District Court Denies CTA Challenge to AB 5
On March 15, the United States District Court for the Southern District of California denied the California Trucking Association’s (CTA) claims that California’s AB 5 test for worker status determination cannot be enforced against the trucking industry. CTA had renewed its claim that AB 5 was, in fact, preempted by a federal deregulatory statute (FAAAA), but the court held that the Ninth Circuit decision reversing the court’s prior preliminary injunction foreclosed the claim. The court similarly held that an implied preemption claim was unproven.
As to CTA’s dormant Commerce Clause claim, the court found that AB 5 has no discriminatory intent or effect that would favor California truckers, and without that, courts should generally not engage in a weighing of benefits versus burdens. CTA also claimed that the legislature improperly targeted the trucking industry under the Equal Protection Clause, pointing to bill sponsor Assemblywoman Gonzales’ public statements to that effect. The court indicated that one legislator’s comments could not be attributed to the entire legislature’s motives for enacting a law. CTA had relied heavily on a recent Ninth Circuit decision in which the appellate court found an Equal Protection violation in favor of Uber, Lyft, and other gig companies, who were also targeted by the legislation via statements made by Gonzales and several other legislators to that effect. Yet, that decision was subsequently vacated for rehearing by the full Ninth Circuit and is no longer precedential to support CTA’s Equal Protection argument.
CTA’s final argument was that AB 5’s business-to-business (B2B) exemption could not be met by interstate truckers who are subject to the Federal Leasing Regulations (FLRs). The FLRs require the owner-operator’s truck to be in the legal “exclusive possession, control, and use” of the motor carrier, while the B2B exemption requires the business service provider to be free from such legal control. The court held that whatever the impact of the FLRs on the ability to meet the B2B exemption, AB 5 and its B2B exemption is not so irrational as to be a violation of the Equal Protection Clause.
The district court judge was sympathetic to the disruptions and burdens AB 5 places on the trucking industry. However, he indicated it was better left to the legislature to remedy the problem. We anticipate CTA will appeal the decision, but there will be no relief from AB 5 in the meantime. Contact Scopelitis Partners Greg Feary, Shannon Cohen, Prasad Sharma, and Chris McNatt with questions.
News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.
District Court Denies CTA Challenge to AB 5
On March 15, the United States District Court for the Southern District of California denied the California Trucking Association’s (CTA) claims that California’s AB 5 test for worker status determination cannot be enforced against the trucking industry. CTA had renewed its claim that AB 5 was, in fact, preempted by a federal deregulatory statute (FAAAA), but the court held that the Ninth Circuit decision reversing the court’s prior preliminary injunction foreclosed the claim. The court similarly held that an implied preemption claim was unproven.
As to CTA’s dormant Commerce Clause claim, the court found that AB 5 has no discriminatory intent or effect that would favor California truckers, and without that, courts should generally not engage in a weighing of benefits versus burdens. CTA also claimed that the legislature improperly targeted the trucking industry under the Equal Protection Clause, pointing to bill sponsor Assemblywoman Gonzales’ public statements to that effect. The court indicated that one legislator’s comments could not be attributed to the entire legislature’s motives for enacting a law. CTA had relied heavily on a recent Ninth Circuit decision in which the appellate court found an Equal Protection violation in favor of Uber, Lyft, and other gig companies, who were also targeted by the legislation via statements made by Gonzales and several other legislators to that effect. Yet, that decision was subsequently vacated for rehearing by the full Ninth Circuit and is no longer precedential to support CTA’s Equal Protection argument.
CTA’s final argument was that AB 5’s business-to-business (B2B) exemption could not be met by interstate truckers who are subject to the Federal Leasing Regulations (FLRs). The FLRs require the owner-operator’s truck to be in the legal “exclusive possession, control, and use” of the motor carrier, while the B2B exemption requires the business service provider to be free from such legal control. The court held that whatever the impact of the FLRs on the ability to meet the B2B exemption, AB 5 and its B2B exemption is not so irrational as to be a violation of the Equal Protection Clause.
The district court judge was sympathetic to the disruptions and burdens AB 5 places on the trucking industry. However, he indicated it was better left to the legislature to remedy the problem. We anticipate CTA will appeal the decision, but there will be no relief from AB 5 in the meantime. Contact Scopelitis Partners Greg Feary, Shannon Cohen, Prasad Sharma, and Chris McNatt with questions.
News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.