CALIFORNIA TRUCKING ASSOCIATION, et al., Plaintiffs, v. ATTORNEY GENERAL XAVIER BECERRA, et al., Defendants, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Intervenor-Defendant.
Case No.: 3:18-cv-02458-BEN-BLM
January 16, 2020
Plaintiffs California Trucking Association, Ravinder Singh, and Thomas Odom move for a preliminary injunction. Having carefully considered the parties’ arguments, the motion is GRANTED.
I. BACKGROUND
The following facts are taken from the Second Amended Complaint and the declarations filed related to Plaintiffs’ preliminary injunction motion.1
For decades, the trucking industry has used an owner-operator model to provide the transportation of property in interstate commerce. That model generally involves a licensed motor carrier contracting with an independent contractor driver to transport the carrier-customer‘s property. The volume of trucking services needed within different industries can vary over time based on numerous factors. For example, in the agriculture industry, demand for trucking services varies depending on the time of year, the price at which the produce can be sold, the available markets, the length of the growing season, and the size of the crop, which itself varies based on temperature, rainfall, and other factors. Motor carriers offer many types of trucking services, including conventional trucking, the transport of hazardous materials, refrigerated transportation, flatbed conveyance, intermodal container transport, long-haul shipping, movement of oversized loads, and more. Motor carriers meet the fluctuating demand for highly varied services by relying upon independent-contractor drivers.
Individual owner-operators use a business model common in both California and across the country. They typically buy or lease their own trucks, a significant personal investment considering that the record reflects a single truck can cost in excess of $100,000. See, e.g., Doc. 54-2 at 5. Then, the owner-operators typically work for themselves for some time to build up their experience and reputation in the industry. Once the owner-operator is ready to expand their business, they contract for or bid on jobs that require more than one truck, at which time, the owner-operator will subcontract with one or more other owner-operators to complete the job. Many individual owner-operators have invested in specialized equipment and have obtained the skills to operate that equipment efficiently.
Whether certain laws and regulations in the California Labor Code apply to truck drivers, generally, depends on their status as employees or independent contractors. S.G. Borello & Sons, Inc. v. Dep‘t of Indus. Relations, 48 Cal. 3d 341, 350 (1989). For nearly three decades, California courts have used a test, based on the Borello decision, to determine whether workers
California‘s Assembly-Bill 5 (“AB-5“) codified the ABC test adopted in Dynamex and expanded its reach to contexts beyond Wage Order No. 9, including workers’ compensation, unemployment insurance, and disability insurance. As applied to the motor carrier context, AB-5 provides a mandatory test for determining whether a person driving or hauling freight for another contracting person or entity is an independent contractor or an employee for all purposes under the
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity‘s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
AB-5 also includes certain exceptions that were not part of the Dynamex test, including an exception for “business-to-business contracting relationship[s].”2
On September 18, 2019, California Governor Gavin Newsom signed AB-5 into law. AB-5 went into effect on January 1, 2020. On December 2, 2019, Plaintiffs filed their motion for a preliminary injunction with a hearing set for December 30, 2019. When the Court continued the hearing to January 13, 2020, Plaintiffs filed a motion for a temporary restraining order on December 24, 2019. After considering the parties’ arguments in their briefing, the Court granted the temporary restraining order and
II. DISCUSSION
In support of their motion for preliminary injunction, Plaintiffs argue they are highly likely to show AB-5 is preempted by the FAAAA and by the Dormant Commerce Clause. According to Plaintiffs, unless the Court enjoins Defendants from enforcing AB-5, its members will suffer irreparable injury, including constitutional injuries, as well as enforcement actions imposing civil and criminal penalties. The State Defendants oppose, contending that Plaintiffs are unlikely to succeed on the merits of their claims, that Plaintiffs’ delay in seeking injunctive relief undermines their claim of irreparable injury, and that the public interest weighs in the State Defendants’ favor. Intervenor-Defendant International Brotherhood of Teamsters opposes on the same grounds as the State Defendants but with the additional contention that Plaintiffs CTA and Odom lack standing.3 Accordingly, as a threshold matter, the Court first addresses Plaintiffs’ standing and then the four elements required for a preliminary injunction.
