377 F. Supp. 3d 1056
E.D. Cal.2019Background
- Western States Trucking Association (trade association) sued California officials seeking declaratory and injunctive relief to prevent application/enforcement of the California Supreme Court’s Dynamex ABC test for employee status under California wage orders.
- Dynamex (4 Cal. 5th 903) adopted a three-part ABC test (A: no control; B: work outside usual course of hiring entity’s business; C: worker engaged in independently established trade) and applied it to California wage orders, replacing the previous Borello multifactor approach for that context.
- Western States alleges Dynamex will force motor carriers to reclassify many independent contractors (including owner-operators), increasing costs and altering prices, routes, and services.
- Claims: (1) Dynamex is preempted by the FAAAA; (2) Dynamex is preempted by federal FMCSA safety regulations; (3) Dynamex violates the Dormant Commerce Clause by discriminating against interstate carriers.
- Court held it had Article III and associational standing but granted defendants’ motion to dismiss on the merits under Rule 12(b)(6), dismissing without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (case/controversy) | Dynamex creates a concrete, imminent threat to members; litigation already filed post-Dynamex; association needs guidance on business model changes | No concrete threat or imminent enforcement; suit seeks advisory opinion | Court: Western States has a concrete controversy; standing exists |
| Associational standing | Association represents members who will be harmed; identifying specific members not necessary when harm is clear | Must identify at least one specific member with imminent injury | Court: associational standing satisfied; identifying members not required here |
| FAAAA preemption | Dynamex ‘‘relates to’’ prices, routes, services by making independent contracting unworkable and thus is preempted | Dynamex/wage orders are generally applicable labor rules with at most indirect/tenuous effect on prices/routes/services | Court: No preemption — effects are indirect/remote; precedents (Mendonca, Dilts, Su) support no preemption |
| FMCSA/regulations preemption | FMCSA regulations are comprehensive and conflict with Dynamex; federal safety scheme preempts state rules affecting trucking employment relationships | FMCSA preemption limited to conflicting commercial motor vehicle safety rules; Dynamex addresses wage/employment classification, not safety | Court: No conflict; FMCSA regs do not preempt Dynamex here |
| Dormant Commerce Clause | Dynamex discriminates against out-of-state/interstate carriers and burdens interstate commerce | Wage orders apply even-handedly to in-state and out-of-state employers performing work in California | Court: No facial or discriminatory effect; law applies equally and any burden is not excessive |
Key Cases Cited
- Dynamex Operations W. v. Superior Court, 4 Cal. 5th 903 (Cal. 2018) (adopted ABC test for wage-order employee status)
- S.G. Borello & Sons v. Dept. of Ind. Relations, 48 Cal. 3d 341 (Cal. 1989) (prior multifactor independent-contractor standard)
- Californians for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F.3d 1184 (9th Cir. 1998) (state labor rules with indirect effects on carriers not FAAAA-preempted)
- Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. 2014) (FAAAA does not preempt generally applicable labor/safety/welfare rules not regulating prices/routes/services)
- California Trucking Ass'n v. Su, 903 F.3d 953 (9th Cir. 2018) (discussed Borello, ABC test, and limits of FAAAA preemption)
- Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364 (U.S. 2008) (FAAAA/related preemption framework; significant-impact vs. tenuous-connection distinction)