Petition for Writ of Certiorari — Cal Cartage Transportation Express, LLC, et al., Petitioners v. California, et al.

Supreme Court briefApr 13, 2021

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IN THE

Supreme Court of the United States

_______________

CAL CARTAGE TRANSPORTATION EXPRESS, LLC;

CCX2931, LLC; K&R TRANSPORTATION CALIFORNIA,

LLC; KRT2931, LLC; CMI TRANSPORTATION, LLC;

CM2931, LLC,

Petitioners,

THE PEOPLE OF THE STATE OF CALIFORNIA;

SUPERIOR COURT OF LOS ANGELES COUNTY,

Respondents.

_______________

On Petition For A Writ Of Certiorari

To The California Court of Appeal

_______________

PETITION FOR A WRIT OF CERTIORARI

_______________

Christopher D. Dusseault

Michele L. Maryott

Dhananjay S. Manthripragada

Thomas F. Cochrane

Brian Yang

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7000

Joshua S. Lipshutz

Counsel of Record

Thomas H. Dupree Jr.

Aaron Smith

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

JLipshutz@gibsondunn.com

Christopher C. McNatt, Jr.

SCOPELITIS, GARVIN, LIGHT,

HANSON & FEARY, LLP

2 North Lake Avenue, Suite 560

Pasadena, CA 91101

(626) 345-5020

Counsel for petitioners

QUESTION PRESENTED

Does the Federal Aviation Administration

Authorization Act, which expressly preempts state

laws “related to a price, route, or service of any motor

carrier,” 49 U.S.C. § 14501(c)(1), preempt state

worker-classification laws that have an effect on a

motor carrier’s prices and services by discouraging the

use of independent contractors?

PARTIES TO THE PROCEEDING AND

CORPORATE DISCLOSURE STATEMENT

All parties to the proceeding in People of the State

of California v. Superior Court of Los Angeles County;

Cal Cartage Transportation Express LLC et al., No.

B304240 (Cal. Ct. App.) are named in the caption.

Pursuant to this Court’s Rule 29.6, undersigned

counsel state that Cal Cartage Transportation

Express, LLC; CMI Transportation, LLC; and K&R

Transportation California, LLC are wholly owned by

parent company California Cartage Transportation,

LLC. California Cartage Transportation, LLC is

wholly owned by parent company NFI California

Cartage Holding Company, LLC, which is wholly

owned by a privately held parent company, NFI, L.P.

CCX2931, LLC; CM2931, LLC; and KRT2931, LLC

each have no parent company.

iii

RELATED PROCEEDINGS

Pursuant to this Court’s Rule 14.1(b)(iii), the

following proceedings are directly related to this case:

•

Cal Cartage Transportation Express LLC

et al. v. Superior Court of Los Angeles

County; People of the State of California,

No. S266217 (Cal.) (judgment and order

entered February 24, 2021).

•

People of the State of California v. Superior

Court of Los Angeles County; Cal Cartage

Transportation Express LLC et al., No.

B304240 (Cal. Ct. App.) (judgment and

opinion entered November 19, 2020).

•

People of the State of California v. Superior

Court of Los Angeles County; Cal Cartage

Transportation Express LLC et al., No.

S261764 (Cal.) (order granting petition for

review entered June 17, 2020).

•

People of the State of California v. Superior

Court of Los Angeles County; Cal Cartage

Transportation Express LLC et al., No.

B304240 (Cal. Ct. App.) (order denying

petition for writ of mandate entered March

26, 2020).

•

People of the State of California v. Cal

Cartage Transportation Express LLC et al.,

Nos. BC689320, BC689321, BC689322

(Cal. Superior Ct.) (order entered January

8, 2020).

TABLE OF CONTENTS

Page

QUESTION PRESENTED........................................ i

PARTIES TO THE PROCEEDING AND

CORPORATE DISCLOSURE STATEMENT ... ii

RELATED PROCEEDINGS ................................... iii

TABLE OF APPENDICES ..................................... vi

TABLE OF AUTHORITIES ................................... vii

OPINIONS BELOW ................................................. 1

JURISDICTION ....................................................... 1

STATUTORY PROVISIONS INVOLVED .............. 1

INTRODUCTION ..................................................... 3

STATEMENT ........................................................... 5

REASONS FOR GRANTING THE PETITION .... 13

THE LOWER COURTS ARE DEEPLY SPLIT

OVER AN IMPORTANT AND RECURRING

QUESTION OF FEDERAL LAW. ............................ 13

A. The Split Is Clear And Indisputable. ...... 14

B. The Split Has Led Courts To Different

Conclusions As To The Same Statute. .... 18

II. THE CALIFORNIA COURTS’ APPROACH TO

FAAAA PREEMPTION CANNOT BE

RECONCILED WITH THIS COURT’S DECISIONS. .. 19

A. The California Courts Have Relied On

Three Principles That Are In Tension

With This Court’s Decisions. ................... 20

B. The FAAAA Preempts California’s

ABC Test................................................... 24

III. THIS CASE PRESENTS A CRITICALLY

IMPORTANT LEGAL ISSUE WITH SWEEPING

COMMERCIAL RAMIFICATIONS. .......................... 27

CONCLUSION ....................................................... 30

TABLE OF APPENDICES

Page

APPENDIX A: Order of the California

Supreme Court (Feb. 24, 2021) ......................... 1a

APPENDIX B: Opinion of the California

Court of Appeal (Nov. 19, 2020) ........................ 2a

APPENDIX C: Order of the California

Court of Appeal (July 10, 2020) ....................... 24a

APPENDIX D: Order of the California

Supreme Court (June 17, 2020) ...................... 26a

APPENDIX E: Order of the California

Court of Appeal (Mar. 26, 2020) ...................... 28a

APPENDIX F: Order and Judgment of the

Superior Court of Los Angeles County

(Jan. 8, 2020) .................................................... 30a

APPENDIX G: Statutory Provisions Involved ..... 56a

49 U.S.C. § 14501 ....................................... 56a

Cal. Labor Code § 2775 .............................. 61a

Cal. Labor Code § 2776 .............................. 63a

Mass. Gen. Laws ch. 149 § 148B................ 66a

820 Ill. Comp. Stat. Ann. 115/2 .................. 68a

N.J. Stat. Ann. § 43:21-19 .......................... 70a

vii

TABLE OF AUTHORITIES

Cases

Altaville Drug Store, Inc. v. Emp’t Dev.

