Appeals Court Denies Teamsters Motion in California Trucking Association Lawsuit
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A federal appeals court has denied an effort to temporarily lift a lower court’s preliminary injunction blocking California from enforcing a state law that restricts how motor carriers classify independent operators.
The earlier ruling blocked the state from enforcing California Assembly Bill 5, which was set to take effect Jan. 1. In an order filed March 30, the 9th U.S. Circuit Court of Appeals denied a motion filed by the International Brotherhood of Teamsters that sought a stay of the lower court’s injunction, and also said it will fast-track oral arguments on a request for review of that decision filed by the Teamsters and California Democratic Attorney General Xavier Becerra.
The ruling ties back to a lawsuit filed by the California Trucking Association that challenges AB 5, and now paves the way for the appeals court to hear oral arguments as soon as early July, according to Greg Feary, president of Scopelitis, Garvin, Light, Hanson & Feary.
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“Basically, the Teamsters went to the 9th Circuit to ask that while you’re pondering the district court’s preliminary injunction decision, you need to turn the law back on,” Feary told Transport Topics. “Now, the 9th Circuit has said you haven’t convinced us that we need to do that. We’ll ponder this whole issue of whether the preliminary injunction is legally correct or not.”
The appeals court said that the union “has not made an adequate showing that it will be irreparably injured absent a stay, that a stay will not substantially injure the other parties, and that a stay would be in the public interest.”
AB 5 would potentially reclassify tens of thousands of independent contractors as employees, according to CTA. In a March 30 statement, CTA said the appeals court denial of the Teamsters’ motion will ensure that CTA’s win at the district court will remain in place for the duration of the proceedings at the 9th Circuit.
At the heart of the issue is that California’s AB 5 calls for a three-pronged “ABC test” that requires motor carriers render their workers employees unless the employer demonstrates that the worker is free from the control of the hiring entity; the worker performs work outside the usual course of the hiring entity’s business; and that the worker is customarily engaged in an independent trade or occupation.
The second part of the three-prong test is the one that many carriers say they have found next-to-impossible to demonstrate.
Benitez
In his Jan. 13 preliminary injunction, U.S. District Judge Roger Benitez of the Southern District Court of California said, “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.”
About two weeks later, the Teamsters and Becerra asked the appeals court for a review of Benitez’s injunction.
“Some would argue that this is a very good sign of what the court is thinking,” said Feary, whose firm represents many California trucking companies. “And, it might well be. But it might be that the procedural standard was just not met by the Teamsters.”
In a separate case, on Jan. 8, Los Angeles Superior Court Judge William Highberger ruled that an independent contractor/employee test required by AB 5 is pre-empted by the Federal Aviation Administration Authorization Act of 1994.
Highberger’s ruling came in a lawsuit filed by the Los Angeles City Attorney’s office against NFI Industries and its subsidiaries, drayage operator Cal Cartage Transportation Express, CMI Transportation and K&R Transportation California, for alleged misclassification of truck drivers under AB 5.
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