As we recently wrote here, just hours before California’s controversial AB 5 went into effect, a federal court in San Diego issued a temporary restraining order (“TRO”) to enjoin enforcement of the independent contractor statute as to approximately 70,000 independent truckers, many of whom have invested substantial sums of money to purchase their own trucks and to work as “owner-operators.”
Now, days after a state court judge ruled that the statute does not apply to independent truckers, the federal court has extended the TRO while it decides whether to enter a preliminary injunction.
In the federal lawsuit, the California Trucking Association (“CTA”) has alleged that the “ABC” test set forth in AB 5 is preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”).
The CTA asserts that the FAAA preempts the “B” prong because it will effectively operate as a de facto prohibition on motor carriers contracting with independent owner-operators, and will therefore directly impact motor carriers’ services, routes, and prices, in contravention of the FAAA’s preemption provision.
The CTA further contends that the test imposes an impermissible burden on interstate commerce, in violation of the Commerce Clause of the U.S. Constitution. The CTA asserts that the test would deprive motor carriers of the right to engage in the interstate transportation of property free of unreasonable burdens, as motor carriers would be precluded from contracting with a single owner-operator to transport an interstate load that originates or terminates in California. Instead, motor carriers would be forced to hire an employee driver to perform the leg of the trip that takes place in California.
A ruling on the preliminary injunction should come shortly. We will continue to monitor the developments on this controversial law.