Dep’t,

746 P.2d 871 (Cal. 1988) ...................................... 10

Alvarez v. XPO Logistics Cartage LLC,

2018 WL 6271965 (C.D. Cal. Nov. 15,

2018) ..................................................................... 18

Am. Airlines, Inc. v. Wolens,

513 U.S. 219 (1995) .......................................... 5, 21

Am. Trucking Ass’ns v. United States,

344 U.S. 298 (1953) ................................................ 6

B&O Logistics, Inc. v. Cho,

2019 WL 2879876 (C.D. Cal. Apr. 15,

2019) ..................................................................... 18

Bedoya v. Am. Eagle Express Inc.,

914 F.3d 812 (3d Cir. 2019) ........................... 15, 19

Brindle v. R.I. Dep’t of Labor &

Training,

211 A.3d 930 (R.I. 2019) ...................................... 17

Cal. Trucking Ass’n v. Becerra,

433 F. Supp. 3d 1154 (S.D. Cal.

2020) ............................................................... 18, 25

Cal. Trucking Ass’n v. Su,

903 F.3d 953 (9th Cir. 2018) ................................ 14

viii

Cent. Forwarding, Inc. v. ICC,

698 F.2d 1266 (5th Cir. 1983) ................................ 6

Chambers v. RDI Logistics, Inc.,

65 N.E.3d 1 (Mass. 2016) ............................... 17, 26

Costello v. BeavEx, Inc.,

810 F.3d 1045 (7th Cir. 2016) .............................. 15

Cox Broad. Corp. v. Cohn,

420 U.S. 469 (1975) .............................................. 30

Dan’s City Used Cars, Inc. v. Pelkey,

569 U.S. 251 (2013) .............................................. 23

Dilts v. Penske Logistics, LLC,

769 F.3d 637 (9th Cir. 2014) ................................ 14

Echavarria v. Williams Sonoma, Inc.,

2016 WL 1047225 (D.N.J. Mar. 16,

2016) ..................................................................... 19

Ginsberg v. Northwest, Inc.,

695 F.3d 873 (9th Cir. 2012) ................................ 23

People ex rel. Harris v. Pac Anchor

Transp., Inc.,

329 P.3d 180 (Cal. 2014) .............. 12, 14, 20, 22, 23

Henry v. Cent. Freight Lines, Inc.,

2019 WL 2465330 (E.D. Cal. June

13, 2019) ............................................................... 17

Mass. Delivery Ass’n v. Coakley,

769 F.3d 11 (1st Cir. 2014) .................................. 16

Morales v. Trans World Airlines, Inc.,

504 U.S. 374 (1992) ......................... 5, 7, 20, 21, 22,

23, 24, 25, 26, 28

Northwest, Inc. v. Ginsberg,

572 U.S. 273 (2014) .............................. 5, 21, 23, 26

Parada v. E. Coast Transp. Inc.,

_ Cal. Rptr. 3d _, 2021 WL 1222007

(Cal. Ct. App. Mar. 26, 2021) ............................... 27

R. Mayor of Atlanta, Inc. v. City of

Atlanta,

158 F.3d 538 (11th Cir. 1998) .............................. 24

Radio Station WOW v. Johnson,

326 U.S. 120 (1945) .............................................. 29

Rowe v. N.H. Motor Transp. Ass’n,

552 U.S. 364 (2008) ........................... 5, 7, 8, 19, 20,

22, 24, 25, 26, 28

S.G. Borello & Sons, Inc. v. Dep’t of

Indus. Relations,

769 P.2d 399 (Cal. 1989) ...................................... 11

Schwann v. FedEx Ground Package

Sys., Inc.,

813 F.3d 429 (1st Cir. 2016) .................... 16, 19, 26

Valadez v. CSX Intermodal Terminals,

Inc.,

2019 WL 1975460 (N.D. Cal. Mar.

15, 2019) ............................................................... 18

W. States Trucking Ass’n v. Schoorl,

377 F. Supp. 3d 1056 (E.D. Cal.

2019) ..................................................................... 18

Statutes

28 U.S.C. § 1257(a) ...................................................... 1

49 U.S.C. § 14501(c)(1) ............................ 1, 3, 7, 13, 20

49 U.S.C. § 41713(b)(1) ............................................... 7

820 Ill. Comp. Stat. Ann. 115/2................................. 18

Cal. Labor Code § 2775(b) ..................... 2, 9, 11, 18, 25

Cal. Labor Code § 2776 ................................. 10, 11, 25

Cal. Pub. Utils. Code § 4128.5 (1993) ................... 8, 24

Mass. Gen. Laws ch. 149 § 148B(a) .......................... 18

Motor Carrier Act of 1980, 94 Stat. 793 ..................... 6

R.I. Gen. Stat. § 25-3-3(a) ......................................... 17

Regulations

49 C.F.R. § 376.1 ......................................................... 6

Rules

Cal. Rules of Court, Rule 8.532(b)(2)(A) ..................... 1

Other Authorities

Cal. Assembly Comm. on Utils. &

Commerce, Digest of Assembly Bill

2015 (Sept. 9, 1993)................................................ 9

H.R. Conf. Rep. No. 103-677

(1994) ...................................... 7, 8, 9, 19, 21, 24, 28

H.R. Rep. No. 95-1812 (1978)............................ 6, 8, 28

Jennifer Cheeseman Day & Andrew W.

Hait, America Keeps on Truckin’,

U.S. Census Bureau (June 6, 2019),

https://bit.ly/3tO3qbq ........................................... 28

Keith Cunningham-Parmeter, GigDependence, 39 N. Ill. U. L. Rev. 379

(2019) .................................................................... 10

Remarks of Assembly Member Lorena

Gonzalez, Assembly Floor Session

(Sept. 11, 2019),

https://bit.ly/3a4U1VF ......................................... 10

Richard Meneghello, Could 2020 Be the

Year of the California Copycats?,

Fisher Phillips (Oct. 21, 2019),

https://bit.ly/3lMmKTS ........................................ 10

Scott L. Cummings & Emma Curran

Donnelly Hulse, Preemption as a

Tool of Misclassification, 66 UCLA

L. Rev. 1872 (2019) .............................................. 29

Statement by President Clinton Upon

Signing H.R. 2739 (Aug. 23, 1994) ...................... 25

PETITION FOR A WRIT OF CERTIORARI

Petitioners Cal Cartage Transportation Express,

LLC; K&R Transportation California, LLC; CMI

Transportation, LLC; CCX2931, LLC; CM2931, LLC;

and KRT2931, LLC respectfully petition for a writ of

certiorari to review the judgment of the California

Court of Appeal.

OPINIONS BELOW

The California Court of Appeal’s opinion is

reported at 57 Cal. App. 5th 619. Pet. App. 2a-23a.

The California Supreme Court’s order denying further

review is unreported. Id. at 1a. The California

Superior Court’s order is available at 2020 WL

497132. Id. at 30a-55a.

JURISDICTION

The California Court of Appeal entered its

judgment on November 19, 2020. Pet. App. 2a. The

California Supreme Court denied a timely petition for

review on February 24, 2021. Id. at 1a; Cal. Rules of

Court, Rule 8.532(b)(2)(A). The jurisdiction of this

Court is invoked under 28 U.S.C. § 1257(a).

STATUTORY PROVISIONS INVOLVED

The express preemption provision of the Federal

Aviation Administration Authorization Act, 49 U.S.C.

§ 14501(c)(1), provides:

Except as provided in paragraphs (2) and

(3), a State, political subdivision of a

State, or political authority of 2 or more

States may not enact or enforce a law,

regulation, or other provision having the

force and effect of law related to a price,

route, or service of any motor carrier

(other than a carrier affiliated with a

direct air carrier covered by section

41713(b)(4)) or any motor private carrier,

broker, or freight forwarder with respect

to the transportation of property. 1

The California ABC test for worker classification,

Cal. Labor Code § 2775(b)(1), provides:

For purposes of this code and the

Unemployment Insurance Code, and for

the purposes of wage orders of 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.

engaged in an independently

established trade, occupation, or

The exceptions in paragraphs (2) and (3) of 49 U.S.C.

