Cal. Trucking Ass'n v. Bonta

Decision Date28 April 2021
Docket Number No. 20-55107,No. 20-55106,20-55106
Citation996 F.3d 644
Parties CALIFORNIA TRUCKING ASSOCIATION; Ravinder Singh ; Thomas Odom, Plaintiffs-Appellees, v. Rob BONTA, in his official capacity as the Attorney General of the State of California; Andre Schoorl, in his official capacity as the Acting Director of the Department of Industrial Relations of the State of California; Julie A. Su, in her official capacity as Secretary of the California Labor Workforce and Development Agency; Patrick W. Henning, in his official capacity as the Director of the Employment Development Department; Lilia Garcia-Brower, in her official capacity as Labor Commissioner of the State of California, Division of Labor Standards Enforcement, Defendants-Appellants, and International Brotherhood of Teamsters, Intervenor-Defendant. California Trucking Association; Ravinder Singh ; Thomas Odom, Plaintiffs-Appellees, v. Rob Bonta, in his official capacity as the Attorney General of the State of California; Andre Schoorl, in his official capacity as the Acting Director of the Department of Industrial Relations of the State of California; Julie A. Su, in her official capacity as Secretary of the California Labor Workforce and Development Agency; Patrick W. Henning, in his official capacity as the Director of the Employment Development Department; Lilia Garcia-Brower, in her official capacity as Labor Commissioner of the State of California, Division of Labor Standards Enforcement, Defendants, and International Brotherhood of Teamsters, Intervenor-Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

Jose A. Zelidon-Zepeda (argued), Deputy Attorney General; Tamar Pachter and Benjamin M. Glickman, Supervising Deputy Attorneys General; Thomas S. Patterson, Senior Assistant Attorney General; Attorney General's Office, San Francisco, California; for Defendants-Appellants.

Andrew Kushner (argued) and Stacey M. Leyton, Altshuler Berzon LLP, San Francisco, California, for Intervenor-Defendant-Appellant.

Andrew E. Tauber (argued), Miriam R. Nemetz, and Evan M. Tager, Mayer Brown LLP, Washington, D.C.; Robert R. Roginson and Alexander M. Chemers, Ogletree Deakins Nash Smoak & Stewart P.C., Los Angeles, California; for Plaintiffs-Appellees.

David A. Rosenfeld, Weinberg Roger & Rosenfeld, Alameda, California, for Amicus Curiae California Labor Federation AFL-CIO.

Michael N. Feuer, City Attorney; Kathleen A. Kenealy, Chief Assistant City Attorney; Michael J. Bostrom, Assistant City Attorney; Danielle L. Goldstein and Christopher S. Munsey, Deputy City Attorneys; Office of the City Attorney, Los Angeles, California; Barbara J. Parker, City Attorney; Maria Bee, Erin Bernstein, Malia McPherson, Caroline Wilson, and Nicholas DeFiesta, Attorneys; Office of the City Attorney, Oakland, California; for Amici Curiae Office of the Los Angeles City Attorney and the City of Oakland.

Shannon Liss-Riordan and Harold Lichten, Lichten & Liss-Riordan P.C., Boston, Massachusetts, for Amicus Curiae California Employment Lawyers Association (CELA).

Joshua S. Lipshutz, Gibson Dunn & Crutcher LLP, San Francisco, California; Christopher D. Dusseault, Michelle L. Maryott, and Dhananjay S. Manthripragada, Gibson Dunn & Crutcher LLP, Los Angeles, California; for Amici Curiae Cal Cartage Transportation Express LLC, CMI Transportation LLC, and K&R Transportation California LLC.

Patrick J. Whalen, Ellison Whalen & Blackburn, Sacramento, California, for Amici Curiae American Dream Coalition and Western States Trucking Association.

Karen A. Booth and Jason D. Tutrone, Thompson Hine LLP, Washington, D.C., for Amici Curiae American Chemistry Council, Consumer Brands Association, Institute of Scrap Recycling Industries Inc., National Industrial Transportation League, National Shippers Strategic Transportation Council, and Fertilizer Institute.

Theane Evangelis, Blaine H. Evanson, and Max E. Schulman, Gibson Dunn & Crutcher LLP, Los Angeles, California; Steven P. Lehotsky and Emily J. Kennedy, U.S. Chamber Litigation Center, Washington, D.C.; Deborah White and Kathleen McGuigan, Retail Litigation Center Inc., Washington, D.C.; Stephanie Martz, National Retail Federation, Washington, D.C.; for Amici Curiae Chamber of Commerce of the United States of America, Retail Litigation Center Inc., and National Retail Federation.

