas law applied because of the

substantial state interests in regulating the seamen’s employment

and the predominant state contacts with the hiring and employment

process. This Court reversed, holding that the predominant job

situs was the proper standard for measuring applicability of state

law. Since the vessels operated primarily on the high seas, the

Court held that neither Texas nor any other state had a sufficient

interest to regulate the relationship between a vessel and its crew.

426 U.S. at 412-21. Accord, Offshore Logistics, Inc. vy.

Tallentire, supra, 477 U.S. at 220-33.

Because of the strong local interest in protecting the shoreline

from environmental harm, some of this Court’s decisions have

permitted limited state regulation of shipboard activity — but only

within the three-mile state territorial zone. See Ray v. Atlantic

Richfield Co., supra, 435 U.S. 151 (permitting application of state

statute concerning tug-escorts to certain tankers in confined

waters); Askew v. American Waterways Operators, Inc., supra,

411 U.S. 325 (permitting application of state statute concerning oil

spill damage to the shoreline); Huron v. Portland Cement Co. v.

Detroit, 362 U.S. 440 (1960) (permitting application of city air

pollution regulations to tankers within a harbor).”°

The California Supreme Court’s decision dramatically expands

this limited authority. By following the state’s own unique

definition of its seaward boundaries, it expands the state’s

territorial seas and permits state regulation of working conditions

on the high seas. That expansive result is inconsistent with this

Court’s decisions and with the clear and uniform seaward

boundaries established by federal law.

Ill. REVIEW BY THIS COURT IS APPROPRIATE AND

NECESSARY

A. The Case is Ripe for Supreme Court Review

During the 1991 term, the Solicitor General described the

preemption issues in this case as presenting “difficult and novel

issues concerning a State’s exercise of its traditional powers to

regulate the minimum wages of its citizens in the context of

26 Other cases contain dictum which suggests that the states may exercise

police powers beyond their territorial seas. See Skiriotes v. Florida, 313 U.S.

69, 75 (1941) (laws restricting state citizens engaged in sponge farming in state

and federal waters), and Toomer v. Wiisell, 334 U.S. 385, 393 (1948) (laws

restricting state citizens engaged in shrimping in state and federal waters). These

cases were decided before the Court’s clear demarcation of federal/state

boundaries in cases such as United Siates v. California, and the enactment of the

Submerged Lands Act. They also relate to fishing and preservation of natural

resources, a traditional concern of the states, and not to the regulation of

shipboard working conditions, which is a traditional federal concern.

Po eee ee ea ee, eee Se TT eee

cote Wa nt Be Bs tT, ony se eee ee

maritime employment." App. at A-56. The Solicitor General also

recognized the merit of petitioners’ arguments against state

Overtime regulations:

"[T]here is, we believe, considerable force to petitioners’

arguments that state law should not apply to their

Operations. The interest in the uniformity of maritime law

has retained the greatest force with respect to ‘suits relating

to the relationship of vessels, plying the high seas and our

navigable waters, and to their crews.’ In terms of their

effect on vessels and their crews, overtime compensation

laws are in many respects similar to the workers’

compensation law at issue in Jensen itself, and the state

Statute of frauds that this Court held could not bar a seaman

from recovering damages under an oral contract with a

vessel owner in Kossick v. United Fruit Co." App. at A-66

(Citations omitted).

Despite the strength of these points, the Solicitor General

concluded that “although this Court may ultimately need to resolve

the issues presented," it was appropriate to defer review "at least

until potentially dispositive state law issues have been addressed

by the California state courts." App. at A-56.

Those state law issues have now been decided, and the

California Supreme Court has done so in a manner that enhances

the clash between the federal and state interests in this case.

Review by this Court is appropriate now, and should be granted.

B. State Regulation of Seamen’s Overtime Will Have

Great Impact in the Maritime Industry

This is by no means a case with limited importance or

application. Because these proceedings arose in California, this

Case necessarily has a great impact on the United States maritime

industry. According to figures compiled by the Bureau of Labor

Statistics, more than 9.59% of all United States maritime

employees are based in California.”

The State of California has a similarly disproportionate share of

maritime employees in the offshore sub-industries that will be

most affected by respondents’ overtime jurisdiction: water

transportation services (10.56% of all U.S. employees), water

passenger transportation (7.75% of all U.S. employees), water

ferries (8.58% of ali U.S. employees), marine cargo handling

(14.17% of all U.S. employees), and towing and tugboat services

(4.45% of all U.S. employees). Jd.

The California Supreme Court’s decision has accordingly

removed the longstanding seamen’s exemption for approximately

one out of every ten offshore maritime employees in the United

States. The impact will of course be greater if additional states

apply their overtime provisions to maritime employees.

From an economic and operational standpoint, the California

Supreme Court’s decision will also have an enormous impact on

maritime employers. The Shipping Act, 46 U.S.C. § 8104(b), and

Coast Guard Certificates of Inspection for of’shore vessels now set

a maximum work period of twelve hours per day on crew and

supply vessels like those operated by petitioners. As the Coast

Guard Officer who submitted a declaration to the trial court

explained, reliance upon these federal standards has created an

accepted and customary twelve hour work day throughout the

offshore maritime industry.”

2 U.S. Dept. of Labor, Bureau of Labor Statistics, Employment & Wages

Annual Averages 1994 (Bull. 2467, November 1995) at pp. 330-35.

2 Declaration of Capt. Robert Janecek, App. at A-74-75 (“In all of the

years I have been involved in supervising the manning requirements for crew

boats and supply boats of the type operated by Tidewater, I have always

considered and understood the twelve hour shift to be the normal workday for

seamen (including officers) serving on these type vessels.").

Continuing these customary practices in the face of respondents’

State overtime regulations is simply not a feasible alternative. The

California Wage Order requires premium overtime pay at one and

one-half or two times the regular rate of pay for work exceeding

eight hours in any day, the first eight hours on the seventh day of

work, and forty hours in any week. 8 Cal. CODE REGs.

§ 11090.3. The customary twelve hour workday would therefore

produce at least four hours of premium pay each day (or six

additional hours of regular pay at the one and one-half overtime

rate) — resulting in seamen earning considerably more than the

captain of their vessels.

The economic pressures caused by respondents’ maximum hour

standards would accordingly require maritime employers to

restructure seamen’s work periods to come closer to the land-based

standards prescribed by the California Wage Order, without regard

to the operational needs of the vessels or their work. This will

necessarily require premium overtime pay, the employment of a

greater number of seamen, and correspondingly higher costs to

maritime employers. The practical consequences of respondents’

actions are enormous.”

C. This Court’s Guidance is Needed

The limits of Southern Pacific Co. v. Jensen and federal

admiralty preemption is an area known for its confusion and

uncertainty.” The principles established by the Ninth Circuit's

*® For this reason it may be theoretically true, as the California Supreme

Court suggested, that the California overtime laws do not absolutely foreclose the

12-hour seamen’s workday that is prescribed by 46 U.S.C. § 8104(b). However,

as a practical matter the economic costs of the state overtime regulations are so

great that they will totally displace federal standards on the vessels.

* As the Court stated in American Dredging Co. v. Miller, supra, 510 U.S.

at 452, “It would be idle to pretend that the line separating permissible from

impermissible state regulation is readily discernible in our admiralty

decision in Pacific Merchant Shipping and the California Supreme

Court’s present decision will only add to that confusion. The

preemption analysis in Pacific Merchant Shipping has been sharply

criticized,*' and several courts (including the Ninth Circuit) have

distinguished the decision in admiralty preemption cases involving

similar claims and arguments.”

This case presents the Court with the opportunity to clarify a

difficult area and correct an improper result. Review should be

granted.

jurisprudence, or indeed is even entirely consistent within our admiralty

jurisprudence." See also, Currie, Federalism and the Admiralty: "The Devil's

Own Mess," 1960 Sup. CT. REV. 158 (1960); Ruhl, Finding Federalism in the

Admiralty: ‘The Devil's Own Mess’ Revisited, 12 TUL. MARITIME L.J. 263

(1988).

** Comment, "Uniformity—State Wage and Hour Laws," 23 J. MARITIME

Law & COMMERCE 635 (1992).

*% See Fuller v. Golden Age Fisheries, 14 F.3d 1405, 1409 (9th Cir. 1994)

(Alaska minimum wage and overtime statute preempted); Long v. F/V Melanie,

918 F.Supp. 323, 326 (W.D. Wash. 1996) (Washington statute prohibiting

unlawful withholding of wages preempted); Stanton v. Bayliner Marine Corp.,

866 P.2d 15, 268 (Wash. 1993) (state product liability laws preempted).

eR en ner mere

CONCLUSION

For the foregoing reasons, review by this Court is appropriate

and necessary. Certiorari should be granted.

Respectfully submitted,

MICHAEL M. JOHNSON

Counsel of Record

RALPH ZAREFSKY

LISA F. HINCHLIFFE

BAKER & HOSTETLER LLp

Attorneys for Petitioners

APPENDIX

Filed December 19, 1996

IN THE SUPREME COURT OF CALIFORNIA

TIDEWATER MARINE

WESTERN, INC., et al.,

Plaintiffs and Respondents,

v. $048739

as Labor Commissioner, etc..,

et al., Santa Barbara County

Super. Ct. No. 195103

)

VICTORIA L. BRADSHAW, ) Ct. App. No. 2/6 B082689

)

Defendants and Appellants. _)

)

In this case, we decide whether the wage orders of the Industrial

Welfare Commission (IWC) govern employment in the Santa

Barbara Channel. To decide that question, we must decide,

among other things, whether written interpretive policies of the

State agency charged with enforcing IWC wage orders constitute

regulations within the meaning of the Administrative Procedure

Act (APA) (Gov. Code, § 11340 et seq.). We conclude that these

interpretive policies do constitute regulations and therefore are

void because they were not adopted in accordance with the APA.

Nevertheless, we conclude that the agency properly exercised its

enforcement jurisdiction and that the trial court erred in granting

a permanent injunction barring enforcement. Accordingly, we

affirm the judgment of the Court of Appeal.

A-l

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs Tidewater Marine Western, Inc. (Tidewater), and

Zapata Gulf Pacific, Inc. (Zapata), are maritime firms that

transport (or transported) workers and supplies from the California

coast to oil-drilling platforms located in the Santa Barbara

Channel. Plaintiff Offshore Marine Service Association (OMSA)

is a trade association representing the owners and operators of

vessels engaged in offshore marine services. The crew members

who work for Tidewater and Zapata in the Santa Barbara Channel

reside in California. They are on duty 12 hours during a 24-hour

period, but the demands of work are inconstant, and crew

members may spend part of this duty period engaged in leisure

activities. Zapata and Tidewater compensate their crew members

at a flat daily rate of pay without special compensation for

“overtime.”

