The California Trucking Association last week filed a renewed preliminary injunction request against the state of California's AB 5 independent contractor law with the U.S. District Court for the Southern District of California.
The request follows a similar request by the Owner-Operator Independent Drivers Association filed last month. OOIDA, which is an intervenor in the case, has since withdrawn and resubmitted that request to reflect a new briefing schedule in the case.
In its new request filed Jan. 11, CTA claimed that the state “never articulated how a motor carrier can possibly satisfy” the law, particularly the “B” prong of the now-codified ABC test for independent contractor status, which requires that a worker performs work outside the usual course of the hiring company’s business.
By enforcing the ABC test against motor carriers, CTA said California continues “to threaten irrevocable harm” to fleets and owner-operators who have built their businesses around the leased owner-operator model, codified in federal law in the Truth in Leasing regulations of the business-to-business relationship.
The same court in 2020 issued a preliminary injunction just before the AB 5 law took effect, concluding that CTA and others challenging the law were likely to prevail on the argument that the Federal Aviation Administration Authorization Act (FAAAA or F4A) preempted state law.
CTA said that because the original injunction was based on the FAAAA preemption argument, other claims against AB 5 were not addressed.
In its new request for injunction, CTA said in reversing the district court’s original finding that CTA and others would likely to succeed based on AB 5 being preempted by the FAAAA, the Ninth Circuit “took for granted that motor carriers could continue providing the same services by reclassifying owner-operators as employees, such that the harms would be limited to increased costs and other ‘indirect effects’ from an employee model.”
The practical effect of AB 5’s enforcement, however, “is to entirely eliminate services, since thousands of owner-operators are not willing to work as employees,” CTA said. “As shown by declarations, recent protests at the ports, and surveys, owner-operators want the freedom to operate their own businesses. Because motor carriers can neither engage owner-operators as independent contractors (without running afoul of AB-5) nor hire them as employees (given that many owner-operators want to remain independent),” AB 5 “limits the services that motor carriers could otherwise provide.”
CTA also claims the law violates the Dormant Commerce Clause of the U.S. Constitution. The law “exempts several in-state professions and industries from the ABC test, while imposing increased burdens on motor carriers engaged in interstate commerce, disproportionately lowering the cost of doing business for intrastate businesses. There is no legitimate justification for the disparate treatment or for allowing California to erect barriers to a national market,” CTA said.
Finally, CTA believes AB 5’s preemption is implied by Congress’ activity in regulating and deregulating motor carrier activity.
CTA said the state would not suffer any harm by staying enforcement of a preempted statute, adding that it is only seeking to enjoin AB 5 as it applies to motor carriers and owner-operators and will not bar the state from enforcing the law in other contexts.
A hearing on AB 5 is scheduled for 10:30 a.m. Pacific on May 1 in Courtroom 5A at the U.S. District Court for the Southern District of California in San Diego.