Dive Brief:

• Thirteen industry groups and trucking firms have signed onto four amicus briefs, filed in support of the California Trucking Association (CTA) in the AB5 lawsuit.
• This follows an answering brief filed by CTA, in which the association defended the Jan. 16 preliminary injunction that barred enforcement of AB5 on the trucking industry while proceedings are ongoing in the 9th Circuit Court of Appeals. After a party appeals a case and files an opening brief, which California Attorney General Xavier Becerra did in response to the injunction, the appellee can respond with an answering brief.
• Amicus briefs were filed by​ the Owner-Operator Independent Drivers Association (OOIDA); the Western States Trucking Association (WSTA); Cal Cartage Transportation Express, CMI Transportation and K&R Transportation; and American Trucking Associations (ATA), the Intermodal Association of North America, National Tank Truck Carriers, the Truckload Carriers Association and the trucking associations of Arizona, Nevada, Oregon and Washington.

Dive Insight:

From the uptick in truck movement in early March, to the plunge in spot rates in April, to the slight recovery so far in May, the coronavirus has created volatile market conditions. Some owner-operators in California have maintained contracts that have kept them out of the open market — a scenario that may not be be possible under AB5.

"Absent the current preliminary injunction, these truckers will be left with a Hobson's choice: abandon the unique opportunities provided by the owner-operator model, cease serving the California market to the detriment of their businesses and the goodwill they have cultivated, or simply cease to exist," OOIDA's amicus brief reads.

One of the biggest sticking points in AB5 is the "ABC" test, a set of three criteria for determining if a worker can be classified as an independent contractor. The "B" prerequisite is the person must be contracted to perform work that is outside the typical scope of what the hiring entity does.

This effects relationships between owner-operators and carriers, brokers and shippers, in what Cal Cartage, CMI Transportation and K&R Transportation described as the "backbone of the trucking industry" — the model in which shippers contract with carriers and in turn the carrier contracts with owner-operators to move product.

​Proponents of AB5 contend the pandemic emphasizes the importance of classifying owner-operators as employees.

​"An expedited determination process has become even more pressing during this current public health and humanitarian crisis where port truck drivers are suffering disproportionally from the impacts of the coronavirus pandemic due to rampant and systemic misclassification in the port trucking industry,"  Ron Herrera, Teamsters International VP and director of the Port Division, said in a March statement. 

AB5 would not be a detriment to every carrier. Those with the means to increase staff would do so and increase prices to cover the costs, WSTA wrote in its brief. The carriers without the means would have to reduce their services and routes.

"For many small owner-operators, the result will be that they will no longer be able to work as independent contractors by marketing their trucks and their skills as drivers, because the employment mandate will be cost-prohibitive," WSTA wrote.

Whether AB5 affects non-California residents operating in California, or whether it affects California residents contracting with out-of-state businesses "is not currently a settled matter of law," according to CTA.

ATA and the other state associations that signed onto its amicus brief have members who contract with California-based owner-operators and who regularly conduct business in the state, the brief reads. "Thus, they have an acute interest both in the preservation of the independent owner-operator model in the trucking industry, and in ensuring that the congressional policy establishing a deregulated trucking industry is not undermined by a patchwork of state-level impediments to the safe and efficient flow of commerce," the groups wrote.

One of the cornerstones of the anti-AB5 argument addesses the potential "patchwork." As CTA noted in the answering brief, the Federal Aviation Administration Authorization Act of 1994 (FAAAA) prevents states from legislating policy "related to a price, route, or service of any motor carrier … with respect to the transportation of property." Becerra argued in his opening brief the court "made no findings on whether AB 5 has any effect on" those aspects of the industry, "let alone whether any such effect had the requisite significance."

The music industry in California has successfully lobbied for an AB5 exemption. On April 17, state Rep. Lorena Gonzalez, who spearheaded the bill, announced pending amendments that would "balance the need to protect workers and preserve musicians' ability to collaborate with the industry." This followed a year of conversations and fact finding, she said. Various workers in music production and involved with live performances are set to become exempt from the "ABC" test.

CTA in its answering brief named advantages of the owner-operator model, such as the ability to more easily handle ebbs and flows of demand than a small fleet with limited resources. Owner-operators are responsible for their equipment, which means a fleet can hire them during peak demand without financing parked trucks.

"Given the sizable investment needed to acquire and maintain a truck, the fluctuating demand for trucking services, the sporadic demand for specialized trucking services in particular, and other related considerations," CTA wrote, "it would be extremely difficult if not impossible for a motor carrier doing business in California."