Defendant IWC is the state agency empowered to

formulate regulations (known as wage orders) governing

employment in the State of California. (Lab. Code, §§ 1173,

1178.5, 1182.) Defendant Division of Labor Standards

Enforcement (DLSE), headed by defendant Victoria L. Bradshaw,

as Labor Commissioner, is the state agency empowered to enforce

California’s labor laws, including IWC wage orders. (Lab. Code,

§§ 21, 61, 95, 98-98.7, 1193.5.) TWC wage order No. 4-89

governs employees “in professional, technical, clerical,

mechanical, and similar occupations . . . unless such occupation

is performed in an industry covered by an industry order of this

Commission." (Cal. Code Regs., tit. 8, § 11040, subd. 1, italics

added.) IWC wage order No. 9-90 governs employees in the

transportation industry, which includes "any industry, business, or

establishment operated for the purpose of conveying persons or

property from one place to another whether by rail, highway, air,

or water, and all operations and services in connection

therewith... ." (Cal. Code Regs., tit. 8, § 11090, subd. 2(C),

italics added.) Wage orders Nos. 4-89 and 9-90 both bar work in

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excess of eight hours in any twenty-four-hour period unless the

employer pays "overtime," which is generally “[o]ne and one-half

(1 1/2) times the employee’s regular rate of pay," increasing to

"[dJouble the employee’s regular rate of pay for all hours worked

in excess of twelve (12) hours." (Cal. Code Regs., tit. 8,

§§ 11040, subds. 3(A)(1), 3(A)(2), 11090, subds. 3(A)(1),

3(A)(2).)

Starting about 1978, employees in the maritime industry began

filing claims with the DLSE. The DLSE determined on a case-by-

case basis whether state labor laws applied to these employees,

considering such factors as the type of vessel, the nature of its

activities, how far it traveled from the California coast, how long

it was at sea, and whether it left from and returned to the same

port. The DLSE also considered contacts, if any, between the

employees and California, such as whether the employees entered

into their employment contracts in California, resided in

California, owned property in California, paid taxes in California,

made regular purchases in California, sent their children to

California schools. or spent significant time in California. The

DLSE eventually replaced this case-by-case adjudication with a

written enforcement policy, which provides: "IWC standards

apply to crews of fishing boats, cruise boats, and similar vessels

operating exclusively between California ports, or returning to the

same port, if the employees in question entered into employment

contracts in California and are residents of California." In the

early 1980’s, this written policy existed only in a draft policy

manual the DLSE prepared for the guidance of deputy labor

commissioners. In 1989, however, the DLSE prepared a formal

“Operations and Procedures Manual" incorporating the same

policy and made that manual available to the public on request.

The manual reflected "an effort to organize . . . interpretive and

enforcement policies” of the agency and "achieve some measure

of uniformity from one office to the next." The DLSE prepared

its policy manuals internally, without input from affected

employers, employees, or the public generally.

In 1987, the DLSE began applying IWC wage order No. 4-80,

the predecessor to wage order No. 4-89, to maritime employees

working in the Santa Barbara Channel. Various shipping

associations, including OMSA, brought an action in federal court,

seeking an injunction curtailing enforcement of California’s labor

laws, and Tidewater intervened in that action. (Pacific Merchant

Shipping Ass’n v. Aubry (C.D.Cal. 1989) 709 F.Supp. 1516.)

Among other things, the plaintiffs asserted that the Fair Labor

Standards Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.)

preempted California’s attempt to regulate the overtime pay of

certain maritime employees. The FLSA requires employers

engaged in “commerce” to pay overtime wages to their employees

(29 U.S.C. § 207), but the FLSA includes an express exception

for seamen. (29 U.S.C. § 213(b)(6).) This exception covers

Tidewater’s and Zapata’s crew members. The plaintiffs asserted

that the exception evidenced congressional intent to preempt state

laws mandating overtime pay for seamen. The plaintiffs also

argued that federal law and Coast Guard regulations provided

seamen with ample protection. (See, e.g., 46 U.S.C. §§ 8101,

8104; 46 C.F.R. § 15.101 et seq. (1995).)

The federal district court issued an injunction, but the Ninth

Circuit Court of Appeals reversed. (Pacific Merchant Shipping

Ass’n y. Aubry (9th Cir. 1990) 918 F.2d 1409, cert. den. (1992)

504 U.S. 979.) The Ninth Circuit held that federal law did not

preempt the IWC wage orders governing overtime wages, but the

court expressly did not decide whether the IWC wage orders were

enforceable against maritime employers under state law. (Id. at

p. 1425.)

Starting in 1992, various employees of Tidewater and Zapata

working aboard boats operating in the Santa Barbara Channel filed

suits in Santa Barbara Superior Court, seeking retroactive overtime

pay. Plaintiffs responded by filing this action, again asking for an

injunction curtailing enforcement of the IWC wage orders

governing overtime pay.

Plaintiffs argue that the Legislature did not intend the IWC’s

jurisdiction to extend beyond California’s federal law boundaries.

Plaintiffs also renew their argument that federal law preempts state

law. Finally, plaintiffs assert that the provision in the DLSE’s

Operations and Procedures Manual that interprets the IWC wage

orders as applying to Tidewater’s and Zapata’s operations in the

Santa Barbara Channel is an "underground regulation" that was

not issued in accordance with the APA and is therefore void.

The superior court granted an injunction barring application of

IWC wage orders to Tidewater’s and Zapata’s employees working

more than three miles off the coast, but the Court of Appeal

reversed. The Court of Appeal held, among other things, that the

relevant provision of the DLSE’s Operations and Procedures

Manual was not a regulation subject to the rulemaking procedures

of the APA, but merely an “interpretation” that “applies the wage

order to a specific group of employers." We granted review, and,

though we disagree with some of the Court of Appeal’s reasoning,

we affirm.

II. DISCUSSION

Though the superior court’s injunction covered Tidewater’s and

Zapata’s employees working anywhere more than three miles from

the California coast, the Court of Appeal focused on those

employees who are named defendants in this action and who work

in the Santa Barbara Channel. Because we are reviewing the

decision of the Court of Appeal, our focus is also on Tidewater’s

and Zapata’s operations in the Santa Barbara Channel. At issue,

of course, is whether IWC wage orders apply to those operations.

A. Federal Law Does Not Bar California From Regulating

Maritime Employment in the Santa Barbara Channel

As an initial matter, we consider whether federal law preciudes

the IWC from regulating maritime employment in the Santa

A-5S

Barbara Channel. If it does, then we need not consider whether

the IWC attempted to do so when it adopted wage orders Nos. 4.

89 and 9-90.

1. California has the power to regulate employment outside

its federal law boundaries

Under state law, California’s territorial boundaries extend three

nautical miles beyond the outermost islands, reefs, and rocks, and

include all waters between those islands and the coast. (Cal.

Const., art. Ill, § 2; Gov. Code, §§ 170, 171; People v. Weeren

(1980) 26 Cal.3d 654, 661 (Weeren).) Under this state law

definition of California’s boundaries, the entire Santa Barbara

Channel is within the state. On the other hand, federal law

defines California’s territorial boundaries more narrowly,

extending three nautical miles from the coast, and including a

three-mile-wide band around any islands lying off the coast, but

excluding waters between the islands and the coast. (43 U.S.C.

§§ 1301(b), 1312.) Under this federal law definition of

California’s boundaries, the central portion of the Santa Barbara

Channel is not within the state. (United States v. California

(1965) 381 U.S. 139, 169-171.)

In defining California’s federal law boundaries, Congress did

not, however, suggest that California lacked power to regulate

conduct outside those boundaries and within broader state law

boundaries. (Weeren, supra, 26 Cal.3d at p. 666.) Congress

adopted the statute defining California’s federal law boundaries in

response to the United States Supreme Court’s opinion in United

States v. California (1947) 332 U.S. 19 (supplemental opn. at 332

U.S. 804). In that case, the State of California and the United

States disputed the ownership of the land, and more significantly

the minerals, adjacent to the coast and underlying the Pacific

Ocean. The Supreme Court held that, with the exception of bays,

all the land seaward of the low-water mark belonged to the United

States. (332 U.S. at p. 805.) Nevertheless, the high court

expressly conceded that California is "authorized to exercise local

police power functions” within the territory found to belong to the

United States. (332 U.S. at p. 36.) Congress responded to the

high court’s decision by enacting the Submerged Lands Act (43

U.S.C. § 1301 et seq.), which defined California’s boundaries as

extending three geographical miles seaward of the low-water line,

and which transferred to California ownership of the underwater

lands located within its boundaries.

In Weeren, we considered the applicability of California’s

criminal laws in the territory beyond California’s federal law

boundaries but within its state law boundaries. We Stated the

federal law boundaries apply “when the extent of a State’s

territorial jurisdiction is relevant to the operation of federal law."

(Weeren, supra, 26 Cal.3d at p. 660.) Thus, federal law defines

“the state’s ‘boundaries’ for all purposes, political and proprietary,

‘as between Nation and State.’" (Jd. at p. 663.) On the other

hand, where state criminal law does not conflict with federal law,

"the state boundaries as defined by our state Constitution and

Statutes ... are the limits to which the Legislature implicitly

intended to extend California’s criminal laws ... ." (Id. at

p. 669.) Thus, we did not interpret the federal law boundaries as

limiting the state’s power to regulate conduct outside those

boundaries and within broader state law boundaries. Like the

criminal laws at issue in Weeren, California employment laws

implicitly extend to employment occurring within California’s state

law boundaries, including all of the Santa Barbara Channel. The

federal law boundaries would have precedence only if the

operation of federal law were at issue, as for example if federal

law conflicted with state law. (Id. at p. 670.)

Moreover, even if California had not defined (or could not

define) its boundaries more broadly than does federal law, nothing

precludes a state from regulating conduct beyond its borders.

(Smith v. United States (1993) 507 U.S. 197, 213; Skiriotes v.

Florida (1941) 313 U.S. 69; Weeren, supra, 26 Cal.3d at p. 666.)

A-7

Skiriotes involved a Florida law prohibiting the use of certain

diving equipment in taking commercial sponges from the Gulf of

Mexico. The trial court convicted Lambiris Skiriotes of violating

this law. Skiriotes argued on appeal that he used the equipment

more than three miles from the coast and therefore outside

Florida’s boundaries as defined in certain federal treaties. Florida

asserted that Skiriotes’s activities were within its boundaries

because, regardless of federal treaties, its boundaries extended nine

nautical miles from the coast. The high court thought the dispute

over Florida’s boundaries irrelevant, stating: “Even if it were

assumed that the locus of the offense was outside the territorial

waters of Florida, it would not follow that the State could not

prohibit its own citizens from the use of the described divers’

equipment at that place." (Skiriotes v. Florida, supra, 313 U.S.

at p. 76.) “[WJe see no reason why the State of Florida may

not . . . govern the conduct of its citizens upon the high seas with

respect to matters in which the State has a legitimate interest and

where there is no conflict with acts of Congress. .. . [T]he State

of Florida has retained the status of a sovereign.” (Jd. at p. 77.)

Similarly, regardless of its boundaries, California can govern

employment of its residents on the high seas, provided there is no

conflict with federal law.

2. Federal law does not conflict with or otherwise preempt

state regulation of seamen’s overtime pay

In a reprise of the argument OMSA and Tidewater made to the

federal courts, plaintiffs here argue that the FLSA conflicts with

or otherwise preempts state regulation of the overtime pay of

seamen, including Tidewater’s and Zapata’s employees in the

Santa Barbara Channel. Of course, the Ninth Circuit's decision

finding no preemption binds OMSA and Tidewater, who were

parties to the federal action. (Bernhard v. Bank of America (1942)

19 Cal.2d 807.) Zapata does noc persuade us that the Ninth

Circuit’s decision was wrong.

A-8

As discussed above, the FLSA requires employers engaged in

“commerce” to pay overtime wages to their employees (29 U.S.C.