§ 14501(c) are not at issue, but are reproduced at Pet. App. 58a59a.

business of the same nature as

that involved in the work

performed.

INTRODUCTION

The

Federal

Aviation

Administration

Authorization Act of 1994 (“FAAAA”) was enacted to

prevent states from undermining federal deregulation

of the trucking industry with regulations of their own.

Congress had grown concerned with the dizzying

patchwork of state laws that motor carriers had to

contend with—including laws that discouraged the

use of independent-contractor truck drivers, who form

the backbone of the trucking industry nationwide—

and decided that the solution was to broadly preempt

all state laws “related to a price, route, or service of

any motor carrier.” 49 U.S.C. § 14501(c)(1). This

deliberately expansive language prevents states from

substituting their own regulatory judgment for freemarket forces, and allows motor carriers to engage in

uniform business practices across the country.

California, on the other hand—like several other

States, including Massachusetts and Illinois—has

sought to force motor carriers to cease contracting

with independent owner-operator truck drivers,

preferring instead an employee model in which truck

drivers are wage laborers rather than entrepreneurs.

These states have enacted a so-called “ABC test” for

worker classification, declaring workers to be

employees unless they are in a different line of

business from the companies that hire them—a

requirement that can never be met when a motor

carrier hires a truck driver.

In this case, the City Attorney of Los Angeles

alleges that petitioners—motor carriers who service

the Ports of Los Angeles and Long Beach—incorrectly

classify the truckers who work for them as

independent contractors rather than employees.

Relying on California Supreme Court precedent

holding that the FAAAA does not preempt generally

applicable worker-classification laws, the California

Court of Appeal upheld California’s statutory ABC

test for determining whether a worker is an

independent

contractor

employee,

notwithstanding the FAAAA’s express preemption

provision.

The decision below deepens a split in the lower

courts over the correct interpretation of the FAAAA’s

express preemption provision. Like the California

courts, the Third, Seventh, and Ninth Circuits have

held that the FAAAA does not preempt generally

applicable worker-classification laws, despite the

laws’ effects on motor carriers’ prices and services.

In contrast, the First Circuit and the

Massachusetts Supreme Judicial Court hold that the

FAAAA does preempt generally applicable workerclassification laws, where those laws have an effect on

a motor carrier’s prices and services by discouraging

the use of independent-contractor truck drivers. The

Rhode Island Supreme Court similarly holds that the

FAAAA preempts generally applicable workercompensation laws that are substantively similar to

worker-classification laws.

This case demonstrates the confusion resulting

from the split in authority. The same workerclassification law at issue here—the so-called “ABC

test”—is preempted in Massachusetts and the First

Circuit, but not in California or the Seventh Circuit.

Motor carriers, who are engaged in a business that is

quintessentially interstate in nature, are now subject

to the very patchwork of state laws that Congress

sought to avoid, free to use independent owneroperator truck drivers to satisfy their customers’

shipping needs in some states but not others.

The approach followed by the California courts is

in conflict with this Court’s precedents. The court in

this case determined that the California statute is not

preempted because it is a generally applicable law

that, in the court’s view, has only indirect effects on

motor carriers’ prices, routes, or services, and does not

make it impossible for motor carriers to use

independent contractors.

But this Court has

disagreed with every part of that analysis: It has held

that the FAAAA does not distinguish between

generally applicable and targeted laws; that it

preempts state laws with even indirect effects on

prices, routes, or services; and that preemption occurs

even where the state law merely discourages (but does

not make impossible) a particular action. See Rowe v.

N.H. Motor Transp. Ass’n, 552 U.S. 364, 371-73

(2008); Northwest, Inc. v. Ginsberg, 572 U.S. 273, 276

(2014); Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 22728 (1995); Morales v. Trans World Airlines, Inc., 504

U.S. 374, 385-86 (1992).

This Court should grant review to resolve the split

among the lower courts, bring clarity to this

important and recurring question of federal law, and

ensure that the plain text of the FAAAA is enforced.

STATEMENT

1. Motor carriers move goods from point A to

point B throughout the country. Motor carriers can

move cargo themselves, but more often, they contract

with individual truck drivers known as independent

owner-operators. Independent owner-operators are

“the ‘independent truckers’ of song and legend.” Cent.

Forwarding, Inc. v. ICC, 698 F.2d 1266, 1267 (5th Cir.

1983). They own one or sometimes a few trucks. They

do not hold a motor carrier license issued by a federal

agency, and that is by design. Under federal law,

these “last American cowboy[s]” lease their services

and equipment to a motor carrier and haul cargo

under the motor carrier’s federal operating authority.

H.R. Rep. No. 95-1812, at 5 (1978); see 49 C.F.R.

§ 376.1 et seq.

The business model of motor carriers contracting

with independent owner-operators forms the

backbone of the trucking industry. As far back as the

1950s, motor carriers had “increasingly turned to

owner-operator truckers,” “hir[ing] them to conduct

operations under the [motor carrier’s] permit.” Am.

Trucking Ass’ns v. United States, 344 U.S. 298, 303

(1953). Independent owner-operators swiftly grew to

account for “approximately 40 percent of all intercity

truck traffic in the United States” by the 1980s, when

Congress deregulated the trucking industry. H.R.

Rep. No. 95-1812, at 5; see Motor Carrier Act of 1980,

94 Stat. 793. Because independent owner-operators

proved to be “one of the most efficient movers of goods”

in the country, they became a “vital segment of the

motor transportation industry.” H.R. Rep. No. 951812, at 5, 26.

2. Congress protected the motor carrier

industry’s predominant practice of contracting with

independent owner-operators by enacting the FAAAA

in 1994 during a period of federal deregulation.

The FAAAA contains an express preemption

provision that prohibits any state from passing or

enforcing any 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).

This preemption provision is “identical to the

preemption provision” contained in the Airline

Deregulation Act, H.R. Conf. Rep. No. 103-677, at 85

(1994), which this Court has interpreted as “broadly

worded,” “deliberately expansive,” and “conspicuous

for its breadth.” Morales, 504 U.S. at 383-84 (internal

quotation marks omitted); see 49 U.S.C. § 41713(b)(1)

(preempting state laws “related to a price, route, or

service of an air carrier”). Congress intentionally

“adopted” the “broad preemption interpretation” set

forth in Morales when it enacted the FAAAA. H.R.

Conf. Rep. No. 103-677, at 83; see Rowe, 552 U.S. at

370 (explaining that the express preemption

provisions in the Airline Deregulation Act and

FAAAA are interpreted identically).

Congress crafted a deliberately broad express

preemption provision to achieve two overarching

“objectives.” Rowe, 552 U.S. at 372. First, Congress

wanted to eliminate the “patchwork of [State]

regulation” relating to motor carriers’ prices, routes,

and services. H.R. Conf. Rep. No. 103-677, at 87. At

the time, the “sheer diversity” of “State economic

regulation” was “a huge problem for national and

regional carriers.”

Id.

It caused “significant

inefficiencies,

increased

costs,

reduction

competition, [and] inhibition of innovation and

technology,” and “curtail[ed] the expansion of

markets.” Id. A broad preemption provision would

secure a uniform, nationwide scheme for motor

carriers “attempting to conduct a standard way of

doing business.” Id. at 88.

