As expected, the California Trucking Association has filed an appeal in its setback to keep AB 5 out of the state’s trucking sector, asking a full 9th Circuit to review a recent appellate court decision.
In an action filed last week, the CTA asked for an en banc hearing. In an en banc action, the party making the appeal asks for the full circuit to hear the case, with a subset of the full circuit assigned to it.
The en banc request was filed last week.
In the filing, the CTA returns to the key arguments it has made in its efforts to keep independent contractor law AB 5 away from the state’s trucking market. For all of 2020 and into 2021, those arguments were successful, with a temporary injunction handed down by a lower court early last year barring the implementation of AB 5 in trucking even as it began to govern and impact independent contractor relationships in other fields. (Independent gig drivers, like those at Uber, got out from under AB 5 through the passage last Election Day of Prop 22.)
But the state of California, in an appeal that had oral arguments heard in early September, persuaded a divided Ninth Circuit appeals court earlier this month to overturn the injunction.
That injunction is still in place, now awaiting the full Ninth Circuit’s decision on whether to take the en banc petition.
The part of AB 5 that is problematic is the so-called B prong. Under the B prong, a worker who is hired to perform a function that is at the heart of what the company does–like a trucking company hiring an independent owner operator of a truck–should be considered an employee. A trucking company hiring an outside accountant, for example, would not fall under the B prong.
The district court in early 2020 agreed with the CTA’s argument that AB 5 was in conflict with the Federal Aviation Administration Authorization Act, a 1994 law that the CTA argued blocked AB 5 because of potential impact on “rates, routes and services.” State laws that would affect those three parts of the market are precluded by FAAAA. But the appellate court disagreed in overturning the injunction.
CTA’s en banc request reiterates its view that AB 5 is in conflict with FAAAA. Citing earlier legal precedents, the association’s lawyers write that earlier courts “held that the FAAAA (and nearly identical language in the Airline Deregulation Act) preempt state laws, including generally applicable laws, that affect rates, routes or services, either directly or indirectly. AB-5 is preempted under that standard.”
The association’s filing also says that other legal decisions, one involving the American Trucking Associations, found that it would be “obvious that a ban on motor carriers’ use of independent contractors would probably be preempted.”
Maintaining the owner operator model is “critical…because it ‘permits expansion in times of plenty and contraction during shortages in business,’” the CTA appeal says, quoting the dissent in the case from Judge Bennett of the three-judge appeals court. Bennett was also quoted as saying that AB 5 would “require all motor carriers to reclassify all independent contractor drivers as employee drivers.”
If that were to happen, the CTA said, quoting Judge Bennett, it would “eliminate motor carriers flexibility to accommodate fluctuations in supply and demand.” Judge Bennett’s arguments are cited frequently in the CTA filing.
The appellate court held that AB 5 is a “law of general applicability,” not focused solely on trucking and would not “compel a result in a motor carrier’s relationship with consumers.”
California’s trucking sector has consistently argued that AB 5 is not a law of general applicability. It has cited the numerous exemptions granted to certain industries, either in the original legislation or subsequent legislation that was passed in part to address problems with independent contractors that arose when the law first went into effect, as showing that it is legislation targeted at several industries, including trucking.
In a footnote, the CTA cites a statement by the AB 5 sponsor, Assemblywoman Lorena Gonzalez, from statements she made on the floor of the Assembly. “And let me talk for one
minute about trucking,” she said, according to the CTA’s submission of her statements from a transcript. “We are getting rid of an outdated broker model that allows companies to basically make money and set rates for people that they called independent contractors.”
With as many precedents out there that could be viewed as in conflict with the Ninth Circuit’s appellate court decision overturning the injunction, “the panel decision creates an acknowledged circuit split,” the CTA’s attorneys write.