§ 207), but the FLSA includes an express exemption for seamen.

(29 U.S.C. § 213(b)(6).) Zapata asserts that this exemption is not

merely the absence of federal regulation under the FLSA, but an

affirmative preemption of state regulation. In support of this

assertion, Zapata argues that regulating the overtime of seamen

would be impractical because of the variable and unpredictable

nature of their workdays. Zapata also argues that general

principles of federal admiralty law regulate the hours and working

conditions of maritime workers, including a right to "a reasonable

amount of extra wages" for overtime. (See Bender v. Waterman

S. S. Corporation (E.D. Pa. 1946) 69 F.Supp. 15, 19, affd. (3d

Cir. 1948) 166 F.2d 428; The Carrier Dove (N.D.Wash. 1899) 98

Fed. 313, 314; The Lakme (N.D.Wash. 1899) 93 Fed. 230, 232.)

Zapata asserts that the FLSA’s exemption for seamen is part of the

fabric of federal admiralty law, which, in the interest of

uniformity, generally preempts state law. (See Southern Pacific

Co. v. Jensen (1917) 244 U.S. 205 [federal admiralty law

preempts state workers’ compensation law]; see also Offshore

Logistics, Inc. v. Tallentire (1986) 477 U.S. 207; Oii Workers v.

Mobil Oil Corp. (1976) 426 U.S. 407; Knickerbocker Ice Co. v.

Stewart (1920) 253 U.S. 149.)

In pressing these arguments, Zapata skirts the analytical

framework generally applicable to preemption questions. In

determining whether federal law preempts state law, "our sole task

is to ascertain the intent of Congress." (California Federal S. &

L. Assn. v. Guerra (1987) 479 U.S. 272, 280 (Guerra).)

Moreover, this intent must be “clear and manifest.” (Rice v.

Santa Fe Elevator Corp. (1947) 331 U.S. 218, 230.) Preemption

may occur in three situations: (1) where the federal law expressly

SO states, (2) where the federal law is so comprehensive that it

leaves “‘no room’ for supplementary state regulation,” or

(3) where the federal and state laws "actually conflict{]." (Guerra,

supra, 479 U.S. at pp. 280-281.)

A-9

Here, not only does the FLSA leave "room" for supplementary

state regulation of overtime, the FLSA expressly indicates that it

does not preempt this regulation. The FLSA includes a "savings

clause," which provides: "No provision of this chapter or of any

order thereunder shall excuse noncompliance with any . . . State

law or municipal ordinance establishing...a maximum

workweek lower than the maximum workweek established under

this chapter... ." (29 U.S.C. § 218(a).) The federal courts that

have addressed this question have interpreted this savings clause

as expressly permitting states to regulate overtime wages. (See,

e.g., Overnite Transp. Co. v. Tianti (2d Cir. 1991) 926 F.2d 220,

222 ["state overtime wage law is not preempted by... . the

FLSA"); Pacific Merchant Shipping Ass’n v. Aubry, supra, 918

F.2d at p. 1422 ["Congress has specifically allowed states to

enforce overtime laws more generous than the FLSA,” citing the

savings clause]; Pettis Moving Co., Inc. v. Roberts (2d Cir. 1986)

784 F.2d 439, 441 [savings clause "explicitly permits states to set

more stringent overtime provisions than the FLSA"}; and Williams

v. W. M. A. Transit Company (D.C. Cir. 1972) 472 F.2d 1258,

1261 [savings clause “permits state laws to operate even as to

workers exempt from FLSA"].)

Moreover, no provision of the FLSA “actually conflicts" with

California law. The FLSA does not expressly preclude states from

regulating the overtime wages of seamen, and the legislative

history of the FLSA does not suggest an implicit preclusion. The

legislative history indicates that Congress added the exemption for

seamen at the request of labor unions representing seamen. The

unions were concerned that regulating the employment of seamen

under the FLSA would conflict with other federal laws protecting

seamen. (29 C.F.R. § 783.29 (1996) [describing legislative

history of the FLSA’s seaman exemption].) Thus, the seamen

exemption appears to have had no purpose other than to negate the

regulatory effect the FLSA would otherwise have had on the

employment of seamen, not to create an affirmative bar against

state regulation of that employment. In sum, we find no evidence

A-10

that Congress intended the FLSA’s seamen exemption to preempt

State law.

Having determined that federal law permits California to

regulate maritime employment in the Santa Barbara Channel, we

next consider whether California exercised this power by way of

IWC wage orders Nos. 4-89 and 9-90. Of course, the DLSE

Operations and Procedures Manual addresses this question, and we

must “accord[] great weight and respect" to a valid administrative

construction of a controlling statute or regulation. (International

Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d

923, 931, fn. 7.) Thus, before construing the applicable legal

provisions on our own, we must determine whether the DLSE’s

construction of those provisions is valid and therefore entitled to

deference.

B. The DLSE’s Policy for Determining Whether IWC Wage

Orders Apply to Maritime Employers Is Void for Failure

to Follow the APA

The APA establishes the procedures by which state agencies may

adopt regulations. The agency must give the public notice of its

Proposed regulatory action (Gov. Code, §§ 11346.4, 11346.5);

issue a complete text of the Proposed regulation with a statement

of the reasons for it (Gov. Code, § 11346.2, subds. (a), (b)); give

interested parties an Opportunity to comment on the proposed

regulation (Gov. Code, § 11346.8): respond in writing to public

comments (Gov. Code, §§ 11346.8, subd. (a), 11346.9); and

forward a file of all materials on which the agency relied in the

regulatory process to the Office of Administrative Law (Gov.

Code, § 11347.3, subd. (b)), which reviews the regulation for

consistency with the law, clarity, and necessity (Gov. Code,

§§ 11349.1, 11349.3).

One purpose of the APA is to ensure that those persons or

entities whom a regulation will affect have a voice in its creation

A-ll

(Armistead v. State Personnel Board (1978) 22 Cal.3d 198, 204-

205 (Armistead)), as well as notice of the law’s requirements so

that they can conform their conduct accordingly (Ligon v. State

Personnel Bd. (1981) 123 Cal.App.3d 583, 588 (Ligon)). The

Legislature wisely perceived that the party subject to regulation is

often in the best position, and has the greatest incentive, to inform

the agency about possible unintended consequences of a proposed

regulation. Moreover, public participation in the regulatory

process directs the attention of agency policymakers to the public

they serve, thus providing some security against bureaucratic

tyranny. (See San Diego Nursery Co. v. Agricultural Labor

Relations Bd. (1979) 100 Cal.App.3d 128, 142-143.)

The Labor Code includes regulatory procedures analogous to

those in the APA, but applicable only to the IWC. For example,

the IWC must hold a public hearing when it investigates the

adequacy of wages or employment conditions in a given industry.

(Lab. Code, § 1178.) It must then select a wage board composed

equally of employer and employee representatives and designate

a nonvoting chairperson. The wage board reports a

recommendation (Lab. Code, § 1178.5, subds. (a), (b)), and after

the IWC receives that report, it prepares proposed regulations. In

most cases, the IWC must hold a public hearing in three cities in

the state. (Lab. Code, § 1178.5, subd. (c).) The IWC must give

notice of these public hearings by advertising in newspapers

throughout the state and mailing notice "to each association of

employers or employees which, in the opinion of the commission,

would be affected by the hearing.” (Lab. Code, § 1181,

subds. (a), (b).) The IWC must also publish any action that it

takes in newspapers throughout the state (Lab. Code, § 1182.1)

and mail copies of new regulations to affected employers (Lab.

Code, § 1183). Any aggrieved person may apply within 20 days

for a rehearing. (Lab. Code, § 1188.) Finally, the public has a

right to petition the IWC to adopt new regulations. (Lab. Code,

§§ 1176.1, 1176.3.)

A-12

In light of these comprehensive procedural protections applicable

to IWC rulemaking, the Legislature no doubt concluded that

compliance with the APA would be largely redundant and might

create confusion as to which procedures applied in a particular

circumstance. Thus, the Legislature provided that IWC

regulations promulgated in accordance with the Labor Code are

| "valid and operative" and expressly exempted from the APA.

| (Lab. Code, § 1185.)

The DLSE’s primary function is enforcement, not rulemaking.

(Lab. Code, §§ 61, 95, 98-98.7, 1193.5.) Nevertheless,

recognizing that enforcement requires some interpretation and that

these interpretations should be uniform and available to the public,

the Legislature empowered the DLSE to promulgate necessary

"regulations and rules of practice and procedure.” (Lab. Code,

§ 98.8.) The Labor Code does not, however, include special

rulemaking procedures for the DLSE similar to those that govern

IWC rulemaking, nor does it expressly exempt the DLSE from the

APA. At issue in this litigation is whether the Legislature

intended to make the DLSE’s regulations subject to the APA, and

if it did, whether the DLSE policy at issue here constitutes a

regulation.

The APA provides that "[n]o state agency shall issue, utilize,

enforce, or attempt to enforce any guideline, criterion, bulletin,

manual, instruction, order, standard of general application, or

other rule, which is a regulation ..., unless the guideline,

criterion, bulletin, manual, instruction, order, standard of general

application, or other rule has been adopted as a regulation and

filed with the Secretary of State pursuant to this chapter." (Gov.

Code, § 11340.5, subd. (a), italics added.) The APA applies "to

the exercise of any quasi-legislative power conferred by any

Statute heretofore or hereafter enacted," and the APA’s provisions

"shall not be superseded or modified by any subsequent legislation

except to the extent that the legislation shall do so expressly."

A-13

(Gov. Code, § 11346, italics added.) These broad statements of

scope suggest the APA applies to the DLSE.

Defendants argue that applying the APA to the DLSE’s

interpretations of IWC wage orders would undermine the IWC's

exemption from the APA. For example, the DLSE argues:

"Clearly, in deliberately excluding the wage order promulgation

process from the procedures and oversight of the APA, the

Legislature could not have intended the very wage orders it had

specifically excluded from the APA to be rescreened and examined

under the APA when interpreted." Of course, the wage order is

not “rescreened and examined under the APA"; rather, the

DLSE’s policy interpreting the wage order is so examined.

Moreover, the Legislature created comprehensive rulemaking

procedures that apply to the IWC in lieu of the APA. No such

procedures apply to the DLSE.

The APA provides that "[n]o state agency shall issue, utilize,

enforce, or attempt to enforce ... a regulation” without

complying with the APA’s notice and comment provisions. (Gov.

Code, § 11340.5, subd. (a), italics added.) The exception that

covers the IWC is expressly limited to the WC and makes specific

reference to the comprehensive rulemaking procedures that apply

to the IWC. (Lab. Code, § 1185.) In the absence of textual

support or some other persuasive indication of legislative intent,

we will not assume the Legislature intended the DLSE to adopt

regulations without any public participation or procedural

safeguards. Thus, we find no basis for exempting the DLSE from

the requirements of the APA.

Defendants argue the DLSE policy at issue here is not a

regulation subject to the APA. The APA, however, defines

“regulation” very broadly to include “every rule, regulation,

order, or standard of general application or the amendment,

supplement, or revision of any rule, regulation, order, or standard

adopted by any state agency to implement, interpret, or make

A-14

specific the law enforced or administered by it, or to govern its

procedure, except one that relates only to the internal management

of the state agency." (Gov. Code, § 11342, subd. (g).) A

regulation subject to the APA thus has two principal identifying

characteristics. (See Union of American Physicians & Dentists v.

