OOIDA Tells Supreme Court that California’s AB 5 Eliminates the Business Model Driving the Trucking Industry—Independent Owner-Operators.

 

On September 10, 2021, the Cullen Law Firm filed on behalf of the Owner-Operator Independent Drivers Association a brief as amicus curiae in support of truckers challenging California’s worker classification rule, AB 5. OOIDA stressed to the high court that the independent owner-operator model represents the lifeblood of the interstate trucking industry, providing small businessmen and -women the opportunity to work for themselves and gain experience in a demanding industry. OOIDA urged that AB 5 removes the flexibility that is crucial to the success of operators and carriers alike, mandating that carriers who haul freight in California do so with employee drivers.

California Trucking Association and two owner-operators sued California officials to stop enforcement of AB 5 against motor carriers.

As outlined on this blog throughout the case, AB 5 presumes all workers are employees unless they can show three facts, including that the worker “performs work that is outside the usual course of the hiring entity’s business.” This requirement—“Prong 2” of AB 5—effectively prevents carriers from ever using independent truckers for California operations, transforming all drivers in California into employees. CTA and two owner-operators sued California officials in United States District Court for the Southern District of California to prevent enforcement of AB 5. The International Brotherhood of Teamsters intervened in the lawsuit in support of its enforcement.

Plaintiffs argued that the FAAAA,[1] the federal government’s means of ensuring the states do not undue Congress’s deregulation of the motor carrier industry, preempted California’s attempt to mandate the business model of truckers in California and that AB 5’s impact on interstate commerce violated the Constitution’s Commerce Clause. The lower court agreed with plaintiffs that the FAAAA preempted AB 5’s application in the motor carrier industry and entered a preliminary injunction against truckers. The state and the Teamsters appealed the injunction to the United States Court of Appeals for the Ninth Circuit. OOIDA participated in the appeal,[2] filing a brief in support of the lower court’s decision. The Ninth Circuit reversed the lower court, holding that the FAAAA doesn’t stop states from enacting laws that apply generally—to all businesses statewide rather than only to motor carriers—and directly impact only carriers’ relationships with their workers.

The Ninth Circuit’s decision directly conflicts with a decision of the First Circuit,[3] which held that the FAAAA preempted a similar worker classification law in Massachusetts because its “usual course of business” requirement mandated that carriers use employee drivers. The Ninth Circuit also split with the Third Circuit, who approved of New Jersey’s worker classification law because its “usual course of business” prong excepted workers who work outside the employer’s place of business.[4] This caveat would allow owner-operators to maintain their independent status in New Jersey, in contrast to the California rule.

The full Ninth Circuit refused plaintiffs’ and OOIDA’s request to rehear the appeal.

OOIDA joined the petitioners in asking the Court to review and reverse the Ninth Circuit’s decision undoing the lower court’s injunction.

In August, plaintiffs petitioned the Supreme Court, asking the Court to review the Ninth Circuit’s decision. OOIDA filed a brief in support highlighting the importance of independent owner-operators to the trucking business, a relationship fostered and protected by Congress and FMCSA through the Truth-in-Leasing rules. OOIDA’s brief also focused the Court’s attention on the significance of the California trucking market, emphasizing that the impact from a mandate to use employee drivers in California crosses state lines and disrupts the national motor carrier market.

Several other trucking interests filed amicus briefs in support of the petition, including the National Motor Freight Traffic Association, American Trucking Associations, Western States Trucking Association, Transportation Intermediaries Association, Intermodal Association of North America, Shipper Trade Associations, the Minnesota Trucking Association, and the 48 State Trucking Associations. The Washington Legal Foundation and the U.S. Chamber of Commerce also joined the trucking entities.

The State of California and the Teamsters have until October 12 to file a response to the petition. Comments and questions about this litigation can be sent to: info@cullenlaw.com.

 

[1] Federal Aviation Administration Authorization Act, Pub. L. No. 103-305, 108 Stat. 1569 (1994).

[2] OOIDA has also moved to intervene in the district court action, which is currently stayed pending resolution of the appeal process.

[3] Schwann v. FedEx Ground Package Sys., 813 F.3d 429 (1st Cir. 2016).

[4] Bedoya v. Am. Eagle Express Inc., 914 F.3d 812 (3d Cir. 2019), cert. denied, 140 S. Ct. 102 (2019).

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