A federal district court in California won’t hold a hearing for a new preliminary injunction blocking independent contractor law AB5 until May.
That means that any hope the state’s trucking sector had that a new preliminary injunction stopping AB5 from enforcement in the state might be handed down by a federal judge is dashed for five more months.
The ongoing litigation in the U.S. District Court for the Southern District of California is the result of the U.S. Supreme Court decision in late June not to review an appellate court decision that had overturned the earlier lower court decision from New Year’s Eve 2019 that AB5 could not be enforced against the state’s trucking sector because of what Judge Roger Benitez saw was a conflict with other federal laws.
The appellate court’s decision to overturn the Benitez injunction was stayed while the Supreme Court pondered whether to review it. With the Supreme Court deciding to punt, the stay was lifted, AB5 came into effect against trucking and the original lawsuit filed by the California Trucking Association came back to the district court to be fully litigated on the CTA’s arguments. The injunction came before the case was resolved.
The judge in the revived litigation is the same one that handed down the original injunction, Benitez. As odd as it seems, even though an appellate court decision overturned the Benitez injunction, it remains possible that the same judge might hand one down again. But now, barring something unexpected, it would not happen until May.
Briefs in the CTA case were to be filed by Wednesday. But in an agreement among all parties, the court set a new schedule for various deadlines. A formal request for a preliminary injunction would need to be filed by Jan. 11. The state, which is the defendant in the case, must file responses by March 8. So must the Teamsters, intervenors on behalf of the state. And a hearing on the request for a preliminary injunction will be held May 1.
AB5 was approved by the state in 2019 and codifies the ABC test of determining whether a worker is an employee or a legitimate independent contractor. The trucking sector has been particularly focused on the B prong of the ABC test, which says a worker can be considered independent if “the worker performs work that is outside the usual course of the hiring entity’s business.” A trucking company hiring an independent contractor to move freight has an obvious potential conflict with the B prong.
Even though there’s still time for the request for a preliminary injunction to be submitted, OOIDA, recently admitted as an intervenor on behalf of CTA, didn’t waste any time. It already has submitted that request and its arguments are for reasons that were not part of the basis for the original injunction: that AB5 should be blocked from enforcement because it violates the dormant commerce clause of the U.S. Constitution.
When Judge Benitez handed down his original injunction, he did so on the grounds that AB5 in trucking was in conflict with a federal law known as the Federal Aviation Administration Authorization Act, known colloquially as F4A. The law from the 1990s restricts what states can do in laws regarding transportation.
But the possible conflict with the dormant commerce clause, which was part of the original CTA lawsuit, never got a hearing. OOIDA’s addition as an intervenor assures that it will.
“The Commerce Clause gives Congress the authority to regulate commerce between the states,” OOIDA says in the brief. “This grant of authority implies a restriction on state’s authority to interrupt — by discriminating against or imposing improper burdens on — interstate commerce.”
In its brief, OOIDA says that “applying AB5 to the motor carrier industry means that carriers will no longer be able to use independent owner operators in California, ending a business model that has served as the lifeblood of the industry.”
OOIDA argues that the multi-prong “Borello” test, which has long been another legal decision that has guided litigation on employee versus independent contractor status, has been sufficient in settling such disputes in the past.
“OOIDA is not aware of any instance when the application of Borello has failed to address misclassification problems that may be found in the trucking industry,” OOIDA wrote in its brief.
The OOIDA brief also cited the “Pike” standard, a decision that goes back to 1970. “AB5, a state regulatory enactment, must satisfy the Pike standard, which invalidates a state law that does not discriminate on its face but imposes burdens on interstate commerce that clearly exceed the law’s putative local benefits.”
The OOIDA brief also said the “public benefit of AB5 to California is even lower when applied to out-of-state truckers.”
The association cited two recent cases involving airlines that OOIDA said “makes clear [that] California’s interest in applying its labor rules wanes with increased distance from the state’s borders.”
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