Nationwide uniformity would also help the

independent owner-operators.

As Congress had

explained in earlier deregulation efforts, the

“cumulative effect of the multiplicity of State

requirements poses an overwhelming burden” on

independent owner-operators, forcing them to “fight

[their] way through” a “paper jungle” of forms,

permits, and laws. H.R. Rep. No. 95-1812, at 12.

These burdens flowed downstream: When “variations

between State requirements” pose “undue problems

for the independent owner-operators,” it “affects the

movement of goods and the price the consumer pays

at the store.” Id.

Second, Congress wanted to ensure that motor

carriers’ “[s]ervice options will be dictated by the

marketplace[,] and not by an artificial regulatory

structure.” H.R. Conf. Rep. No. 103-677, at 88.

Congress sought to promote free-market choices by

“[l]ift[ing]” the “antiquated controls” States had

imposed on the industry, thus “permit[ting] our

transportation companies to freely compete more

efficiently and provide quality service to their

customers.” Id. By broadly preempting state law,

Congress “ensure[d] transportation rates, routes, and

services [would] reflect maximum reliance on

competitive market forces.” Rowe, 552 U.S. at 371

(internal quotation marks omitted).

Congress specifically preempted a California

statute that deterred motor carriers from using

independent owner-operators. In 1993, the year

before Congress enacted the FAAAA, California had

passed a law that exempted motor carriers from rate

regulations but “denied this exemption . . . to those

[motor carriers] using a large proportion of owneroperators instead of company employees.” H.R. Conf.

Rep. No. 103-677, at 87; see Cal. Pub. Utils. Code

§ 4128.5 (1993). The California law was expressly

designed to “limit[] the use of independent

contractors” working for motor carriers.

Cal.

Assembly Comm. on Utils. & Commerce, Digest of

Assembly Bill 2015, at 1 (Sept. 9, 1993). When

Congress enacted the FAAAA, it singled out the

California law as being preempted by the new federal

statute. H.R. Conf. Rep. No. 103-677, at 87.

3. The California statute at issue in this case has

the same purpose, and the same effect, as its

predecessor: It discourages motor carriers from using

independent owner-operators.

California’s ABC test requires a putative

employer to prove three elements before a worker can

be classified as an independent contractor:

(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.

an independently established trade,

occupation, or business of the same

nature as that involved in the work

performed.

Cal. Labor Code § 2775(b)(1). 2

An “ABC test” is a test used to classify workers as either

employees or independent contractors. The name derives from

the test’s three prongs. Under an ABC test, workers are

presumed to be employees, and the putative employer must

demonstrate that each of prongs A, B, and C is satisfied to

Because truck drivers perform work that is within

the usual course of a motor carrier’s business, the “B

prong” cannot be met by motor carriers that want to

hire independent owner-operators, as they have

historically done. This is by design. The bill’s sponsor

declared that the ABC test was “getting rid of an

outdated [trucking] broker model that allows

companies to basically make money and set rates for

people that they called independent contractors.”

Remarks of Assembly Member Lorena Gonzalez,

Assembly Floor Session at 1:08:20-1:08:30 (Sept. 11,

2019), https://bit.ly/3a4U1VF. The State Assembly

Committee on Appropriation—whose statements are,

under state law, presumed to express the legislative

intent of statutes—later confirmed that the ABC test

“makes it clear that” “port truck drivers” are “entitled”

to be treated as employees. AB 2257 at 2, Assembly

Committee on Appropriations Analysis (June 2, 2020);

see Altaville Drug Store, Inc. v. Emp’t Dev. Dep’t, 746

P.2d 871, 875 (Cal. 1988) (“Statements of legislative

committees pertaining to the purpose of legislation

are presumed to express the legislative intent of

statutes as enacted.”).

The California statute exempts certain “businessto-business” contractual relationships from the ABC

test. Cal. Labor Code § 2776. But this is a narrow

exemption that applies only if twelve requirements

are met.

Among other things, the putative

independent contractor must be a formal business

establish an independent-contractor relationship. An increasing

number of states have adopted ABC tests, see Keith

Cunningham-Parmeter, Gig-Dependence, 39 N. Ill. U. L. Rev.

379, 408-11 (2019), and additional states are considering

enacting an ABC test, see Richard Meneghello, Could 2020 Be

the Year of the California Copycats?, Fisher Phillips (Oct. 21,

2019), https://bit.ly/3lMmKTS.

entity or sole proprietorship, have all necessary

business licenses, provide its services directly to the

party contracting for its services rather than to that

party’s customers, maintain a business location

separate from the party contracting for its services,

and advertise its services to the public.

Id.

§ 2776(a)(1)-(12).

4. Petitioners are federally regulated motor

carriers that operate trucking and drayage services at

the Ports of Los Angeles and Long Beach,

transporting cargo from the California ports to inland

destinations. Pet. App. 33a. Petitioners engage

independent owner-operator truck drivers to provide

these trucking services. Id.

In January 2018, the City Attorney of Los Angeles

sued petitioners, alleging that petitioners misclassify

truck drivers as independent contractors rather than

employees. Pet. App. 33a-34a. Petitioners argued

that the FAAAA preempted the ABC test as applied

to motor carriers. Id. at 35a; see also id. at 9a n.7. 3

The Superior Court held that the FAAAA “clearly”

preempts the ABC test. Pet. App. 31a. The court

found that the ABC test interfered with motor

carriers’ ability to “utilize independent owneroperator truck drivers, as that term has been used in

the trucking industry, by Congress, and by the U.S.

Supreme Court for many decades.” Id. at 46a. “[L]ike

Petitioners further argued that because the ABC test is

preempted, California’s traditional, flexible, multi-factor

standard should govern the worker-classification analysis. See

Pet. App. 32a; S.G. Borello & Sons, Inc. v. Dep’t of Indus.

Relations, 769 P.2d 399, 404 (Cal. 1989) (setting forth the

traditional standard); Cal. Labor Code § 2775(b)(3) (prescribing

the application of Borello where the ABC test does not apply).

many others before it,” the court reached the

“common-sense conclusion” that the ABC test related

to motor carriers’ “services” and “prices.” Id. at 50a,

54a.

The court explained that motor carriers

operating in California would have to “revamp their

business models,” and that petitioners’ costs of

transporting goods “nearly triple[d]” when they

contracted with licensed businesses rather than with

independent

owner-operators—“the

sort

inefficiency Congress sought to preempt.” Id. at 54a.

5. The City sought a writ of mandate from the

California Court of Appeal. That court summarily

denied the request, Pet. App. 28a, but the California

Supreme Court ordered the Court of Appeal to grant

the writ and hear the appeal, id. at 26a.

So instructed, the Court of Appeal held that the

FAAAA did not preempt the ABC test. Pet. App. 4a.

It explained that its decision was “compelled” by the

California Supreme Court’s decision in People ex rel.

Harris v. Pac Anchor Transp., Inc., 329 P.3d 180 (Cal.

2014), which reasoned that the FAAAA does not

preempt “laws of general application” that have an

“indirect” “effect” on motor carriers’ prices, routes, or

services—such as California’s traditional, multifactor worker-classification law that the ABC test

replaced. Id. at 189-90 (internal quotation marks

omitted); see Pet. App. 14a. Applying Pac Anchor, the

Court of Appeal explained that laws of general

applicability can be preempted only “if they have a

direct effect on carriers’ prices, routes, or services.”

