OOIDA to Ninth Circuit: AB5 harms leased owner-operators

Forcing leased owner-operators to relinquish their business is an excessive and unconstitutional burden, the Owner-Operator Independent Drivers Association told the U.S. Court of Appeals for the Ninth Circuit.

OOIDA filed its reply brief to the federal appeals court on Dec. 26 as part of its lawsuit against California’s worker classification law, Assembly Bill 5. The Association contends that AB5 violates the U.S. Constitution’s dormant Commerce Clause, which prevents states from placing undue burdens on interstate commerce.

“Defendants argue that AB5’s burdens on these truckers are mere reasonable regulatory compliance costs,” OOIDA wrote. “They ignore the most significant and unreasonable measure of AB5’s burden: the loss of all the small businesses that make up the leased owner-operator sector of the interstate trucking industry from California’s roads. There is no burden or cost that a leased owner-operator can bear to keep their small business on California’s roads.”

AB5, which was signed into law in 2019, requires a business to demonstrate three factors are established before a worker can be considered an independent contractor. The B prong of the ABC Test effectively prevents leased owner-operators from being classified as independent contractors.

“Despite their vigorous policy justifications for AB5, defendants avoid either admitting or denying OOIDA’s contention that AB5’s ABC Test prohibits the operation in California of leased owner-operators,” the Association wrote in its brief. “But AB5 would even prohibit leased owner-operators based outside of California from entering and exiting merely to pick up or haul freight into or out of the state. AB5’s elimination of this entire category of businesses far exceeds the types of burdens that courts have found reasonable under the dormant Commerce Clause.”

In California’s response brief filed in November, the state argued that OOIDA was exaggerating the effect the law has on leased owner-operators. OOIDA, however, said that the state is downplaying the loss of a trucker’s business.

“Defendants argue that, to comply with AB5, leased owner-operators could simply give up their small businesses and take on the reasonable compliance burdens to become entirely different legal entities in the trucking industry – employee drivers or DOT-authorized motor carriers,” OOIDA wrote. “This is tantamount to telling a lawyer who has labored to establish their own legal practice that they must give up their practice, but they can still work within the legal industry as either a paralegal or as a judge.”

In both industries, the respective three roles are not interchangeable, OOIDA argued.

“All these positions involve legal research, analysis and writing,” the Association wrote. “But they also contrast starkly in responsibility, authority, opportunity to profit and autonomy. Just as these three positions are not interchangeable law jobs, the three entirely different positions in the trucking industry are not, as defendants suggest, interchangeable truck-driving jobs.”

California’s AB5 is particularly burdensome on out-of-state leased owner-operators, the Association argued.

“Defendants provide not a scrap of evidence that the state benefits in any way by applying AB5 or California employment laws to independent owner-operators from other states who only visit California to drop off or pick up freight,” OOIDA wrote. “Incredibly, the state admits that it does not even know whether California’s employment laws protect such truckers … The burden of AB5’s prohibition on leased owner-operators based out of state (complete prohibition) clearly outweighs the evidence of the state’s interest (none) in imposing AB5 and California employment laws on them.”

The Ninth Circuit is expected to hear oral arguments for this case in the spring. LL