Three key trade groups have filed amicus briefs to the latest legal effort by the California Trucking Association to keep the state’s AB5 independent contractor law from being implemented.
The American Trucking Associations, the Western States Trucking Association and the Owner-Operator Independent Drivers Association all have asked the full 9th U.S. Circuit Court of Appeals to grant the CTA request for an en banc hearing. That hearing would seek to give the CTA an opportunity to argue in favor of a continuation of the injunction that so far has kept AB5 out of the state’s trucking industry.
Although the three-judge appellate court overturned the injunction, it remains in place while the CTA pursues further appeals.
The three briefs take different approaches to their arguments. But they largely come down to the same fundamental legal logic: that AB5 is a state law that impacts prices, routes and service, which the 1994 Federal Aviation Authorization Administration Act (F4A) specifically said was not permitted and would be in conflict with the federal rule.
The organizations’ argument was that Congress had always intended for the F4A to preempt state laws that might override the goals of the act. Specifically, it sought to bar state regulations that might affect prices, routes or service, the three aspects of the trucking market specifically cited in the act’s wording.
Citing an earlier Supreme Court decision, the ATA said the preemption provision in F4A “reflects Congress’ concern that ‘state requirements could easily lead to a patchwork of state service-determining laws, rules and regulations.’”
That is the argument that CTA successfully made before the lower court, which agreed and granted the injunction against AB5 at the start of 2020, but which ultimately was rejected by the appellate court.
At issue is the B prong of AB5, which defines as an employee a worker who is hired by a company to perform a task or service that is little or no different from the company’s regular business operations. A trucking company hiring an independent owner operator to move freight would be difficult — some analysts say impossible — under AB5.
As the WSTA said in its brief, the “manner in which trucking services are bid, won and subcontracted” means that all trucking companies in those relationships “are … engaged in the same usual course of business when they subcontract with each other.” Any legal action would find that the companies failed the B-prong, it said.
WSTA, citing precedent, said AB5 is “an all or nothing law” that would “categorically prevent motor carriers from exercising their freedom to choose between using independent contractors or employees.” Given that, the impact on prices, routes and services is clear, WSTA said.
The efficiency in delivery seen during the pandemic occurred in part because of independent contractor relationships. “That capability will be severely curtailed, or the prices will rise exorbitantly under the new law,” WSTA wrote.
Making the argument about prices, routes and and service allows the trade groups to forecast scenarios of what might happen under AB5. The decision by the appellate court takes the current balance in the market “and permits California to wholly condemn the business model used by a significant segment of the trucking industry,” OOIDA wrote in its brief. AB5 “eliminates an entire category of motor carriers who rely upon independent owner operators to do business and therefore subverts Congress’ intent.”
Both ATA and WSTA take aim at the appellate court’s conclusion that AB5 is a law of general applicability. The finding of AB5 as a law of general applicability undercuts the case that AB5 is specifically targeted at trucking. That argument in turn supports the thesis that the law impacts prices, routes and service.
WSTA attacks the case for AB5 as a law of general applicability by noting the many carve-outs from AB5 that have been approved either by the people of California in the Prop 22 Election Day referendum, or that were passed by the California legislature. Those exceptions range from still photographers to manicurists.
“There are so many exceptions to the ABC test that to call it a law of general applicability strains the meaning of that term,” the WSTA brief said.
The organization quoted the appellate court decision, which said AB5 “does not single out motor carriers but instead affects them solely in their capacity as employers.” The appellate court noted that while some businesses are exempt, many more are not.
But given the sheer number of the exemptions, the WSTA argues that “it is no exaggeration to say that millions of professions and business relationships are exempted from the law.”