Petition for Writ of Certiorari — California Trucking Association, Inc., et al., Petitioners v. Rob Bonta, Attorney General of California, et al.

APPENDICES

1a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 20-55106

CALIFORNIA TRUCKING ASSOCIATION;

et al.,

Plaintiffs-Appellees,

v.

ROBERT ANDRES BONTA, Esquire, in his

official capacity as the Attorney General of the State

of California; et al.,

Defendants-Appellants,

and

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS,

Intervenor-Defendant

D.C. No. 3:18-cv-02458-BEN-BLM

Southern District of California, San Diego

Appeal from the United States District Court

for the Southern District of California

Roger T. Benitez, District Judge, Presiding

Argued and Submitted September 1, 2020

Pasadena, California

Filed April 28, 2021

Before: Sandra S. Ikuta and Mark J. Bennett, Circuit

Judges, and Douglas P. Woodlock, District Judge.

Opinion by Judge Ikuta;

Dissent by Judge Bennett

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OPINION

IKUTA, Circuit Judge:

The Federal Aviation Administration Authorization Act of 1994 (F4A or FAAAA) preempts any state

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). California’s Assembly

Bill 5 (AB-5) codified a judge-made test (referred to as

the “ABC test”) for classifying workers as either employees or independent contractors. This appeal raises

the question whether application of AB-5 to motor carriers is preempted by the F4A. Because AB-5 is a generally applicable labor law that affects a motor carrier’s relationship with its workforce and does not

bind, compel, or otherwise freeze into place the prices,

routes, or services of motor carriers, we conclude that

it is not preempted by the F4A. See, e.g., Dilts v.

Penske Logistics, LLC, 769 F.3d 637, 647 (9th Cir.

2014).

I

We first provide the context for this challenge. Before 2018, the California Supreme Court’s framework

for classifying workers as either employees or independent contractors was set forth in S.G. Borello

Sons, Inc. v. Department of Industrial Relations, 48

Cal. 3d 341 (1989). Borello set out indicia of an employer-employee relationship as opposed to an independent-contractor relationship. Id. at 350-51. The indicia included “the right to control work,” “the right to

discharge at will, without cause,” and, most important

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here, “whether or not the work is a part of the regular

business of the principal.” Id.1

Almost thirty years after Borello, the California

Supreme Court revisited the framework for classifying workers as employees or independent contractors

for purposes of California’s Industrial Welfare Commission (IWC) Wage Orders.2 See Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903, 912, 957

(2018). Dynamex adopted a standard commonly referred to as the “ABC” test. Id. at 957. Under Prong B

of that test, a worker is presumed to be an employee

and may be classified as an independent contractor

only if “the worker performs work that is outside the

1 The other indicia are:

(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with

reference to whether, in the locality, the work is usually done

under the direction of the principal or by a specialist without

supervision; (c) the skill required in the particular occupation;

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing

the work; (e) the length of time for which the services are to

be performed; (f) the method of payment, whether by the time

or by the job; …. and (h) whether or not the parties believe

they are creating the relationship of employer-employee.

Borello, 48 Cal. 3d at 351.

2 As explained in Dynamex, California’s IWC Wage Orders “are

constitutionally-authorized, quasi-legislative regulations that

have the force of law” and “impose obligations relating to minimum wages, maximum hours, and a limited number of very basic

working conditions (such as minimally required meal and rest

breaks) of California employees.” Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903, 913-14 & n.3 (2018).

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usual course of the hiring entity’s business.” Id.3 The

ABC test was thus significantly different from the Borello test: while Borello considered “whether or not the

work is a part of the regular business of the principal”

as only one factor in the classification analysis, 48 Cal.

3d at 351, the ABC test presumed a worker was an

employee unless the worker met that condition, Dynamex, 4 Cal. 5th at 957.

In September 2019, the California legislature enacted AB-5, which codified the ABC test and expanded

its applicability. See Cal. Lab. Code § 2775.4 The statutory text of AB-5 classifies certain workers as employees, stating that a person “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

3 In full, the ABC test as enunciated by Dynamex provides that

workers are presumed to be employees unless each of the following conditions is met:

(A) that the worker is free from the control and direction of

the hiring entity in connection with the performance of the

work ... ; and (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 of the same nature

as the work performed [for the hiring entity].

Id. at 957.

4 AB-5 was originally codified at section 2750.3 of the California

Labor Code. Section 2750.3 was repealed effective September 4,

2020, and the ABC test is currently codified at section 2775 of

the California Labor Code. Cal. Lab. Code § 2775(b)(1)(A)—(C).

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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.

Id. § 2775(b)(1)(A)—(C).

AB-5 exempts certain occupations and services.

Id. § 2778. It also contains a number of exemptions,

including a “business-to-business” exception, which

exempts any “business service provider” that meets

several requirements. Id. § 2776(a).5 If an exemption

from AB-5 applies, then the Borello test controls the

classification of workers as employees or independent

contractors. Id. §§ 2775(b)(3), 2776(a), 2778(a).

California Trucking Association (CTA) is a trade

association representing motor carriers that hire independent contractors who own their own trucks (referred to as “independent owner-operators”) to

transport property throughout California. The change

from the Borello test to Dynamex and then to AB-5

concerned CTA. It viewed the new rule statutorily

classifying a worker as an employee unless the hiring

5 In September 2020, the California legislature revised some of

AB-5’s exemptions and created additional exemptions. See Assembly Bill 2257 (AB-2257); Cal. Lab. Code §§ 2775-2787. California voters added further exemptions by adopting Proposition

22 in November 2020. Proposition 22 provides that app-based

drivers (drivers who provide delivery and transportation services

in personal vehicles through a business’s online application or

platform) are independent contractors if certain conditions are

met. See Cal. Bus. & Prof. Code § 7451 (codifying Proposition 22).

Neither AB-2257 nor Proposition 22 changed the portion of AB5 that set forth the ABC test itself.

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entity demonstrates that the worker performs “work

that is outside the usual course of the hiring entity’s

business,” id. § 2775(b)(1)(B), as effectively precluding

the business model employed by CTA’s members. Cf.

Scott L. Cummings & Emma Curran Donnelly Hulse,

Preemption As A Tool of Misclassification, 66 UCLA

L. Rev. 1872, 1880 (2019).

A

In October 2018, after Dynamex was decided,

CTA, along with Ravinder Singh and Thomas Odom,

two independent owner-operators (the plaintiffs), filed

this lawsuit against Xavier Becerra, the Attorney

General of California; Julie Su, Secretary of the California Labor Workforce; and several other California

officials (collectively referred to as “California” or “the

state”), seeking a declaration that the F4A preempted

the ABC test as applied to motor carriers. The district

court allowed the International Brotherhood of Teamsters (IBT), a labor union that represents owner-operators classified as employees, to intervene. Dist Ct.

Dkt. No. 31. In February 2019, IBT and California

filed motions to dismiss. Dist. Ct. Dkt. No. 28, 29.

On September 24, 2019, about a week after the

California legislature enacted AB-5, the district court

dismissed CTA’s amended complaint with leave to

amend, explaining that it was unclear whether the state

would enforce Dynamex now that AB-5 had been enacted.

On November 12, 2019, the plaintiffs filed the now-operative Second Amended Complaint, raising their challenge

that the F4A preempts AB-5, and moved to enjoin its enforcement.

The district court held that CTA had standing and

was likely to succeed on the merits of its claim. It

therefore enjoined the state from enforcing AB-5

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against any motor carrier doing business in California. The state and IBT timely appealed.

B

The district court had jurisdiction under 28 U.S.C.

§ 1331. We have jurisdiction under 28 U.S.C.