Pet. App. 16a n.12. And because the ABC test is a

“law of general application,” the Court of Appeal found

California’s law not preempted because it does not

make it “impossible” for a motor carrier to contract

with an independent owner-operator, “even though”

the state law “may have some indirect effect on

[petitioners’] prices or services.” Id. at 16a-22a.

The California Supreme Court denied petitioners’

petition for review. Pet. App. 1a.

REASONS FOR GRANTING THE PETITION

Courts are sharply divided over whether the

FAAAA preempts generally applicable state workerclassification laws that have an effect on a motor

carrier’s prices and services by discouraging the use of

independent contractors. This creates a patchwork of

state laws that undermines Congress’s legislative

effort to achieve market-driven, nationwide

uniformity in this space. This Court should grant

review to resolve the lower courts’ disagreement and

clarify that the statute means what it says: State laws

relating to a motor carrier’s prices, routes, or services

are preempted.

THE LOWER COURTS ARE DEEPLY SPLIT

OVER AN IMPORTANT AND RECURRING

QUESTION OF FEDERAL LAW.

Federal courts of appeals and state courts of last

resort are deeply divided over whether generally

applicable state worker-classification laws are

preempted because they “relate[ ] to” a motor carrier’s

prices, routes, or services. 49 U.S.C. § 14501(c)(1).

Some courts hold that generally applicable

worker-classification laws are not preempted because

they do not have a direct effect on, or are several steps

removed from, prices, routes, or services. Other

courts, in contrast, hold that such laws are preempted

because they do have a direct effect on prices, routes,

or services, or because any effect triggers preemption.

The courts’ conflicting tests have led to opposite

outcomes with respect to ABC laws governing worker

classification, with materially identical statutes

preempted in some states but not others.

A. The Split Is Clear And Indisputable.

1. California courts, along with the Ninth

Circuit, the Seventh Circuit, and the Third Circuit,

hold that generally applicable worker-classification

laws are not preempted.

The California Supreme Court has held that the

FAAAA does not preempt “generally applicable”

worker-classification laws because they create only

“some indirect effect on” motor carriers’ prices, routes,

or services. Pac Anchor, 329 P.3d at 189-90 (internal

quotation marks omitted). The Court of Appeal relied

on Pac Anchor here, concluding that California’s ABC

law is not preempted because it does not have a “direct

effect” on a motor carrier’s prices, routes, or services.

Pet. App. 16a n.12; see id. at 17a, 22a.

The Ninth Circuit has similarly concluded that

California’s (pre-ABC test) worker-classification law

fits the category of “generally applicable background

regulations that are several steps removed from

prices, routes, or services,” and thus “not preempted,

even if the employers must factor those provisions into

their decisions about” prices, routes, or services. Cal.

Trucking Ass’n v. Su, 903 F.3d 953, 963 (9th Cir. 2018)

(quoting Dilts v. Penske Logistics, LLC, 769 F.3d 637,

646 (9th Cir. 2014)). The court reasoned that

“Congress did not intend to hinder States from

imposing normative policies on motor carriers as

employers.” Id. 4

The Ninth Circuit declined, in that case, to decide whether

the FAAAA would preempt California’s ABC test. 903 F.3d at

959 n.4.

The Seventh Circuit has held that a state ABC law

is not preempted because it has too tenuous a

connection with a motor carrier’s prices, routes, or

services. In Costello v. BeavEx, Inc., 810 F.3d 1045

(7th Cir. 2016), the court drew a “distinction” between

“generally applicable state laws that affect the

carrier’s relationship with its customers and those

that affect the carrier’s relationship with its

workforce.” Id. at 1054. Laws in the latter category

are “often too tenuously connected to” a motor

carrier’s prices, routes, or services to warrant

preemption. Id. Applying this standard, the Seventh

Circuit held that a state ABC law forcing motor

carriers to use “employees” for its same-day delivery

services was not preempted. Id. at 1050, 1056.

The Third Circuit also has held that a state

worker-classification law was not preempted because

it lacked a “direct,” “indirect,” or “significant” effect on

prices, routes, or services. Bedoya v. Am. Eagle

Express, Inc., 914 F.3d 812, 823 (3d Cir. 2019). The

court emphasized that the law was generally

applicable because it “applies to all businesses as part

of the backdrop they face in conducting their affairs,”

and Congress did not “mean to exempt workers from

receiving proper wages,” even if such wage laws have

“an incidental impact on carrier prices, routes, or

services.” Id. at 824, 826 (internal quotation marks

omitted).

2. The First Circuit and the Massachusetts

Supreme Judicial Court have reached the opposite

conclusion, holding that generally applicable workerclassification laws are preempted. Similarly, the

Rhode Island Supreme Court has held that the

FAAAA preempts generally applicable wage-and-hour

laws that indirectly affect prices, routes, or services.

The First Circuit has held that a state workerclassification law directly relates to, and has a direct

effect on, motor carriers’ prices, routes, or services. In

Massachusetts Delivery Association v. Coakley, 769

F.3d 11 (1st Cir. 2014), the district court had found

that the FAAAA did not preempt the state’s ABC

worker-classification test because it was a “generally

applicable wage law” whose application to motor

carriers had only “an indirect impact” on prices,

routes, and services—reasoning that mirrored the

decision below and the approaches taken by the

Ninth, Seventh, and Third Circuits. Id. at 21 (internal

quotation marks omitted). But the First Circuit

reversed, holding the district court’s “narrow[ ]”

reading of the FAAAA resulted in “critical errors.” Id.

at 17, 21. The court, “following Congress’s directive to

immunize motor carriers from state regulations that

threaten

unravel

Congress’s

purposeful

deregulation in this area,” confirmed that the “logical

effect” of a particular regulatory scheme “can be

sufficient even if indirect.” Id. at 21.

After a remand, the First Circuit held that the

FAAAA preempted the state’s ABC law because of its

direct and “tangible” effects on prices, routes, and

services. Schwann v. FedEx Ground Package Sys.,

Inc., 813 F.3d 429, 439-40 (1st Cir. 2016). The court

explained that the law made it “quite difficult” for

motor carriers such as FedEx to treat its last-mile

delivery drivers as independent contractors, and thus

the law “directly and substantially restrain[ed] the

free-market pursuit of perceived efficiencies and

competitive advantage,” “change[d] the manner in

which” FedEx delivered packages, and ran “counter”

to Congress’s directive to avoid a “patchwork of state

service-determining laws.” Id. at 438-39 (internal

quotation marks omitted).

The Massachusetts Supreme Judicial Court has

likewise held that the FAAAA preempts a generally

applicable worker-classification law. In Chambers v.

RDI Logistics, Inc., 65 N.E.3d 1 (Mass. 2016), the

court found that the state’s ABC law, as applied to

retail companies that hired independent contractors

to drive and deliver furniture, resulted in motor

carriers “adopt[ing] a different manner of providing

services from what they otherwise might choose.” Id.

at 9. The state law’s influence on who drives the

delivery

trucks—employees

independent

contractors—in turn “likely” would have a

“significant, if indirect, impact on motor carriers’

services” and, by “raising the costs of providing those

services,” on prices. Id.