A. Article III Standing
“One of the essential elements of a legal case or controversy is that the plaintiff have standing to sue.” Trump v. Hawaii, 138 S.Ct. 2392, 2416 (2018). To demonstrate Article III standing, a plaintiff must show a “concrete and particularized” injury that is “fairly traceable” to the defendant‘s conduct and “that is likely to be redressed by a favorable decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547-48 (2016). “At least one plaintiff must have standing to seek each form of relief requested, and that party bears the burden of establishing the elements of standing with the manner and degree of evidence required at the successive stages of the litigation.” City & Cty. of San Francisco v. U.S. Dept. of Homeland Security, 944 F.3d 773, 786-87 (9th Cir. 2019) (internal quotation marks and citations omitted). “At this very preliminary stage, plaintiffs may rely on the allegations in their Complaint and whatever other evidence they submitted in support of their preliminary-injunction motion to meet their burden.” Id. at 787.
Intervenor attacks Plaintiffs’ standing on three grounds, none of which have merit. First, Intervenor argues that Plaintiffs lack standing because they do not establish the ABC test will be used against them, and thus, they do not establish the requisite actual or imminent injury. For the same reasons discussed in the Court‘s Order granting Plaintiffs’ temporary restraining order, the Court disagrees. Plaintiffs have satisfied the imminent injury requirement where, assuming their interpretation of AB-5 is correct, they face the choice of either implementing significant, costly compliance measures or risking criminal and civil prosecution.
Next, Intervenor contends that to show a concrete injury, CTA must definitively show that some of its members’ drivers would be classified as independent contractors under the pre-AB-5 Borello classification test. The Court is not persuaded that such proof is required at this very preliminary stage. In other words, Plaintiffs need not show with complete certainty that a CTA member would be harmed by the ABC test but not by the Borello test; rather, plaintiffs “need only establish a risk or threat of injury to satisfy the actual injury requirement.” City & Cty. of San Francisco, 944 F.3d at 787 (quoting Harris v. Bd. of Supervisors, 366 F.3d 754, 762 (9th Cir. 2004) (emphasis in original)). CTA has done so here by claiming that many of its members contract with independent-contractor drivers, who can no longer be classified as independent contractors under the ABC test.
Regardless, even if CTA were held to the higher standard proposed by Intervenor, CTA would satisfy it. In response to Intervenor‘s challenge, CTA offers evidence showing that some of its members’ drivers have been classified as independent contractors under Borello or tests like Borello.4 Furthermore, Intervenor‘s apparent position—that CTA members’ drivers will always be classified as employees under Borello and thus, the new ABC test‘s classification of them as employees cannot harm them—is undermined by the Ninth Circuit‘s own observations about the two tests. See, e.g., California Trucking Ass‘n v. Su, 903 F.3d 953, 964 (9th Cir. 2018) (distinguishing Borello test as “contrary” to ABC tests adopted in other states because under Borello, “[w]hether the work fits within the usual course of an employer‘s business is one factor among many—and not even the most important one“) (“[T]he Borello standard does not compel the use of employees or independent contractors.“). Accordingly, the Court finds that, at this very preliminary stage, Plaintiffs have carried their burden to show some of its members face the risk of having their drivers, who would be classified as independent contractors under Borello, instead be misclassified as employees under the ABC test.
Finally, Intervenor argues that CTA lacks “associational standing” because it
The Court disagrees. “[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization‘s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Hunt v. Washington State Apple Advertising Com‘n, 432 U.S. 333, 343 (1977). Associational standing is present here where CTA claims that many of its members use independent-contractor drivers to provide interstate trucking services to customers in California and other states, and that, as a result, those members have a concrete interest in knowing whether they must fundamentally change their longstanding business structure by shifting to using only employee drivers when operating within California.
Moreover, Summers is distinguishable from CTA‘s case. Summers involved a dispute about a timber project that had settled, and “no other project [was] before the court in which respondents were [even] threatened with injury in fact.” Summers, 555 U.S. at 491-92. Unlike Summers, the dispute here facing CTA‘s members is still very much alive because without preliminary injunctive relief, AB-5 will apply to them and likely be enforced against CTA‘s members to the full extent of the law. The Ninth Circuit, too, has expressed doubt that ”Summers, an environmental case brought under the National Environmental Policy Act, stands for the proposition that an injured member of an organization must always be specifically identified in order to establish Article III standing for the organization.” Nat‘l Council of La Raza v. Cegavske, 800 F.3d 1032, 1041 (9th Cir. 2015). The Ninth Circuit explained:
where it is relatively clear, rather than merely speculative, that one or more members have been or will be adversely affected by a defendant‘s action, and where the defendant need not know the identity of a particular member to understand and respond to an organization‘s claim of injury, we see no purpose to be served by requiring an organization to identify by name the member or members injured.
