Western States Trucking Association v. Xavier Becerra

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Laura Elias N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Patrick Whalen Jose Zelidon-Zepeda

Attorneys Present for Intervenor

Defendants:

Stacey Leyton

Andrew Kushner

Proceedings: TELEPHONE HEARING ON DEFENDANTS’ MOTION TO

DISMISS (ECF No. 20, filed March 2, 2020)

INTERVENOR-DEFENDANT’S MOTION TO DISMISS

(ECF No. 25, filed April 7, 2020)

I. INTRODUCTION

This case concerns a federal preemption challenge to three discrete provisions of a

recently enacted California worker classification law that, along with other related but

unchallenged provisions, govern the scope of a specific exemption from that law.

Plaintiff Western States Trucking Association (““WSTA”) filed this action against

defendant Xavier Becerra, in his official capacity as Attorney General of the State of

California (the “State”), on December 19, 2019. See ECF No. 1 (“Compl.”). On March 2,

2020, the Court granted a motion by the International Brotherhood of Teamsters (“IBT”’)

to intervene as an additional defendant. See ECF No. 21.

That same day, the State filed a motion to dismiss pursuant to Federal Rules of Civil

Procedure 12(b)(1) and 12(b)(6). See ECF No. 20 (“CA MTD”). IBT filed a motion to

dismiss pursuant to the same rules on April 7, 2020. See ECF No. 25 (“IBT MTD”).

WSTA filed a consolidated opposition to both motions on Apnil 27, 2020. See ECF No.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

26 (“Opp.”). The State and IBT filed replies on May 4, 2020. See ECF No. 30 (“CA

Reply”), ECF No. 31 (‘IBT Reply”).

The Court held a hearing on May 18, 2020. The motions are now before the Court.

Having considered the parties arguments and submissions, the Court finds and concludes

as follows.

I. FACTUAL AND STATUORY BACKGROUND

A. The California Supreme Court Adopts A New Worker Classification

Standard

In California, whether a worker is classified as an “employee” or an “independent

contractor” changes the obligations that an employer has to that worker. Before 2018,

California courts and agencies applied the standard set forth in S.G. Borello & Sons, Inc.

v. Department of Industrial Relations, 48 Cal. 3d 341 (1989), to determine whether a

worker should be classified as an employee or an independent contractor. Borello required

courts and agencies to consider multiple factors that focused on the kind of work the worker

performed, and the degree of control the employer exercised over the worker, to make that

classification. See Borello, 48 Cal. 3d at 351-55.

The California Supreme Court announced a departure from that worker classification

standard in Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018). Dynamex

held that courts and regulators must henceforth apply a three-part test (the “ABC test”), not

the multi-factor standard set forth in Borello, to determine whether a worker will be

classified as an employee, or an independent contractor, for certain purposes of California

labor law. Id. at 916-17. Pursuant to the ABC test, a worker 1s presumptively classified as

an employee “unless the hiring entity establishes (A) that the worker 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) that the worker performs

work that is outside the usual course of the hiring entity’s business, and (C) that the worker

is customarily engaged in an independently established trade, occupation, or business, the

worker should be considered an employee and the hiring business an employer under the

suffer or permit to work standard in wage orders.” Id. at 964. The “failure to prove any

one of these three prerequisites” is “sufficient” to “establish that the worker is an included

employee, rather than an excluded independent contractor[.|” Id.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

B. AB5 Codifies The New Standard, With Many Exemptions

The California State Legislature codified the ABC test in 2019 by enacting AB 5,

which the Governor signed into law on September 18, 2019. Now enrolled as California

Labor Code § 2750.3, subdivision (a)(1) of the statute provides that—for purposes of the

California Labor Code, the California Insurance Code, and the Industrial Welfare

Commission—“a person providing labor or services for remuneration 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.” Cal. Labor Code § 2750.3(a)(1).

