YOUR EXECUTION HAS BEEN STAYED!
Breaking News: A federal judge granted trucking companies an injunction that temporarily blocks AB-5 enforcement against California trucking companies.
Trucking companies got a temporary reprieve from AB-5 and the horrible ABC test when a Federal Judge granted an injunction restraining the big, bad state of California and its minions and lackeys from enforcing AB-5. In the final hours of New Year’s Eve (the day before AB-5 went into effect), your new hero, U.S. District Judge Roger Benitez issued a temporary restraining order preventing state officials from enforcing the law against motor carriers. The CTA brought a motion asking for injunction – which are not commonly granted – and the judge agreed with the CTA’s position. Can I get a “Hallelujah” and “Amen” from my brothers and sisters?
How did the CTA win this huge battle?
The CTA argued that Federal Law – specifically the FAAAA – preempted state law (i.e. AB-5) regarding the use of independent contractors. In its motion, the CTA said this:
“Given the realities of trucking, it would be impracticable if not
impossible for CTA’s motor-carrier members to provide interstate trucking services by contracting with independent owner-operators and to simultaneously comply with California’s onerous requirements for employees. The direct and real consequence of Dynamex and AB-5, therefore, is that CTA’s motor-carrier members, if they wish to avoid significant civil and criminal penalties, must cease contracting with owner-operators to perform trucking services for customers in California and to shift to using employee drivers only when operating within the State.”
The CTA went on to state:
“For decades, the trucking industry has heavily relied on the owneroperator
model-which involves the use by licensed motor carriers of independent
contractors who own and operate their own trucks-to provide the transportation of property in interstate commerce. A motor carrier’s ability to contract with independent contractors is necessary because the demand for, duration of, and volume of trucking services provided by individual motor carriers fluctuates significantly.”
The thrust of the CTA’s legal argument was summed up here:
“The ABC test and AB-5 “is expressly preempted by the FAAAA because the requirement that motor carriers treat all drivers as employees and the concomitant de facto prohibition on motor carriers contracting with independent owner-operators to perform trucking services in California directly impacts the services, routes, and prices offered by CTA’s motor-carrier members to their customers.”
The FAAAA says “.[A] State… 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.” See 49 U.S.C. § 14501(c)(1)
The CTA went on in great detail in a 29 page motion, which is beyond the scope of this article, but notably concluded:
The ABC test, as construed in Dynamex and codified by AB-5, therefore, undermines the economic viability of independent owner-operators….The intent and impact of the Dynamex decision and now AB-5 is clear-motor carriers can no longer contract with independent owner-operators and must shift to using an employee-only business model.”
The Judge Agreed With The CTA
Judge Benitez discussed the CTA’s contention that AB5 was preempted by a 1994 federal statute that prohibits states from making laws that affect the price, route or service of freight-hauling motor carriers. Here are the highlights and excerpts of his decision and his reasoning:
“On December 24, 2019, [CTA] filed a motion for temporary restraining order, seeking to enjoin [California] from enforcing Assembly Bill 5 (“AB-5”) as to any motor carrier operating in California…Having considered the parties’ arguments set forth in [CTA]’s supporting papers, as well as the [State’s] opposition papers, the Court finds that (the) requested temporary restraining order is warranted.
“The Court finds that a temporary restraining order is warranted. At this early stage of the proceedings and within the brief amount of time available, [the CTA has] carried their burden for purposes of emergency relief to show (1) that they are likely to succeed on the merits, (2) likely to suffer irreparable harm in the absence of relief, (3) that the balance of equities tips in their favor, and (4) that their requested relief is in the public interest. See Winter v. Natural Resource Defense Council, 555 U.S. 7, 20 (2008).
“Specifically, [CTA has] shown that AB-5’s Prong B is likely preempted by the FAAAA because AB-5 effectively mandates that motor carriers treat owner-operators as employees, rather than as the independent contractors that they are. In other words, because contrary to Prong B, drivers perform work within “the usual course of the [motor carrier] hiring entity’s business,” drivers will never be considered independent contractors under California law. “
“[The CTA has] established that imminent, irreparable harm is likely because without significantly transforming their operations to treat independent contracting 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.”
Why this is such a big deal and a major victory.
Even though this is merely a Preliminary Injunction, and the court could change its mind, here’s why the court will likely stick with its initial ruling. In his ruling, Benitez said the CTA “are likely to succeed on the merits.” This means that based on the limited arguments and evidence before him, the Judge decided that if the case goes to a full-blown trial, the CTA will likely win. That is an extremely strong statement coming from a Federal District Judge who tend to be highly regarded. Furthermore, it is very difficult to get a restraining order and injunction against a State from enforcing an enacted law. This is huge and it speaks volumes as to the strength of the CTA’s position. I was skeptical of the prospects of the CTA’s success in seeking an injunction, knowing how hard they are to win and how hesitant judges are to rule before a full and fair trial on the merits. Prior to this ruling, I was frequently asked about the CTA’s lawsuit, and I voiced my lack of optimism. Yet the judge saw through the absurdity of what the state Democrats – in their unbridled arrogance – tried to shove down the throats of trucking companies and their owner-operators. That said, my optimism on the future of the Owner-Operator business model has increased exponentially.
Here Is The Best Part of Judge Benitez’s Ruling.
I love this:
“It is further ORDERED: 1. 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 (“AB-5″) as to any motor carrier operating in California, pending this Court’s resolution of Plaintiffs’ motion for a preliminary injunction.”
It’s not everyday that someone succeeds in telling the the State of California to Fuck Off – the CTA did just that. #FUCADems, #FUTeamsterWhores, and best of all, #FULG.
Call To Discuss The Implications Of This Victory
While I cannot understate the significance of winning this battle, the war is far from over and the enemies of trucking companies and owner-operators will regroup, reload and marshal their forces in their efforts to preserve AB-5