§ 1292(a)(1). We review de novo whether CTA has

standing. Taylor v. Westly, 488 F.3d 1197, 1199 (9th

Cir. 2007). We review for an abuse of discretion the

district court’s grant of a preliminary injunction. Am.

Trucking Ass’ns, Inc. v. City of Los Angeles, 559 F.3d

1046, 1052 (9th Cir. 2009). “A preliminary injunction

is an extraordinary remedy never awarded as of

right.” Winter v. Nat. Res. Def Council, Inc., 555 U.S.

7, 24 (2008). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the

merits, that he is likely to suffer irreparable harm in

the absence of preliminary relief, that the balance of

equities tips in his favor, and that an injunction is in

the public interest.” Id. at 20.6 A district court abuses

its discretion when it “base[s] its decision on an erroneous legal standard.” Puente Arizona v. Arpaio, 821 F.3d

1098, 1103 (9th Cir. 2016) (citation omitted). Thus, the

district court’s “legal conclusions, such as whether a

statute is preempted, are reviewed de novo.” Id.

II

Before reaching the merits, we must determine

whether any plaintiff has standing to bring this pre6 In our circuit, “serious questions going to the merits,” as well as

“a balance of hardships that tips sharply towards the plaintiff

can support issuance of a preliminary injunction, so long as the

plaintiff also shows that there is a likelihood of irreparable injury

and that the injunction is in the public interest.” All. for the Wild

Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (citation

omitted).

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enforcement challenge. We focus on the associational

standing of CTA.7 To have standing, CTA must allege

“a case or controversy within the meaning of Art. III

of the Constitution,” and not just “abstract questions

not currently justiciable by a federal court.” Babbitt v.

United Farm Workers Nat’l Union, 442 U.S. 289, 297

(1979). There needs to be “a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement.” Id. at 298. We have listed

three factors for evaluating “the genuineness of a

claimed threat of prosecution”: “[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 or enforcement under the challenged statute.” Thomas v. Anchorage Equal Rights Comm’n, 220

F.3d 1134, 1139 (9th Cir. 2000). “At this very preliminary stage, plaintiffs may rely on the allegations in

their Complaint and whatever other evidence they

submitted in support of their preliminary-injunction

motion to meet their burden” of demonstrating Article

III standing. City & County of San Francisco v. U.S.

Citizenship Immigr. Servs., 944 F.3d 773, 787 (9th

Cir. 2019) (cleaned up).

An association has standing if “(1) its individual members

would have standing in their own right, (2) the interests at stake

in the litigation are germane to the organization’s purposes, and

(3) the case may be litigated without participation by individual

members of the association.” Airline Serv. Providers Ass’n v. L.A.

World Airports, 873 F.3d 1074,1078 (9th Cir. 2017). So long as

standing can be shown for one plaintiff, we need not consider the

standing of the other plaintiffs. See Watt v. Energy Action Educ.

Found., 454 U.S. 151,160 (1981). We note that the parties dispute only whether CTA’s members would have standing in their

own right.

7

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Applying these factors, we conclude that CTA has

standing to bring this complaint. Based on the allegations in its complaint, CTA and its members have

“demonstrated that their policies are presently in conflict with” the challenged provision, City & County of

San Francisco v. Trump, 897 F.3d 1225, 1237 (9th Cir.

2018), and they have a concrete plan to violate AB-5.

The complaint alleges that CTA and its members currently contract with independent owner-operators, rather than employees. CTA alleges that this is permissible under the Borello test but not under AB-5. The

complaint further alleges that AB-5 requires CTA to

terminate its independent-contractor arrangements

and instead hire only employees, which (according to

CTA) would require “an immediate and significant

change in the plaintiffs’ conduct of their affairs.” Abbott Lab’ys v. Gardner, 387 U.S. 136, 153 (1967).

CTA’s members are continuing with their current

business practices, and thus CTA alleges that if not

for the district court’s injunction, its members would

be in violation of AB-5. Because CTA’s members are

maintaining policies that “are presently in conflict

with” AB-5, according to the allegations in the complaint, they are deemed to have articulated a concrete

plan to violate it. See Trump, 897 F.3d at 1237.

Second, CTA has established that there is a threat

to initiate proceedings against its members. Here, the

state’s refusal to disavow enforcement of AB-5 against

motor carriers during this litigation is strong evidence

that the state intends to enforce the law and that

CTA’s members face a credible threat. See LSO, Ltd.

v. Stroh, 205 F.3d 1146, 1154-56 (9th Cir. 2000) (holding that “the Government’s failure to disavow application of the challenged provision [is] a factor in favor of

a finding of standing”). Plaintiffs are also deemed to

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have established that there is a realistic threat to initiate proceedings against them if the government has

declared its “intention to enforce” the new law. Pierce

v. Soc’y of the Sisters of the Holy Names of Jesus &

Mary, 268 U.S. 510, 533 (1925). In this case, the state

has notified the regulated community that it intends

to enforce AB-5. On December 13, 2019, several weeks

before AB-5 took effect, the state sent letters to businesses notifying them that, under AB-5, the ABC test

“must be used to determine the appropriate classification of workers in most occupations.” And after AB-5

took effect, California began “moving aggressively to

enforce” it. Carolyn Siad, AB5 Gig Law Enforced: California Sues Uber and Lyft to Make Drivers Employees, San Francisco Chronicle (May 5, 2020). The state

has commenced a number of prosecutions against

companies for misclassifying workers under AB-5.

See, e.g., Complaint, People v. Uber Techs., Inc., No.

CGC-20-584402 (Cal. Super. May 5, 2020).

As to the history of enforcement, this factor has

“little weight” when the challenged law is “relatively

new and the record contains little information as to

enforcement or interpretation.” Wolfson v. Brammer,

616 F.3d 1045, 1060 (9th Cir. 2010). CTA filed its operative complaint several weeks before AB-5’s effective date, and thus it was not possible for the state to

have enforced AB-5 before that date. See Sacks v. Off. of

Foreign Assets Control, 466 F.3d 764, 774 (9th Cir. 2006)

(explaining that standing is determined “as of the date

the complaint was filed”). Nonetheless, in September

2019, before AB-5 became effective and before CTA filed

its operative complaint, the state sued Instacart and

sought civil penalties based on allegations that Instacart

misclassified its workers under Dynamex. See Complaint, State v. Maplebear Inc. et al., No. 37-201900048731-CU-MC-CTL (Cal. Super. Ct. Sept. 13, 2019).

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Given that AB-5 codified Dynamex’s ruling regarding

the ABC test, this “history of past enforcement against

parties similarly situated to the plaintiffs cuts in favor

of a conclusion that a threat is specific and credible.”

Lopez v. Candaele, 630 F.3d 775, 786-87 (9th Cir. 2010).

Because our three-factor test, as applied to the enactment of a new law, establishes that the plaintiffs

face “a realistic danger of sustaining a direct injury as

a result of the statute’s operation or enforcement,”

Babbitt, 442 U.S. at 298, we hold that CTA and its

members have standing to bring this complaint.

III

We next consider whether the district court

abused its discretion by enjoining the state from enforcing AB-5 against motor carriers doing business in

California on the ground that such enforcement is

preempted by the F4A.

A

The Supremacy Clause of the United States Constitution provides that federal law “shall be the supreme Law of the Land; and the Judges in every State

shall be bound thereby, any Thing in the Constitution

or Laws of any State to the Contrary notwithstanding.” U.S. Const. art. VI, cl. 2. Thus, if a state law “conflicts with, or frustrates, federal law, the former must

give way.” CSX Transp., Inc. v. Easterwood, 507 U.S.

