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California Trucking Association’s battle over AB5 returns to court Monday

Supreme Court inaction only impacts preliminary injunction; CTA’s original case proceeding

Photo: Jim Allen/FreightWaves

The battle over California’s independent contractor law, AB5, and the state’s trucking industry goes back to court Monday.

This would seem to contradict widespread assumptions that the legal road for the California Trucking Association’s fight against AB5 came to an end when the U.S. Supreme Court in late June chose not to review a 9th U.S. Circuit Court of Appeals decision to overturn a lower court injunction against AB5 that had been in effect since the start of 2020.

The high court’s punt paved the way for the state to enforce AB5 in its trucking sector. Barring a completely unexpected outcome Monday, that isn’t changing.

But the journey to a hearing that may yield a foregone conclusion has been complicated. The original case brought by the CTA had neither trial nor oral arguments. There was just an argument by the CTA that the Federal Aviation Administration Authorization Act (F4A) preempted AB5’s restrictions on using independent contractors in the state and as a result, AB5 should be blocked from the state’s trucking business when it went into effect statewide on Jan. 1, 2020.

The lower court on New Year’s Eve 2019 agreed that it was likely such an argument would prevail and issued a temporary injunction against AB5 implementation in the state’s trucking sector. That morphed into a preliminary injunction.

Then the state and the Teamsters successfully appealed to the 9th Circuit that the injunction should be overturned. But even with the 9th Circuit rejecting the CTA’s underlying claims, the  injunction stayed in place while the CTA went to the Supreme Court — an effort that died at the end of June when the court denied a certiorari review.

The appeals court then ordered the case back to the lower court via an action known as a mandate, but with its earlier injunction reversal intact.

Legal sources close to the case said the proceeding Monday is referred to as an Appeal Mandate Hearing. It is expected that any ambiguity surrounding the mandate will be ended by the proceedings in U.S. District Court for the Southern District of California. 

But the hearing will also mark the start of the next round of legal action by the CTA, where it is pursuing a resolution to its original claim: that F4A preempts a law like AB5 from being applied to the state’s trucking industry. Rulings on the injunction do not close the book on the original case, and the argument has never had, to use an old phrase, its day in court. 

“We’ll go back to where we were the day after the injunction was handed down” is how one attorney, requesting anonymity, described what happens next.

In a joint report filed with the court by attorneys for both sides in advance of Monday’s hearing, it was revealed that CTA plans to move for a new preliminary injunction in the case.

CTA attorneys are also expected to ask the court to reconsider an earlier decision that dismissed a claim that AB5 was in conflict with the Dormant Commerce Clause, which has been defined as a bar to states passing laws that burden interstate commerce. 

Separately, the state, as well as its Teamsters co-defendants, will ask the court to reconsider the court’s earlier decision on the F4A preemption claims, which ultimately became the basis for the injunction.

The court is also expected to take up a request by the Owner Operator Independent Drivers Association (OOIDA) to be allowed as an intervenor in the case.

But no action is expected soon. The joint filing lays out a proposed schedule for briefs to be filed that doesn’t end until early December. The court would then set a hearing.

The CTA argument over AB5, which sets out restrictive guidelines on the hiring of independent contactors, is that the law conflicts with F4A’s prohibition against state laws that impact “prices, routes, and services.” The lower court that handed down the original injunction agreed with that. The three-judge panel of the appellate court did not.

Attorneys close to the case — California Trucking Association vs. Bonta, a reference to California Attorney General Rob Bonta — say CTA v. Bonta could eventually go to trial. But a more likely outcome would be the attorneys filing briefs and motions, with summary judgment ultimately issued from the bench.

In the meantime, the state’s trucking sector continues to figure out how it will proceed with AB5 in place. 

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  1. Richard M. Rehmer

    We keep expecting our judicial system to wake up and see what is an unprecedented move to destroy owner-operators leased on to companies. They fail to see that leasing on lowers the company’s capital outlay for trucks and offers an owner-operator a guaranteed source of freight. To make the owner-operator an employee would mean the company would have to purchase the owner-operator’s equipment ( you can not use your personnel equipment for a company you work for. It would be an insurance nightmare), and that will never happen, so the owner-operator loses contracts with the company he is leased to. They say there are provisions that would allow them to stay leased on, but the state of California sees an increase in tax revenue by these individuals becoming employees

  2. Jeffrey

    When we shut EVERYTHING DOWN across the country, like we did in Colorado, they’ll get the picture. There’s nothing more essential than trucks moving freight. To impede upon my livelihood, my liberty or my pursuit of happiness, is unconstitutional. As a business owner/operator the whole idea is in direct conflict. If I own 20 trucks and find 20 people willing or even wanting to be independent contractors, who’s business is it….

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.