Kizer (1990) 223 Cal.App.3d 490, 497 [describing two-part test of

the Office of Administrative Law].) First, the agency must intend

its rule to apply generally, rather than in a specific case. The rule

need not, however, apply universally; a rule applies generally so

long as it declares how a certain class of cases will be decided.

(Roth v. Department of Veterans Affairs (1980) 110 Cal.App.3d

622, 630.) Second, the rule must "implement, interpret, or make

specific the law enforced or administered by [the agency], or. . .

govern [the agency’s] procedure." (Gov. Code, § 11342, subd.

(g).)

Of course, interpretations that arise in the course of Case-specific

adjudication are not regulations, though they may be persuasive as

precedents in similar subsequent cases. (Bendix Forest Products

Corp. v. Division of Occupational Saf. & Health (1979) 25 Cal.3d

465, 471; Carmona v. Division of Industrial Safety (1975) 13

Cal.3d 303, 309-310; Taye v. Coye (1994) 29 Cal. App.4th 1339,

1345; Aguilar v. Association for Retarded Citizens (1991) 234

Cal.App.3d 21, 28 (Aguilar).) Similarly, agencies may provide

private parties with advice letters, which are not subject to the

rulemaking provisions of the APA. (Gov. Code, §§ 11343,

subd. (a)(3), 11346.1, subd. (a).) Thus, if an agency prepares a

policy manual that is no more than a restatement or summary,

without commentary, of the agency’s prior decisions in specific

cases and its prior advice letters, the agency is not adopting

regulations. (Cf. Lab. Code, § 1198.4 [implying that some

“enforcement policy statements or interpretations" are not subject

to the notice provisions of the APA].) A policy manual of this

kind would of course be no more binding on the agency in

subsequent agency proceedings or on the courts when reviewing

A-15

agency proceedings than are the decisions and advice letters that

it summarizes.

Examples of policies that courts have held to be regulations

subject to the rulemaking procedures of the APA include: (1) an

informational "bulletin" defining terms of art and establishing a

rebuttable presumption (Union of American Physicians & Dentists

v. Kizer, supra, 223 Cal.App.3d at p. 501); (2) a "policy of

choosing the most closely related classification” for determining

prevailing wages for unclassified workers (Division of Lab. Stds.

Enforcement v. Ericsson Information Systems, Inc. (990) 221

Cal.App.3d 114, 128); and (3) a policy memorandum declaring

that work performed outside one’s job classification does not count

toward qualifying for a promotion (Ligon, supra, 123 Cal.App.3d

at p. 588). In contrast, examples of policies that courts have held

not to be regulations include: (1) a Department of Justice

checklist that officers use when administering an intoxilyzer test

(People v. French (1978) 77 Cal.App.3d 511, 519); (2) the

determination whether in a particular case an employer must pay

employees whom it requires to be on its premises and on call, but

whom it permits to sleep (Aguilar, supra, 234 Cal.App.3d at

pp. 25-28); (3)a contractual pooling procedure whereby

construction tax revenues are allocated among a county and its

cities in the same ratio as sales tax revenues (City of San Joaquin

v. State Bd. of Equalization (1970) 9 Cal.App.3d 365, 375); and

(4) resolutions approving construction of the Richmond-San Rafael

Bridge and authorizing issuance of bonds (Faulkner v. Cal. Toll

Bridge Authority (1953) 40 Cal.2d 317, 323-324).

The policy at issue in this case was expressly intended as a rule

of general application to guide deputy labor commissioners on the

applicability of TWC wage orders to a particular type of

employment. In addition, the policy interprets the law that the

DLSE enforces by determining the scope of the IWC wage orders.

Finally, the record does not establish that the policy was, either in

form or substance, merely a restatement or summary of how the

A-16

DLSE had applied the IWC wage orders in the past. Accordingly,

the DLSE’s enforcement policy appears to be a regulation within

the meaning of Government Code section 11342, subdivision (g),

and therefore void because the DLSE failed to follow APA

procedures.

Defendants cite Bono Enterprises, Inc. v. Bradshaw (1995) 32

Cal. App.4th 968, 978-979 (Bono Enterprises), and Skyline Homes,

Inc. v. Department of Industrial Relations (1985) 165 Cal. App.3d

239, 252-253 (Skyline Homes), in support of their assertion that

the DLSE’s enforcement policy is not a regulation. In Skyline

Homes, the court considered the propriety of an employer’s

method of calculating overtime pay for salaried employees who

worked a fluctuating workweek. The employer calculated an

employee’s hourly wage by dividing the employee’s weekly salary

by the number of hours the employee actually worked in a

particular week. Thus, if an employee with a weekly salary of

$500 worked 50 hours in a particular week, the employer

calculated a base hourly wage of $10 and paid an additional $5 per

hour for every hour of overtime. The DLSE, on the other hand,

had a written policy of calculating an employee’s hourly wage by

dividing the employee’s weekly salary by 40 hours (regardless of

how many hours the employee actually worked) and not applying

any of the base salary to overtime. Thus, if we use the same

example as above, the DLSE would calculate an hourly wage of

$12.50 ($500 + 40 hours) and require an additional $18.75 per

hour for every hour of overtime.

The employer in Skyline Homes asserted that the DLSE’s policy

for calculating overtime was a regulation within the meaning of the

APA and therefore void because the DLSE did not adopt it in

accordance with the APA. The Court of Appeal disagreed,

reasoning that the policy was merely an interpretation precedent

to enforcement. (Skyline Homes, supra, 165 Cal.App.3d at

p. 253.) The only case the Court of Appeal cited ia support of its

holding was Bendix Forest Products Corp. v. Division of

A-17

Occupational Saf. & Health, supra, 25 Cal.3d 465, which

involved the interpretation of a regulation in the context of a

specific adjudication, not a blanket interpretation that the agency

memorialized in a policy manual, intending to apply it in all cases

of a particular class or kind.

The policy for calculating overtime pay at issue in Skyline

Homes was a regulation within the meaning of the APA because

it was a standard of general application interpreting the law the

DLSE enforced and because it was not merely a restatement of

prior agency decisions or advice letters. We acknowledge that the

employer challenged the policy in the context of a particular

adjudication, but this fact does not alter its character as a policy

of general application and thus a regulation. We disapprove

Skyline Homes to the extent that it concludes otherwise.

In Bono Enterprises, the employer challenged a DLSE policy

that required the employer to pay its employees if they had to

remain on its premises during lunch break. The DLSE’s policy

interpreted an IWC wage order that required employers to pay for

" ‘the time during which an employee is subject to the control of

an employer, and includes all the time the employee is suffered or

permitted to work, whether or not required to do so.’ [Citation.]"

(Bono Enterprises, supra, 32 Cal.App.4th at p. 971.) The

employer asserted, among other things, that the DLSE’s policy

was a regulation within the meaning of the APA and therefore

void because the DLSE had not adopted it in accordance with the

APA. (Jd. ai p. 978.)

The Court of Appeal disagreed, describing the policy as an

interpretation of a regulation, not a new regulation, and citing

Skyline Homes, supra, 165 Cal.App.3d 239. (Bono Enterprises,

supra, 32 Cal.App.4th at p. 978.) The court noted that the DLSE

had to have discretion to interpret the IWC regulation in particular

factual contexts. (Ibid.) The court added that it would not declare

generally invalid a policy that appeared reasonable “on its face";

A-18

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instead, the court would “assume decisions are fairly made on a

case-by-case basis." (/d. at p. 979.)

The court in Bono Enterprises seems not to have appreciated the

thrust of the employer’s argument. The issue -was not the DLSE’s

power to interpret the IWC regulation on a case-by-case basis or

the reasonableness of its interpretation. The issue was the DLSE’s

power to interpret the regulation in an enforcement policy of

general application without following the APA. Because the

DLSE’s policy interpreted the wage order, applied generally to a

Class of similar cases, and did not merely restate or summarize the

DLSE’s prior decisions or advice letters, it was a regulation within

the meaning of the APA. We disapprove Bono Enterprises to the

extent that it concludes otherwise.

Defendants also argue that the DLSE’s interpretation of the IWC

wage orders "is the only reasonable interpretation," and therefore

it does not constitute a regulation, but rather a direct application

of the law. (See Liguid Chemical Corp. v. Department of Health

Services (1991) 227 Cal.App.3d 1682, 1696, 1698; cf. Union of

American Physicians & Dentists v. Kizer, supra, 223 Cal.App.3d

at p. 498.) We disagree. Indeed, if the DLSE’s interpretation of

the IWC wage orders were the only reasonable interpretation, then

the DLSE would not need to state the interpretation in a policy

manual in order to "achieve some measure of uniformity from one

office to the next."

Professor Michael Asimow, as an amicus Curiae, suggests that

interpretive regulations, such as the DLSE policy at issue here, are

consistent with the APA because full APA rulemaking

requirements apply only "to the exercise of any quasi-legislative

power." (Gov. Code, § 11346, italics added.) Professor Asimow

argues interpretive regulations are not "quasi-legislative” because

an agency does not adopt them pursuant to delegated legislative

power, and they do not have the force of law. (See generally,

A-19

Asimow, California Underground Regulations (1992) 44

Admin.L.Rev. 43.)

We disagree. A written statement of policy that an agency

intends to apply generally, that is unrelated to a specific case, and

that predicts how the agency will decide future cases is essentially

legislative in nature even if it merely interprets applicable law.

Professor Asimow argues that interpretive regulations are

nonlegislative because, though courts should give them

"deference," "[c]ourts need not follow them; [and] members of the

public may choose to follow them but are not legally bound to do

so." (See International Business Machines v. State Bd. of

Equalization, supra, 26 Cal.3d at p. 931, fn. 7 [discussing scope

of review of interpretive regulations].) To the extent, however,

courts must defer to agency interpretations found in these

regulations, they are rules of law, and the public disregards them

at its peril.

Moreover, even if we were to agree with Professor Asimow that

the Legislature did not consider interpretive regulations to be

"quasi-legislative," an agency would arguably still have to adopt

these regulations in accordance with the rulemaking procedures of

the APA. Government Code section 11346 states that APA

rulemaking procedures apply “to the exercise of any quasi-

legislative power"; however, the statute does not state the

opposite, i.e., that the rulemaking procedures do not apply when

an agency adopts rules that are not quasi-legislative. On the other

hand, Government Code section 11340.5 makes clear that the

rulemaking procedures of the APA apply to any "regulation," and

the definition of regulation includes “every rule . . . adopted...

to... interpret. . . the law . . ." (i.e., interpretive regulations).

(Gov. Code, § 11342, subd. (g), italics added.) If the Legislature

did not intend the APA to apply to interpretive regulations, we do

not think it would have expressly included interpretive regulations

in this definition. Furthermore, when the Legislature wanted to

create exceptions to the formal rulemaking requirements of the

A-20

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APA, it did so expressly and in separate sections. (Gov. Code,

$§ 11346.1, subd. (a), 11343, subds. (a), (b); see also Gov. Code,

§ 11351; Lab. Code, § 1185.)