Id. Such is the case here. Intervenor offers no reason why it cannot address the predominately legal claims brought by CTA without the identification of a particular CTA member. Thus, for the previous reasons, the Court is satisfied that Plaintiffs have standing at this very preliminary stage.5
B. Preliminary Injunction
“Generally, the purpose of a preliminary injunction is to preserve the
1. Likelihood of Success on the Merits
To prevail on their motion for a preliminary injunction, Plaintiffs must establish, at a minimum, that there are “serious questions” on the merits of at least one of their challenges to AB-5‘s ABC test. See Cottrell, 632 F.3d at 1135. For the following reasons, Plaintiffs have done so with their FAAAA preemption challenge.6
Within the FAAAA, Congress included an express preemption provision, which provides that states “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.”
Similarly, the First Circuit has explained that Congress had “dual objectives” for adopting a “broad reach” by copying the language of the Airline Deregulation Act of 1978 into the FAAAA‘s preemption clause: (1) “to ensure that the States would not undo federal deregulation with regulation of their own” and (2) “to avoid a patchwork of state service-determining laws, rules, and regulations.” Schwann v. FedEx Ground Pkg. System, Inc., 813 F.3d 429, 436 (1st Cir. 2016) (internal quotation marks and citations omitted). To be sure, the breadth of the FAAAA‘s preemption clause “does not mean the sky is the limit“: “Congress did not intend to preempt laws that implement
Whether the FAAAA preempts AB-5 and its ABC test is a matter of first impression in this circuit, but Ninth Circuit jurisprudence touching on the issue strongly suggests preemption. For example, in American Trucking Associations, Inc. v. City of Los Angeles, the Ninth Circuit reversed the district court‘s denial of American Trucking Association‘s (“ATA“) motion for a preliminary injunction and even took the unusual step of remanding with instructions to the district court to issue a preliminary injunction. 559 F.3d 1046, 1060-61 (9th Cir. 2009). ATA contended that the FAAAA preempted various provisions in the Port‘s mandatory concession agreements for drayage trucking services at ports. As to the provision requiring motor carriers to use employee drivers rather than independent-contractor drivers, the Ninth Circuit concluded it could “hardly be doubted” that the FAAAA preempted the provision and that, unless the Port could demonstrate an exception to the FAAAA‘s preemption provision applied, the motor carriers would likely prevail on their challenge.7 Id. at 1053. The Ninth Circuit went on to conclude that the concession agreement‘s provision requiring the “phasing out” of thousands of independent contractors “is one likely to be shown to be preempted.” Id. at 1056.
California Trucking Association v. Su offers additional guidance. 903 F.3d 953 (9th Cir. 2018). There, the Ninth Circuit considered whether the FAAAA preempted the Borello multi-factor test for distinguishing between employees and independent contractors. In so doing, the Ninth Circuit noted the “obvious proposition” for which American Trucking stood: “that an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers . . . was likely preempted [by the FAAAA].” Id. at 964. The court then distinguished the Borello test as “wholly different from [the provision at issue in] American Trucking” because neither the Borello standard or “the nature of the Borello standard compell[ed] the use of employees to provide certain carriage services.” Id. The Ninth Circuit distinguished the Borello test from the ABC test adopted in other states, noting “the application of which courts have then held to be preempted.” Id. It did so by explaining that, “[l]ike American Trucking, the ‘ABC’ test may effectively compel a motor carrier to use employees for certain services because, under the ‘ABC’ test, a worker providing a service within an employer‘s usual course of business will never be considered an independent contractor.” Id.
Although not binding on this Court, the First Circuit‘s recent analysis of an ABC test identical to California‘s is persuasive. In Schwann v. FedEx Ground Package System, Inc., the First Circuit held the FAAAA preempted Massachusetts’ ABC test‘s Prong B as applied to FedEx.8 813 F.3d 429 (1st Cir. 2016). In so holding, the First Circuit reasoned:
The regulatory interference posed by Plaintiffs’ application of Prong 2 is not peripheral. The decision whether to provide a service directly, with one‘s own employee, or to procure the services of an independent contractor is a significant decision in designing and running a business. . . . Such an application of state law poses a serious potential impediment to the achievement of the FAAAA‘s objectives because a court, rather than the market participant, would ultimately determine what services that company provides and how it chooses to provide them.
