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Law Alert: AB 5 Preliminary Injunction Granted

by Kelli M. Block, Shannon M. Cohen, Gregory M. Feary, Christopher C. McNatt Jr.

January 16, 2020

Law Alert: AB 5 Preliminary Injunction Granted 

 

Today, California Federal District Judge Roger Benitez granted a preliminary injunction in California Trucking Association v. Beccera. The order enjoins the State from enforcing AB 5 as to any motor carrier operating in California pending entry of final judgment in the case by the District Court. 

Following Monday’s hearing on the motion for preliminary injunction, the court essentially affirmed its December 31, 2019, order ruling that the CTA is likely to win on its argument that the FAAAA preempts application of AB 5's Prong B to motor carriers and that motor carriers are likely to suffer irreparable harm if the legislation is enforced as applied to them. 

In so doing, the court held that Plaintiffs had shown a likelihood of success on the merits as to their FAAAA preemption challenge. In support, it cited the Ninth Circuit’s analysis in both American Trucking Associations v. City of Los Angeles and California Trucking Association v. Su to state that a rule that requires employee drivers to perform services was likely to be preempted by the FAAAA. The court also challenged the State’s claims that AB 5 is a law of general applicability and not subject to preemption, stating that even if AB 5 is a law of general applicability (of which the court is not convinced), compelling motor carriers to use employees would still subject the law to preemption.  

An order granting or denying a motion for preliminary injunction is appealable as a matter of right. We expect the State to ask the District Court and then the Ninth Circuit for a stay of the injunction pending the appeal—in essence, asking permission to enforce AB 5 while the appeal is pending. For that relief, the State would have to show, among other things, that it has a “strong” likelihood of success on the merits and that it is likely to be irreparably injured absent a stay. Given the State has an alternative misclassification test it can use, as recognized by the District Court, it seems unlikely the State could demonstrate it will be irreparably injured. However, the Ninth Circuit has discretion to affirm the order, reverse the order, or remand for further findings.

The Firm is monitoring legal challenges to AB 5 closely to advise its clients. Any questions can be directed to Partners Greg Feary, Shannon Cohen, Chris McNatt, and Kelli Block.  

 

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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.

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