658, 663 (1993). When a federal statute like the F4A

contains an express preemption clause, “the task of

statutory construction must in the first instance focus

on the plain wording of the clause, which necessarily

contains the best evidence of Congress’ pre-emptive

intent.” Id. at 664. In focusing on congressional intent,

we take into account “the presumption that Congress

does not intend to supplant state law, particularly in

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areas of traditional state regulation.” Miller v. C.H.

Robinson Worldwide, Inc., 976 F.3d 1016, 1021 (9th

Cir. 2020) (cleaned up). “We therefore presume that

Congress has not preempted the historic police powers

of the States unless that was the clear and manifest

purpose of Congress.” Id. (cleaned up).

We begin with the plain language of the statute.

The F4A expressly preempts any state 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). In interpreting these words, and thus

determining the F4A’s preemptive scope, we are

bound by a long line of precedent that requires us,

among other things, to consider “Congress’ deregulatory and pre-emption-related objectives” in enacting

the F4A. Rowe v. N.H. Motor Transp. Ass’n, 552 U.S.

364, 371 (2008). Therefore, we begin by providing the

relevant historical and interpretive background.

Before 1978, the trucking and airline industries

were extensively regulated. See Morales v. Trans

World Airlines, Inc., 504 U.S. 374, 378 (1992). In 1978,

Congress concluded that “maximum reliance on competitive market forces” would favor lower airline fares

and better airline service, and it enacted the Airline

Deregulation Act (ADA). Id. (citation omitted). To preclude states from eliminating the benefits of increased

competition by imposing their own regulations on the

airlines, the ADA included a preemption provision

“prohibiting States from enacting or enforcing any law

related to rates, routes, or services of any air carrier.”

Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 256

(2013) (citation omitted).

Congress then focused its deregulatory efforts on

the trucking industry. It engaged in a two-step process. First, Congress enacted the Motor Carrier Act of

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1980 (MCA), which extended federal deregulation to

the trucking industry but “explicitly preserved state

authority to regulate intrastate trucking.” Jill E.

Fisch, How Do Corporations Play Politics?: The Fedex

Story, 58 Vand. L. Rev. 1495, 1528-29 (2005). For this

reason, state economic regulation of trucking continued to be a “huge problem for national and regional

carriers attempting to conduct a standard way of doing business.” City of Columbus v. Ours Garage

Wrecker Serv., Inc., 536 U.S. 424, 440 (1994) (citation

omitted). For instance, although the ADA preempted

state regulation of FedEx’s trucking operations because FedEx was organized as an air carrier, Fed.

Exp. Corp. v. Cal. Pub. Utilities Comm’n, 936 F.2d

1075, 1078-79 (9th Cir. 1991), many of FedEx’s competitors, which were organized as motor carriers, did

not receive similar protection from state regulation.

In 1994, Congress enacted the F4A, which

preempted state authority to regulate intrastate

trucking and created a level playing field so that all

companies using motor carriers and air carriers received the same protections, regardless of how they

were organized. See H.R. Conf. Rep. No. 103-677, at 87

(1994). Adopting language from the ADA’s preemption

clause, the F4A states: “[A] State…. may not enact or

enforce a 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); see also id.

§ 41713(b)(4)(A) (similar provision for combined motor/air carriers).

Because the F4A uses “text nearly identical” to the

ADA’s, we have held that analysis of the ADA’s

preemption clause “is instructive for our FAAAA analysis as well.” Dilts, 769 F.3d at 644. There is one difference between the preemption provisions of the ADA

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and the F4A, however: the latter “contains one conspicuous alteration the addition of the words ‘with respect to the transportation of property,’” a phrase that

“massively limits the scope of preemption ordered by

the FAAAA” compared to the ADA. Dan’s City, 569

U.S. at 261 (cleaned up).8 In sum, the state law at issue is preempted to the extent it relates to the price,

route, or service of a motor carrier in its operations

involving the transportation of property.

B

The interpretation of the words “related to a price,

route, or service of any motor carrier” likewise has a

long history. The Supreme Court first interpreted

similar language in the ADA’s express preemption

provision in Morales v. Trans World Airlines. Morales

held that the ADA preempts states from enforcing

guidelines related to how airlines may advertise fares.

504 U.S. at 391. Morales reached this conclusion because the guidelines established “binding requirements as to how tickets may be marketed.” Id. at 388.

In interpreting “related to,” which is the “key phrase”

in the preemption provision, Morales stated that “the

ordinary meaning of these words is a broad one—‘to

stand in some relation; to have bearing or concern; to

pertain; refer; to bring into association with or connection with’—and the words thus express a broad preemptive purpose.” Id. at 383 (quoting Black’s Law Dictionary 1158 (5th ed. 1979)). For this reason, Morales

8 The Supreme Court has suggested that this additional limiting

language means that the F4A preempts “only laws, regulations,

and other provisions that single out for special treatment motor

carriers of property.” Ours Garage, 536 U.S. at 449 (Scalia, J.,

dissenting) (cleaned up); see also Dan’s City, 569 U.S. at 261 & n.

4 (agreeing with the Ours Garage dissent’s characterization of

the F4A).

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rejected the argument that “only state laws specifically addressed to the airline industry are preempted, whereas the ADA imposes no constraints on

laws of general applicability.” Id. at 386. According to

the Court, such a construction would create “an utterly irrational loophole” and “ignores the sweep of the

‘relating to’ language.” Id. Nevertheless, Morales

acknowledged that “state actions may affect airline

fares in too tenuous, remote, or peripheral a manner

to have pre-emptive effect.” Id. at 390 (cleaned up).

In subsequent cases, the Supreme Court refined

its interpretation of “related to.” As the Court has explained, “the breadth of the words ‘related to’ does not

mean the sky is the limit.” Dan’s City, 569 U.S. at 260.

A court cannot take an uncritically literal reading of

“related to,” otherwise “for all practical purposes preemption would never run its course.” Id. Perhaps the

author of Morales said it best: “applying the ‘relate to’

provision according to its terms was a project doomed

to failure, since, as many a curbstone philosopher has

observed, everything is related to everything else.”

Cal. Div. of Lab. Standards Enf’t v. Dillingham

Const., NA., Inc., 519 U.S. 316, 335 (1997) (Scalia, J.,

concurring). Further, the “related to” language “provides an illusory test, unless the Court is willing to

decree a degree of pre-emption that no sensible person

could have intended—which it is not.” Id. at 335-36.

In this vein, the Supreme Court’s decisions about F4A

preemption after Morales have tended to construe the

F4A narrowly, holding, for instance, that a state law

is “related to” prices, routes, and services if it “aim[s]

directly at the carriage of goods” and requires motor

carriers “to offer a system of services that the market

does not now provide,” or “freeze[s] into place services

that carriers might prefer to discontinue in the future.” Rowe, 552 U.S. at 372, 376.

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In light of this guidance, we have attempted to

“draw a line between laws that are significantly related to rates, routes, or services, even indirectly, and

thus are preempted, and those that have only a tenuous, remote, or peripheral connection to rates, routes,

or services, and thus are not preempted.” Dilts, 769

F.3d at 643 (citation omitted). A law’s general applicability, while not dispositive, “will likely influence

whether the effect on prices, routes, and services is

tenuous or significant.” Cal. Trucking Ass’n v. Su, 903

F.3d 953, 966 (9th Cir. 2018), cert. denied, 139 S. Ct.

1331 (2019). “What matters is not solely that the law

is generally applicable, but where in the chain of a motor carrier’s business it is acting to compel a certain

result… and what result it is compelling.” Id.