Together, these cases show that the FAAAA likely preempts “an all or nothing” state law like AB-5 that categorically prevents motor carriers from exercising their freedom to choose between using independent contractors or employees. See also Bedoya v. Am. Eagle Express Inc., 914 F.3d 812, 824 (3d Cir. 2019) (holding New Jersey‘s ABC test is not preempted by the FAAAA because contrary to Massachusetts’ test, it includes an “alternative method for reaching independent contractor status—that is, by demonstrating that the worker provides services outside of the putative employer‘s ‘places of business,‘” and “[n]o part of the New Jersey test categorically prevents carriers from using independent contractors.“). Yet, that is precisely the case here. Because contrary to Prong B, independent-contractor drivers necessarily perform work within “the usual course of the [motor carrier] hiring entity‘s business,” drivers who may own and operate their own rigs will never be considered independent contractors under California law.9 Thus, it follows that Prong
Notably, the first and only court thus far to consider an FAAAA preemption challenge to AB-5 agreed. On January 8, 2020, the Los Angeles Superior Court ruled that because the ABC test effectively prohibits motor carriers from using independent contractors to provide transportation services, the test has a significant, impermissible effect on motor carriers’ “prices, routes, and services,” and thus, is preempted by the FAAAA. The People of the State of California v. Cal Cartage Transportation Express, LLC, Case No. BC689320 (Los Angeles Superior Court January 8, 2020). Moreover, other district courts considering FAAAA preemption challenges to California‘s ABC test, albeit under the pre-AB-5 Dynamex standard, have applied similar logic and found the FAAAA preempts Prong B. See, e.g., B&O Logistics, Inc. v. Cho, 2019 WL 2879876, at *2-4 (C.D. Cal. April 15, 2019) (holding ”Su, American Trucking, and Schwann collectively establish that the FAAAA preempts a state law that categorically requires a motor carrier to hire employees—and not independent contractors—as drivers. Here, the B prong of Dynamex‘s ABC test would require Plaintiff to reclassify Defendant as an employee for the purposes of California‘s wage orders (which regulate, inter alia, minimum wages, maximum hours, and meal and rest breaks) because Defendant performs work that is in the usual course of Plaintiff‘s business (i.e., transporting property),” and thus, “Plaintiff may seek a declaration that the B prong is preempted by the FAAAA“); Valadez v. CSX Intermodal Terminals, Inc., 2019 WL 1975460, at *7-8 (N.D. Cal. March 15, 2019) (finding the FAAAA preempts Prong B of the ABC test in Dynamex in part because Prong B “effectively prevents motor carriers from using independent contractors to perform services within their usual course of business,” and ”Su strongly indicates that a state law that would prevent a motor carrier, like Defendant, from hiring independent contractors, rather than employees, to perform its services would be preempted by the FAAAA“); Alvarez v. XPO Logistics Cartage LLC, 2018 WL 6271965, at *4-5 (C.D. Cal. Nov. 15, 2018) (relying in part on Su and finding “the ABC test [as adopted in Dynamex] ‘relates’ to a motor carrier‘s services in more than a ‘tenuous’ manner and is therefore preempted by the FAAAA“); contra. Henry v. Central Freight Lines, Inc., 2019 WL 2465330, at *5 (E.D. Cal. June 13, 2019) (holding the FAAAA does not preempt the Dynamex ABC test because “[t]he Dynamex ABC test is a general classification test that does not apply to motor carriers specifically and does not, by its terms, compel a
Defendants offer a variety of arguments against FAAAA preemption, but none are persuasive. For example, Defendants argue that Su and American Trucking have no bearing on the ABC test. In so doing, however, Defendants attempt to characterize the ABC test as “not requir[ing] that motor carriers—or anyone at all—transition from independent contractors to employees,” but “[i]nstead, [as] merely provid[ing] the applicable test to assess whether a worker is an independent contractor or an employee.” Doc. 55 at 18. Defendants’ curious argument is that “the ABC test itself imposes no legal obligations” because it only sets forth the test for determining whether California‘s labor laws apply to a worker. Doc. 58 at 19. Although it is technically true that nothing in the ABC test prohibits motor carriers from contracting with independent contractors, that argument merely poses a distinction without a difference. Put another way, it is true that the statute does not expressly state that motor carriers cannot contract with independent contractors, but Prong B permits motor carriers to contract with independent contractors only if they classify and treat those independent contractors as employees under California law.
