Tuesday, May 21, 2024

CTA, OOIDA to appeal court decision upholding AB5 in California trucking

The California Trucking Association and the Owner-Operator Independent Drivers Association will appeal last month’s decision that rejected their latest attempt to block imposition of California independent contractor law AB5 on the state’s trucking sector.

The decision to appeal the ruling to the 9th U.S. Circuit Court of Appeals, filed Friday with the U.S. District Court for the Southern District of California, came as something of a surprise given the consensus in the trucking legal community that continuing the fight would be expensive and had limited chance of success.

CTA and OOIDA are appealing a decision handed down March 15 by District Court Judge Roger Benitez rejecting their request for a new injunction blocking AB5 enforcement in trucking. Benitez was the judge who handed down the initial injunction against AB5 on New Year’s Eve 2019, when the CTA was the sole plaintiff against then-state Attorney General Xavier Becerra. (OOIDA was added later as a plaintiff.)

The basis for that injunction was the judge’s view that the Federal Aviation Administration Authorization Act preempted AB5 because the latter rule was state action that could affect “prices, routes and services,” specifically blocked by the so-called F4A.

That decision was ultimately rejected by a three-judge panel of the 9th Circuit Court, review by the U.S. Supreme Court was denied in June 2022, and the case went back to Benitez’s courtroom.

Benitez rejected a new attempt by CTA and OOIDA to cite F4A as a reason for a new injunction, saying that issue had been settled by the appellate court. But he also rejected other CTA/OOIDA arguments, including a potential conflict between AB5 and the Dormant Commerce Clause of the Constitution, which regulates interstate trade.

He also rejected CTA/OOIDA arguments that AB5 denies the trucking industry the equal protection of the laws. The trade groups had cited statements by AB5 sponsor Lorena Gonzalez, a now former assemblywoman who was the driving force behind the law, as well as the many exemptions granted to various industries in AB5 itself and follow-up legislation.

At the Scopelitis Transportation Law seminar in Indianapolis, the president of the firm, Greg Feary, announced from the stage Monday the “breaking news” that the appeal had been filed.

Feary found some statements in Benitez’s decision regarding the equal protection issue that he said might open the door to an appeal. “There may be a viable equal protection argument,” he said.

In response to a FreightWaves query, a spokeswoman for OOIDA said the group “respectfully disagrees with the legal basis for the decision issued by the District Court. OOIDA appeals this decision with the hope that the Ninth Circuit will agree with OOIDA and reverse it.”

FreightWaves had received no response from the CTA by publication time.

AB5 is a law governing independent contractor status in California. It was approved by the state legislature and signed by Gov. Gavin Newsom in 2019, taking effect Jan. 1, 2020.

At the core of it is the so-called ABC test to help determine whether a worker is an employee or an independent contractor. 

In particular, the B prong of the ABC test has the potential to create difficulties for the trucking industry. It says that a worker can be considered independent if he or she “performs work that is outside the usual course of the hiring entity’s business.” Trucking companies that hire independent owner operators to move freight could be viewed as in conflict with that and fear not just regulatory action against them but an inability to continue to use independent contractors.

More articles by John Kingston

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The post CTA, OOIDA to appeal court decision upholding AB5 in California trucking appeared first on FreightWaves.

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