The Rhode Island Supreme Court has similarly

held that “even an indirect effect by a state law of

general applicability is sufficient to meet the ‘related

to’ language in the preemption clause.” Brindle v. R.I.

Dep’t of Labor & Training, 211 A.3d 930, 935 (R.I.

2019).

The court then held that the Airline

Deregulation Act preempted a state labor law

requiring one-and-a-half pay on Sundays and holidays

because the state law “could impact or modify” the

airline’s services, such as flight frequency, customer

service, and staffing. Id. at 938. 5

3. Even the federal courts within California are

split over whether the FAAAA preempts California’s

ABC test. Two have reached the same conclusion as

the Court of Appeal below. Henry v. Cent. Freight

Although the state law at issue in Brindle was not a workerclassification law, it was substantively identical to workerclassification laws because it determined the compensation that

workers statewide were owed. See 211 A.3d at 931; R.I. Gen.

Stat. § 25-3-3(a).

Lines, Inc., 2019 WL 2465330, at *7 (E.D. Cal. June

13, 2019); W. States Trucking Ass’n v. Schoorl, 377 F.

Supp. 3d 1056, 1070 (E.D. Cal. 2019). Four have

reached the opposite conclusion, holding that the

FAAAA preempts California’s ABC test.

Cal.

Trucking Ass’n v. Becerra, 433 F. Supp. 3d 1154 (S.D.

Cal. 2020) (issuing injunction against enforcement of

ABC test), appeal pending, Nos. 20-55106, 20-55107

(9th Cir.); B&O Logistics, Inc. v. Cho, 2019 WL

2879876 (C.D. Cal. Apr. 15, 2019); Valadez v. CSX

Intermodal Terminals, Inc., 2019 WL 1975460 (N.D.

Cal. Mar. 15, 2019); Alvarez v. XPO Logistics Cartage

LLC, 2018 WL 6271965 (C.D. Cal. Nov. 15, 2018).

B. The Split Has Led Courts To Different

Conclusions As To The Same Statute.

The conflict and confusion in the lower courts has

led to an untenable situation: The same law is

preempted in some states but not in others. The ABC

tests in California, Massachusetts, and Illinois are

almost identical. Each provides that an individual

shall be an employee unless that worker is “free from

[the] control and direction” of the hiring entity,

performs work “outside the usual course of [the hiring

entity’s] business,” and is engaged in an

“independently established trade, occupation, . . . or

business.” See Cal. Labor Code § 2775(b)(1); Mass.

Gen. Laws ch. 149 § 148B(a); 820 Ill. Comp. Stat. Ann.

115/2. But the FAAAA has been applied differently to

these laws because of lower courts’ divergent tests for

preemption. The California and Illinois laws have

been held not preempted against motor carriers; the

Massachusetts law, in contrast, has been held

preempted and unenforceable against motor carriers.

Lower courts have recognized the split in

authority and expressly noted the need for this Court

to resolve it. “[T]he Supreme Court” has not “recited

precise standards for evaluating” the application of

the FAAAA to generally applicable workerclassification laws. Bedoya, 914 F.3d at 820. As a

result, “[e]xactly where the boundary lies between

permissible and impermissible state regulation is not

entirely clear.” Schwann, 813 F.3d at 437. As one

court recognized, there is irreconcilable “tension

with[in] the case law.” Echavarria v. Williams

Sonoma, Inc., 2016 WL 1047225, at *8 (D.N.J. Mar.

16, 2016) (contrasting the “First Circuit’s conclusion”

in Schwann with “other circuits”). Indeed, the

California Court of Appeal in this case acknowledged

parting ways with the First Circuit’s decision

regarding Massachusetts’ ABC test, “which contains

the same language as California’s ABC test.” Pet.

App. 13a n.10.

The split of authority calls out for this Court’s

intervention not only because lower courts disagree

about how to interpret and apply federal law, but also

because their disagreement creates a “patchwork” of

state laws that “is inconsistent with Congress’ major

legislative effort.” Rowe, 552 U.S. at 373. The courts’

divergent decisions regarding ABC workerclassification laws are imposing the very kind of

“problem[atic]” discrepancies in state law the FAAAA

is intended to prevent. H.R. Conf. Rep. No. 103-677,

at 87. Absent intervention from this Court, the split—

and the resulting patchwork of state laws—will

persist.

II. THE CALIFORNIA COURTS’ APPROACH TO

FAAAA PREEMPTION CANNOT BE

RECONCILED WITH THIS COURT’S DECISIONS.

This Court has explained that a state law is

“related to” a motor carrier’s prices, routes, or

services—and thus preempted—so long as it has “a

connection with, or reference to,” a motor carrier’s

prices, routes, or services. Rowe, 552 U.S. at 370

(quoting Morales, 504 U.S. at 384). As demonstrated

by Pac Anchor and the decision below, the California

courts have developed their own test for FAAAA

preemption, one that has no grounding in the

statutory text and is in substantial tension with

decisions of this Court.

A. The California Courts Have Relied On

Three Principles That Are In Tension

With This Court’s Decisions.

1. The California courts place substantial weight

on whether the state law is “generally applicable,”

applying a deferential standard of review. In Pac

Anchor, the California Supreme Court held that the

FAAAA does not preempt worker-classification laws

that “apply to all employers” absent exceptional

circumstances, such as a law outright dictating motor

carriers’ prices or services. Pac Anchor, 329 P.3d at

189-90; see also id. at 190 (“regulations of general

applicability are not preempted as applied under the

FAAAA”). The Court of Appeal faithfully followed

that teaching, repeatedly emphasizing that the ABC

statute was “generally applicable” in justifying its

preemption decision. See, e.g., Pet. App. 4a, 14a, 16a

& n.12.

This Court, however, has rejected the suggestion

that laws of general applicability are immune from

FAAAA preemption. The statute’s plain language is

clear: It preempts any state law “related to a price,

route, or service of any motor carrier.” 49 U.S.C.

§ 14501(c)(1). The “ordinary meaning of these words

is a broad one,” and if Congress had intended to

preempt only those state laws that expressly governed

prices, routes, or services, “it would have forbidden

the States to ‘regulate’” prices, routes, or services.

Morales, 504 U.S. at 383-85. Distinguishing between

generally applicable and targeted laws flatly “ignores

the sweep of the ‘relating to’ language” enacted by

Congress. Id. at 386.

Carving out “laws of general applicability” from

the FAAAA’s preemptive scope would also “creat[e] an

utterly irrational loophole,” because there is “little

reason why state impairment of the federal scheme

should be deemed acceptable so long as it is effected

by the particularized application of a general statute.”

Morales, 504 U.S. at 386. Indeed, Congress was

concerned that states would attempt to regulate

motor carriers’ prices, routes, or services through “the

guise of some form of unaffected regulatory

authority.” H.R. Conf. Rep. No. 103-677, at 84.