Professor Asimow asserts that full APA compliance entails

impractical costs and delays. The agency must devote Significant

resources to building an agency file that will Satisfy the Office of

Administrative Law. (Gov. Code, § 11347.3, subd. (b).) Among

other things, the agency must establish the necessity of the

proposed rule. (Gov. Code, §§ 11349.1.) In addition, opponents

of a proposed rule may file long and complex comments, which

the agency must address point by point. (Gov. Code, §§ 11346.8,

subd. (a), 11346.9.) Professor Asimow argues that, because of

the burden of full APA compliance, agencies do not adopt

regulations. Instead, they resort to case-by-case adjudication, and

they use informal oral communications to direct agency staff.

Sometimes, agencies seek Statutory amendments, in lieu of

adopting regulations, or they simply ignore the APA, issuing and

enforcing regulations without regard to its provisions.

Professor Asimow identifies serious concerns. Though too many

regulations may lead to confusing, conflicting, or unduly

burdensome regulatory mandates that stifle individual initiative,

this effect is less pronounced in the Case of interpretive

regulations. The public generally benefits if agencies can easily

adopt interpretive regulations because interpretive regulations

clarify ambiguities in the law and ensure agency-wide uniformity.

In addition, agencies cannot always respond to changing

circumstances promptly if they must ask the Legislature for a

Statutory amendment or resort to a regulatory process fraught with

delays. Finally, if an agency simply ignores the APA, it ceases

to be responsive to the public, and its regulations are vulnerable

to attack in the courts.

Of course, the ability of agencies to issue restatements or

Summaries of their prior decisions and prior advice letters

A-21

mitigates these concerns to some extent. If an issue is important,

then presumably it will come before the agency either in an

adjudication or in a request for advice. By publicizing a summary

of its decisions and advice letters, the agency can provide some

guidance to the public, as well as agency staff, without the .

necessity of following APA rulemaking procedures. If in some

circumstances agencies should also be free to adopt regulations

informally and without following the APA’s elaborate procedures,

then the Legislature should state what those circumstances are and

what lesser procedural protections are appropriate. Until it does,

we decline to carve out an exception for interpretive regulations

that we do not believe the language of the APA adequately

supports.

Thus, we conclude that DLSE’s policy for determining whether

to apply IWC wage orders to maritime employees constitutes a

regulation and is void for failure to comply with the APA.

Defendants assert that, even if the DLSE policy is void, the

interpretation the DLSE expressed in that policy is nevertheless

entitled to deference because of its more than 80 years of

experience. We addressed and rejected the same argument in

Armistead, supra, 22 Cal.3d at page 204. "[T]o give weight to

[an improperly adopted regulation] in a controversy that pits [the

agency] against an individual member of exactly that class the

APA sought to protect . . . would permit an agency to flout the

APA by penalizing those who were entitled to notice and

opportunity to be heard but received neither." (Ibid.) We

conclude we can give no weight to the DLSE’s interpretation of

the wage orders. (See also Jones v. Tracy School Dist. (1980) 27

Cal.3d 99, 107; City of Los Angeles v. Los Olivos Mobile Home

Park (1989) 213 Cal.App.3d 1427, 1433.)

Nevertheless, while we do not defer to the DLSE’s interpretation

of the IWC wage orders, we do not necessarily reject its decision

to apply the wage orders to maritime employees working in the

Santa Barbara Channel. If, when we agreed with an agency’s

A-22

application of a controlling law, we nevertheless rejected that

application simply because the agency failed to comply with the

APA, then we would undermine the legal force of the controlling

law. Under such a rule, an agency could effectively repeal a

controlling law simply by reiterating all its substantive provisions

in improperly adopted regulations. Here, for example, if

Tidewater and Zapata violate applicable IWC wage orders, they

should not be immune from suit simply because the DLSE adopted

an invalid policy. The DLSE’s policy may be void, but the

underlying wage orders are not void. Courts must enforce those

wage orders just as they would if the DLSE had never adopted its

policy. Thus, in Armistead, although we determined not to give

weight to an agency interpretation, we nevertheless considered

whether that interpretation was correct. (Armistead, supra, 22

Cal.3d at pp. 205-206.) We disapprove Grier v. Kizer (1990) 219

Cal.App.3d 422 to the extent that it holds otherwise.

In conciusion, we hold that the DLSE’s interpretation of the

IWC wage orders is void and not entitled to any deference.

Nevertheless, the question remains whether the wage orders apply

to Tidewater’s and Zapata’s activities in the Santa Barbara

Channel.

C. Wage Orders Nos. 4-89 and 9-90 Apply to Tidewater’s

and Zapata’s Activities in the Santa Barbara Channel

By their terms, wage orders Nos. 4-89 and 9-90 might apply to

maritime employment anywhere in the world. Plaintiffs, however,

argue that California’s territorial boundaries establish the limits of

the ITWC’s and the DLSE’s jurisdiction, citing Labor Code

sections 1173, 1174, and 1193.5. Labor Code section 1173

imposes on the IWC the duty to ascertain information about

wages, hours, and working conditions "in this State"; section 1174

facilitates this information-gathering process by imposing certain

affirmative duties on "[elvery person employing labor in this

State"; and section 1193.5 authorizes DLSE representatives to

A-23

"liJnvestigate and ascertain the wages of all employees, and the

hours and working conditions of all employees employed in any

occupation in the state." (Italics added.) Nothing, however, in

these sections explicitly defines or limits the WC’s or the DLSE’s

jurisdiction.

In some circumstances, state employment law explicitly governs

employment outside the state’s territorial boundaries. (Lab. Code,

§§ 3600.5, 5305 [California workers’ compensation law applies to

workers hired in California but injured out of state].) The

Legislature may have similarly intended extraterritorial

enforcement of IWC wage orders in limited circumstances, such

as when California residents working for a California employer

travel temporarily outside the state during the course of the normal

workday but return to California at the end of the day. On the

other hand, the Legislature may not have intended IWC wage

orders to govern out-of-state businesses employing nonresidents,

though the nonresident employees enter California temporarily

during the course of the workday. Thus, we are not prepared,

without more thorough briefing of the issues, to hold that IWC

wage orders apply to all employinent in California, and never to

employment outside California.

Nevertheless, California’s territorial boundaries are relevant to

determining whether IWC wage orders apply. The Labor Code

provides that "[oJne of the functions of the Department of

Industrial Relations [which includes the IWC and the DLSE] is to

foster, promote, and develop the welfare of the wage earners of

California ...." (Lab. Code, § 50.5, italics added.) If an

employee resides in California, receives pay in California, and

works exclusively, or principally, in California, then that

employee is a "wage earner of California" and presumptively

enjoys the protection of IWC regulations. (Cf. United Air Lines,

Inc. v. Industrial Welfare Com. (1963) 211 Cal.App.2d 729, 735,

748-749 [court assumes that IWC regulations apply to persons

who are domiciled in California but work principally outside the

A-24

State].) Thus, because the crew members who work for Tidewater

and Zapata in the Santa Barbara Channel reside in California and

receive pay in California, we must determine whether their work

in the Santa Barbara Channel is also in California.

Plaintiffs argue that the federal law definition of California’s

boundaries applies and therefore that Tidewater’s and Zapata’s

operations in the Santa Barbara Channel are outside the state. As

discussed above, the federal law definition of California’s

boundaries applies “when the extent of a State’s territorial

jurisdiction is relevant to the operation of federal law." (Weeren,

supra, 26 Cal.3d at p. 660.) On the other hand, where state and

federal law do not conflict, "the state boundaries as defined by our

state Constitution and statutes . . . are the limits to which the

Legislature implicitly intended to extend California’s . . . laws

-...+" (Ud. at p. 669.) Because the sole issue is the interpretation

and application of IWC wage orders, which constitute state law,

and because we find no conflict with federal law, we hold that

California’s state law boundaries apply, which boundaries

encompass the Santa Barbara Channel.

Accordingly, the crew members who work for Tidewater and

Zapata in the Santa Barbara Channel reside in California, receive

pay in California, and work in California. They are "wage

earners of California" and presumptively enjoy the protections of

IWC wage orders. Because we find nothing in the wage orders or

the Labor Code to rebut that presumption, we hold that the wage

orders apply to these employees, and the trial court erred by

enjoining their application. We express no opinion as to whether

the trial court can enjoin the application of IWC wage orders to

crew members who work primarily outside California’s State law

boundaries because the Court of Appeal did not address that

question.

A-25

We affirm the judgment of the Court of Appeal.

WE CONCUR:

GEORGE, C.J.

MOSK, J.

KENNARD, J.

BAXTER, J.

WERDEGAR, J.

BROWN, J.

Ill. DISPOSITION

CHIN, J.

A-26

Filed August 1, 1995

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

TIDEWATER MARINE WESTERN, INC., 2d Civil No. B082689

ZAPATA GULF PACIFIC, INC. and (Super. Ct. No. 195103)

OFFSHORE MARINE SERVICE (Santa Barbara County)

ASSOCIATION,

Plaintiffs and Respondents,

LABOR COMMISSIONER OF THE STATE

OF CALIFORNIA, DIVISION OF LABOR

STANDARDS ENFORCEMENT,

INDUSTRIAL WELFARE COMMISSION

OF THE STATE OF CALIFORNIA, and

ALVIN ALLEN, et. al.,

Defendants and Appeilants.

The Labor Commissioner of the State of California (Labor

Commissioner), the Industrial Welfare Commission (IWC), and

the Division of Labor Standards Enforcement (DLSE) appeal from

a judgment granting respondents Tidewater Marine Western, Inc.

(Tidewater), Zapata Gulf Pacific, Inc. (Zapata) and Offshore

Marine Service Association a permanent injunction and

peremptory writ of mandate. The judgment prohibits appellants

from "... applying the statutes, Wage Orders, regulations,

manuals and other provisions of California law pertaining to

A-27

maximum hours of work and overtime pay to any of

[respondents’] employees who work beyond the State of

California’s territorial borders located three nautical miles off the

coast.” In addition, the trial court stayed actions filed by many

present and former employees of Tidewater and Zapata to recover

unpaid overtime compensation. The Labor Commissioner, DLSE,

IWC and 31 employees appeal from the judgment.

We hold that the Labor Commissioner, the IWC, and the DLSE

are empowered to regulate overtime compensation of California

residents who work on vessels operating exclusively to and from

a California port or ports if they enter into employment contracts

in California. This covers the oil boat workers who work

principally in the Santa Barbara Channel. We further hold that

IWC has exercised its jurisdiction over employees so engaged by

promulgating wage order 9-90, and that the DLSE enforcement

policy properly extends that wage order to the employees in this

action. (Cal. Code Regs., tit. 8, § 11090.) Accordingly, we

reverse.

FACTS

Tidewater and Zapata operate fleets of seagoing vessels which

transport workers and supplies between the California mainland

and oil drilling platforms lying within the Santa Barbara Channel

from one to twelve nautical miles off shore. Tidewater also

operates an oceanographic research vessel which travels up to 50

nautical miles off the coast and is engaged in voyages that may

last several months.! Respondent, Offshore Marine Service

1 The record contains little information concerning this vessel. It is not

referred to in the pleadings, motions for summary judgment or statements of

undisputed material facts. In fact, respondents’ pleadings refer exclusively to

crew members of supply, crew, and towing vessels which "regularly travel up

to 25 nautical miles off the California coast{,]" a description which appears to

exclude employees working on the oceanographic research vessel. We conclude,

A-28

ee ce rote

Association, is a trade association which represents owners and

operators of vessels engaged in similar services.