The balance of the statute establishes an extensive and detailed array of industry-

specific exemptions that carve out certain discrete types of business activities from the

ABC test that subdivision (a)(1) otherwise requires. See Cal. Labor Code §§ 2750.3(b)-

(j). Relevant here, subdivision (f) provides that “[s]ubdivision (a) and the holding in

Dynamex do not apply to the relationship between a contractor and an individual

performing work pursuant to a subcontract in the construction industry, and instead the

determination of whether the individual is an employee of the contractor shall be governed

by Section 2750.5 and by Borello, if the contractor demonstrates” that it satisfies a

specified list of criteria. See Cal. Labor Code § 2750.3(f) (emphasis added). Although one

criterion requires a construction contractor seeking to invoke the exemption to demonstrate

that “[t]he subcontractor” it hired “is licensed by the Contractors State License Board

[“CSLB’| and the work is within the scope of that license,” id. § 2750.3(f)(2), this

requirement does “not apply” if the subcontractor at issue “provid|es] construction trucking

services for which a contractor’s license is not required” by other provisions of state law,

“provided that” another list of criteria is also satisfied, id. § 2750.3(f)(8)(A).

' For the purposes of claiming this exception from the exemption criteria, the statute

defines “construction trucking services” as “trucking services provided in the construction

industry pursuant to a contract with a licensed contractor” using large or specialty

commercial vehicles. See Cal. Labor Code § 2750.3(f)(8)(C) (emphasized added).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

Among those additional criteria is proof that a subcontractor meets two conditions:

[t]he subcontractor utilizes its own employees to perform the construction trucking

services, unless the subcontractor is a sole proprietor who operates their own truck to

perform the entire subcontract and holds a valid motor carrier permit issued by the

Department of Motor Vehicles”; and “(iv) [t]he subcontractor negotiates and contracts

with, and is compensated directly by, the licensed contractor.” Id, §§ 2750.3(f)(8)(A)(i11)-

(iv). The statute further provides in this respect that “|f]or any work performed after

January 1, 2020, any business entity that provides construction trucking services to a

licensed contractor utilizing more than one truck shall be deemed the employer for all

drivers of those trucks.” Id. § 2750.3(f)(8)(B) (emphasis added).

C. ©WSTA Members Provide Subcontracted Trucking Services To

Construction Contractors, And Sometimes Hire Other Subcontractors

WSTA is an industry association that represents providers of construction trucking

services. Compl. § 5. WSTA does not allege that its members hold construction

contracting licenses, or otherwise operate as construction contractors. Rather, its members

subcontract to provide trucking services fo such construction contractors. Id. 7. Because

construction trucking jobs are uncertain and involve irregular fluctuations in demand, id.

8-11, in many instances, a construction trucking subcontractor will not have enough

trucks or drivers—or the right kinds of trucks or drivers—available to perform the

obligations in its subcontract. Id. When that happens, the trucking company holding the

trucking services subcontract will itself subcontract with additional trucking companies to

fulfill its contractual obligations to the construction contractor. Id. 9] 7, 12-13, 24.

According to WSTA, the independent contractor model underlying these sorts of

transactions is essential to the construction trucking services industry because it enables

trucking companies to provide flexible services that meet the demands of construction

contractors, and the obligations under construction trucking subcontracts. See generally

id. J] 8-26

D. WSTA Files This Suit Challenging Parts Of One Exemption To AB □

WSTA does not allege in this action that the ABC test contained in California Labor

Code § 2750.3(a)(1) is itself preempted as applied to trucking companies.” Instead, WSTA

* That issue is the subject of a separate, unrelated action pending in the United States

District Court for the Southern District of California. See California Trucking Ass’n v.

Becerra, No. 18-CV-02458-BEN-BLM, (S.D. Cal.). An appeal of that court’s preliminary

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

claims that the three “discrete” provisions discussed above—California Labor Code

§§ 2750.3(f)(8)(A)(aii)-(iv), and (f)(8)(B)}—impose obligations on construction trucking

companies to classify their workers as employees in a manner that is proscribed and

preempted by the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C.

§ 14501 et seq., which prohibits states from enforcing any law related to the price, route,

or service of a motor carrier. See Compl. 4] 45-56.

WSTA’s contention turns on an interpretation that California Labor Code

§ 2750.3(£)(8) is not “an additional criterion that must be met” for a construction contractor

to obtain an exemption from the ABC test set forth in subdivision (a)(1), but rather

independent criteria establishing “a separate exception applicable to . . . subcontractors

providing construction trucking services for which a contractor’s license is not required.”

See Compl. § 29. According to WSTA, the challenged provisions of California Labor Code

§ 2750.3(f)(8) should be read to prohibit “a construction trucking subcontractor of any

size” from “contract[ing| with other independent trucking companies or owner-operators”

and “make[]| employment an explicit mandate” in the industry. Id. 9931-34. WSTA

alleges that these changes will “result in increased prices charged by motor carriers” and

“severely limit the types of services they can provide and the routes they can utilize,” id.