This Court has repeatedly held generally

applicable state laws preempted. See Northwest, Inc.

v. Ginsberg, 572 U.S. 273, 276 (2014) (claims for

breach of the implied covenant of good faith and fair

dealing preempted); Am. Airlines, Inc. v. Wolens, 513

U.S. 219, 227-28 (1995) (claims under a state’s

consumer-fraud and deceptive-business practices law

preempted); Morales, 504 U.S. at 383 (“general

consumer protection laws” preempted). In none of

these cases did the Court suggest it was subjecting the

state laws to a more deferential preemption inquiry.

2. The California courts also focus on whether

the state law’s effect on motor carriers’ prices, routes,

or services is direct or indirect. In Pac Anchor, the

California Supreme Court created a “direct effect”

requirement for generally applicable laws, holding

that

state

minimum

wage

and

employer

recordkeeping laws were not preempted because their

“effect on . . . prices, routes, or services . . . is indirect,

and thus falls outside the scope of the test set forth in

Morales.” 329 P.3d at 189. In this case, the Court of

Appeal followed Pac Anchor by concluding that a

generally applicable state law cannot be preempted

unless it has a “direct effect” on motor carriers’ prices,

routes, or services. Pet. App. 16a n.12; see also id. at

22a (no preemption unless state law “prohibits motor

carriers from using independent contractors or

otherwise directly affects motor carriers’ prices,

routes, or services” (emphasis added)).

Morales, of course, held the opposite.

The

California courts’ artificial distinction between direct

and indirect effects is what the dissent advocated in

Morales. In the dissent’s view, only state laws

“relate[d] directly to rates, routes, or services” should

be preempted, while state laws with an “indirect

connection with, or relationship to,” rates, routes, or

services should not be preempted. Morales, 504 U.S.

at 420-21 (Stevens, J., dissenting) (emphases added).

The majority disagreed, holding that a state law may

be preempted “even if the law is not specifically

designed to affect” rates, routes, or services, “or the

effect is only indirect.” Id. at 386 (majority opinion)

(internal quotation marks omitted).

The Court

concluded that the “general consumer protection

laws” at issue had a “significant impact” on airlines’

ability to market their product, “and hence a

significant impact upon the fares they charge.” Id. at

390. The laws’ indirect, one-step-removed effect on

prices was sufficient to trigger preemption. Id.

In Rowe, 552 U.S. at 370, this Court reaffirmed

Morales’s rejection of the distinction between direct

and indirect effects, confirming that the FAAAA

preempts state laws relating to a motor carrier’s

prices, routes, or services “even if a state law’s

effect . . . is only indirect.” This Court has since

affirmed yet again that the “phrase ‘related

to’ . . . embraces state laws having a connection with

or reference to carrier rates, routes, or services,

whether directly or indirectly.” Dan’s City Used Cars,

Inc. v. Pelkey, 569 U.S. 251, 260 (2013) (internal

quotation marks omitted) (emphasis added).

3. The California courts ask whether the state

law makes it “impossible” for motor carriers to use

independent contractors. Pet. App. 14a, 21a; see Pac

Anchor, 329 P.3d at 189 (“Nothing in the People’s

[Unfair Competition Law] action would prevent

defendants from using independent contractors.”

(emphasis added)). If the statute “is not one that

prohibits motor carriers from using independent

contractors,” the court below held, it “therefore[ ] does

not have an impermissible effect on prices, routes, or

services.” Pet. App. 18a.

This Court, however, has held that FAAAA

preemption does not require that state law “compel[ ]

or restrict[ ]” a motor carrier from taking certain

actions, such as advertising in a particular way.

Morales, 504 U.S. at 389 (emphases added). Nor does

the FAAAA preempt states laws only if they “force

[motor carriers] to adopt or change” their prices,

routes, or services. Ginsberg, 572 U.S. at 279

(emphasis added) (quoting and rejecting the Ninth

Circuit’s test in Ginsberg v. Northwest, Inc., 695 F.3d

873, 880 (9th Cir. 2012)). Instead, the FAAAA

prevents states from “curtail[ing]” a motor carrier’s

ability to set prices, routes, and services as the free

market allows. Morales, 504 U.S. at 389.

The California courts’ “impossibility” standard

would save from preemption one of the very laws that

led Congress to enact the FAAAA preemption

provision. The 1993 law enacted by the California

Legislature discouraged but did not prohibit the use

of independent contractors; it denied rate-regulation

exemptions to motor carriers that paid independent

contractors more than 10 percent of the carrier’s

intrastate revenue. Cal. Pub. Utils. Code § 4128.5

(1993). Congress singled out that law as one that

would be preempted by the FAAAA, see H.R. Conf.

Rep. No. 103-677, at 88, but under the approach taken

by the California courts, the law would survive.

B. The FAAAA Preempts California’s ABC

Test.

California’s ABC test is preempted because it has

an impermissible “connection with” motor carriers’

prices, routes, and services. Rowe, 552 U.S. at 371

(quoting Morales, 504 U.S. at 384). Motor carriers

such as petitioners have been contracting with

independent owner-operators for nearly a century.

And a motor carrier’s decision to provide services with

one’s own employee, or to procure the services of an

independent owner-operator, is one of the “essential

details of a motor carrier’s system for picking up,

sorting, and carrying goods.” Id. at 373; see R. Mayor

of Atlanta, Inc. v. City of Atlanta, 158 F.3d 538, 545

(11th Cir. 1998) (holding that the FAAAA preempted

state towing laws “limit[ing] who is permitted to

provide the [towing] services”), abrogated on other

grounds by City of Columbus v. Ours Garage &

Wrecker Serv., Inc., 536 U.S. 424 (2002).

California’s ABC test makes it exceedingly

difficult (quite likely impossible) for motor carriers to

hire independent owner-operators because, by

definition, a truck driver does not perform “work that

is outside the usual course of the [motor carrier’s]

business.” Cal. Labor Code § 2775(b)(1)(B). This

thumb on the scale “curtail[s]” a motor carrier’s ability

to contract with independent owner-operators, as they

have for decades. Morales, 504 U.S. at 389.

The business-to-business exemption that “further

supported” the lower court’s decision, Pet. App. 18a, is

of no support at all. At minimum, it requires motor

carriers that have historically contracted with an

individual owner-operator (call him Joe Trucker) to

instead contract only with formalized business

entities (e.g., Joe Trucker, Inc.) that satisfy a host of

statutory controls. See Cal. Labor Code § 2776(a)(1)(12). 6 Accordingly, the “effect” of California’s law is

that carriers will make hiring decisions that “differ

significantly from those that, in the absence of the

[law], the market might dictate.” Rowe, 552 U.S. at

372.

California’s ABC test also relates to prices

because, as an “economic matter,” it has a “tangible

It is far from clear that motor carriers could ever invoke the

business-to-business exemption successfully.

Whether an

individual truck driver has met all of the exemption’s dozen

requirements—forming a business, finding a business location,

advertising to the public—is beyond the motor carrier’s control.

Tellingly, California’s Attorney General has never taken the

position that the exemption could apply to motor carriers. See

Cal. Trucking Ass’n, 433 F. Supp. 3d at 1169. But even if the

exemption could apply to certain drivers, it would still change

the current “system of services” used by motor carriers, Rowe,

552 U.S. at 372, and its maze of controls still “curtail[s]” a motor

carrier’s ability to hire drivers according to prevailing market

forces, Morales, 504 U.S. at 389; see Statement by President

Clinton Upon Signing H.R. 2739 (Aug. 23, 1994) (“State

regulation preempted under [the FAAAA] takes the form of

controls on who can enter the trucking industry” (emphasis

added)).

effect” on prices. Morales, 504 U.S. at 388. State laws

that influence inputs that in turn affect prices are

preempted. In Ginsberg, for example, a generally

applicable state-law claim against an airline’s

termination

the

plaintiff’s

frequent-flyer

membership had a “connection with” the airline’s

prices because terminating the membership affected

mileage credits, which in turn affected ticket prices.