All of respondents’ vessels depart from and return to ports within

the State of California. The vessels are equipped with sleeping

quarters and kitchens for use by crew members. Crew members

work on a schedule of seven or fourteen days on and seven days

off, with duty periods of twelve hours within each twenty-four

hour period. While on board, crew members are on call 24 hours

a day. Consistent with the standard among maritime employers,

crew members are paid a flat daily rate of pay without overtime

compensation. Current rates range from slightly less than $100.00

to over $200.00 per day. The crew members at issue here are

California residents who begin and end their work periods in this

State. They are paid in California and pay California income

taxes.

The Federal Fair Labor Standards Act specifically exempts these

employees from federal overtime regulations. (29 U.S.C. § 213,

subd. (b) (6), 29 C.F.R. §§ 783.29, et seq.) Maximum hours of

work and working conditions on the vessels are, however,

regulated by the Federal Shipping Act and regulations issued by

the United States Coast Guard. (46 U.S.C. §§ 8101, 8104; 31

C.F.R. §§ 157, et seq.) Neither the Federal Shipping Act nor the

therefore, that respondents’ pleadings have not placed in issue the status of

employees working on that vessel. Thus, neither the judgment nor this opinion

addresses the extent to which California may regulate the maximum hours of

work or overtime compensation due such employees.

To the extent that the judgment purported to adjudicate the status of

employees on the oceanographic research vessel, it would be reversed because

humerous issues of material fact remain unresolved. For example, the record

does not disclose the locations where this vessel operates nor does it contain any

information concerning the job duties of employees on this vessel. It is therefore

impossible to determine whether these employees are employed in the

transportation industry within the meaning of wage order 9-90. (Cal. Code Regs.,

tit. 8, § 11090, subd. (2)(C).)

A-29

coast guard regulations require or preclude payment of overtime

compensation.

In 1988, Tidewater and other maritime employers filed an action

in the United States District Court for the Central District of

California challenging attempts by DLSE to apply state overtime

regulations to crew members on vessels operating in the Santa

Barbara Channel. Tidewater contended that federal maritime law

preempted the California regulations. Although this argument was

successful in the district court, the Ninth Circuit Court of Appeals

reversed, holding that federal maritime law did not preempt

California regulation of the wages, hours and working conditions

of such employees. (Pacific Merchant Shipping Ass’n. v. Aubry

(9th Cir. 1990) 918 F.2d 1409, 1416; cert. denied, 112 S.Ct.

2956 (1992).)? Respondents then filed this action seeking a ruling

that state overtime compensation regulations did not apply to the

crew members on respondents’ vessels.

The California Constitution, Statutes,

Orders, and Policies

California Constitution, article XIV, section 1 provides: "The

Legislature may provide for minimum wages and for the general

welfare of employees and for those purposes may confer on a

commission legislative, executive, and judicial powers." The IWC

and its parent agency, the Department of Industrial Relations, are

charged with the responsibility ". . . to foster, promote, and

develop the welfare of the wage earners of California, to improve

their working conditions, and to advance their opportunities for

profitable employment." (Lab. Code, § 50.5.) To that end, the

IWC issues wage orders which regulate ". . . the hours and

2 Zapata was not a party to the federal action. Here it reprises Tidewater’s

argument that the California regulations are preempted by federal law. The

Ninth Circuit has exhaustively and correctly analyzed these issues. We decline

the invitation to revisit them.

A-30

conditions of labor and employment in the various occupations,

. . . in which employees are employed in this state... ." (Lab.

Code, §§ 1173, 1178.5.) The Legislature has declared that [i]t

is the policy of this state to vigorously enforce minimum labor

standards in order to ensure employees are not required or

permitted to work under substandard unlawful conditions . . Sr

(Lab. Code, § 90.5, subd. (a).)°

IWC wage order 9-90 sets the minimum wage and maximum

work hours for “all persons employed in the transportation

industry." (Cal. Code Regs., tit. 8, § 11090, subd. (1).)* The

“transportation industry” includes "any industry, business, or

establishment operated for the purpose of conveying persons or

property from one place to another whether by rail, highway, air

or water... ." (Cal. Code Regs., tit. 8, § 11080, subd. (2)(c).)

Among other things, the wage order specifies the circumstances

under which employees in the transportation industry are entitled

to receive overtime compensation. (Cal. Code Regs., tit. 8,

§ 11080, subd. (3).)

IWC wage orders and other minimum labor Standards are

enforced by DLSE. (Lab. Code, § 82.) In section 10.65 of its

“Operations and Procedures Manual," DLSE has declared: "TWC

* It is beyond question that these statutes are remedial legislation. "[I}n light

of the remedial nature of the legislative enactments authorizing the regulation of

wages, hours and working conditions for the protection and benefit of employees,

the statutory provisions are to be liberally construed with an eye to promoting

such protection." (/ndustrial Welfare Com. v. Superior Court (1980) 27 Cal.3d

690, 702; see also Ford Dealers Assn. v. D.M.V. (1982) 32 Cal.3d 347, 356.)

Here the trial court strictly construed the Labor Code to defeat application of

wage order 9-90 to respondents’ employees. As we shall explain, this strict

construction was erroneous. (See infra, at p. 11 et seq.)

* Wage order 9-90 supersedes wage order 9-80, which was in effect when

respondents initiated their action in federal court. For all purposes relevant to

this appeal, the two orders are identical.

standards apply to crews of fishing boats, cruise boats, and similar

vessels operating exclusively between California ports, or

returning to the same port, if the employees in question entered

into employment contracts in California and are residents of

California. Employees in the commercial fishing industry are not

covered by the IWC regulations ... ." This policy has never

been published in the California Code of Regulations and was not

adopted pursuant to the Administrative Procedures Act. (Gov.

Code, §§ 11340, et seq.)

The Trial Court Ruling

The trial court credited respondents’ contention and ruled that the

Labor Code, wage order 9-90 and DLSE policy do not apply

outside the territorial boundaries of California as established by

federal law. In so ruling, the trial court said that the Labor Code

"_. , does not expressly include a declaration of legislative intent

that the IWC’s rulemaking extend to workers who depart from

California, perform their daily work in the territory of another

sovereign (the United States), and then return to California to bank

their pay and engage in off-duty pursuits.... [Either the

Legislature never considered the problem, or . . . the Legislature

intended these acts to have no extraterritorial operation." Even if

the Labor Code allowed IWC to regulate "extraterritorial"

employment, the trial court ruled that IWC had never exercised its

jurisdiction because its wage order does not explicitly refer to

"offshore workers whose job sites are outside" the state, and

because the IWC never "specifically announced its intent to

regulate these sorts of offshore enterprises . . . ."

Appellant’s Contention

Appellants argue that the Legislature’s intent to regulate the

working conditions of respondents’ maritime employees may be

inferred from the history and purpose of the Labor Code, if not

from its express terms. They contend that DLSE was not

A-32

obligated to follow the Administrative Procedure Act in

promulgating its internal policy because the policy is an

interpretation of wage order 9-90 rather than a new regulation.

Appellants also challenge the scope of the judgment, arguing that

it inappropriately restricts the ability of DLSE and IWC to

regulate the hours and working conditions of employees who

spend even a small fraction of their work hours outside the

territorial boundaries of California.

Standard of Review

In ruling on an appeal from the grant of a summary judgment, we

apply the same analytical process as the trial court. "First, we

identify the issues framed by the pleadings . . . . [{] Secondly,

we determine whether the moving party’s showing has established

facts which . . . justify a judgment in movant’s favor... . [J]

[T]he third and final step is to determine whether the opposition

demonstrates the existence of a triable, material fact issue.

[Citations.]" (AARTS Productions, Inc. v. Crocker National Bank

(1986) 179 Cal.App.3d 1061, 1064.)

Because an appeal from a summary judgm-at motion raises only

questions of law, we must independently analyze the supporting

and opposing papers to determine whether there is a triable issue

as to any material fact. (Code Civ.Proc., § 437c, subd.(c);

Planned Parenthood v. City of Santa Maria (1993) 16 Cal. App.4th

685, 690.) We view the evidence before the trial court in the light

most favorable to the non-moving parties. (Gibb v. Stetson (1988)

199 Cal.App.3d 1008, 1011; Gomez vy. Ticor (1983) 145

Cal. App.3d 622, 627.)

The Reach of California Law

The territorial boundaries of California as established by federal

law differ from those established by state law. As a matter of

federal law, California’s ". . . territorial Claims in Santa Barbara

A-33

Channel are confined to three-mile belts seaward from the

mainland and around the perimeter of each of the islands in the

channel." (People v. Weeren (1980) 26 Cal.3d 654, 662; see also

United States v. California (1965) 381 U.S. 139, 172-75 [14

L.Ed.2d 296, 316-18, 85 S.Ct. 1401].)

The California Constitution and Government Code, however,

provide that the state’s territorial boundary runs "three English

nautical miles oceanward of lines drawn along the outer sides of

the outermost of the islands, . . . along and adjacent to the

mainland and across intervening waters .. . ." (Gov. Code

§ 170.) In addition, the territory of the state extends throughout

its inland waters, which include, “[aJll waters between the

mainland and the outermost of the islands .. . ." (Gov. Code,

§ 171.)

In People v. Weeren, supra, 26 Cal.3d 654, our Supreme Court

held that, ". . . when the extent of a state’s territorial jurisdiction

is relevant to the operation of federal law, the [federal] delineation

of state boundaries prevails over conflicting state assertions. " dd.

at p. 660.) The Weeren court also said, “[flairly read,

California II established the state’s ‘boundaries’ for all purposes,

political and proprietary, ‘as between Nation and State.’" (/d., at

p. 663.) However, where the interests of the federal and state

governments do not conflict, and the state has a legitimate interest

at stake, the state may give effect to its laws for the benefit of

workers on federally defined waters. This is especially

appropriate where state law has defined such waters as being

within the state territorial boundaries. (See Weeren at pp. 669-

670.)

In Weeren a California resident was subject to criminal

prosecution for using fishing methods prohibited by state law,

even though the fishing occurred beyond the three mile federal

limit but within the boundary as defined by state law. (Id. at

pp. 659, 669.) The Supreme Court ruled that California had a

A-34

PSST Seer reese eee eae

legitimate interest in regulating fishing activity along its coast and

that the relevant state and federal regulations did not conflict. (Id.

at pp. 666-667.) Thus, ". . . the state boundaries as defined by

our state Constitution and statutes . . . are the limits to which the

Legislature implicitly intended to extend California’s criminal

laws, including Fish and Game Code section 2000." (Id. at

Pp. 669-670.) Accordingly, the Fish and Game Code applied to

conduct occurring within the Santa Barbara Channel, despite the

fact that the statute contained no express reference to

“extraterritorial” jurisdiction over fishing methods.

The same reasoning applies here. If the state can regulate the

taking of fish in the Santa Barbara Channel, it can surely regulate

labor of its own residents who work there. The employees at

issue in this case spend all of their working hours within the Santa

Barbara Channel. The Ninth Circuit Court of Appeals has already

determined that there is no conflict between federal and state

regulation of overtime compensation for these workers. (Pacific

Merchant Shipping Ass’n v. Aubry, supra, 918 F.2d 1409, 1427.)

Accordingly, there is no reason to limit the application of

California law to the boundaries established by the federal

government and there is a reason to hold that the remedial

legislation designed to protect California residents follows them on

the Santa Barbara Channel provided they are otherwise described

in wage order 9-90.