48-51, and on this basis, it claims the “offending provisions of . . . subdivision (f)(8) are

preempted by the FAAAA,” id. 52.

I. RELEVANT LEGAL STANDARD

“Federal courts are courts of limited jurisdiction” possessing the power to hear cases

only when “authorized by Constitution and statute.” _Kokkonen v. Guardian Life Ins. Co.

of Am., 511 U.S. 375, 377 (1994). A motion to dismiss an action pursuant to Federal Rule

injunction order, which enjoined the State from enforcing the ABC test codified in

subdivision (a)(1) against trucking companies, is pending before the Ninth Circuit. See

California Trucking Ass’n v. Becerra, No. 20-55106 (9th Cir.).

WSTA, for its part, also previously challenged the application of the ABC test to

trucking companies under Dynamex before it was codified by AB 5, but the United States

District Court for the Eastern District of California rejected that preemption challenge,

dismissing the complaint with prejudice and entering final judgment against WSTA. See

W. States Trucking Ass’n v. Schoorl, 377 F. Supp. 3d 1056, 1072 (E.D. Cal. 2019), appeal

dismissed, No. 19-15794, 2019 WL 5212963 (9th Cir. Sept. 5, 2019).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

of Civil Procedure 12(b)(1) raises the objection that the federal court has no subject matter

jurisdiction over the action. The burden of proof in a Rule 12(b)(1) motion is on the party

asserting jurisdiction. See Sopcak v. N. Mountain Helicopter Serv., 52 F.3d 817, 818 (9th

Cir. 1995): Ass’n of Am. Med. Coll. v. United States, 217 F.3d 770, 778-79 (9th Cir. 2000).

Standing is a jurisdictional requirement, and the party invoking federal jurisdiction

has the burden of establishing it. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

“To meet the constitutional threshold of Article [II] standing,” the party invoking federal

jurisdiction must allege that it “(1) suffered an injury in fact, (2) that is fairly traceable to

the challenged conduct of [the defendant], and (3) that is likely to be redressed by a

favorable judicial decision.” Daniel v. Nat’] Park Serv., 891 F.3d 762, 766 (9th Cir. 2018)

(citing Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016)).

Like standing, ripeness is a justiciability doctrine designed “to prevent the courts,

through avoidance of premature adjudication, from entangling themselves in abstract

disagreements over administrative policies|.|” Abbott Laboratories v. Gardner, 387 U.S.

136, 148-49 (1967). The ripeness doctrine is “drawn both from Article III limitations on

judicial power and from prudential reasons for refusing to exercise jurisdiction.” Reno v.

Catholic Social Servs., Inc., 509 U.S. 43, 57, n. 18 (1993) (citations omitted). “The

constitutional component of the ripeness inquiry is often treated under the rubric of

standing and, in many cases . . . comcides squarely with standing’s injury in fact prong.”

Thomas v. Anchorage Equal Rights Comm/’n, 220 F.3d 1134, 1138 (9th Cir. 2000). In

cases concerning pre-enforcement challenges to enacted legislation or regulation, Article

III ripeness requirements are satisfied if “the plaintiffs face a ‘realistic danger of sustaining

a direct injury as a result of the statute’s operation or enforcement.” Id. at 1139 (quoting

Babbit v. United Farm Workers Nat’] Union, 442 U.S. 289, 298 (1979)). “[N]either the

mere existence of a proscriptive statute nor a generalized threat of prosecution” meets this

standard. Thomas, 220 F.3d at 1139.

IV. DISCUSSION

The State and the IBT collectively move to dismiss on grounds that (a) WSTA lacks

associational standing to pursue its pre-enforcement claim, (b) the pre-enforcement claim

is not ripe, and (c) the complaint fails to state a claim for relief because the FAAAA does

not preempt the challenged provisions of the California Labor Code.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

The Court addresses each argument in turn. Because the Court concludes that

WSTA’s complaint does not present a ripe justiciable controversy, see infra § IV_B, the

Court does not reach the Rule 12(b)(6) motions, see infra § IV.C.

