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Transportation Brief: AB5 and ABC: The Story Continues

by Shannon M. Cohen, Gregory M. Feary

January 27, 2020

Two recent decisions have clarified how courts might interpret and analyze California Assembly Bill 5 (AB5). In CTA v. Becerra, the Southern District of California granted a temporary restraining order on December 31, 2019 enjoining the state from enforcing AB5 as applied to motor carriers. A hearing for a preliminary injunction was held on January 13; and on January 16, the preliminary injunction was granted with important references to U.S. Congressional intent to allow for owner-operator/independent contractors in trucking.

Concurrently, in California v. Cal Cartage Transportation Express, LLC, a California Superior Court held that the B prong of the ABC test used in AB5 and in Dynamex is preempted by the Federal Aviation Administration Authorization Act (FAAAA). The court recognized that the FAAAA was specifically adopted – at least in part – to limit state rules that act to limit owner-operator entry into the industry. The order granting the preliminary injunction in Becerra concurs and even defers to the well-reasoned B2B analysis in Judge Highberger’s decision in the Cal Cartage case.

Importantly, the Becerra court denied the City of L.A.’s motion to intervene in the federal case, potentially limiting AB5 proponents’ ability to make overlapping arguments in the two cases. It now appears likely that the issue will make its way to the United States Supreme Court via appeals of the final Becerra decision through the Ninth Circuit. The next steps in that journey occurred on January 29th when the State of California and Teamsters filed their notices of interlocutory appeal to the Ninth Circuit. Of course, it is likely to take months or even years to reach the Supreme Court for consideration, at which time the Supreme Court could decide not to hear the case (as it did recently in a case considering similar issues under the Airline Deregulation Act – Brindle v. Rhode Island Dep’t of Labor and Training).

On the other coast, New Jersey continues to move forward with its efforts to create a more California-like environment. While New Jersey Senate Bill 4204 failed upon the legislature’s adjournment this week, it was immediately reintroduced as Senate Bill 863 and is poised to continue its high-profile consideration by the Senate. We continue to monitor this legislation and other legislation introduced by states attempting to model the changes made to the treatment of independent contractors by AB5.

Scopelitis’ Transportation Brief® 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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