In North Alaska Salmon Co. v. Pillsbury (1916) 174 Cal. 1, the

Supreme Court held that it is possible for California to apply its

Statutes outside the state, but the state’s intention to do so "will not

be declared to exist unless [it] is clearly expressed or reasonably

to be inferred ‘from the language of the act or from its purpose,

subject matter or history." Jd. at p. 4, quoting Kennerson v.

Thames Towboat Co. 89 Conn. 367 [L.R.A. 1916A, 436, 94 Atl.

372].)

A-35

North Alaska held that California’s original workers’

compensation statute did not apply to injuries suffered by a

California resident while working in Alaska for a California

employer. First, the statute did not expressly "indicate that the

compensation provisions were intended to apply to injuries

occurring in foreign jurisdictions . . . . Nothing is said about the

place of injury." (North Alaska Salmon Co. v. Pillsbury, supra,

174 Cal. at p. 4.) Second, because the statute declared itself to be

the exclusive remedy for workplace injuries, its application would

necessarily have prevented Alaska from applying its own law to an

injury occurring within its borders. The court refused to assume

". . that the legislature of this state undertook to pass a law

which would trench upon the sovereign powers of any other

jurisdiction." (Jd. at p. 5.) Finally, while the case was pending,

the legislature amended the statute to add a section which

expressly provided coverage for certain employees injured while

working outside the state. The Supreme Court considered this

"more or less significant as indicating that the law-making

body itself did not consider the original statute as covering

extraterritorial injuries." (Jd.)

Here, as in North Alaska, California’s wage and hour statutes do

not expressly state that [WC wage orders apply to California

employees who cross the federal boundary during the workday.

However, there is within the Labor Code a clearly expressed

intention to protect the interests of such employees. The IWC and

DLSE are charged with the obligation to ". . . foster, promote,

and develop the welfare of the wage earners of California . . . oe

(Lab. Code, § 50.5.) As indicated (see ante, fn. 3) legislative

enactments regulating work hours and overtime compensation are

remedial in nature, and must be liberally construed for the

protection and benefit of the employee. The employees at issue

here reside, are paid wages, and pay income taxes in California.

They are, therefore "wage earners of California" entitled to the

protection of California laws regulating their hours of work and

overtime compensation.

The remaining factors which restricted application of the workers’

compensation statute in North Alaska are not present here.

Applying California law to these workers would not infringe on

the sovereignty of any other nation or state. There is no conflict

between federal and California law in this area, and no other state

claims jurisdiction over the Santa Barbara Channel. (Pacific

Merchant Shipping Ass’n v. Aubry, 918 F.2d 1409, 1427.)

In addition, the subsequent conduct of the Legislature

demonstrates its belief that the IWC and DLSE have jurisdiction

over these employees. IWC Wage Order 9-80, the predecessor to

the current wage order, took effect in January 1980. In 1986, the

Legislature enacted Labor Code section 1182.3, exempting

licensed commercial fishers and employees of commercial

passenger fishing boats from IWC wage and hour regulations.

Employees of commercial fishing and passenger fishing vessels,

like the employees at issue here, frequently cross the federal

boundary in the Pacific Ocean. The fact that the Legislature found

it necessary to exempt those employees from IWC regulation is a

strong indication that the Legislature believes it has granted IWC

the power to regulate other employees who perform work beyond

the federal boundary in the Pacific Ocean.

The "WC Has Exercised Its Jurisdiction

Over Respondents’ Maritime Employees by

Enacting Wage Order 9.90

The trial court concluded that the IWC had not exercised

jurisdiction over respondents’ maritime workers because its wage

orders ". . . do not contain a clear and distinct statement that they

are intended to be applied to workers who reside in California but

leave its boundaries to reach their jobs.” According to the trial

court: “The impact of these rules on offshore commercial

enterprises is sufficiently great that due process requires that

before these rules be given extraterritorial effect, that intent must

be publicly declared and submitted to the regular process of

publication and comment which attends all valid administrative

rulemaking.” We disagree.

Due process does not require that the IWC specifically identify

every conceivable job title or category of employer subject to an

industry-wide wage order. At most, the wage order must ". . .

give the person of ordinary intelligence a reasonable _opportunity

to know” which employers and employees are covered by the

order. (Cranston v. City of Richmond (1985) 40 Cal.3d 755, 763

[221 Cal.Rptr. 799, 710 P.2d 845]. See also Rutherford v. State

(1987) 188 Cal.App.3d 1267, 1276.)

Wage order 9-90 applies to “all persons employed" in". . . any

industry, business, or establishment operated for the purpose of

conveying persons or property from one place to another . . . by

_..wWwater...." (Cal. Code Regs. tit. 8, § 11090, subd. (1),

(2)(c).) Respondents concede their employees fit this definition.

Nevertheless, respondents claim they had no idea that wage order

9-90 would apply to their employees because the wage order does

not explicitly refer to workers who spend a portion of their

workday outside the state. The argument is disingenuous at best.

These workers convey persons and property over the water from

the mainland to oil drilling platforms. Persons of ordinary

intelligence are capable of discerning that these employees are

engaged in the transportation industry and, therefore, subject to

the terms of wage order 9-90. TWC’s exercise of jurisdiction over

these employees did not violate due process.

DLSE’s Internal Policy is a Valid Administrative

Interpretation of [IWC Wage Order 9-90.

The DLSE internal policy at issue here provides that wage order

9-90 applies to ". . . crews of fishing boats, cruise boats, and

similar vessels operating exclusively between California ports, or

returning to the same port, if the employees in question entered

into employment contracts in California and are residents of

A-38

California." Relying upon cases such as Armistead v. State

Personnel Board (1978) 22 Cal.3d 198, respondents contend, and

the trial court determined, that this policy constitutes "underground

rulemaking” and violates the Administrative Procedures Act

because it expands the scope of wage order 9-90 to cover workers

not specifically considered by the IWC during its public

rulemaking. (Gov. Code, § 11340 et seq.)

The IWC must comply with the rulemaking procedures outlined

in the Labor Code before it may adopt, amend or rescind a wage

order. (Lab. Code, § 1178.5.) Absent compliance with those

procedures, any wage order or other regulation adopted by the

IWC or DLSE is void. (Gov. Code, § 11347.5.)

A regulation is "a rule of general application which implements,

interprets and makes specific the statute... ." (Division of Lab.

Stds. Enforcement v. Ericsson Information Systems, Inc. (1990)

221 Cal.App.3d 114, 128; see also Gov. Code, § 1342, subd.

(b).) DLSE internal policies which interpret or construe the words

of a wage order and apply the order to a specific situation are not

regulations within the meaning of the Administrative Procedures

Act. (Aguilar v. Association for Retarded Citizens (1991) 234

Cal.App.3d 21, 27.)

Here, the DLSE policy interpreted IWC wage order 9-90 to

include California residents employed in the transport of goods or

persons by water, including the “crews of fishing boats, cruise

boats and similar vessels... ." This interpretation is consistent

with the language and intention of the wage order. Rather than

establishing a new rule of general application throughout the

industry, the DSLE policy inteiprets the term "transportation

industry" and applies the wage order to a specific group of

employers. The DSLE policy is not, therefore, a regulation

Subject to the Administrative Procedures Act. (Id. at p. 27;

Skyline Homes Inc. v. Department of Industrial Relations (1985)

165 Cal. App.3d 239, 253.)

A-39

Conclusion

The trial court erred in restricting the scope of the Labor Code

and wage order 9-90, in concluding that [WC had not adequately

identified respondents’ employees as persons subject to the wage

order, and in concluding that DLSE had incorrectly interpreted the

wage order with respect to those employees. This decision

protects California employees, is consonant with article XIV,

section 2, of the California Constitution, and implements the

purpose of the remedial statutes passed by the Legislature.

The judgment is reversed. Costs to appellants.

CERTIFIED FOR PUBLICATION.

YEGAN, J.

We concur:

STONE, P. J.

GILBERT, J.

A-~40

Filed January 18, 1994

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA BARBARA

TIDEWATER MARINE WESTERN, No. 195103

INC.; ZAPATA GULF PACIFIC, INC.;

and OFFSHORE MARINE SERVICE RULINGS ON

ASSOCIATION, PLAINTIFFS’

MOTIONS FOR

Plaintiffs, SUMMARY

JUDGMENT

LABOR COMMISSIONER OF THE

STATE OF CALIFORNIA, et al.,

Defendants.

METSON MARINE, INC. and SAN

PEDRO OFFSHORE MARINE, ENC.

Plaintiff Intervenors.

FERRE SS Te AOSD Ma SE

The plaintiffs and intervenors in this case have moved for

summary judgment, contending that undisputed facts establish,

among other things, that the State of California has not adopted a

Statute, or engaged in valid administrative rulemaking under the

state Administrative Procedure Act, which would extend the state’s

wage and hours laws to operate outside the state’s territory in the

near-offshore waters. In the alternative, they contend that the

A-41

state’s attempt to regulate wages, hours, and working conditions

for offshore workers who spend some of their time outside the

three-mile limit is pre-empted by implication by the exclusive

federal jurisdiction in maritime matters. These motions were fully

briefed and argued, and have been submitted to the court for

decision on Friday January 7, 1994. For the reasons stated in this

memorandum of decision, the court has determined to grant the

motions.

Federal Pre-emption

The argument that the exclusive federal jurisdiction reserved by

the United States Constitution to the federal government in

maritime matters operates by implication to pre-empt California

from attempting to regulate these offshore workers was examined,

and decisively rejected by the United States Court of Appeals for

the Ninth Circuit. (Pacific Merchant Shipping v. Aubrey (9th Cir.

1990) 918 F.2d 1409, 1415-1416.) This court is aware that

decisions of the intermediate federal appellate courts are

persuasive, but not binding, authority for California state trial

courts. (Auto Equity Sales v. Superior Court (1962) 57 Cal.2d

450, 456-457.) Nevertheless, this court declines the invitation

extended by the moving parties to get into conflict with the ruling

of the Ninth Circuit. This court will presume, for the purpose of

the present case, that California is not ousted of jurisdiction over

the wages, hours, and working conditions of the offshore workers

by the operation of federal pre-emption. We turn to the question

whether the state has validly exercised the jurisdiction it possesses.

Boundaries of the State

The seaward boundaries of the state are defined in California

Constitution, Article 3, section 2, as explained and made more

definite by Government Code section 170. There it states that the

seaward boundaries of the state of California are a line three

A-42

English nautical miles offshore, from a line connecting the

outermost headlands of all bays and estuaries, and from a line

connecting the outermost works of all artificial harbors. Measured

by that definition, many of the workers in this case perform their

duties outside the territory of the state of California, although it

Should be noted that under Government Code section 170 the

ocean within three English nautical miles of the shores of all the

islands, such as the Channel Islands, which the federal government

recognizes as being territory of California, is included within the

territorial waters of the state. Many, though not all, of the oil

extraction platforms where these workers perform their duties are

located in the area of the Santa Barbara Channel which is within

the twelve-mile limits which define the waters of the United

States, but not within the three-mile limits described above for the

territorial waters of California. (in re Marincovich (1920) 48

Cal.App. 474.) The limit of the state’s territory is the ordinary

limit of the state’s regulatory jurisdiction. (Oil Worker’s

International Union v. Superior Court (1951) 103 Cal.App.2d

512.) The three-mile limit is the boundary between state and

federal jurisdiction for most purposes. (See People v. Weeren

(1980) 26 Cal.3d 654.)