A. Associational Standing

IBT contends that WSTA lacks associational standing (1) because its alleged injuries

are illusory, since they result from a misinterpretation of the challenged provisions, and (2)

because WSTA fails to allege that any individual WSTA member has been or will be

injured by the challenged provisions. See IBT MTD at 10-13; IBT Reply at 2-6. WSTA

responds that its members will suffer harm since the challenged provisions will be

interpreted in the manner it asserts will harm its members’ interests, and disputes that it

needs to identify any specific injured members since their injuries are readily apparent.

See Opp. at 6-18, 28-33.

IBT’s first argument is unavailing. For the purposes of assessing the justiciability

of WSTA’s claims, the Court must assume the correctness of WSTA’s legal arguments on

their merits—whether or not they are actually valid. See Stop the Beach Renourishment,

Inc. v. Fla. Dept. of Envtl. Prot., 560 U.S. 702, 729 n.10 (2010) (“accepting [plaintiffs]

version of Florida law as true” in the justiciability analysis, despite subsequently rejecting

the same substantive claims on the merits); United States v. Antelope, 395 F.3d 1128, 1133

(9th Cir. 2005) (assessing the satisfaction of Article III “from [plaintiff s] perspective, in

whose shoes we stand when deciding this threshold issue of justiciability” and therefore

assuming “his legal argument is correct”): United States v. Purvis, 940 F.2d 1276, 1278

(9th Cir. 1991) (plaintiff demonstrated standing because “[1i|f his legal argument is correct,

he has already suffered constitutional injury”): see also Flynt v. Rumsfeld, 355 F.3d 697,

702 (D.C. Cir. 2004) (“In order to test the . . . justiciability of [plaintiff's] claims, we . . .

assume that they are otherwise valid.”).

Here, assuming that its interpretation of the challenged statutory provisions 1s

correct, WSTA has alleged facts sufficient to establish that its members would be required

to reclassify any subcontractors they hire as employees, at great cost to their operations, if

the challenged provisions were enforced against them. That alleged injury—if sufficiently

imminent, but see infra §, [V.B—is enough to invoke this Court’s Article III jurisdiction.

See Lorenz v. Safeway, Inc., 241 F. Supp. 3d 1005, 1014 (N_D. Cal. 2017) (concluding

that plaintiff had standing, “|r]egardless of whether [the plaintiff] has advanced a plausible

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

theory” on the merits, because “the Court assumes the merits of his legal claim for purposes

of the standing analysis.”).

Nor does WSTA lack associational standing because it fails to identify which of its

members would be injured by the challenged provisions. It is well-established that “an

association has standing to bring suit on behalf of its members when: (a) its members would

otherwise have standing to sue in their own right; (b) the interests it seeks to protect are

germane to the organization’s purpose; and (c) neither the claim asserted nor the relief

requested requires the participation of individual members in the lawsuit.” Hunt v.

Washington State Apple Advertising Comm’n, 432 U.S. 333, 343 (1977). Neither IBT nor

the State contest the second or third elements. Instead, IBT cites the Supreme Court’s

holding in Summers v. Earth Island Institute, 555 U.S. 488 (2009), to contend that the first

element requires WSTA to identify which of its members would be harmed by the

challenged provisions. But the holding in Summers—that an association meets the three-

part standard in Hunt when “at least one identified member had suffered or would suffer

harm,” id. at 498—does not, as IBT contends, additionally require an association to identify

an injured individual member. See Nat’] Council of La Raza v. Cegavske, 800 F.3d 1032,

1041 (9th Cir. 2015) (rejecting contention that Summers “stands for the proposition that an

injured member of an organization must always be specifically identified in order to

establish Article III standing for the organization”). The Ninth Circuit has explained that

there is “no purpose to be served by requiring an organization to identify by name the

member or members injured” when “‘it is relatively clear” that “one or more members have

been or will be adversely affected by a defendant’s action,” and when “the defendant need

not know the particular member to understand and respond to an organization’s claim of

injury|.]” Id. at 1041.

Assuming again for the limited purpose of the Court’s justiciability analysis that

WSTA’s statutory interpretation 1s correct, its allegations meet this standard: according to

WSTA, if the challenged provisions are enforced in the way WSTA reads them, they would

require WSTA members to reclassify any subcontractors they hire as employees at great

expense to their operations. These allegations, accepted to be true, make it “relatively

clear” that any construction trucking service provider would be adversely affected by the

challenged provisions, and there is little (if any) additional material understanding to be

gained by forcing WSTA to divulge added information identifying its members at this

juncture. Cegavske, 800 F.3d at 1041. Provided, once again, that the alleged injuries are

sufficiently imminent, but see infra § IV.B, WSTA’s allegations are enough to establish

that WSTA members “would otherwise have standing to sue in their own right,” and to

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

permit WSTA to invoke this Court’s Article III jurisdiction to sue on an associational basis.