When a generally applicable law compels a motor

carrier to a certain result in its relationship with consumers, such as requiring a motor carrier “to offer a

system of services that the market does not provide”

or that “would freeze into place services that carriers

might prefer to discontinue in the future,” and “that

the market would not otherwise provide,” the law’s effect is more likely to be significantly related to rates,

routes or services. Dilts, 769 F.3d at 645-46 (citation

omitted). Such a law may be preempted because it “directly or indirectly, binds the carrier to a particular

price, route or service and thereby interferes with the

competitive market forces within the industry.” Id. at

646 (citation omitted). Similarly, a state’s common

law rule may be preempted if it “otherwise regulate[s]” prices, routes, and services by impacting the

motor carrier’s relationship with its customers. Miller, 976 F.3d at 1025 (emphasis omitted) (citing Dilts,

769 F.3d at 647). For instance, a negligence claim that

seeks to hold a broker (or motor carrier) liable at the

point at which it provides a service to its customers is

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directly (and significantly) related to rates, routes or

services, and thus preempted. Id. at 1024.

By contrast, laws of general applicability that affect a motor carrier’s relationship with its workforce,

and compel a certain wage or preclude discrimination

in hiring or firing decisions, are not significantly related to rates, routes or services. See Su, 903 F.3d at

966. Therefore, enforcement of California’s prevailing

wage law against motor carriers, the application of

California’s meal and rest break laws, and “the use of

California’s common-law test for determining

whether a motor carrier has properly classified its

drivers as independent contractors” are not

preempted, because they impact motor carriers’ business at the point where the motor carriers interact

with their workers. Miller, 976 F.3d at 1023.

A generally applicable law is one that affects individuals “solely in their capacity as members of the

general public,” Rowe, 552 U.S. at 375, and applies “to

hundreds of different industries,” Dilts, 769 F.3d at

647 (citation omitted). When such generally applicable laws impact motor carriers’ relationship with their

workforce, they are not “related to a price, route or

service” “even if they raise the overall cost of doing

business,” or “shift[] incentives and make[] it more

costly for motor carriers to choose some routes or services relative to others, leading the carriers to reallocate resources or make different business decisions.”

Dilts, 769 F.3d at 646-47 (emphasis omitted); see also

Ridgeway v. Walmart Inc., 946 F.3d 1066, 1083 (9th

Cir. 2020) (holding that a law was not preempted,

even if employers had to factor the law “into their decisions about the prices they set, the routes that they

use, or the services that they provide, because the law

did not “set prices, mandate or prohibit certain routes,

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or tell motor carriers what services that they may or

may not provide, either directly or indirectly” (cleaned

up)).

In Dilts we applied these principles and determined that California’s meal and rest break laws, as

applied to motor carriers, are not preempted by the

F4A. See 769 F.3d at 640. The state laws at issue,

which required “a 30-minute meal break for every five

hours worked, and a paid 10-minute rest break for

every four hours worked,” might have increased the

costs of doing business, because they might have required motor carriers to hire more drivers, change

their current schedules, and make “minor deviations”

from their routes. Id. at 640, 649 (citations omitted).

But because these generally applicable labor laws did

not bind motor carriers to specific rates or services,

meaningfully interfere with the ability of motor carriers to set routes, or compel a certain result at the level

of the motor carriers’ consumers rather than their

workforce, we determined that the laws were not “related to” prices, routes or services, and thus were not

preempted by the F4A. Id. at 640; see also Ridgeway,

946 F.3d at 1083-86 (holding that the F4A does not

preempt a California minimum-wage law that would

require Walmart to pay long-haul-truck-drivers minimum wages for layovers in California).

Four years after Dilts, we concluded that the F4A

does not preempt the Borello test for classifying California workers as either employees or independent

contractors. See Su, 903 F.3d at 957. We rejected the

plaintiff’s contentions that application of the Borello

standard to its workforce bound or compelled it to certain prices, routes, or services. Id. at 964-65. Rather,

consistent with Dilts and Californians for Safe Competitive Dump Truck Transportation v. Mendonca, 152

19a

F.3d 1184 (9th Cir. 1998), we held that “[a]t most, carriers will face modest increases in business costs, or

will have to take the Borello standard and its impact

on labor laws into account when arranging operations.” Id. at 965. The Borello test was not preempted

by the F4A, we held, because it was “a generally applicable background regulation in an area of traditional state power” that merely affected the relationship “between a carrier and its workforce,” where “the

impact is on the protections afforded to that workforce.” Id. at 961-62. In reaching this conclusion, we

rejected the plaintiff’s contentions that the Borello

standard improperly compelled motor carriers to use

employees, but we did not decide whether such compulsion would cause a law to be preempted by the

F4A. Id. at 959 n.4.

Based on Dilts, Su, and related precedent, a generally applicable state law is not “related to a price,

route, or service of any motor carrier” for purposes of

the F4A unless the state law “binds the carrier to a

particular price, route or service” or otherwise freezes

them into place or determines them to a significant

degree. Dilts, 769 F.3d at 646. We have generally held

that the state law at issue does not have such a binding or freezing effect unless it compels a result at the

level of the motor carrier’s relationship with its customers or consumers. See id. at 640, 646; Su, 903 F.3d

at 966. Such a law does not have a binding or freezing

effect, and thus is not preempted, merely because a

motor carrier must take the law into account when

making business decisions, or merely because the law

increases a motor carrier’s operating costs. See Dilts,

769 F.3d at 646-47.

20a

IV

We now turn to the question whether the F4A

preempts the ABC test, as codified in AB-5 and applied to motor carriers. This requires us to determine

whether AB-5 is “significantly related to rates, routes,

or services ... and thus [is] preempted,” or whether it

has “only a tenuous, remote, or peripheral connection

to rates, routes, or services” and therefore is not

preempted. Id. at 643 (cleaned up).

A

We first consider whether AB-5 is generally applicable, because this determination “will likely influence whether the effect on prices, routes, and services

is tenuous or significant.” Su, 903 F.3d at 966. Under

our precedent, AB-5 is a generally applicable law because it applies to employers generally; it does not single out motor carriers but instead affects them solely

in their capacity as employers. Cf. Rowe, 552 U.S. at

375. Even if some businesses are exempt from AB-5,

it certainly applies “to hundreds of different industries.”9 Dilts, 769 F.3d at 647.

We next consider where in the chain of a motor

carrier’s business AB-5 is acting to compel a certain

result, and the result it is compelling. Su, 903 F.3d at

966. AB-5 affects the way motor carriers must classify

their workers, and therefore compels a particular result at the level of a motor carrier’s relationship with

its workforce. It does not compel a result in a motor

9 CTA claims that AB-5 is not generally applicable because it in-

cludes a number of exemptions. We disagree. Labor laws typically include exemptions. For instance, the meal-and-rest-break

requirements were deemed to be generally applicable in Dilts,

even though they do not apply to certain categories of workers.

See Cal. Lab. Code § 512(b)(2)—(f).

21a

carrier’s relationship with consumers, such as freezing into place a particular price, route or service that

a carrier would otherwise not provide. See Dilts, 769

F.3d at 646-47. Indeed, CTA does not argue that AB5 does so. Therefore, it does not have the sort of binding or freezing effect on prices, routes, or services that

are preempted under the F4A.

Because AB-5 is a generally applicable law that

impacts a motor carrier’s business at the point where

the motor carrier interacts with its workers, and the

law affects motor carriers’ relationship with their

workers in a manner analogous to the worker classification laws we have previously upheld in Su, AB-5 is

not significantly related to rates, routes, or services.

Therefore, we conclude that the F4A does not preempt

AB-5 as applied to motor carriers.

B

CTA raises two main arguments in support of its

claim that the F4A preempts AB-5.

The first is that AB-5’s impact is so significant

that it indirectly determines price, routes, or services.

