California has filed its legal arguments opposing the request for a preliminary injunction that may block imposition of independent contractor law AB5 within the state’s trucking sector and was capable of cite developments within the sector for the reason that law went into effect last yr.
Each the California Trucking Association (CTA) and the Owner-Operators Independent Drivers Association (OOIDA) are plaintiffs within the suit to stop AB5 from being implemented within the trucking industry within the state. CTA filed the unique suit in 2018. That led to an injunction issued Recent 12 months’s Eve 2019, the day before the law broadly went into effect within the state, that AB5 couldn’t be implemented within the state’s trucking sector since it was in conflict with a federal law often known as F4A.
That injunction was overturned in April 2021 by the ninth Circuit, however the lifting of it stayed while the CTA pursued an appeal before the Supreme Court. The Supreme Court denied review on June 30, 2022, and AB5 became the law of the land.
The unique suit, never having been fully adjudicated, was kicked back to the unique lower court. OOIDA has been added as a plaintiff. Each CTA and OOIDA have asked for a brand new injunction.
The attorney general’s office, headed by lead defendant within the case Attorney General Rob Bonta, filed responses to each the CTA and OOIDA injunction requests. There is important overlap each within the plaintiffs’ arguments and the state’s response.
Robert Rogison, outside counsel for CTA, said CTA’s and OOIDA’s briefs in response to the state’s filings are due July 14. A hearing on the request for injunctions from each CTA and OOIDA is about for Aug. 28 within the courtroom of Federal District Court Judge Roger Benitez, who handed down the unique Recent 12 months’s Eve 2019 injunction.
With AB5 in place for nearly a yr, it did allow the California attorney general’s temporary to cite developments up to now yr that it said showed AB5 wouldn’t be the wrecking ball to the state’s trucking industry argued by CTA and OOIDA. It also was capable of cite what the ninth Circuit said when it overturned the unique injunction.
For instance, the state could — and did — say things corresponding to “plaintiffs rehash arguments the Ninth Circuit has rejected.” California also has the power now to hunt to rebut the CTA’s argument that AB5 would lead to increased costs. The state noted that the ninth Circuit had already said the CTA’s argument about costs was not enough to support its argument that imposing AB5 on the trucking sector was in violation of the Federal Aviation Administration Authorization Act, the law often known as F4A. And with AB5 in place, it allows the state to argue that the CTA “cannot cite any material differences that may support a distinct result today.”
Referring to protests on the Port of Oakland that developed after AB5 went into effect, the state said, “There isn’t any evidence that these protests have had lingering effects or have continued. On the contrary, the ports have reopened for business.”
It also cited a rise in data from the Federal Motor Carrier Safety Administration that showed the variety of drivers in California rose significantly, to about 876,000 from 813,000. The timeframe for that comparison was not disclosed within the temporary but the rise would have followed a national trend that in 2021 and early 2022 showed a major increase within the variety of motor carrier authorities granted by FMCSA.
The state also cited firms, without identifying them, where “motor carriers have reclassified drivers as employees [and] have continued to operate.” A move by Universal Logistics (NASDAQ: ULH) last yr to take that step was one in every of the more notable, partly because Universal’s position as a publicly traded company meant the switch was announced.
Documents filed by CTA written by trucking industry officials in support of the request for an injunction are vague, the state said. One said that independent contractors at the corporate whose executives filed the temporary are usually not willing to work as employees. However the state said the filing lacked information on the terms of the offer to modify to full time, “notwithstanding the incontrovertible fact that AB5 has been in effect for nearly a yr.”
“Courts have rejected … self-serving conclusory declarations” in requests for preliminary injunctions, the state said.
California also argued that the business-to-business exception could be utilized by carriers wishing to maintain independent owner-operators as contractors. The B-to-B exception is a 13-point pathway that should be met fully on each of the baker’s dozen of necessities, with no leeway for failing to satisfy one or two mandates. Trucking industry executives generally have scoffed at the concept the exception is a legitimate way of using independent contractors as drivers, believing the test is just too difficult to satisfy.
Between the 2 responses, one to the CTA motion and the opposite to OOIDA, the state made several other arguments.
— The argument that AB5 would impact “prices, routes and services,” which F4A says can’t be impacted by a station motion, isn’t enough to overturn the law for trucking, California said. The state quoted an earlier precedent that said requiring a motor carrier to “bear in mind a state regulation in its planning services isn’t sufficient to require FAAAA preemption, so long as the law doesn’t have an impermissible effect, corresponding to binding motor carriers to specific services.”
— The CTA lost already on the ninth Circuit. “The Ninth Circuit recognized … carriers can proceed to work with owner-operators, much as they do now, by treating them as employees,” the state said.
— OOIDA’s central argument didn’t concentrate on the problem of F4A. As an alternative, it’s primarily concerned with the query of whether AB5 runs afoul of the Commerce Clause of the U.S. Structure, which limits a state’s ability to take motion that would impact interstate commerce. That was in the unique CTA lawsuit as well but was not a part of the idea for the 2019 injunction. The state’s argument goes back again to the ninth Circuit’s decision to overturn that call. The three-judge panel already rejected the argument that “the legislative history of the F4A … [has] nothing within the background materials reflecting a Congressional intent to preempt the standard authority of states to guard employees.” Individually in its response to OOIDA, the state said, “The Commerce Clause doesn’t protect a celebration’s preferred business model or preferred methods of operation in a given marketplace.”
— The long list of exemptions granted to varied industries from AB5 enforcement, which at times can seem random, has been cited by CTA and OOIDA as proof the trucking industry was “singled out” by the law’s writer, former Assemblywoman Lorena Gonzalez. California repeats the finding of the ninth Circuit that AB5 is a “law of general applicability,” applying to “lots of of various industries.” The patchwork of exemptions that ended up with trucking not getting any kind of relief got here after the state Legislature “considered the history of misclassification particularly occupations, noting that such misclassification is especially rampant in certain industries, including the trucking industry.”
AB5 uses a three-pronged test often known as the ABC test to guide regulatory and legal questions regarding the status of whether a employee is an independent contractor or an worker. The B prong of the ABC test is especially problematic for the trucking industry, because it says an independent contractor “performs work that’s outside the same old course of the hiring entity’s business.” That may be a challenge for a trucking company that hires independent owner-operators.
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