CTA's Last Hope To Protect California Trucking From AB5: US Supreme Court

The California Trucking Association has asked the U.S. Supreme Court to review its case against imposing AB5 on the state's trucking sector.

It's a last-ditch effort to keep in place a stay that is blocking imposition on the law governing the definition of independent contractors in the state.

The last two rounds in the courts did not go well for the CTA. In April, the injunction that kept AB5 from being implemented was overturned by a three-judge panel of the 9th U.S. Circuit Court of Appeals. In June, a petition to appeal the panel's ruling to an en banc sitting of the court — a larger number of judges from the 9th Circuit — was denied.

After that petition was denied, the earlier injunction that prevents the state from implementing AB5 — which dates back to a New Year's Eve decision at the close of 2019 — was allowed to remain in place temporarily. But the wording of the order that allowed the injunction to remain in place said that if the Supreme Court denied certiorari, the stay against AB5 in California's trucking sector would end immediately.

The Supreme Court generally grants certiorari to less than 2% of all the petitions it receives.

In a brief statement announcing its filing, the CTA cited its view that the Federal Aviation Administration Authorization Act, the so-called F4A, should prevent AB5 from applying to trucking in the state.

AB5 governs the definition of independent contractors. The issue that the trucking industry faces is the so-called "B prong," which defines an employee as a worker engaged in a primary activity of the hiring entity. A trucking company hiring an outside accountant would not face a problem with the B prong, since accounting is not its primary business. But a trucking company hiring an independent owner-operator would have an issue with that part of the ABC test that is at the heart of AB5.

The CTA's lawsuit against AB5's implementation argued that F4A blocks any state law that might impact rates or services — wording that can be found in federal legislation passed in the early '90s. A lower court agreed with that argument and imposed a temporary injunction and then a preliminary injunction to block the state from enforcing AB5.

But an appeals court ruled in April that F4A's wording should not be seen as blocking what it said was a "law of general applicability" like AB5.

In its statement announcing the certiorari filing, CTA President Shawn Yadon said: "We believe the Federal Aviation Administration Authorization Act prohibits a state statute such as California's AB 5 that clearly abolishes the historic role within the trucking industry of independent owner-operators. It is our hope the United States Supreme Court will take up this urgent matter of national significance and we are asking the country's highest court to fully consider the question of FAAAA preemption of the ‘all or nothing' ABC test and resolve the circuit conflicts that exist on this issue."

There is no known F4A Circuit Court decision regarding its relationship to AB5. However, the body of law on F4A, in general, is far from unanimous in what constitutes legislation that might impact rates and services, which is what Yadon presumably was referring to when he mentioned "circuit conflicts." (The so-called Cal Cartage case, which ruled that AB5 is not preempted by F4A, was a state case.)

"In California, more than 70,000 owner-operators choose to work independently because of the freedom, flexibility, and business growth potential that business model provides," Yadon said in his statement. "These small-business entrepreneurs face irreparable damage should AB 5 be allowed to exist as it relates to the trucking industry."

How the state's trucking industry would cope with AB5 has been a source of much speculation. Using the B2B exception, having trucking companies become more of a brokerage operation...all have been discussed. But one option that does not appear to have much support is the idea that trucking companies will just turn to add a lot more company drivers.

Trucking was long seen as a primary target of AB5, along with gig worker delivery services like Uber and Lyft. However, those two companies and others worked together to get Prop 22 on the ballot in November in California. It won by a large margin, exempting those workers from AB5.

More articles by John Kingston

Truck transportation jobs continued solid growth in July

Swift wins appeal in multimillion-dollar driver ‘poaching' case

$92M Werner verdict from 2018 becomes a hot potato on appeal

Image Sourced from Pixabay

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.