According to CTA, the ABC test requires that motor

carriers use employees rather than independent contractors as drivers.10 Given the impact such a requirement has on its members’ business models, CTA contends, AB-5 necessarily has a significant effect on

prices, routes, and services. In detailing the impact of

AB-5 on prices, routes, and services, CTA begins by

10 IBT disputes this claim, and argues that AB-5’s business-tobusiness exemption “permits motor carriers to contract with

truly independent owner-operators without necessarily creating

an employment relationship.” For purposes of determining

whether the F4A preempts AB-5, however, we need not address

this issue.

22a

alleging that AB-5 will increase its members’ costs “by

as much as 150% or more.” According to CTA, motor

carriers will have to buy a “fleet of trucks” and maintain and repair those trucks, provide for meal and rest

breaks, train employees, set up staff, and provide

worker’s-compensation insurance. As a result, CTA

alleges, its members would pass these increased costs

off to customers as increased prices.11

Moreover, CTA contends that its members would

have to “reconfigure and consolidate routes” to offset

increased costs. Its members might eliminate certain

routes all together and might have to reconfigure

routes to ensure their drivers can take meal and rest

breaks. All of this would make the routes of CTA’s

members less efficient.

And finally, CTA contends that the increased labor costs caused by AB-5 would likely put small motor

carriers out of business and force other motor carriers

to leave California. The remaining motor carriers

would therefore offer “diminished services.”

We have routinely rejected similar arguments

that the F4A preempts California labor laws that impose such indirect effects. See, e.g., Dilts, 769 F.3d at

646 (holding that California’s meal-and-rest-break

laws “are not preempted even if they raise the overall

cost of doing business or require a carrier to re-direct

or reroute some equipment”).

11 Although CTA’s allegations of increased costs rely heavily on

its claim that motor carriers will be forced to buy a fleet of trucks,

CTA conceded that its members could avoid incurring such costs

by hiring owner-operators (i.e., drivers who own their own

trucks) as employees. Given the undeveloped record in the district court, CTA’s allegations with respect to prices, routes, and

services are merely speculative.

23a

In Mendonca, for example, the plaintiffs argued

before the district court that California’s prevailing

wage law would increase motor carriers’ costs by 75%,

and this increase in costs would increase prices by

25% because wages constituted 33% of the eventual

price charged by motor carriers. Californians For Safe

& Competitive Dump Truck Transp. v. Mendonca, 957

F. Supp. 1121, 1127 & n. 11 (N.D. Cal. 1997). This

price increase would, the plaintiffs alleged, require

the motor carriers to use independent owner-operators and compel them “to redirect and reroute equipment to compensate for the additional costs imposed

on them by the Prevailing Wage Law,” and it would

“interfere[] with their California segment of operations, which in turn [would disrupt] their interstate

services.” Id. Despite the motor carriers’ dire predictions

about increased costs leading to changes in routes and

services, we concluded that California’s prevailing

wage law was not the sort of law that Congress intended to preempt. Mendonca, 152 F.3d at 1189. As

the district court explained, “if preemption was based

on percentages of price, then numerous areas of state

regulation would be preempted based solely on their

percentage effect on motor carrier prices,” contrary to

“the Supreme Court’s requirement of ‘clear and manifest’ Congressional intent to preempt.” Mendonca, 957

F. Supp. at 1127 n.11. We affirmed the district court,

holding that the law’s effect “is no more than indirect,

remote, and tenuous” and did not fall “into the ‘field of

laws’ regulating prices, routes, or services.” Mendonca, 152 F.3d at 1189; see also Ridgeway, 946 F.3d

at 1083.

Our decision in California Trucking Association v.

Su supports this conclusion. In that case, the plaintiff

argued that the Borello worker-classification test

would impact its prices, routes, and services. 903 F.3d

24a

at 958. But we held that the test would at most impose

“modest increases in business costs” or require motor

carriers “to take the Borello standard and its impact

on labor laws into account when arranging operations.” Id. at 965. Because the state worker-classification law would not “have an impermissible effect, such

as binding motor carriers to specific services, making

the continued provision of particular services essential to compliance with the law, or interfering at the

point that a carrier provides services to its customers,”

the law was not preempted. Id. The same analysis applies to the impact of AB-5 here.

The dissent argues that we have given insufficient

weight to the effect that AB-5 may have on a motor

carrier’s prices, routes and services. Dissent at 49-50.

According to the dissent, even a generally applicable

law that impacts a motor carrier’s relationship with

its workforce may have such a significant impact on

prices, routes and services that it is preempted by the

F4A. See generally Dissent. While our precedents do

not rule out the possibility that a generally applicable

law could so significantly impact the employment relationship between motor carriers and their employees that it effectively binds motor carriers to specific

prices, routes, or services at the consumer level, the

dissent has not identified any case where we have

done so. Rather, as noted above, our precedents have

consistently considered and rejected predicted effects

similar to those raised by CTA. We see no basis for

departing from our precedent holding that a law increasing motor carriers’ employee costs, but not interfering at the point where the motor carrier provides a

service to its customers, does not simply fall “into the

field of laws” that Congress intended to preempt. Mendonca, 152 F.3d at 1189 (cleaned up).

25a

C

Second, CTA and the dissent argue that because

the ABC test requires an employer to hire employees,

rather than independent contractors, language in

American Trucking Associations v. City of Los Angeles

and Su compels us to conclude that AB-5 is related to

the prices, routes, and service of a motor carrier.

Again, we disagree.

American Trucking Associations involved a challenge to city ordinances requiring that trucks providing drayage services to the Port of Los Angeles and

the Port of Long Beach enter into mandatory concession agreements. See generally 559 F.3d at 1046. The

Ports acknowledged that the principal purpose of the

concession agreements was to reduce truck emissions

and address other environmental concerns. Id. at

1055. A provision in the Port of Los Angeles’s concession agreement required motor carriers operating at

the Port of Los Angeles to “transition over the course

of five years from independent-contractor drivers to

employees.” Id. at 1049. The district court held that

the plaintiff demonstrated a likelihood of success in

showing that the agreements were preempted by the

F4A, because the agreements “directly regulate[d] the

carriers themselves” and might have “force[d] motor

carriers to change their prices, routes, or services in a

way that the market would not otherwise dictate.”

Am. Trucking Ass’ns, Inc. v. City of Los Angeles, 577

F. Supp. 2d 1110, 1117 (C.D. Cal. 2008), rev’d, 559

F.3d at 1046. According to the district court, defendants did “not seem to dispute this,” but rather argued

that the concession agreements were exempted from

preemption because, among other things, the F4A’s

safety exemption likely applied. See id.; see also 49

U.S.C. § 14501(a)(2) (providing that the F4A’s

26a

preemption provision “shall not restrict the safety regulatory authority of a State with respect to motor vehicles”). The district court agreed with this rationale

and refused to enjoin the implementation of the concession agreements, because there was a significant

probability that the concession agreements fell under

the safety exception to the F4A. Am. Trucking Ass’ns,

577 F. Supp. 2d at 1125.

On appeal, we likewise focused on the F4A’s safety

exemption. Although we agreed that it “can hardly be

doubted” that the concession agreements “relate[d] to

prices, routes or services of motor carriers,” we noted

that the defendants did not “actually dispute that on

appeal.” Am. Trucking Ass’ns, 559 F.3d at 1053; see

also id. at 1051 (noting that the district court’s ruling

that the plaintiff could likely demonstrate that the

concession agreements “related to a price, route, or

service” of motor carriers was “a ruling left unchallenged” on appeal). We reversed the district court on

the ground that the concession agreements were

aimed at environmental and economic concerns, not

safety concerns, and so the concession agreements did

not qualify for the safety exemption from preemption.