See. e.g., California Trucking Ass’n, 2020 WL 248993, at *5 (rejecting analogous

associational standing argument advanced by IBT in a FAAAA preemption challenge by

the California Trucking Association to subdivision (a)(1), and concluding that the

California Trucking Association had “standing at this very preliminary stage,” because IBT

“offers no reason why it cannot address the predominately legal claims brought by CTA

without the identification of a particular CTA member’).

B. — Pre-Enforcement Ripeness

The State and IBT next contend that, even accepting the correctness of WSTA’s

legal argument, WSTA’s pre-enforcement claim does not present a constitutionally ripe

justiciable controversy since there is no imminent threat that WSTA or its members will

be prosecuted, or held liable, under the challenged provisions. See IBT MTD at 13-14:

IBT Reply at 6-7; CA MTD at 14-16; CA Reply at 8-10. WSTA responds that its claim

is ripe (i) because “liability has likely already attached” such that a misclassified worker

“could bring a wage/misclassification claim against a WSTA member at any time,” (11)

because WSTA members need to “know|] whether they need to dramatically change their

business models in order to insulate themselves” from “potential liability,” and (111) because

there is an actual conflict between state and federal law. See Opp. at 37-41.

“|T |he threatened enforcement of a law creates an Article III injury” only when the

party asserting the claim “alleges an intention to engage in” some proscribed “course of

conduct” and “there exists a credible threat of prosecution thereunder.” Susan B. Anthony

List v. Driehaus, 573 U.S. 149, 159 (2014) (quoting Babbitt v. Farm Workers, 442 US.

289, 298 (1979)). “In evaluating the genuineness of a claimed threat of prosecution,”

courts in the Ninth Circuit consider (1) “whether the plaintiffs have articulated a ‘concrete

plan’ to violate the law in question,” (2) “whether the prosecuting authorities have

communicated a specific warning or threat to initiate proceedings,” and (3) “the history of

past prosecution” under the challenged law. Thomas, 220 F.3d at 1139. The party invoking

jurisdiction bears the burden to establish all three elements in order to allege an actual case

or controversy that survives a motion to dismiss. See Sacks v. Office of Foreign Assets

Control, 466 F.3d 764, 773 (9th Cir. 2006) (dismissing claim on these grounds even though

two out of three elements of the Thomas test were satisfied).

WSTA’s allegations do not satisfy the second element in Thomas because WSTA

has not alleged any “specific warning or threat” that the State, or anyone else, has sought

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

or is seeking to hold its members liable under the challenged provisions. See Thomas, 220

F.3d at 1139. The State has effectively disavowed any intent to prosecute WSTA members

for violating the challenged provisions by misclassifying employees as independent

contractors because the State does not construe those provisions to require WSTA members

to reclassify their workers in the first place. See State MTD at 12 (expressing the State’s

regulatory understanding, not limited to a litigation position, that the challenged provisions

only govern “the relationship between the licensed contractor and its subcontractor,” not

the relationship between a construction trucking company and any worker or workers it

subcontracts with).? And WSTA does not allege that any trucking company has threatened

to invoke the challenged provisions to obligate WSTA members to re-classify them as

employees rather than independent contractors.*

> The State confirmed this position at the hearing on these motions, but made clear

that it does not disavow enforcing other requirements of AB 5 against WSTA members, or

disavow enforcing the challenged provisions against WSTA members in accordance with

the State’s construction of those provisions.

At oral argument, WSTA requested a finding that the State 1s judicially estopped

from bringing future enforcement actions against WSTA members based on its

representation that the State does not intend to enforce the challenged provisions in the

manner that WSTA construes them in this action. The Court declines to make a finding as

to estoppel at this juncture.

*Tn its opposition, WSTA points to contentions in IBT’s motion to dismiss that more

than more than 1,150 trucking service workers have filed misclassification suits against

WSTA members since 2010. See Opp. at 37 (citing IBT MTD at 12). But even if the

Court were to construe or take notice of material in IBT’s brief as part of WSTA’s

complaint, it would not help because WSTA does not allege that any of these prior claims

arose under the challenged provisions, nor—since the challenged provisions were just

enacted—is it likely that any of those claims could have so arisen.