The Court is similarly unpersuaded by Defendants’ contention that this Court lacks the ability to consider whether AB-5 is preempted because, according to Defendants, the ABC test is merely a “test for employment.” Doc. 58 at 19. According to Defendants, “[t]he question for purposes of Plaintiffs’ FAAAA preemption claim is . . . whether California‘s employment laws that attach through the ABC test are preempted,” rather than the ABC test, itself. Doc. 58 at 19 (emphasis added). To support their theory, Defendants rely upon the unpublished district court opinion from which the parties appealed in Su. That opinion, however, is both not binding and lacks persuasive value, particularly in light of the Ninth Circuit‘s decision. See Su, 903 F.3d at 955 (distinguishing Borello standard from Massachusetts ABC test by explaining “the ABC test may effectively compel a motor carrier to use employees for certain services because, under the ABC test, a worker providing a service within an employer‘s usual course of business will never be considered an independent contractor“). Contrary to Defendants’ position, the Court finds that “the question is not whether the FAAAA preempts California‘s wage orders [and other employment laws]; rather, it is whether [AB-5‘s] ABC test—used to interpret the wage orders [and other employment laws]—is preempted.” Alvarez v. XPO Logistics Cartage LLC, 2018 WL 6271965, at *5 (C.D. Cal. Nov. 15, 2018).
Next, Defendants argue that the FAAAA‘s preemption provision does not apply to the ABC test because, according to Defendants, that test is a “law of general applicability.” First, to the extent Defendants posit that a law of general applicability cannot be preempted, they are incorrect. See Su, 903 F.3d at 966 (“This is not to say that the general applicability of a law is, in and of itself, sufficient to show it is not preempted.“) (citing Morales v. Trans World Airlines, Inc., 504 U.S. 374, 386 (1992)). For the same
Defendants argue that Dilts v. Penske Logistics, LLC, 769 F.3d 637, 649 (9th Cir. 2014) and Californians for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir. 1998) require the opposite conclusion. The preemption issues in those cases, however, are significantly different from the preemption issue raised here. Dilts and Mendonca concerned workers that had already been properly classified as “employees.” In Dilts, the Ninth Circuit held that specific California Labor Code protections for employees—meal and rest break laws—were not preempted by the FAAAA because they were “normal background rules for almost all employers doing business in the state of California” and did not, either directly or indirectly “set prices, mandate or prohibit certain routes, or tell motor carriers what services they may or may not provide, either directly or indirectly.” Dilts, 769 F.3d at 647 (emphasis in original); see also Mendonca, 152 F.3d at 1187-89 (holding FAAAA did not preempt California‘s prevailing wage law as applied to employees); Ridgeway et al. v. Walmart, Inc., Case No. 17-15983 (9th Cir. Jan. 6, 2020) (holding FAAAA did not preempt California‘s wage law requiring trucking company to pay minimum wages for driver rest time during which the company retains control over the driver because the law did not set prices, mandate or prohibit certain routes, or tell motor carriers what services they may provide).
In contrast, the present case concerns the test used to classify workers for the purpose of determining whether all of California employment laws do or do not apply, rather than a small group of those laws, such as the meal break regulations in Dilts. Thus, the combined effect of all such laws has a significant impact on motor carriers’ prices, routes, or services. Accordingly, Dilts and other similar cases are distinguishable because they focus on whether discrete wage-and-hour laws and regulations had more than a tenuous impact on motor carriers’ prices, routes, or services, not whether the combined impact
Finally, the Court is not persuaded by Intervenor‘s brief, conclusory argument that “Plaintiffs fail to establish that motor carriers cannot avail themselves of AB-5‘s business-to-business exception.” Doc. 58 at 25. To the extent Intervenor contends a motor carrier could contract with an independent contractor under AB-5‘s business-to-business exception, Intervenor has not shown how that is possible. Further, like the Los Angeles Superior Court, this Court is skeptical that motor carriers could, in fact, avail themselves of that exception, particularly where the State Defendants, who are tasked with enforcing AB-5, do not expressly concede that the exception would apply.11 Accordingly, the Court adopts the thorough reasoning of the Los Angeles Superior Court‘s January 8, 2020 order rejecting that argument. See Cal Cartrage, Case No. BC689320, at 12-14 (rejecting plaintiff‘s argument that the “business-to-business” exception saves AB-5 from FAAAA preemption as applied to motor carriers).
