February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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In a Blow to the Transportation Industry, Ninth Circuit Overturns AB 5 Injunction

In early January 2020, the California Trucking Association (CTA) struck an early victory for the industry by successfully enjoining enforcement of California’s AB 5, which codified the so-called “ABC Test” for determining whether workers are lawfully considered independent contractors. On April 28, 2021, however, the Ninth Circuit reversed the district court’s injunction order, finding in a split decision that the court had abused its discretion. A request for en banc review and a petition for certiorari to the Supreme Court of the United States are likely, but for now, motor carriers operating in the Golden State face a sea change.

In California Trucking Association, et al., v. Bonta et al., the majority found that because AB 5 is a law of general applicability affecting a businesses’ interaction with its workforce, rather than with consumers, it is not preempted by the Federal Aviation Administration Authorization Act (F4A). In so holding, the majority found that AB 5 was not sufficiently “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property,” as required to be preempted by the F4A. According to the majority, “laws of general applicability that affect a motor carrier’s relationship with its workforce, and compel a certain wage or preclude discrimination in hiring or firing decisions, are not significantly related to rates, routes or services.” The majority found that because AB 5 “merely” affects the classification of workers, it does not result in a motor carrier “freezing into place a particular price, route or service that a carrier would otherwise not provide,” and it is thus not preempted.

The dissent, in a detailed and thorough opinion, took the majority to task, finding that the majority ignored the possibility that state law might affect a motor carrier’s relationship with its workforce and thus have a significant impact on that motor carrier’s prices, routes, or services. The dissent reasoned that the “all or nothing” approach proscribed by AB 5 would require motor carriers to reclassify all independent owner-operator drivers as employees, and would therefore “significantly impact motor carriers’ services by mandating the means by which they are provided.” At a minimum, the dissent argued that the district court did not abuse its discretion, given the declarations in the record concerning AB 5’s effect on services, not to mention the decision by the First Circuit, holding that a similar “all or nothing” classification test from Massachusetts was preempted by the F4A. 

The split decision raises the possibility that the full Ninth Circuit may take the case en banc and the decisional split between the First and Ninth circuits raises the possibility of a Supreme Court review. In any event, the Ninth Circuit’s decision will likely create even more issues for the transportation industry, which is already dealing with supply chain issues arising out of the COVID-19 pandemic. If the Ninth Circuit’s panel decision stands, misclassification class action litigation against motor carriers operating in California is likely to follow. Barnes & Thornburg’s transportation and logistics and wage and hour practice groups will continue to monitor developments as this litigation moves forward. 

© 2023 BARNES & THORNBURG LLPNational Law Review, Volume XI, Number 120

About this Author

Mark Wallin, Attorney, BT, Chicago, Labor Employment
Of Counsel

In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of...

Scott Witlin Employment lawyer Barnes Thornburg

Scott J. Witlin is a partner and the administrator of the Labor & Employment Department in the firm's Los Angeles office. He is Co-Chair of the firm's Wage and Hour Practice Group and a member of the firm's Entertainment, Media and Sports Practice Group.

Scott assists companies in dealing with the challenges of employing workers in California and throughout the U.S. Scott's practice includes both traditional labor and employment law matters, including wage and hour class actions, arbitrations, collective bargaining negotiations, compliance with various guild and union agreements...

Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...