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

Separate case by California Trucking Association seen as more significant in deciding whether federal rule blocks independent contractor law

Photo: Jim Allen/FreightWaves

The U.S. Supreme Court on Tuesday denied review of the AB5-related Cal Cartage case. But the decision does not directly impact the more significant case regarding AB5, the state’s independent contractor law, by the California Trucking Association, which is also seeking high court review.

Reporting by at least two key news sources earlier in the day suggested that the denial of certiorari in the Cal Cartage case would have the effect of fully implementing AB5 in California’s trucking sector. (Cal Cartage is a drayage provider to various ports in California.)

But the Supreme Court has not been fully briefed on the case of California Trucking Association vs. Bonta, which is generally seen as more significant than the California vs. Cal Cartage case. There is a conference in coming weeks on the review request by CTA, so no decision on that petition was expected this early in the Supreme Court’s term, which began Monday. However, a decision on the Cal Cartage certiorari request at this point was considered possible.

AB5 has been blocked from being implemented in California’s trucking sector because of an injunction handed down by a U.S. District Court in California at the start of January 2020. That injunction has continued to keep AB5 at bay in the trucking sector even as the plaintiff in the original court case, the CTA, saw two levels of the state’s appellate courts rule against it after its successful quest to get a federal district court to impose the injunction.

Even when a ruling in the Cal Cartage case overturned an earlier state court ruling that blocked AB5 from implementation, the federal injunction in the CTA case preempted the Cal Cartage decision from having any impact.

AB5, enacted in 2019, seeks to define the status of an independent contractor in the state. It sets as law the ABC test for determining whether a worker is an employee or a true independent contractor. And for trucking, the B prong is viewed as making it difficult to hire independent owner-operators as drivers, because it defines a person engaged in the primary activity of the hiring company — like a trucking company hiring a truck driver — as an employee. (A trucking company hiring a janitorial service to clean the offices would not face this issue, since janitorial work is not its business.)

“There was no dissent from the denial of certiorari so it is nearly impossible to do anything but speculate as to why Cal Cartage was denied,” Greg Feary of the law firm of Scopelitis  said in an email to FreightWaves.

One theory Feary had as to why review was denied was that the Cal Cartage appeal was an “interlocutory appeal.” Cal Cartage was a state case that had not gone all the way up to the California Supreme Court, which may have been a factor in the U.S. high court’s decision. But he conceded that conclusion was speculative.

Both Feary and attorney Marc Blubaugh, a partner and co-chair of the Transportation & Logistics Practice Group at the Benesch law firm, noted that the Cal Cartage decision in California’s appellate courts relied heavily on the question of the “business-to-business exception.” The B2B exception is a road map that would allow a trucking company to hire an independent contractor, but it has a multistep process that is viewed by the trucking industry as difficult to navigate successfully.

By contrast, the key question in the CTA case is whether language in the Federal Aviation Authorization Act, the so-called F4A, preempts the implementation of a law like AB5 in the state’s trucking sector. The F4A question is part of the lower state court rulings in the Cal Cartage case, but in the CTA case, it is essentially the entire basis for the injunction.

“Maybe the best, hopeful spin on this is that the Supreme Court is waiting to address the question in the broader context of the 9th Circuit’s serial deviation from the Supreme Court’s preemption case law [on F4A],” Feary said. He cited several cases that have sought review by the high court that deal with F4A preemption, including another logistics-related case, C.H. Robinson v. Miller. (NASDAQ: CHRW).

Blubaugh noted that the Supreme Court recently asked the U.S. solicitor general to file a brief regarding its views on C.H. Robinson vs. Miller, “which shows they are interested in this [the question of F4A preemption.]

“I would take that as an encouraging note,” he added. 

Shawn Yadon, CEO of the CTA, said in a statement to FreightWaves that the organization expects its petition for certiorari to be taken up by the Supreme Court in late November or early December.

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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.