Supreme Court showdown?

Next up, a petition to the U.S. Supreme Court.

After being denied an en banc hearing by the U.S. Court of Appeals for the Ninth Circuit, the California Trucking Association will ask the highest court to hear its case that the state’s Assembly Bill 5 worker classification test is preempted by federal law.

The trucking group’s petition to the Supreme Court is due Nov. 18, and the injunction preventing AB5 from being enforced on motor carriers will remain in place until a decision is made on whether or not to hear the case. If the Supreme Court grants the petition, the injunction will remain in place until a ruling is made. If the Supreme Court elects not to hear the case, AB5 will immediately take effect in the trucking industry. Regardless of the decision, the injunction will likely stay in place until late 2021.

A potential showdown in the U.S. Supreme Court has been building since the California Supreme Court’s 2018 Dynamex ruling that established the ABC Test. The test considers all workers to be employees unless the hiring business demonstrates that three factors are established.

1. 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.
2. That the worker performs work that is outside the usual course of the hiring entity’s business.
3. 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.

Controversial law

The controversial test has received criticism from a wide array of industries, including trucking, journalism, and gig economy businesses, such as Uber and DoorDash. Opponents argue that the B prong makes it virtually impossible for those companies to hire an individual as an independent contractor.

In September 2019, the California State Senate passed AB5, which codifies the California Supreme Court’s decision. The law, which applied to several industries, went into effect Jan. 1, 2020.

Trucking industry opponents of the law include California motor carriers that say the law would up-end their business model, as well as leased-on owner-operators who don’t want to become employees. The Owner-Operator Independent Drivers Association also has gotten involved in the fight, filing amicus briefs to the Ninth Circuit in support of the California Trucking Association.

The California Trucking Association sued over the law, contending that the Federal Aviation Administration Authorization Act preempts AB5 from being applied to the trucking industry.

The F4A prevents states from enforcing a law or regulation related to a price, route or service of motor carriers.

Shortly after AB5 went into effect, the U.S. Southern District Court of California granted the preliminary injunction to stop the state from enforcing it on motor carriers. In doing so, the district court determined that AB5 “likely” was preempted by the F4A.

Then-California Attorney General, Xavier Becerra and the International Brotherhood of Teamsters appealed the ruling to the Ninth Circuit.

During oral arguments, attorneys for the California Trucking Association said AB5 was not a law of general applicability and that it violated the F4A.

In an amicus brief, OOIDA said AB5 would cause “irreparable harm” and could be “fatal” to owner-operators – even those who don’t reside in California.

“This court should not adopt the blinders that defendants urge,” OOIDA wrote. “AB5’s impact is not limited to large motor carriers, simply a matter of increasing the cost of doing business, or confined to California.

“Instead for tens of thousands of interstate owner-operators and small-business motor carriers that regularly cross the California border – small-business truckers critical to the interstate motor carrier industry – AB5 could be fatal.”

Ninth Circuit ruling

However on April 28, the Ninth Circuit ruled 2-1 that AB5 is not preempted by the F4A.

Judges Sandra S. Ikuta and Douglas P. Woodlock for the Ninth Circuit said AB5 “is a generally applicable labor law.”

“AB5 is not significantly related to rates, routes or services,” the judges wrote in their opinion. “Therefore, we conclude that the F4A does not preempt AB5 as applied to motor carriers.”

Ninth Circuit Judge Mark J. Bennett dissented, saying the California Trucking Association’s members “will now suffer irreparable injury.”

Fight continues

After the California Trucking Association petition for a rehearing en banc was denied, the trucking group affirmed that it would take the challenge to the highest level.

“While the decision by the Ninth Circuit to deny an en banc rehearing is disappointing, we are committed to continuing our efforts to protect California’s 70,000 independent truckers,” said Shawn Yadon, CEO of the California Trucking Association. “Enforcing AB5 would throw the nation’s supply chain into further chaos and destroy the livelihoods of thousands of blue collar entrepreneurs.”

OOIDA also said it was reviewing all of its legal options to fight AB5 from being enforced on truckers.

Arent Fox, a Washington, D.C.-based law firm, suggested in a recent blog that it’s the kind of case that may draw the interest of the U.S. Supreme Court.

“The split among the circuits makes the issue of preemption under the F4A ripe for consideration by the U.S. Supreme Court,” the blog stated. “With the current conservative majority, it is certainly conceivable that the Supreme Court would find that the F4A preempts application of state misclassification statutes to truck drivers.” LL