Id. at 1056, 1060-61. We remanded so that the district

court could determine whether, absent the safety exemption, the “specific terms of each agreement” were

likely to be preempted. Id.

CTA focuses on our passing statement that it “can

hardly be doubted” that the concession agreements

“relate to prices, routes or services of motor carriers.”

Id. at 1053. According to CTA, this language compels

us to hold that AB-5 is preempted. This argument

fails. We did not have occasion in American Trucking

Associations to address the question whether or how

27a

the concession agreements related to the motor carrier’s prices, routes, or services, because that issue

was not on appeal. Moreover, any determination that

the concession agreements did “relate to prices, routes

or services of motor carriers” would not be controlling

here, because American Trucking Associations did not

involve a generally applicable law, but rather a targeted agreement that “directly regulate[d] the carriers themselves.” Am. Trucking Ass’ns, 577 F. Supp. 2d

at 1117. As we have since explained, “Congress did not

intend to preempt generally applicable state transportation, safety, welfare, or business rules that do not

otherwise regulate prices, routes, or services.” Dilts,

769 F.3d at 644. Accordingly, our dicta in American

Trucking Associations, which was “made casually and

without analysis, uttered in passing without due consideration of the alternatives, [and] done as a prelude

to another legal issue that command[ed] the panel’s full

attention,” United States v. McAdory, 935 F.3d 838, 843

(9th Cir. 2019) (cleaned up), does not control our analysis

here.

CTA also argues that our discussion of American

Trucking Associations in Su compels the conclusion

that a state law that requires a motor carrier to employ only independent contractors must be deemed to

relate to the prices, routes, and services or motor carriers for purposes of F4A preemption. For several reasons, we do not read Su as going that far.

CTA relies on a portion of Su discussing the plaintiff’s claim that the Borello test imposed an “improper

compulsion” of the sort preempted by the F4A, because it compelled the use of independent contractors.

903 F.3d at 964. Su rejected that argument. Rather

than determine whether such compulsion is

preempted by the F4A, however, Su instead concluded

28a

that the Borello test “does not, by its terms, compel a

carrier to use an employee or an independent contractor.” Id. Distinguishing American Trucking Associations, we stated that the case “stands for the obvious

proposition that an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers and motivated by a State’s own efficiency and environmental goals was likely preempted.” Id.

Despite our passing characterization of American

Trucking Associations, we recognized that the question whether the F4A preempted a labor law like the

ABC test was not before us, and we expressly left that

question open: after recognizing that Dynamex had

adopted the ABC test while the appeal in Su was

pending, we clarified that “we need not and do not decide whether the FAAAA would preempt using the

‘ABC’ test to enforce labor protections under California law.” Id. at 964 n.4, 964 n.9. Because Su “did not

make a deliberate decision to adopt” a rule regarding

the ABC test—and indeed expressly disclaimed doing

so—we are neither bound nor meaningfully assisted

for analytical purposes by its statements made without reasoned consideration. Seven Up Pete Venture v.

Schweitzer, 523 F.3d 948, 953 (9th Cir. 2008). Given

that the issue was not on appeal, it is not surprising

that Su provided no reasoning as to why a state law

requiring the use of employees would necessarily be

“related to” the prices, routes, or services of motor carriers. Indeed, Su itself acknowledged that “Congress

did not intend to hinder States from imposing normative policies on motor carriers as employers.” Id. at

963. Rather, Su’s statement was solely based on its

erroneous characterization of American Trucking Associations as deciding that the F4A likely preempted

an “all or nothing” rule requiring employee drivers. As

explained above, however, this issue was not even on

29a

appeal in that case. We are therefore not constrained

or materially instructed by Su’s passing discussion of

the ABC test. Schweitzer, 523 F.3d at 953.

Finally, the dissent argues that Miller supports

CTA’s position. Dissent at 44. We disagree. Miller

held that a common-law negligence cause of action,

not a generally applicable labor law, was preempted

by the F4A. See 976 F.3d at 1023-24. In reaching this

conclusion, Miller reaffirmed that the F4A does not

prohibit California from enforcing normal background

rules applying to employers doing business in California, which are not “related to” carrier prices, routes,

or services. Id. Rather, Miller held that common law

negligence was distinguishable from laws governing

employment relations, because negligence claims

sought to hold a company “liable at the point at which

it provides a ‘service’ to its customers,” which is “directly connected with” services “in a manner that was

lacking in Mendonca, Dilts, and Su.” Id. at 1024

(cleaned up). Here, of course, AB-5 is a generally applicable statutory labor law that affects motor carriers’ business at the level of the carriers’ workforce, not

their consumers. Thus, Mendonca, Dilts, and Su control, and Miller does not.12

D

We likewise reject the arguments made by CTA

and the dissent based on Schwann v. FedEx Ground

Package Sys., Inc., 813 F.3d 429,437-40 (1st Cir. 2016)

12 The dissent claims that AB-5 is “like the common law of negligence at issue in Miller and unlike the employment regulations

at issue in Mendonca, Dilts, and Su.” Dissent at 44. Because AB5 is a generally applicable law governing employment, closely

analogous to the worker-classification test in Su, and does not

impose liability for negligence, we are puzzled by this argument.

30a

and Bedoya v. Am. Eagle Express Inc., 914 F.3d

812,816 (3d Cir. 2019), cert. denied, 140 S. Ct. 102

(2019). The language relied upon is contrary to our

precedent.

In Schwann, the First Circuit determined that

Prong 2 of Massachusetts’ ABC test (which is identical

to Prong B of the California ABC test codified in AB5) sufficiently relates to a motor carrier’s services and

routes, because interfering with the employer’s decision whether to use an employee or an independent

contractor could prevent a motor carrier from using its

preferred methods of providing delivery services, raise

the motor carrier’s costs, and impact routes. Schwann,

813 F.3d at 438-39; see also Bedoya, 914 F.3d at 82425 (opining in dicta that the F4A preempts Massachusetts’ ABC test because it “mandate[s] a particular

course of action—e.g., requiring carriers to use employees rather than independent contractors”). But we

have previously concluded that such indirect consequences have “only a tenuous, remote, or peripheral

connection to rates, routes or services.” Dilts, 769 F.3d

at 643 (cleaned up).13

In light of our case law, we also reject CTA’s argument that the legislative history of the F4A supports

13 CTA also relies on two state-court opinions holding that Prong

B of the ABC test is preempted by the F4A. See People ex rel.

Harris v. Pac Anchor Transp., Inc., 59 Cal. 4th 772, 783 (2014);

People v. Cal Cartage Transp. Express, LLC, 2020 WL 497132, at

*1 (Cal. Super. Ct. Jan. 8, 2020), vacated by People v. Superior

Ct. of L.A. Cnty., 271 Cal. Rptr. 3d 570, 582 (Ct. App. 2020). But

we are bound by our precedent, not contrary state-court rulings.

Moreover, two California Courts of Appeal recently held that the

F4A does not preempt AB-5 as applied to motor carriers. See Superior Ct. of L.A. Cnty, 271 Cal. Rptr. 3d at 582; Parada v. E.

Coast Transp. Inc., No. B296566, 2021 WL 1222007 (Cal. Ct.

App. Mar. 26, 2021).

31a

holding that the F4A preempts AB-5. In Su, we found

“nothing in the FAAAA’s legislative history indicat[ing] that Congress intended to preempt the traditional power to protect employees or the necessary

precursor to that power, i.e., identifying who is protected.” 903 F.3d at 967. This further supported our

conclusion that “Congress did not intend to foreclose

States from applying common law tests to discern who

is entitled to generally applicable labor protections.”