Richard Pianka, ATA Litigation Center, Arlington, Virginia, for Amici Curiae American Trucking Associations Inc., Arizona Trucking Association, Nevada Trucking Association, Oregon Trucking Association, Washington Trucking Associations, Intermodal Association of North America, National Tank Truck Carriers, and Truckload Carriers Association.

Paul D. Cullen Sr., Paul D. Cullen Jr., Gregory R. Reed, and Daniel E. Cohen, The Cullen Law Firm PLLC, Washington, D.C., for Amicus Curiae Owner-Operator Independent Drivers Association Inc.

Before: Sandra S. Ikuta and Mark J. Bennett, Circuit Judges, and Douglas P. Woodlock,** District Judge.

Dissent by Judge Bennett

IKUTA, Circuit Judge:

The Federal Aviation Administration Authorization Act of 1994 (F4A or FAAAA) preempts any state law "related to a price, route, or service of any motor carrier ... with respect to the transportation of property." 49 U.S.C. § 14501(c)(1). California's Assembly Bill 5 (AB-5) codified a judge-made test (referred to as the "ABC test") for classifying workers as either employees or independent contractors. This appeal raises the question whether application of AB-5 to motor carriers is preempted by the F4A. Because AB-5 is a generally applicable labor law that affects a motor carrier's relationship with its workforce and does not bind, compel, or otherwise freeze into place the prices, routes, or services of motor carriers, we conclude that it is not preempted by the F4A. See, e.g. , Dilts v. Penske Logistics, LLC , 769 F.3d 637, 647 (9th Cir. 2014).

I

We first provide the context for this challenge. Before 2018, the California Supreme Court's framework for classifying workers as either employees or independent contractors was set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations , 48 Cal. 3d 341, 256 Cal.Rptr. 543, 769 P.2d 399 (1989). Borello set out indicia of an employer-employee relationship as opposed to an independent-contractor relationship. Id. at 350–51, 256 Cal.Rptr. 543, 769 P.2d 399. The indicia included "the right to control work," "the right to discharge at will, without cause," and, most important here, "whether or not the work is a part of the regular business of the principal." Id .1

Almost thirty years after Borello , the California Supreme Court revisited the framework for classifying workers as employees or independent contractors for purposes of California's Industrial Welfare Commission (IWC) Wage Orders.2 See Dynamex Operations W. v. Superior Ct. , 4 Cal. 5th 903, 912, 957, 232 Cal.Rptr.3d 1, 416 P.3d 1 (2018). Dynamex adopted a standard commonly referred to as the "ABC" test. Id. at 957. Under Prong B of that test, a worker is presumed to be an employee and may be classified as an independent contractor only if "the worker performs work that is outside the usual course of the hiring entity's business." Id.3 The ABC test was thus significantly different from the Borello test: while Borello considered "whether or not the work is a part of the regular business of the principal" as only one factor in the classification analysis, 48 Cal. 3d at 351, 256 Cal.Rptr. 543, 769 P.2d 399, the ABC test presumed a worker was an employee unless the worker met that condition, Dynamex , 4 Cal. 5th at 957, 232 Cal.Rptr.3d 1, 416 P.3d 1.

In September 2019, the California legislature enacted AB-5, which codified the ABC test and expanded its applicability. See Cal. Lab. Code § 2775.4 The statutory text of AB-5 classifies certain workers as employees, stating that a person "shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied":

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. (B) The person performs work that is outside the usual course of the hiring entity's business. (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Id. § 2775(b)(1)(A)(C).

AB-5 exempts certain occupations and services. Id. § 2778. It also contains a number of exemptions, including a "business-to-business" exception, which exempts any "business service provider" that meets several requirements. Id. § 2776(a).5 If an exemption from AB-5 applies, then the Borello test controls the classification of workers as employees or independent contractors. Id. §§ 2775(b)(3), 2776(a), 2778(a).

California Trucking Association (CTA) is a trade association representing motor carriers that hire independent contractors who own their own trucks (referred to as "independent owner-operators") to transport property throughout California. The change from the Borello test to Dynamex and then to AB-5 concerned CTA. It viewed the new rule statutorily classifying a worker as an employee unless the hiring entity demonstrates that the worker performs "work that is outside the usual course of the hiring entity's business," id. § 2775(b)(1)(B), as effectively precluding the business model employed by CTA's members. Cf. Scott L. Cummings & Emma Curran Donnelly Hulse, Preemption As A Tool of Misclassification , 66 UCLA L. Rev. 1872, 1880 (2019).

A

In October 2018, after Dynamex was decided, CTA, along with Ravinder Singh and Thomas Odom, two independent owner-operators (the plaintiffs), filed this lawsuit against Xavier Becerra, the Attorney General of California; Julie Su, Secretary of the California Labor Workforce; and several other California...

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