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Law Alert: 9th Circuit Rules AB-5 Not Preempted 

by Shannon M. Cohen, Gregory M. Feary, James H. Hanson, Prasad Sharma, Adam C. Smedstad

April 28, 2021

Today—April 28th, the United States Court of Appeals for the Ninth Circuit held that California Trucking Association (CTA) was unlikely to succeed on the merits with respect to its claim that AB-5, the California legislature’s imposition of a restrictive ABC test, is preempted by the Federal Aviation Administration Authorization Act of 1994 (F4A). As a result, the injunction CTA had obtained from the district court against enforcement of AB-5 against motor carriers is overturned and will be dissolved in the near future.
 
The court held that AB-5 is not preempted because it “is a generally applicable labor law that impacts the relationship between a motor carrier and its workforce, and does not bind, compel, or otherwise freeze into place a particular price, route, or service of a motor carrier at the level of its customers.” In so doing, the court strained to explain why pronouncements in earlier Ninth Circuit cases addressing whether laws compelling the use of employees were preempted were not binding. A vigorous dissent focused on those earlier cases, suggesting that a law like AB-5 can both affect a motor carrier’s relationship with its workers and significantly impact the motor carrier’s services. 
 
CTA will have several options available for appealing the decision, and for many of the reasons the dissent pointed out, an appeal is likely. The parties have 14 days to seek rehearing and up to 150 days to petition for certiorari with the US Supreme Court pursuant to special rules in place as a result of the COVID-19 pandemic. The injunction will be lifted seven days following the expiration of time to request a rehearing or following a denial of a request for rehearing, or may be stayed upon further petition of the parties (for example, if the parties are seeking review by the US Supreme Court). Therefore, it is difficult to predict the precise date when the injunction will be lifted and AB-5 can be enforced against motor carriers, although this date could be as early as May 19. Look for commentary on this case (CTA v Bonta) in various follow-up communications. 
 
For more information, contact Scopelitis Partners Greg Feary, Jim Hanson, Shannon Cohen, Adam Smedstad, or Prasad Sharma

 


News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.