Id. CTA argues that a passage in a 1994 House report

makes clear that Congress intended for the F4A to

preempt state laws that discriminated against motor

carriers whose business model was based on hiring

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

(1994). We disagree. The House report states that

“[t]he need for [preemption] has arisen from this

patchwork of regulation and in a June 25, 1991 9th

Circuit Court of Appeals decision….” Id. The Ninth

Circuit opinion at issue had held that the ADA

preempted state regulation of FedEx, which was organized as an air carrier, even though it did not preempt

state regulation of companies engaged in similar operations that were organized as motor carriers. Fed.

Exp. Corp., 936 F.2d at 1078-79. While one of Congress’s purposes may have been to level the playing

field for motor carriers like FedEx’ s competitors, the

House report does not indicate any intent to allow motor carriers full discretion in how they classified their

workforce.14

14 The dissent claims that our holding “undermines the balance

of state and federal power contemplated by the F4A.” Dissent at

53. The dissent gets it backward. We begin with the presumption

that Congress did not intend to preempt a law that is within a

state’s historical police powers, unless that “was the clear and

manifest purpose of Congress.” Miller, 976 F.3d at 1021. It is the

32a

Because AB-5 is a generally applicable labor law

that impacts the relationship between a motor carrier

and its workforce, and does not bind, compel, or otherwise freeze into place a particular price, route, or

service of a motor carrier at the level of its customers,

it is not preempted by the F4A. Because CTA is unlikely to succeed on the merits, the district court erred

by enjoining the state from enforcing AB-5 against

motor carriers operating in California. Winter, 555

U.S. at 20. By failing to follow our precedent regarding

labor laws of general applicability, the district court

committed a legal error to which we cannot defer, even

at the preliminary-injunction stage. See Arpaio, 821

F.3d at 1103.15

REVERSED.

dissent that would tip the balance of power against the states

and in favor of the federal government by holding that federal

law preempts AB-5, a state law clearly within an area of traditional state power, without citing any evidence that Congress

clearly and expressly intended to do so. The dissent relies on

Rowe to support its claim that Congress intended to preempt

laws like AB-5, but this reliance is misplaced. In Rowe, the regulation at issue required, among other things, that a driver delivering tobacco products verify the identity and age of the recipient of the package, and obtain the recipient’s signature. 552 U.S.

at 369. Such a law is clearly the sort of “service-determining law”

that Congress intended to preempt. See id. at 373. By contrast,

AB-5 does not mandate that motor carriers provide or withhold

any service.

15 Because the F4A does not preempt AB-5 as applied to motor

carriers, we do not address the remaining preliminary-injunction

factors.

33a

BENNETT, Circuit Judge, dissenting:

I agree with the majority that for purposes of F4A

preemption, we “draw a line between laws that are

significantly related to rates, routes, or services, even

indirectly, and thus are preempted, and those that

have only a tenuous, remote, or peripheral connection

to rates, routes, or services, and thus are not

preempted.” Majority Opinion at 22 (quoting Dilts v.

Penske Logistics, LLC, 769 F.3d 637, 643 (9th Cir.

2014)). I also agree that “laws of general applicability

that affect a motor carrier’s relationship with its

workforce… are not significantly related to rates,

routes or services,” Majority Opinion at 23—if those

laws significantly affect only a motor carrier’s relationship with its workforce. I do not agree, however,

that a law like AB-5—which affects motor carriers’ relationships with their workers and significantly impacts the services motor carriers are able to provide to

their customers is not related to motor carriers’ services and thus is not preempted.1 Therefore, I respectfully dissent.

We review the grant of a preliminary injunction

for abuse of discretion. Am. Trucking Ass’ns, Inc. v.

City of L.A., 559 F.3d 1046, 1052 (9th Cir. 2009). “Our

review is limited and deferential, and we do not review the underlying merits of the case.” Id. (quotation

marks, citation, and alteration omitted). There are

four factors we must consider: (1) the likelihood of success on the merits, (2) the likelihood of irreparable

harm, (3) the balance of equities, and (4) the public

interest. Short v. Brown, 893 F.3d 671, 675 (9th Cir.

1 I agree with the majority that amendments to AB-5 and the

passage of Proposition 22 do not affect our analysis. Majority

Opinion at 11 n.5.

34a

2018). The majority reverses the district court under

the first prong, concluding that CTA is “unlikely to

succeed” in proving that AB-5 is preempted. Majority

Opinion at 39.

“[T]he [F4A’s] central objective is to avoid frustrating the statute’s deregulatory purpose by preventing states from imposing a patchwork of state servicedetermining laws.” Bedoya v. Am. Eagle Express Inc.,

914 F.3d 812, 818 (3d Cir. 2019) (quotation marks and

citation omitted). Thus, the F4A preempts any state

law that is “related to” a motor carrier’s prices, routes,

or services. 49 U.S.C. § 14501(c)(1). While the Supreme Court has instructed that “the breadth of the

words ‘related to’ does not mean the sky is the limit,”

Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260

(2013), it has also made clear that the words “express

a broad preemptive purpose,” Morales v. Trans World

Airlines, Inc., 504 U.S. 374, 383 (1992). Accordingly,

the Supreme Court held in Morales that a state law is

not “related” for preemption purposes if its impact is

“too tenuous, remote, or peripheral.” Id. at 390 (citation omitted). But Morales also made clear that “preemption occurs at least where state laws have a ‘significant impact’”—specifically on prices, routes, or services in the context of the F4A. Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 371 (2008)

(emphasis added) (quoting Morales, 504 U.S. at 390).

This rule applies both to laws that target motor carriers and to laws of general applicability. See Morales,

504 U.S. at 386. Consistent with Supreme Court precedent, then, the straightforward question we should

have answered today is whether AB-5’s impact on

CTA members’ prices, routes, or services is significant

or instead merely tenuous, remote, or peripheral.

35a

Applying this critical distinction, our court has repeatedly held that state employment laws with a significant impact on motor carriers’ relationships to

their workforces, but only a tenuous, remote, and peripheral effect on their prices, routes, and services, are

not preempted by the F4A. In Californians for Safe

and Competitive Dump Truck Transportation v. Mendonca, 152 F.3d 1184 (9th Cir. 1998), we considered

California’s Prevailing Wage Law that required contractors who were awarded public works contracts to

pay their workers “not less than the general prevailing rate.” Id. at 1186. The motor carriers argued that

the law was “related to” prices, routes, and services

because, among other things, it forced them to increase prices and redirect and reroute equipment to

compensate for lost revenue. Id. at 1189. We held that

the law was not “related to” the carriers’ prices,

routes, or services because it did not “acutely interfer[e]” with them. Id.

In Dilts, we considered California labor laws requiring

“a 30-minute meal break for every five hours worked, and

a paid 10-minute rest break for every four hours

worked.” 769 F.3d at 640 (citation omitted). We held

that the laws were not preempted because they “[did]

not bind motor carriers to specific prices, routes, or

services,” would cause “nothing more than a modestly

increased cost of doing business” and “minor deviations” in drivers’ routes, and would not “meaningfully

decrease the availability of routes to motor carriers.”

Id. at 647-49 (emphasis added) (quotation marks and

citation omitted). In accord with Morales, we reaffirmed that “state laws like California’s, which do not

directly regulate prices, routes, or services, are not

preempted by the [F4A] unless they have a ‘significant

effect’ on prices, routes, or services.” Id. at 649-50.

Thus, because “there [was] no showing of an actual or

36a

likely significant effect on prices, routes, or services,”

we concluded that “the California laws at issue [were]

not preempted.” Id. at 650.

