September 2, 2020

Yesterday, the Ninth Circuit Court of Appeals heard oral argument in the California Trucking Association’s challenge to AB5, California’s recently enacted misclassification statute. In January, the U.S. District Court in San Diego entered an injunction against the State of California that barred its enforcement of AB5 against motor carriers, concluding AB5 was likely preempted by federal law. The Ninth Circuit is considering whether to uphold that decision. As in the District Court, the lawyers for the state and Teamsters could not articulate a single situation in which a motor carrier could satisfy the ABC test with respect to owner operators. However, questions from two of the judges suggested they thought AB5 was simply a general background labor law that is not preempted by the FAAAA. CTA’s lead counsel was quite persuasive in pointing out that while AB5 is cast as a law of general applicability, its legion of industry exceptions from the law strongly suggest it is nothing more than a law targeting certain industries (notably trucking) while exempting many others. The judges also questioned whether there was enough evidence in the record to support the injunction. It is always difficult to predict the outcome of a case based solely on oral argument. While the firm is hopeful the Ninth Circuit will leave the injunction in place and fully supports the CTA and feels its request for continued funding is very much warranted, the questioning by 2 of the 3 judges during oral argument raises some concern the court is leaning toward reversing the District Court’s order. Here is a link to the video of the argument.

If you have questions, please contact Greg Feary, Shannon Cohen, Chris McNatt, or Chris Eckhart.