In a sweeping decision, a federal judge in California on Friday rejected arguments that the state’s independent contractor law, AB5, should be barred from regulating California’s trucking industry.
Judge Roger Benitez of the U.S. District Court for the Southern District of California not only failed to order a new injunction, he also tossed out the case brought by the California Trucking Association (CTA) and the Owner-Operator Independent Drivers Association (OOIDA), with state Attorney General Rob Bonta and the Teamsters as the defendants. Benitez handed down the New Year’s Eve 2019 preliminary injunction that kept AB5 out of the state’s trucking sector for several years.
“Remedying complexities and perceived deficiencies in AB5 are the kind of work better left to the soap box and the ballot box than to the jury box,” Benitez wrote in his decision. “If sufficient political or economic pressure can be brought to bear by [CTA and OOIDA] and their supporters, the more onerous provisions of the statute can be amended. The courts, on the other hand, are not the proper bodies for imposing legislative amendments.”
Benitez expressed little sympathy with the CTA and OOIDA arguments in his decision. The basis for Benitez’s 2019 preliminary injunction blocking AB5 was that it conflicted with the provisions of the Federal Aviation Administration Authorization Act (FAAAA), an argument that was later rejected by a three-judge appellate panel of the 9th Circuit.
Benitez reviewed some of the arguments regarding FAAAA’s preemption of state action that impacts a carrier’s “prices, routes or service.” It is that phrase in the FAAA that originally led Benitez in 2019 to block implementation of AB5 in 2019.
But the judge ultimately comes back to the conclusion of the appellate court: “That the FAAA does not explicitly preempt AB5 was resolved earlier in this case.” And that decision, the judge writes, “is binding on this court.”
The CTA and OOIDA also argued that there was an “implied preemption” in the FAAAA that would block AB5. “Implied preemption might have a place,” Benitez wrote. But an argument that it is impossible to comply with the FAAAA because of AB5 falls short. “It is not impossible for truck drivers to comply with both federal and state law because there is simply no federal standard of classification requiring compliance. The FAAAA does not dictate that truck drivers must be classified as independent contractors or that drivers are not subject to state wage and hour laws.”
An argument that AB5 works to set up a “patchwork quilt” of regulations is inadequate as well, he added. “The particular regulations about which Congress is concerned are those addressing carrier’s prices, routes and services. Congress does not appear to be concerned with a patchwork quilt of truck driver classification for purposes of wage and hour protection.”
Benitez rejected the argument that AB5 conflicts with the dormant Commerce Clause of the Constitution, which regulates state intrusion in interstate commerce. The plaintiffs “object to the employee classification approach as burdening independent drivers everywhere,” Benitez wrote. “Yet even plaintiffs acknowledge that California has no interest in applying its labor laws to out-of-state workers and gains no benefit from classifying those workers.”
Citing a precedent in another case, Benitez said the dormant Commerce Clause is not “a roving license for federal court to decide what activities are appropriate for state and local governments to undertake.” Another precedent is cited by the 9th Circuit, which said that “laws that increase compliance costs … do not qualify as a significant burden on interstate commerce.”
If there is an individual winner in the Benitez decision, it is former California Assemblywoman Lorena Gonzalez. Her statements about AB5 and trucking were cited in the case as evidence that the plaintiffs were targeted by Gonzalez and her allies and that there was “animus” directed at the trucking industry.
Again citing a precedent, Benitez writes that “the statements of a single legislator do not necessarily represent the reasons motivating other legislators who vote to pass a bill into law. The statements of Assemblywoman Gonzalez alone are insufficient to prove legislative animus for an Equal Protection violation.”
There were other arguments rejected by Benitez as well. One involved an exemption in AB5 granted to trucks in the construction industry that the plaintiffs said was not “rationally related to a legitimate governmental interest.” Another involves a complex argument regarding the 12-point business-to-business exemption — a difficult test to reach that does pave the way for utilization of independent contractors — and whether it conflicts with federal leasing laws.
In a brief comments, a spokeswoman for OOIDA said the organization “disagrees with Judge Benitez’s ruling and the reasoning behind it and is exploring all options moving forward-including an appeal.” An email sent to the CTA had not been responded to by publication time.
How we got here
• AB5 is passed and signed in the first half of 2019. It sets the ABC test to determine who is legitimately an independent contractor.
• The B prong of the ABC test is particularly problematic for trucking. It says an independent contractor is one who “performs work that is outside the usual course of the hiring entity’s business.” That could be a difficult test to meet for trucking companies that hire independent owner-operators to move freight.
• The CTA filed suit against AB5, citing preemption by the FAAAA. The defendants are then-Attorney General Xavier Becerra, a position later held by Bonta, and the Teamsters union.
• On New Year’s Eve 2019, Benitez hands down a preliminary injunction blocking AB5 from enforcement against trucking, citing the FAAAA argument.
• In April 2021, a 9th Circuit appellate court overturns the injunction on a 2-1 vote.
• CTA appeals to the U.S. Supreme Court for review, but that request is denied on June 30, 2022, kicking the case back to the lower court. AB5 goes into effect against the state’s trucking sector.
• In September 2022, the OOIDA is added as a plaintiff.
• Oral arguments are heard in early November 2023.
• Benitez rejects the request for a new injunction on March 15, 2024, and rules in favor of the defendants: Bonta and the Teamsters.
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Eltee
In the state vs federal squabble, don’t (the appropriate) containerized shipments represent interstate vs intrastate commerce and should the not be viewed differently before AB5?
Gerald Niedert
If there is ever going to be a solution to commercial driver attraction and retention it must be the trucking industry’s ability to pay ‘Fair Wages’, which are distinct from ‘Competitive Wages’; and in my opinion the only way to get to that place is: 1) Remove the exemption interstate carriers have from the Fair Labor Standards Act; 2) Prohibit the direct or indirect use of owner-operators unless such owner-operators have their own operating authority, secure their own liability and property damage insurance, and maintain a worker compensation policy; and 3) Dramatically raise liability and property damage insurance limits to insure that the underwriting of risks is comprehensive and effective, and able to eliminate dangerous motor carriers, ghost carriers and carriers that are poorly managed, as these are the carriers that pay the lowest wages, generally use owner-operators and often have the costliest accidents. The technology is ready; create a Five (5) Plan to implement these changes, and the solution should become apparent.
Stephen webster
Some people are pushing for the A B 5 to come in more States in including New York state
A number of people in the trucking industry and the fed gov in Canada believe Inc myself that this will the best way to get rid of driver inc and some lease ops agreements. California needs to this because I and many others are seeing too many truck drivers end up in homeless shelters after getting sick or injured as a independent driver. They are then looked after at the taxpayer expense
Stephen webster
The A B 5 has come into California and will probably come into to many more states as well
If the Canadian trucking association keeps pushing to get rid some drivers inc / lease ops in Canada my sources tell inside the Federal gov tell the Easy fix is to bring the California test to truck drivers and a fed min wage to Uber type workers like Minneapolis is thinking about doing for disabled wheelchair accessible Vans. The A T A has been told for the last 7 or more years that too many truck drivers were not able to get proper care and the taxpayer and nonprofit groups had to pay instead of the trucking industry. I hope that the A B 5 comes in along with 11 paid sick days a year in Canada and the United States and Mexico.