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Divided Ninth Circuit Overturns AB 5 Injunction For Transportation Industry

 

About a year ago, the California Trucking Association filed suit and sought to obtain an injunction to prevent California’s AB 5 from applying to motor carriers.  The California Trucking Association argued that AB 5, which codified the ABC Test to determine whether a worker is an employee or independent contractor, was preempted by the Federal Aviation Administration Authorization Act (“Act”) and therefore did not apply to motor carriers.  An injunction was granted and a subsequent appeal was filed that ended up in the Ninth Circuit Court of Appeals.

At the end of April, a split decision from the Ninth Circuit Court of Appeals reversed the district court’s injunction on the grounds that the district court abused its discretion.  According to the majority opinion, because AB 5 is a law of general applicability that impacts an employer’s interaction with its workforce (rather than with consumers), the Act did not preempt AB 5.  To be preempted by the Act, the Ninth Circuit wrote that AB 5 would need to be sufficiently “related to a price, route, or service of any motor carrier...with respect to the transportation of property.”  In this instance, it was found that because AB 5 only affects the classification of workers (ie whether they are employees or independent contractors), it does not result in a motor carrier “freezing into place a particular price, route, or service that a carrier would otherwise not provide.”  Consequently, the injunction issued by the district court was undone.

The question now arises as to what happens next.  For starters, it is possible the Ninth Circuit would take up the matter en banc as only three Judges ruled on the injunction last month.  Should the entire Ninth Circuit uphold April’s ruling, I would expect the California Trucking Association to appeal to the U.S. Supreme Court given that the First Circuit has issued an opposite ruling from the Ninth Circuit.  (For those unaware, a split in circuits on a matter of law is often one of the reasons the Supreme Court will take an appeal.  Of course, the Supreme Court does not have to do so which would leave a split in circuits on the matter.)

For the time being, this is a favorable ruling for those looking to extend the reach of AB 5.  However, this is not the last time we are likely to hear of this appeal.  Stay tuned.


For a copy of the Ninth Circuit’s decision:  https://btlaw.com/-/media/files/blog/cta-9th.ashx

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