Extraterritorial Regulation By California

The state Supreme Court has held that under certain

circumstances, the state may exercise extraterritorial effects by

statute or regulation, provided that the intention to have a rule

operate outside the state’s boundaries clearly appears on the face

of the enactment. (North Alaska Salmon Co. vy. Pillsbury (1916)

174 Cal. 1. The necessary legislative intent for extraterritorial

operation may be gathered from the face of the statute (North

Alaska Salmon, supra, 174 Cal. at 5) or from reading several

related statutes together (People v. Weeren, supra, 26 Cal.3d 654.)

A-43

The state cites Labor Code section 50.5, which provides

authority for the Industrial Welfare Commission (IWC) to regulate

wages, hours and working conditions in this state. The statute

does not expressly include a declaration of legislative intent that

the ITWC’s rulemaking extend to workers who depart from

California, perform their daily work in the territory of another

sovereign (the United States), and then return to California to bank

their pay and engage in off-duty pursuits. Labor Code section

50.5, which does not expressly empower the IWC to make rules

having extraterritorial operation, must be read in conjunction with

Government Code section 110: "The sovereignty and jurisdiction

of this state extends to all places within its boundaries as

established by the constitution." (Emphasis added.) Neither

standing alone, nor in conjunction with the positive language of

Government Code section 110, does the conclusion appear to

follow that the Legislature intended these statutes, or the orders of

the IWC, to have extraterritorial effect. To the contrary, it

appears either that the Legislature never considered the problem,

or that the Legislature intended these acts to have no

extraterritorial operation.

Likewise, the rulings of the [WC itself do not contain a clear

and distinct statement that they are intended to be applied to

workers who reside in California but leave its boundaries to reach

their jobs. Assuming for the sake of argument that the Labor

Code empowers the IWC to regulate the working conditions of

offshore workers whose job sites are outside the three-mile limits,

this court concludes that the IWC has not invoked that power.

The state does not refer the court to any hearing or administrative

proceeding in which the IWC specifically announced its intent to

regulate these sorts of offshore enterprises, and the court is

directed to no public notice or hearings in which such an intention

was submitted to public comment. The court concludes that the

IWC either did not intend such effect for its rulings, or did not

comply with the state APA if such an intent was secretly

A+44

ee ee ee

entertained. The impact of these rules on offshore commercial

enterprises is sufficiently great that due process requires that

before these rules be given extraterritorial effect, that intent must

be publicly declared and submitted to the regular process of

publication and comment which attends all valid administrative

rulemaking. That apparently was not done in this Case, and it is

fatal to the state’s position.

The state observes that hearings before the IWC on the

"transportation industry wage order" were held in 1989, weli after

the commencement of the Pacific Marine case in federal district

court. The state points out that at those hearings, none of the

marine companies concerned with these issues appeared or

commented. From this, the state appears to argue that the

companies are somehow not permitted to make the present

objections. The flaw in the State’s position is that in the IWC

hearings of 1989, the state points to no unambiguous public notice

that the state was Proposing to openly and directly declare

extraterritorial application for the Transportation Industry Wage

Order. In the absence of such public notice, the companies might

well have concluded that the IWC hearings had nothing to do with

any issue in which they had any interest.

The state seeks to avoid this point by the argument that if the

Labor Code, the state Constitution, and the IWC wage orders

themselves do not declare an intent to operate with extraterritorial

effect, the Enforcement Manual of the DLSE does declare such an

intent. The state offers several uncontroversial propositions as

foundations for this argument. First, the state observes that the

opinions and interpretations of the administrative agency Charged

with enforcement of a Particular body of administrative regulations

are entitled to considerable weight in the judicial interpretation of

the regulations. Second, the state observes that several years ago,

the DLSE amended its enforcement manual, which is essentially

its standing instructions and policies to guide its field agents, to

A-45

declare that henceforth enforcement would be had as to offshore

employees. From these points, the state argues that the manual is

the equivalent of a rule or statute, and should be given such

weight as to resolve this issue in the state’s favor.

However, a portion of the state’s own argument is fatally

inconsistent with the effect the state would wish to give the manual

of the DLSE. The state points out that the manual in question did

not have to be adopted by proceedings conforming to the state

administrative procedure act, because the manual is not a

"regulation" having the force of law. (See Gov. Code

section 11342(b), which requires compliance with the notice and

hearing process for every "regulation", including “every rule ...

adopted by any state agency to ... interpret ... the law enforced ...

by it.") The state is thus caught in a dilemma: if the DLSE policy

manual is a policy statement intended to interpret the scope of the

Labor Code by granting extraterritorial enforcement to the wage

orders of the IWC, then the manual would indeed constitute a

"regulation" which would be invalid unless it went through the

notice, hearing and publication procedures before adoption and

subsequent publication in the California Code of Regulations. But

the state admits that this was never done with this manual, and

maintains that it was not required to be done, because the manual

is only intended as an internal working document and policy guide

for the information of the DLSE enforcement officers. That being

so, the manual does not have, and cannot have, the force of law;

specifically, it cannot add to the Labor Code or the IWC wage

orders any intent for extraterritorial application which is not

already found in the words thereof. Since the Labor Code and the

IWC wage orders do not declare that they have extraterritorial

effect, it follows that they have none. Since the manual was not

adopted by proceedings conforming to the APA, it follows that the

manual adds nothing to the Code and regulations.

A-46

Conclusion

The state Constitution and Government Code section 170, taken

togeiher, establish the seaward boundary of this state’s jurisdiction

at three English nautical miles offshore. While statutes may, in

certain limited circumstances, be given effect to regulate conduct

which occurs outside the State’s boundaries, one of the

indispensable preconditions for such extraterritorial effect is that

such intent must appear clearly on the face of the enactment. The

State Labor Code does not so declare, and neither do the IWC

wage orders at issue in this case. While the Ninth Circuit has

determined that California may regulate offshore workers, in the

absence of conflicting Congressional enactments, California has

not yet validly exercised this power. Therefore, California’s

attempts at such regulation premised only on the authority of the

DLSE Enforcement Manual must fail, because the manual is not

the functional equivalent of a Statute or regulation, was not

adopted by Proceedings conforming to the state APA, and thus

does not have the force of law. Accordingly, the motions for

Summary judgment against the state are granted on these grounds.

The moving parties are directed to submit appropriate forms of

judgment.

IT IS SO ORDERED.

Dated: January 18, 1994.

ls/__

WILLIAM L. GORDON, JUDGE

Nos. 91-142 and 91-349

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1991

TIDEWATER MARINE SERVICE, INC., ET AL., PETITIONERS

LLOYD W. AUBRY, JR.,

STATE OF CALIFORNIA LABOR COMMISSIONER, ET AL.

PACIFIC MERCHANT SHIPPING ASS’N, ET AL., PETITIONERS

LLOYD W. AUBRY, JR.,

STATE OF CALIFORNIA LABOR COMMISSIONER ET AL.

meee

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

KENNETH W. STARR

Solicitor General

STUART M. GERSON

Assistant Attorney General

MAUREEN E. MAHONEY

Deputy Solicitor General

STEPHEN L. NIGHTINGALE

Assistant to the Solicitor General

ANTHONY J. STEINMEYER

JOHN P. SCHNITKER

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 514-2217

A-48

QUESTIONS PRESENTED

1. Whether the Fair Labor Standards Act preempts the

application of California’s overtime compensation laws to certain

maritime workers.

2. Whether the application of California’s overtime

compensation laws to those workers is preempted by the federal

law of admiralty, as defined in Southern Pacific Co. v. Jensen,

244 U.S. 205 (1917), and its progeny.

A-49

Nos. 91-142 and 91-349

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1991

TIDEWATER MARINE SERVICE, INC., ET AL., PETITIONERS

LLOYD W. AUBRY, JR.,

STATE OF CALIFORNIA LABOR COMMISSIONER, ET AL.

PACIFIC MERCHANT SHIPPING ASS'N, ET AL., PETITIONERS

LLOYD W. AUBRY, JR.,

STATE OF CALIFORNIA LABOR COMMISSIONER ET AL.

wee

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

enn

This brief is filed in response to the Court’s crder inviting the

Solicitor General to express the views of the United States.

STATEMENT

1. This case involves the intersection of admiralty law, state

minimum wage laws, and the Fair Labor Standards Act (FLSA).

Under Section 7(a) of the FLSA, 29 U.S.C. 207(a), overtime must

generally be paid at one-and-a-half times the regular rate to

A-50

employees who work more than 40 hours in a given week.

Overtime need not be paid, however, to "seamen." Department

of Labor regulations define "seamen" as employees who "work

primarily as an aid in the operation of [a] vessel as a means of

transportation” (29 C.F.R. 783.33) and "perform[] no substantial

amount of work of a different character." 29 C.F.R. 783.31.

Other maritime employees who work on vessels fall within the

broader admiralty definition of "seamen," see McDermott Int’l Inc.

v. Wilander, 111 S. Ct. 807, 817 (1991), but are not exempt from

the overtime compensation requirements of the FLSA.'

The FLSA does not completely displace state wage and hour

laws. The statute includes a savings clause, 29 U.S.C. 218(a),

that preserves state laws that provide greater protection to

workers. That clause provides, in pertinent part, that "[n]jo

provision of [the FLSA] or of any order thereunder shall excuse

noncompliance with any Federal or State law or municipal

ordinance establishing a minimum wage higher than the minimum

wage established under [the FLSA] or a maximum work week

lower than the maximum workweek established under [the

FLSA]." 29 U.S.C. 218(a).

2. This controversy arises out of California’s effort to enforce

its state overtime compensation requirements with respect to a

very narrow class of maritime workers who are all California

residents serving on vessels that are not engaged in foreign,

. The lower courts referred to those employees who fall within the

PLSA’s definition of seamen as "seamen" and to other employees who satisfy the

traditional admiralty definition as "maritime employees." Pet. App. A3, A47-

A48. We use the same terminology in this brief, but also use the term “maritime

workers" to refer to both categories of employees collectively. (Our citations to

"Pet. App.” refer to the appendix to the petition in No. 91-142.)

A-51

intercoastal, or coastwise voyages.’ All of the employees affected

work on vessels that do not travel to ports outside of California.

a. Clean Seas, a petitioner in No. 91-349, operates two

vessels, Mr. Clean I] and Mr. Clean III, which control and clean

up oil spills and other environmentally hazardous discharges off

the California coast. Mr. Clean II is moored at Port San Luis

Harbor in California, approximately 90% of the time.

Mr. Clean III conducts containment and clean-up operations four

to ten nautical miles off the California coast, and at other times is

tied to a buoy approximately seven miles off the California coast.’

Pet. App. A5. Employees on Mr. Clean III are organized into

rotating crews that serve seven days on duty followed by seven

days off. While on duty, crewmembers work 12-hour shifts,

alternating with 12-hour rest periods.* Jd. at AS-A6 & n.3.

b. The petitioners in No. 91-142, Tidewater Marine Service

and Western Boat Operators (collectively Tidewater), operate two

vessels that transport cargo and passengers between California

ports and off-shore oil platforms. Their crews, like those of Clean

Seas, work alternating s

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