572 U.S. at 284. Here, it is beyond cavil that motor

carriers hiring employees instead of independent

owner-operators must incur substantial additional

labor costs. See Schwann, 813 F.3d at 439; Chambers,

65 N.E.3d at 9. And the trial court found that motor

carriers must pay nearly three times the rate to

organized businesses than to independent owneroperators to transport cargo over the same route. Pet.

App. 54a. Because the ABC test influences motor

carriers’ inputs (per-route costs), which in turn affect

the outputs (prices), it is preempted.

California’s ABC test would “undo federal

deregulation with regulation of [its] own.” Rowe, 552

U.S. at 368 (internal quotation marks omitted). Left

unreviewed, the decision below would let stand an

application of a worker-classification law that “has a

significant and adverse impact in respect to the

[FAAAA]’s ability to achieve its preemption-related

objectives.” Id. at 368, 371-72 (internal quotation

marks omitted). Applied to motor carriers, it creates

“the kind of state-mandated regulation that the

federal Act preempts,” instead of leaving motor

carriers’ hiring decisions “to the competitive

marketplace.” Id. at 373. Moreover, “[t]o allow

[California] to insist that the carriers [hire employees]

would allow other States to do the same,” creating a

“regulatory patchwork” that “is inconsistent with

Congress’ major legislative effort.” Id.

III. THIS CASE PRESENTS A CRITICALLY

IMPORTANT LEGAL ISSUE WITH SWEEPING

COMMERCIAL RAMIFICATIONS.

A. The decision below has broad ramifications for

motor carriers. California’s ABC test upends their

decades-long business model in the most populous

state in the nation, undermining their ability to

operate efficiently and effectively within the state and

across the country as Congress intended. If the

decision below stands, some companies may increase

their existing staff of employee drivers, but others

may be forced to dramatically decrease their

operations or leave the industry entirely because

trucking involves fluctuating demand that makes

relying on a fleet of employees impracticable. And

absent this Court’s intervention, the decision below

will stand. The Court of Appeal’s ruling is binding on

the state’s trial courts, and California lower courts

view the California Supreme Court’s Pac Anchor

decision as “compel[ling]” the answer that the FAAAA

does not preempt the ABC test. Pet. App. 14a; accord

Parada v. E. Coast Transp. Inc., __ Cal. Rptr. 3d __,

2021 WL 1222007, at *6 (Cal. Ct. App. Mar. 26, 2021)

(agreeing with the decision below “that Pac Anchor is

‘dispositive’ on the question whether the FAAAA

preempts a claim against a motor carrier seeking to

enforce the ABC test”). Because the California

Supreme Court ordered the Court of Appeal to review

the Superior Court’s decision below and then denied

review when the Court of Appeal found Pac Anchor

dispositive, the issue is unlikely to ever reach the

California Supreme Court again.

As a result of the California courts’ rulings, motor

carriers are unable to “conduct a standard way of

doing business” nationwide as Congress promised.

H.R. Conf. Rep. No. 103-677, at 87. As they transport

goods from state to state, motor carriers will make

decisions about who drives their trucks not by

“competitive market forces,” but rather by each state’s

“own governmental commands.” Rowe, 552 U.S. at

372 (internal quotation marks omitted). If a federally

licensed motor carrier were to hire an independent

owner-operator in Massachusetts to transport goods

cross-country, the motor carrier would have to swap

out its driver in Illinois or California and put an

employee behind the wheel.

The nation’s approximately 352,000 individual

truckers will also be plunged into a state of

uncertainty. See Jennifer Cheeseman Day & Andrew

W. Hait, America Keeps on Truckin’, U.S. Census

Bureau (June 6, 2019), https://bit.ly/3tO3qbq.

Independent truckers within California who own their

own trucks will be forced to become employees of a

single motor carrier and may be required to give up

ownership of their personal fleet of trucks, in addition

to giving up their freedom and flexibility.

Independent truckers from other states will be

unsure, every time they cross into an ABC-test

jurisdiction, whether they may continue to work as an

independent owner-operator.

These “variations

between State requirements” pose “undue problems

for the independent owner-operators,” and in turn

“affect[] the movement of goods and the price the

consumer pays at the store.” H.R. Rep. No. 95-1812,

at 12.

Because

the

Airline

Deregulation

Act’s

preemption provision is identical to the FAAAA’s, see

Morales, 504 U.S. at 386, the lower court’s decision

casts a pall of uncertainty over the airlines as well.

Given the many industries, workers, and levels of

government at play, whether and how federal law

preempts “the nature and scope of [state]

misclassification” laws is “among the most critical

issues

confronting

contemporary

labor

and

employment law.” Scott L. Cummings & Emma

Curran Donnelly Hulse, Preemption as a Tool of

Misclassification, 66 UCLA L. Rev. 1872, 1904 (2019).

B. This case is an ideal vehicle to resolve the

question presented. The Court of Appeal squarely

decided the issue and recognized in doing so that it

was diverging from other courts. See Pet. App. 13a

n.10 (acknowledging that “[t]he First Circuit held

prong B of Massachusetts’ ABC test (which contains

the same language as California’s ABC test) is

preempted by the FAAAA”).

There is no impediment to reviewing the decision

below. “[T]he federal questions that could come

here . . . have been adjudicated by the State court,”

and will require decision no matter what happens

next in the state courts following this appeal. Radio

Station WOW v. Johnson, 326 U.S. 120, 127 (1945).

Following this appeal, the City will seek to adjudicate

under the state ABC test the worker classification of

hundreds of owner-operators contracting with

petitioners. Pet. App. 6a-7a. And there is no question

how that inquiry will end for the many owneroperators who cannot hope to, or have not tried to,

satisfy

the

ABC

test’s

business-to-business

exemption—as to those owner-operators, the lower

court’s decision that the FAAAA does not preempt the

ABC test will dictate their classification as

petitioners’ employees. Because those workers cannot

meet the ABC test and their only defense is federal

preemption, “[n]othing that could happen in the

course of the” proceedings to come, “short of

settlement of the case, would foreclose or make

unnecessary decision on the federal question.” Cox

Broad. Corp. v. Cohn, 420 U.S. 469, 480 (1975).

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

Christopher D. Dusseault

Michele L. Maryott

Dhananjay S. Manthripragada

Thomas F. Cochrane

Brian Yang

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7000

Joshua S. Lipshutz

Counsel of Record

Thomas H. Dupree Jr.

Aaron Smith

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

JLipshutz@gibsondunn.com

Christopher C. McNatt, Jr.

SCOPELITIS, GARVIN, LIGHT,

HANSON & FEARY, LLP

2 North Lake Avenue, Suite 560

Pasadena, CA 91101

(626) 345-5020

Counsel for petitioners

April 13, 2021

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.