At the hearing on these motions, WSTA contended for the first time that some

trucking companies have also come forward and specifically threatened to invoke the

challenged provisions—and not other portions of AB 5—to obligate WSTA members to

re-classify them as employees rather than independent contractors. These representations

at oral argument, however, are not pleadings. See, e.g., Nat. Alternatives Int’l, Inc. v.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

These facts and allegations demonstrate the opposite of an actionable threat of

prosecution under the challenged provisions, and are insufficient to invoke this Court’s

jurisdiction. “[P|laintiffs [do] not demonstrate the necessary injury in fact where the

enforcing authority expressly interpret|s| the challenged law as not applying to the

plaintiffs’ activities.” Lopez v. Candaele, 630 F.3d 775, 788 (9th Cir. 2010) (citing cases

and applying Thomas standard); see, e.g., Loyd’s Aviation. Inc. v. Ctr. for Envtl, Health,

No. 11-CV-01078 AWI, 2011 WL 4971866, at *3 (E.D. Cal. Oct. 19, 2011) (concluding

that there was no justiciable case or controversy in a pre-enforcement action where “State

Defendants have been unequivocal that there is no intention to bring any suit under [the

subject law] against Plaintiffs”): Trustees of Operating Engineers Pension Tr. v. Smith-

Emery Co., No. 19-CV-04058-CAS (AFMx), 2019 WL 5595047, at *18 (C.D. Cal. Oct.

28, 2019) (finding no threat of prosecution under Thomas where “the State Agencies

evince|[d] no intent to initiate enforcement proceedings against” the claimant).

Nor is this a case like Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009),

where, even absent an actual threat of enforcement, plaintiffs present a ripe claim for relief

because they have already been subject to adverse consequences based on the anticipation

of enforcement. Stormans involved a challenge to rules promulgated by the Washington

State Pharmacy Board that required pharmacists to fill prescriptions for birth control drugs.

The court found a justiciable controversy, even though the Pharmacy Board had not

threatened any action against two of the pharmacist plaintiffs, because those two plaintiffs

had already been threatened by employers who anticipated adverse enforcement action. Id.

at 1124 (holding that plaintiff Mesler’s claim was ripe because her “employer has informed

her that it will not be able to accommodate her refusal to dispense Plan B,” and holding

that plaintiff Thelen’s claim was ripe because “[h]er employer told her “it would not work

for [her] to remain employed there’). Here, there is no comparable allegation that any

WSTA member has been threatened with adverse action, of any kind, by anyone, under the

challenged provisions.

Accordingly, even crediting WSTA’s contention on the first Thomas element—by

assuming the correctness of its statutory interpretation—that its members’ intentions to

Allmax Nutrition, Inc., No. 16-CV-01764-H-AGS, 2017 WL 11421527, at *5 n.3 (S_D.

Cal. Aug. 28, 2017) (“[A]n argument presented in an opposition to a Rule 12 motion is not

an allegation in a complaint.”). Unless and until alleged, they cannot provide the basis for

a justiciable controversy.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘Oo’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

continue current operations amount to a plan to “violate” the challenged provisions, and

even setting aside the third Thomas element because this element “has little weight” where,

as here, the challenged provisions are “relatively new,” Wolfson v. Brammer, 616 15 F.3d

1045, 1060 (9th Cir. 2010), because WSTA does not allege a “credible threat of

prosecution” under the challenged provisions, and because the State has effectively

foresworn any intent to prosecute WSTA or its members under those provisions, the

threatened injuries WSTA asserts do not generate a justiciable controversy. See Thomas,

220 F.3d at 1140 (holding that plaintiffs’ claim was not ripe since “[t]he threat of

enforcement based on a future violation—which may never occur—is beyond

speculation”).

None of WSTA’s three counterarguments change this conclusion.

First, the allegation that WSTA members are already subject to liability and “could”

become defendants in a misclassification suit at most alleges “the mere existence of a

proscriptive statute” and “a generalized threat of prosecution,” “neither” of which are

sufficient to establish a ripe controversy. Thomas, 220 F.3d at 1139.

