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Legal match over fate of AB5 has new player: US solicitor general

On the job less than 30 days, Prelogar's office will be providing opinion to Supreme Court

Image: Jim Allen/FreightWaves; BusinessWire

Elizabeth Prelogar took over as the U.S. solicitor general on Oct. 28. On Monday, the U.S. Supreme Court made her new job extremely important to the trucking industry in California.

After a conference Friday on the California Trucking Association’s appeal of lower court rulings that if allowed to stand would implement independent contractor rule AB5 in the state’s trucking business, the court announced Monday that it was seeking the opinion of the solicitor general’s office on the case, known formally as the California Trucking Association v. Bonta. 

This may not seem like a significant development on the surface. But following the conference, the court could have denied certiorari to the CTA appeal. And at that point, the legal case would have ended, the appellate court decisions that overturned the injunction that kept AB5 out of the trucking industry would have been upheld, and the state’s trucking companies would have needed to comply immediately with the independent contractor definitions of AB5.

With the Supreme Court asking for the solicitor general’s office to weigh in on the case, the injunction, first handed down at the start of 2020, stays in place for an undetermined amount of time. There is no known deadline for when the solicitor general’s office needs to file its views on the case.

In an alert sent out to its clients, the trucking-focused Scopelitis law firm said “it is not uncommon for the Court to ask for the Solicitor General’s views on matters of federal preemption. ” It also added there is no “concrete” dealine for when the solicitor general must file its comments.

The solicitor general is considered the No. 2 member of the Justice Department, serving right under the attorney general. The person filling that role argues the federal government’s case before the Supreme Court. 

The defendant in the case is Robert Bonta, the state’s attorney general who took over from the original defendant, Xavier Becerra. Becerra is now secretary of Health and Human Services. 

The attorneys representing trucking-focused trade groups that filed friend of the court briefs told FreightWaves they were pleased with the court’s request for input from the solicitor general. Their focus is not necessarily on the fact that AB5 remains on the sidelines in California trucking. More importantly, the request by the court, along with other steps it has taken, shows it has taken an interest in the key question in the CTA case: state preemption of federal transportation laws, they said.  

The argument the CTA made when it obtained the injunction at the start of 2020 that kept AB5 on the bench in truck transportation is that such state action was preempted by the Federal Aviation Administration Authorization Act, passed in 1994 and known as F4A. F4A specifically bars any state action that would impact a motor carrier’s “prices, routes and services.” CTA argued before the federal district court that AB5 would have that impact; the court agreed. 

But a three-judge appellate panel of the 9th Circuit disagreed in a decision handed down in April. In June, a CTA request for an en banc hearing panel’s ruling was denied, leaving the Supreme Court as the organization’s only hope.

Less than 2% of requests for certiorari — or review — are accepted by the Supreme Court. But the court appears to be focused on the question of F4A preemption, separately requesting solicitor general input in two other cases where preemption is an issue.

One of those cases is Miller v. C.H. Robinson. At issue there is whether a brokerage company can be held negligent for acts of the motor carrier. That is on appeal to the Supreme Court by the plaintiff, with lower court rulings favoring the C.H. Robinson (NASDAQ: CHRW) argument that it is not liable under F4A.

Marc S. Blubaugh, who represented the Transportation Intermediaries Association in its friend of the court brief in the CTA case, said the Supreme Court Monday also asked for the solicitor general to issue an opinion in a case involving Virgin Airlines. The legal question in that case involves an F4A type of issue, though it deals with a parallel law, the Airline Deregulation Act.

Put that all together, and Blubaugh said, “this probably indicates that, at the very least, the case has the court’s attention.”

“We’re certainly glad to see this development,” Richard Pianka, an attorney for the American Trucking Associations, said of the request by the Supreme Court for solicitor general input. “We see this development as an indication that the Supreme Court sees a real issue here (on the F4A question) and it’s not surprising they are asking the federal government to weigh in.”

Prelogar and her team at the solicitor general’s office will issue an opinion that the court is free to ignore. But the speed at which she and that group respond is important because every day that the solicitor general opinion is being formulated does two things. 

One, it keeps AB5 out of California trucking. And two, it gives the industry another day to prepare for the possibility that the court may either deny certiorari or take the case and ultimately uphold the three-judge panel. Either of those outcomes puts AB5 smack in the middle of governing independent contractor relations in California trucking.

The Biden administration, of which Prelogar is part, has already taken at least one significant action on the question of defining independent contractors. 

Soon after it took office, it killed a Trump administration rule on the definition of independent contractors under the Fair Labor Standards Act. That rule was seen as being more liberal in defining what constitutes an independent contractor than the Obama administration rule that preceded it. The Biden administration has not yet offered a substitute. 

AB5, signed into law in 2019, governs the definition of independent contractors in California. At the heart of it is the adoption of the ABC test to help define if a worker is an employee or an independent contractor. The B prong of the ABC test has long been seen as problematic for the trucking industry because it defines an independent contractor as a worker who “performs work that is outside the usual course of the hiring entity’s business.” A trucking company hiring an independent trucker would fall afoul of that definition. 

Pianka said the question of independent contractor status and the preemption issues raised in the CTA case “are really separate issues, and I wouldn’t expect it to play directly into anything.”

In the formal statement it issued after the SCOTUS decision, CTA President Shawn Yadon went right to the current trucking squeeze on the West Coast and how it might be impacted if AB5 becomes operative in trucking. (Presumably, the size of the backup in the ports of Long Beach and Los Angeles would not be a legal consideration by the solicitor general’s office or the court.)

“The decision by the U.S. Supreme Court to call for the view of the solicitor general in CTA v. Bonta, CTA’s challenge to AB5, validates the critical nature of reviewing AB5’s disruptive impact in the midst of a historic, global supply chain crisis,” Yadon said in the statement. “Since the introduction of AB5, CTA has worked to protect the more than 70,000 owner-operators in California who choose to work independently because of the freedom, flexibility and business growth potential that this model has afforded them for decades.”

More articles by John Kingston

Supreme Court denies review of AB5-related case but law still isn’t impacting California trucking

Fate of California’s AB5 riding on 2 cases seeking Supreme Court review

CTA asks for en banc hearing as it seeks to keep AB5 out of California’s trucking sector


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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.