Wednesday, May 22, 2024

California trucking eyes equal protection argument in AB5 litigation

Two key lawsuits regarding trucking, gig workers and California’s independent contractor law, AB5, are starting to converge.

The California Trucking Association (CTA) lawsuit that dates back to 2019, which resulted in an injunction that kept AB5 at bay in trucking for 2 1/2 years until the U.S. Supreme Court declined to review a lower court ruling against the injunction, faced a deadline Wednesday for filing additional briefs.

Those briefs were to be filed by the state of California and the Teamsters union, which is an intervenor in the case in alliance with the state’s defense of AB5. The plaintiffs in the case are the CTA and the Owner-Operator Independent Drivers Association (OOIDA), which was not an initial plaintiff but was added later. Their briefs were filed in January. 

But in a joint filing Wednesday, all of the attorneys in the case asked for more time to file initial or additional briefs. A key reason: the recent decision in an anti-AB5 case brought by Uber and Postmates in which a three-judge panel of the 9th U.S. Circuit Court of Appeals found merit in the argument by those two companies that app-based platforms for gig drivers were unfairly singled out in the crafting of AB5.  

As a result, the court found that the plaintiffs may have been denied equal protection. The decision by the panel sent the Uber/Postmates lawsuit back to a lower federal court, which earlier had dismissed all of the plaintiffs’ arguments.

That case is known as Olson, as the lead plaintiff in it is a gig-based driver named Lydia Olson, as well as other drivers, Uber (NYSE; UBER) and Postmates.

The request to extend the deadline for briefs would allow “the CTA plaintiffs and OOIDA [to] seek to amend their complaints to add a claim under the Equal Protection Clauses and will thereafter seek a preliminary injunction on that ground, thus supplementing the arguments already before the Court.”

The CTA/OOIDA case is back in the same lower court, and before the same judge, Roger Benitez, who on New Year’s Eve 2019 handed down an injunction that blocked implementation of AB5 in the state’s trucking sector. AB5, after being approved and signed into law in 2019, went into effect New Year’s Day 2020. As of Thursday afternoon, Benitez had not ruled on the request for an extension.

The New Year’s Eve injunction was overturned by a three-judge panel in April 2021. It then was stayed while the CTA continued its appeal to the Supreme Court. When the Supreme Court chose not to review the case at the end of June 2022, it started the process that ultimately made AB5 governing law in the state’s trucking sector.

The Supreme Court action did not end the CTA case. Instead, it kicked it back to the lower court, since the arguments made by CTA and now OOIDA have not been fully adjudicated. CTA and OOIDA have made another request for an injunction.

As one attorney who wished not to be identified noted, lawyers for CTA and OOIDA are likely scouring the public record of statements made about trucking by then-state Assemblywoman Lorena Gonzalez. Gonzalez, who sponsored the legislation and is now a union official, was cited by the 9th Circuit panel that ruled in favor of Uber/Postmates for her comments that the court said could be interpreted as singling out gig-based driver platforms in the creation of AB5, thus violating the equal protection clause of the Constitution.

“I think there’s plenty out there where she targets trucking,” the attorney said, requesting anonymity.

The Gonzalez comments on app-based drivers proved beneficial to the Uber/Postmates argument when combined with the fact that there were two major pieces of legislation that carved out a wide range of exemptions to AB5. One was in the AB5 law itself, which carried many exemptions, from surgeons to graphic designers. A second law, AB2257, signed into law in September 2020, increased the number of jobs that were exempt from AB5.

There were exemptions granted to two app-based platforms whose operations were similar to Uber and Postmates: Wag!, which finds dog care providers, and TaskRabbit, which finds workers willing to do a wide variety of tasks. The exemptions granted to them, despite a similar business model to Postmates and Uber, was cited by the court in overturning the lower court decision regarding equal protection.

Lawyers for Uber/Postmates made the argument that the combination of the enormous list of exemptions plus the statements made by Gonzalez that certain app-based platforms like Uber and Lyft would not receive any exemptions were evidence that those companies didn’t receive the equal protection of the laws and were targeted. 

Gonzalez has been silent on the Uber/Postmates decision even though her comments are now core to plaintiffs’ arguments.

Over the years on Twitter, she has made several comments defending the inclusion of trucking in AB5 and argued that it would not end the careers of independent drivers. 

Truck owners: don’t believe the lie. You can be employees, get good wages & benefits & keep your trucks. A truck is like any other equipment you use at work: an employer can provide it, or can reimburse you for using your own. Companies saying otherwise do not care about you.

— Lorena Gonzalez Fletcher (@LorenaSGonzalez) July 13, 2022

Other trucking-related tweets by Gonzalez can be found here, here and here. 

The Supreme Court denial of the CTA case put the lawsuit back in the hands of the lower court, and the 9th Circuit action in Uber/Postmates did the same. One difference: The CTA case is now before a court and a judge who was sympathetic enough to the CTA arguments to grant an injunction. The Uber/Postmates case is before a judge who denied all their claims. (All the denials were upheld by the 9th Circuit, except the argument on equal protection.)

Prasad Sharm, a partner at the trucking-focused firm of Scopelitis, Garvin, Light, Hanson & Feary, said it was a logical leap from the Olson decision to becoming part of the CTA/OOIDA case.

“While CTA already had several arguments as to why the court should grant a preliminary injunction, the 9th Circuit’s decision in Olson lends further credence to an Equal Protection claim,” Sharma said in an email to FreightWaves. “Undoubtedly, AB 5’s sponsor and others in the legislature set their sights on trucking while providing a limited exemption for construction trucking.”

The reference to construction trucking refers to a section of the original AB5 law that covers construction trucking. It is complex but results in construction trucking being defined differently from the rest of the state’s trucking sector. 

The initial injunction handed down by Benitez at the close of 2019 was predicated on the CTA argument that AB5 was in conflict with a federal law known as the Federal Aviation Administration Authorization Act, which restricts state action that impacts transportation. CTA also made the argument that AB5 was in conflict with the dormant commerce clause of the Constitution, which impacts interstate commerce. That argument was not a basis for the injunction, though it is also the argument that OOIDA is making since it joined as a plaintiff. 

The AB5 test contains the ABC test for determining whether a worker is an employee or an independent contractor. The B prong of the ABC test has long been problematic for trucking, as it states a worker can be considered independent if he or she “performs work that is outside the usual course of the hiring entity’s business.” A trucking company hiring an independent owner-operator to move freight on a truck is likely to be seen as violating the B prong.

More articles by John Kingston

DSC chat: Wrestling with proposed DOL rule on independent contractors

Comments come in from trucking sector on proposed DOL independent contractor rule

Decade-long misclassification case against Hub settled for roughly $5 million; California’s ABC test loomed in the background

The post California trucking eyes equal protection argument in AB5 litigation appeared first on FreightWaves.

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