433 F.Supp.3d 1154
S.D. Cal.2020Background:
- Plaintiffs: California Trucking Association (CTA) and individual owner-operators who rely on the long-standing owner-operator independent-contractor model in interstate trucking.
- California enacted AB-5 (effective Jan 1, 2020), which codified Dynamex’s ABC test to classify workers: (A) no control, (B) work outside hiring entity’s usual course of business, (C) independently established business; motor carriers are not exempt and a business-to-business exception exists but is narrow.
- Prong B of the ABC test would categorically treat drivers who perform transportation (the carrier’s usual business) as employees, effectively preventing motor carriers from using owner-operators as independent contractors for California work.
- Plaintiffs sought and obtained a temporary restraining order and then moved for a preliminary injunction to enjoin enforcement of AB-5’s ABC test as applied to motor carriers; the State and the Teamsters intervened to defend AB-5.
- The Court found Plaintiffs had Article III standing, that AB-5’s ABC test likely is preempted by the FAAAA because it significantly affects carriers’ prices, routes, or services, and that Plaintiffs would suffer irreparable harm absent an injunction.
- The Court granted a preliminary injunction enjoining enforcement of AB-5’s ABC test as to any motor carrier operating in California pending final judgment.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Plaintiffs face imminent enforcement and need not identify a specific injured member to sue pre-enforcement. | Defendants/Intervenor say Plaintiffs lack injury because ABC may not be applied and specific harmed members aren’t identified. | Court: Plaintiffs have standing at this preliminary stage. |
| FAAAA preemption (ABC Prong B) | AB-5’s Prong B effectively compels motor carriers to use employees (not contractors), materially affecting prices/routes/services and is preempted. | ABC is a neutral test of employment law (generally applicable) that does not compel operational choices of carriers. | Court: Serious questions and likelihood of success on FAAAA preemption; Prong B likely preempted as applied to motor carriers. |
| Irreparable harm | Enforcement forces costly restructuring (hire/train drivers, buy trucks) or exposes carriers to civil/criminal penalties. | Defendants note plaintiffs’ alleged delay in seeking relief undermines irreparable-harm claim. | Court: Irreparable harm likely; plaintiffs face a Hobson’s choice. |
| Balance of equities & public interest | Federal deregulation and harm to carriers outweigh state interest while Borello and other protections remain. | State interest in preventing worker misclassification and protecting employees. | Court: Equities and public interest favor preliminary injunction. |
Key Cases Cited
- Univ. of Texas v. Camenisch, [citation="451 U.S. 390"] (1981) (procedural note on preliminary injunction evidentiary standards)
- Winter v. NRDC, [citation="555 U.S. 7"] (2008) (four-factor preliminary injunction standard)
- American Trucking Ass’ns v. City of Los Angeles, [citation="559 F.3d 1046"] (9th Cir. 2009) (preemption of port concession rule requiring employee drivers)
- California Trucking Ass’n v. Su, [citation="903 F.3d 953"] (9th Cir. 2018) (distinguishing Borello; ABC can effectively compel use of employees)
- Schwann v. FedEx Ground Package System, Inc., [citation="813 F.3d 429"] (1st Cir. 2016) (FAAAA preempted Prong B of Massachusetts’ ABC test)
- Dynamex Operations West v. Superior Court, [citation="4 Cal.5th 903"] (Cal. 2018) (adoption of the ABC test in California)
- S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, [citation="48 Cal.3d 341"] (Cal. 1989) (multi-factor employee/independent-contractor test)
- Morales v. Trans World Airlines, Inc., [citation="504 U.S. 374"] (1992) (preemption principles; Hobson’s choice context)
- Susan B. Anthony List v. Driehaus, [citation="573 U.S. 149"] (2014) (pre-enforcement standing principles)
- Dilts v. Penske Logistics, LLC, [citation="769 F.3d 637"] (9th Cir. 2014) (distinguishing discrete employee-protective rules from laws that significantly affect carriers’ services)