California Trucking Association seeks rehearing on AB5
May 27, 2021
The California Trucking Association formally petitioned the U.S. Court of Appeals for the Ninth Circuit to review its April ruling that the state’s Assembly Bill 5 is not preempted by federal law.
On April 28, a three-judge panel ruled 2-1 that California’s AB5 “is a generally applicable labor law” and called for the removal of a preliminary injunction against enforcing the state law on motor carriers.
The California Trucking Association’s petition for a rehearing en banc filed on Wednesday, May 26, seeks to have a full 11-judge panel of the Ninth Circuit hear the case. The trucking group contends that AB5 would force the end of the industry’s owner-operator model and would be in violation of the Federal Aviation Administration Authorization Act (F4A), which prevents states from enforcing a law or regulation related to a price, route, or service of motor carriers.
“This court should grant rehearing en banc because the majority’s decision conflicts with decisions of the U.S. Supreme Court and of this court and creates an acknowledged conflict with a decision of the U.S. Court of Appeals for the First Circuit,” the California Trucking Association stated in its court filing.
One judge from the Ninth Circuit’s three-judge panel agreed with the trucking group. Judge Mark J. Bennett offered a fiery dissent, saying the California Trucking Association’s members “will now suffer irreparable injury.”
“I do not agree … that a law like AB5 – which affects motor carriers’ relationships with their workers and significantly impacts the services motor carriers are able to provide to their customers – is not related to motor carriers’ services and thus is not preempted,” Bennet wrote.
The Ninth Circuit’s decision came about three years after the California Supreme Court’s Dynamex ruling established the ABC Test, which considers all workers to be employees unless the hiring business demonstrates that three factors are established.
A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. That the worker performs work that is outside the usual course of the hiring entity’s business.
C. That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.
In September 2019, the California State Senate passed AB5, which codifies the California Supreme Court’s decision. The law, which was intended to apply to a variety of industries, went into effect Jan. 1, 2020.
The California Trucking Association sued and the U.S. Southern District Court of California granted the preliminary injunction to stop the state from enforcing it on motor carriers. The Owner-Operator Independent Drivers Association also filed an amicus brief in support of the lawsuit, saying “AB5 not only threatens the business models and balance sheets of large motor carriers, it will also result in irreparable harm to owner-operators and small-business motor carriers.”
If the Ninth Circuit grants the en banc petition, the injunction will remain in place until a decision is made.
Ultimately, the case could end up in the U.S. Supreme Court.
“The California Trucking Association will take any and all legal steps necessary to continue this fight on behalf of owner-operators and motor carriers operating in California,” Shawn Yadon, CEO of the California Trucking Association, said in a news release after the April 28 ruling. LL