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Appeals Court Denies Teamsters Motion in California Trucking Association Lawsuit
A federal appeals court has denied an effort to temporarily lift a lower court鈥檚 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鈥檚 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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鈥淏asically, the Teamsters went to the 9th Circuit to ask that while you鈥檙e pondering the district court鈥檚 preliminary injunction decision, you need to turn the law back on,鈥 Feary told Transport Topics. 鈥淣ow, the 9th Circuit has said you haven鈥檛 convinced us that we need to do that. We鈥檒l ponder this whole issue of whether the preliminary injunction is legally correct or not.鈥
The appeals court said that the union 鈥渉as 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.鈥
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鈥 motion will ensure that CTA鈥檚 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鈥檚 AB 5 calls for a three-pronged 鈥淎BC test鈥 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鈥檚 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, 鈥淭here is little question that the state of California has encroached on Congress鈥 territory by eliminating motor carriers鈥 choice to use independent contractor drivers, a choice at the very heart of interstate trucking.鈥
About two weeks later, the Teamsters and Becerra asked the appeals court for a review of Benitez鈥檚 injunction.
鈥淪ome would argue that this is a very good sign of what the court is thinking,鈥 said Feary, whose firm represents many California trucking companies. 鈥淎nd, it might well be. But it might be that the procedural standard was just not met by the Teamsters.鈥
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鈥檚 ruling came in a lawsuit filed by the Los Angeles City Attorney鈥檚 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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