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A Federal Judge in San Diego has extended a Temporary Restraining Order against the trucking component of a California law that would restrict how independent workers can be classified by companies.
On Jan. 13, Judge Roger Benitez of the Southern District Court of California extended indefinitely his earlier TRO against the implementation of the trucking component in California’s Assembly Bill 5. The legislation, which was set to take effect Jan. 1, potentially would reclassify tens of thousands of independent contractors as employees. Some trucking officials fear that the law would remove opportunities for drivers to own their own businesses and work as independent owner-operators in the state.
On Dec. 31, Benitez issued a TRO that he said would remain in effect until a Jan. 13 hearing. At that more recent hearing, Benitez heard arguments for and against a preliminary injunction sought by the California Trucking Association and determined the TRO would remain in effect until he issues a ruling in the case.
Regardless of his ruling, legal analysts believe the ruling from Benitez is just the first step in what will be a long, drawn out legal battle.
“The future of California’s AB 5 is uncertain and continues to be a lightning rod law in trucking. Just in the past two weeks, both a California State Court and a Federal District Court in California have weighed in on AB 5’s ABC test with rulings that place its enforcement against trucking companies in abeyance,” said Gregory Feary, the President and Managing Partner of Scopelitis, Garvin, Light, Hanson & Feary, P.C. in Indianapolis.
#AB5 Lawsuit Update: After two hours of oral argument, the court has taken matter under advisement. Temporary restraining order (TRO) extended pending decision on preliminary injunction.— CA Trucking Assoc. (@Caltrux) January 13, 2020
After two spirited hours of debate in a San Diego federal courtroom, federal judge Benitez has extended his temporary restraining order barring enforcement of AB 5 as it relates to trucking pending his decision on a permanent injunction.— Western States Trkng (@WSTA1941) January 13, 2020
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 preempted by the Federal Aviation Administration Authorization Act of 1994.This ruling exempts Camden, N.J.-based motor carrier NFI from the law.
“The record before the court in this case confirms the commonsense conclusion that AB 5 would have a substantial impact on trucking prices, routes and services, as motor carriers in California revamp their business models either to utilize only employee drivers or attempt to satisfy the business-to-business exception,” Highberger wrote. “As the evidence shows, in those circumstances where defendants have contracted with licensed motor carriers to transport loads, the cost of such transport was nearly triple the cost of using independent owner-operators for the same route.”
NFI operates approximately 50 million square feet of warehouse and distribution space, and its company-owned fleet consists of more than 3,000 tractors and 12,500 trailers. It ranks No. 19 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
A spokesman for the Los Angeles City Attorney’s Office says it intends to appeal the decision regarding NFI.
With two decisions in less than two weeks against the law, Feary says it is unlikely the cases will be settled soon.
“Judge Benitez will soon be ruling on a motion for preliminary injunction in the CTA v Becerra case,” he said. “His decision at the hearing on the 13th to extend the TRO allows Judge Benitez time to consider the arguments made by the state and Teamsters on the one hand and the CTA on the other hand.” Regardless of how Benitez rules, Feary expects the case will get tied up in appeals for a while.
“In the meantime, trucking companies and the small businesses with which they contract may have to get comfortable with the uncertainty,” he said.
The California Trucking Association, which brought the lawsuit being heard in Benitez’s court, had no comment on the judge’s latest ruling. The association said it wants to see how the case plays out before it issues a statement.
Other trucking associations are watching the two cases.
“AB 5 is essentially suspended, and we’re all waiting to see if [Judge Benitez] issues a permanent injunction,” Joe Rajkovacz, the director of government affairs for the Western States Trucking Association, told Transport Topics. “Based on what we heard in the courtroom, I think that is likely to happen.”
Transport Topics Reporters Roger Gilroy and Eric Miller contributed to this report.
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