The Court finds AB-5‘s ABC test has more than a “tenuous, remote, or peripheral” impact on motor carriers’ prices, routes, or services, particularly in light of our Ninth Circuit jurisprudence casting serious doubt on the type of “all or nothing rule” that AB-5 implements. Thus, for the previous reasons, Plaintiffs have carried their burden at this preliminary stage of showing a likelihood of success on the merits as to their FAAAA preemption challenge. In the alternative, Plaintiffs have certainly raised “serious questions” going to the merits.
2. Irreparable Harm
As to the second element, the Court finds Plaintiffs have carried their burden to show the likelihood of irreparable harm. As this Court previously concluded at the temporary restraining order stage, Plaintiffs have shown that irreparable harm is likely because without significantly transforming their business operations to treat independent-contractor drivers as employees for all specified purposes under California laws and regulations, they face the risk of governmental enforcement actions, as well as criminal and civil penalties. See, e.g.,
Similarly, in remanding to the district court to issue a preliminary injunction, the Ninth Circuit in American Trucking found the motor carriers faced a sort of Hobson‘s choice because “a very real penalty attaches to the motor carriers regardless of how they proceed,” and “[t]hat is an imminent harm.” American Trucking, 559 F.3d at 1058. Here, motor carriers wishing to continue offering the same services to their customers in California must do so using only employee drivers, meaning they must significantly restructure their business model, including by obtaining trucks, hiring and training employee drivers, and establishing administrative infrastructure compliant with AB-5. The only alternative available to motor carriers is to violate the law and face criminal and civil penalties. The Court is satisfied that Plaintiffs have shown a likelihood of irreparable injury without injunctive relief.
3. Balance of Equities; The Public Interest
If after the preliminary injunction stage, the Court finds that AB-5 is preempted by the FAAAA, motor carriers will have suffered harm due to AB-5‘s application to and enforcement against them. See American Trucking, 559 F.3d at 1059 (finding the balance of equities and public interest weighed in favor of motor carriers, explaining, “[W]e have outlined the hardships that motor carriers will suffer if, as is likely, many provisions of the Concession agreements are preempted and are, thus, being imposed in violation of the Constitution“). On the other side of the scale, Defendants have legitimate concerns about preventing the misclassification of workers as independent contractors. Nonetheless, with or without the ABC test, California still maintains numerous laws and regulations designed to protect workers classified as employees and to prevent misclassification, and the pre-AB-5 Borello standard will continue as the applicable
Similarly, the Court finds that the public interest supports preliminary injunctive relief. The Court recognizes the Legislature‘s public interest in protecting misclassified workers, which it attempted to further address with AB-5. That public interest, however, “must be balanced against the public interest represented in Congress‘s decision to deregulate the motor carrier industry, and the Constitution‘s declaration that federal law is to be supreme.” American Trucking, 559 F.3d at 1059-60. Therefore, the public interest tips sharply in Plaintiffs’ favor.
III. CONCLUSION
FAAAA preemption is broad but not so broad that the sky is the limit: states retain the ability to execute their police power with laws that do not significantly impact rates, routes, or services. Here, however, there is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking. In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA. Accordingly, Plaintiffs’ motion for a preliminary injunction is GRANTED.
It is further ORDERED:
- Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Julia A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, Andre Schoorl, in his official capacity as the Acting Director of the Department of Industrial Relations of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, and Patrick Henning, in his official capacity as Director of the California Employment Development Department are temporarily enjoined from enforcing Assembly Bill 5‘s ABC test, as set out in
Cal. Labor Code § 2750.3(a)(1) , as to any motor carrier operating in California, pending the entry of final judgment in this action. - Because there is no realistic likelihood of harm to Defendants from granting a preliminary injunction as to the enforcement of AB-5‘s ABC test, a security bond is not required.
IT IS SO ORDERED.
Date: January 16, 2020
HON. ROGER T. BENITEZ
United States District Judge