Second, the allegation that WSTA members have an urgent need to understand their

potential liability under the challenged provisions is also inadequate since “bare

uncertainty” about one’s potential exposure to a regulation—‘absent any concrete

application that threatens imminent harm to their interests’—‘cannot support” the

existence of a ripe controversy. Habeas Corpus Res. Ctr. v. U.S. Dep’t of Justice, 816 F.3d

1241, 1250 (9th Cir. 2016) (citations and internal marks omitted).

And third, the allegation that the challenged state provisions are incongruous with

federal law does not make WSTA’s preemption claim ripe by itself. WSTA cites no

authority that supports this sweeping and plainly erroneous proposition, which, if it were

correct, would effectively eliminate constitutional ripeness requirements for any

preemption claim, an outcome at odds with established Supreme Court precedent. See,

e.g., Pac_ Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 US.

190, 203 (1983) (holding that a Federal Atomic Energy Act preemption challenge to a

California state statutory provision was not ripe for adjudication, even though plaintiff

alleged a conflict).

The cases WSTA does cite in support of this third argument stand only for the limited

proposition, not met here, that a preemption action is ripe either where the federal

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

government has taken action to discredit or invalidate the challenged state law, or where

some action arising from the conflicting provisions is “certainly impending.” See

Conference of Fed. Sav. and Loan Ass’ns v. Stein, 604 F.2d 1256, 1259 (9th Cir. 1979)

(cited in Opp. at 40) (holding that a preemption action by federal savings and loan

associations challenging a state lending regulation presented a justiciable controversy, but

only because the relevant federal regulator provided plaintiffs “with an opinion that the

state act did not apply to federal savings and loan associations’’); First Fed. Sav. and Loan

Ass’n of Boston v. Greenwald, 591 F.2d 417, 423 (1st Cir. 1979) (cited in Opp. at 40)

(same); N.L.R.B. v. North Dakota, 504 F. Supp. 2d 750, 754 (D.N.D. 2007) (cited in Opp.

at 41) (holding that a preemption action by the National Labor Relations Board to protect

its jurisdiction from a conflicting state statute presented a justiciable controversy since the

agency had affirmatively taken a position in conflict with the state); Employers Ass’n, Inc.

v. United Steelworkers of Am., 32 F.3d 1297, 1299-1300 (8th Cir. 1994) (cited in Opp. at

41) (federal preemption challenge to state labor law prohibiting employers from hiring

permanent replacements for striking workers presented a justiciable controversy “even

without any enforcement action” only because it was all but certain that the defendant

union “would... avail itself of the state law’s protections”). In contrast with these cases,

WSTA does not allege facts indicating that any federal regulator has taken any action to

discredit or invalidate the challenged provisions, or demonstrating that any subcontracted

worker will certainly “avail itself’ of the challenged provisions to reclassify its

employment status at some point.

The Court cannot exercise jurisdiction over this action consistent with the limits

proscribed by Article II] in these circumstances. The motions to dismiss for lack of subject

matter jurisdiction pursuant to Rule 12(b)(1) are hereby granted.

C. ‘Failure To State A Claim

The State and the IBT also contend that, even if WSTA had presented a justiciable

controversy, its complaint fails to state a claim for relief because the FAAAA does not

preempt the challenged provisions of the California Labor Code. But without jurisdiction,

the Court cannot reach the merits of WSTA’s preemption claim. See Herman Family

Revocable Tr. v. Teddy Bear, 254 F.3d 802, 803 (9th Cir. 2001). The motions to dismiss

on these grounds are, accordingly, moot.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘OQ’

Case No. 5:19-CV-02447-CAS (KKx) Date May 18, 2020

Title WESTERN STATES TRUCKING ASS’N v. BECERRA, ET AL.

IV. CONCLUSION

In accordance with the foregoing, the Court GRANTS the motions to dismiss

pursuant to Rule 12(b)(1). The motions to dismiss pursuant to Rule 12(b)(6) are DENIED

AS MOOT.

The effective date of this order is hereby STAYED for 30 days, during which time

the action will remain pending and WSTA shall be permitted to file a first amended

complaint as of right pursuant to Federal Rules of Civil Procedure 15 and 21. If at the end

of 30 days no amended pleading is filed that supersedes the complaint addressed in this

order, this order shall become final and the action will be dismissed.

IT IS SO ORDERED.

O_O

Initials of Preparer CMJ