Finally, in California Trucking Association v. Su,

903 F.3d 953 (9th Cir. 2018), we considered the Borello test, which used to be California’s common law

test for determining whether someone was an employee or independent contractor. Id. at 957. The Borello test was essentially a totality of the circumstances balancing analysis: there were eight to ten

factors, and no factor was dispositive. See S.G. Borello

Sons, Inc. v. Dep’t of Indus. Rels., 769 P.2d 399,407

(Cal. 1989). We held that the Borello test was not

preempted by the F4A because “[a]t most, carriers

[would] face modest increases in business costs, or

[would] have to take the Borello standard and its impact on labor laws into account when arranging operations.” Su, 903 F.3d at 965 (emphasis added). Such

impacts were “not significant, and so [did] not warrant

preemption.” Id. at 964.

Out of these cases, the majority crafts the general

rule that “laws of general applicability that affect a

motor carrier’s relationship with its workforce… are

not significantly related to rates, routes or services.”

Majority Opinion at 23. But the majority’s rule ignores the possibility that a state law might affect a

motor carrier’s relationship with its workforce and

have a significant impact on that motor carrier’s

prices, routes, or services, which would mandate F4A

preemption under Supreme Court precedent. See

Rowe, 552 U.S. at 371 (“[P]re-emption occurs at least

where state laws have a significant impact [on prices,

routes, or services].” (emphasis added) (quotation

marks and citation omitted)).

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Our prior F4A preemption decisions did not overlook this point. In Mendonca, we stated that “state

regulation in an area of traditional state power having

no more than an indirect, remote, or tenuous effect on

a motor carrier[‘ prices, routes, and services [is] not

preempted” not that any regulation in an area of traditional state power, such as employment, is not

preempted. 152 F.3d at 1188 (emphasis added). In

Dilts, we similarly stated that in enacting the F4A,

“Congress did not intend to preempt generally applicable state transportation, safety, welfare, or business

rules that do not otherwise regulate prices, routes, or

services.” 769 F.3d at 644 (emphasis added). And in

Su, we stated that “Congress did not intend to

preempt laws that implement California’s traditional

labor protection powers, and which affect carriers’

rates, routes, or services in only tenuous ways.” 903

F.3d at 961 (emphasis added). We clarified that

“[w]hat matters is ... where in the chain of a motor

carrier’s business it is acting to compel a certain result

… and what result it is compelling.” Id. at 966. We

thus held that the Borello test was not preempted precisely “because the Borello standard [did] not compel

the use of employees or independent contractors; instead, at most, it impact[ed motor carriers] in ways

that…. [were] not significant.” Id. at 964.

Despite that holding, the majority mischaracterizes dicta in Miller v. C.H. Robinson Worldwide, Inc.,

976 F.3d 1016 (9th Cir. 2020), as reaffirming that “the

F4A does not prohibit California from enforcing normal background rules applying to employers doing

business in California.” Majority Opinion at 35. But

Miller did not embrace such a categorical rule, which

would have been at odds with Morales. Instead, Miller

reaffirmed that “[t]he phrase ‘related to’ in the [F4A]

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embraces state laws having a connection with or reference to… rates, routes, or services, whether directly

or indirectly.” 976 F.3d at 1022 (ellipsis in original)

(quotation marks and citation omitted). Miller then

held that when a generally applicable state law “seeks

to hold [a motor carrier] liable at the point at which it

provides a ‘service’ to its customers,” the state law is

“directly connected with” a motor carrier’s service

(and thus preempted) “in a manner that was lacking

in Mendonca, Dilts, and Su.” Id. at 1024 (quotation

marks, citation, and alteration omitted).

AB-5 seeks to interfere with motor carriers’ operations at the point at which they provide a service to

their customers, like the common law of negligence at

issue in Miller and unlike the employment regulations

at issue in Mendonca, Dilts, and Su. Whereas the

wage law in Mendonca did not require motor carriers

to raise their prices, the meal and rest break laws in

Dilts caused only “modestly increased cost[s]” and “minor deviations” in routes, and the Borello test “[did]

not compel the use of employees or independent contractors,” AB-5 mandates the very means by which

CTA members must provide transportation services to

their customers. It requires them to use employees rather than independent contractors as drivers, thereby

significantly impacting CTA members’ relationships

with their workers and the services that CTA members are able to provide to their customers.

AB-5’s ABC test includes three factors. If the employer fails to establish all three, then the worker

“shall be considered an employee rather than an independent contractor.” Cal. Lab. Code § 2750.3(a)(1)

(emphasis added). The factor at issue is B: whether

the worker “performs work that is outside the usual

course of the hiring entity’s business.” Id.

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§ 2750.3(a)(1)(B). The district court found that under

B, “drivers who may own and operate their own rigs

will never be considered independent contractors under California law.”2 Cal. Trucking Ass’n v. Becerra,

433 F. Supp. 3d 1154, 1165 (S.D. Cal. 2020). And this

is self-evident: independent-contractor truckers hauling goods for the hiring entity are perforce not performing work outside the usual course of the hiring

entity’s business, which is, of course, hauling goods.

Thus, as the district court correctly found, motor carriers would have to “reclassify all independent-contractor drivers as employee-drivers for all purposes

under the California Labor Code, the Industrial Welfare Commission [(IWC)] wage orders, and the Unemployment Insurance Code.” Id. at 1166.

The appellants do not present any arguments to

the contrary. In fact, the district court “repeatedly invited [the state] to explain how the ABC test was not

an ‘all or nothing test’ specifically “how a motor carrier

could contract with an independent owner-operator as

an independent contractor, rather than as an employee”—and neither the State Defendants nor Intervenor-Appellant International Brotherhood of Teamsters did so. Id. at 1165 n.9. These same parties were

just as stumped when asked the same question during

oral argument. Though they insisted that we were

asking the wrong question, they did not dispute that

2 As discussed below, this court made the same point in even

stronger terms in Su: “[T]he ‘ABC’ test may effectively compel a

motor carrier to use employees for certain services because, under the ‘ABC’ test, a worker providing a service within an employer’s usual course of business will never be considered an independent contractor.” 903 F.3d at 964 (emphasis added).

40a

the ABC test would automatically characterize as employees all those with whom CTA members contracted

to haul goods.

In the absence of any dispute that AB-5 will “categorically prevent[] motor carriers from exercising

their freedom to choose between using independent

contractors or employees,” id. at 1165, the obvious

conclusion is that AB-5 will significantly impact motor carriers’ services by mandating the means by

which they are provided. At the very least, the district

court did not abuse its discretion in so concluding, especially given that the differences between transportation services provided by independent contractor

drivers and those provided by employee drivers are

neither superficial nor “peripheral.” Schwann v.

FedEx Ground Package Sys., Inc., 813 F.3d 429, 438

(1st Cir. 2016). Whether to provide a service directly

through employees or indirectly through independent

contractors “is a significant decision in designing and

running a business.… [T]hat decision implicates the

way in which a company chooses to allocate its resources and incentivize those persons providing the

service.” Id.

First, the record demonstrates that in addition to

altering motor carriers’ relationships to their workers,

AB-5 will significantly impact motor carriers’ services

to their customers by diminishing the specialized

transportation services that motor carriers are able to

provide through independent contractor drivers. As

the declaration of Greg Stefflre, an officer of one of

CTA’s members, explains in great detail:

Many individual owner-operators have invested in specialized equipment and have obtained the skills to operate that equipment efficiently. Some of these owner-operators have

41a

unique and expensive equipment not available in the fleet of other trucking companies.

Therefore, an owner-operator fleet by definition consists of a variety of specialists who can

bring on their specialized equipment as

needed and, when the need abates, the owneroperator can move to another motor carrier

where the equipment is needed. In contrast,

employee fleets cannot keep infrequently

used, specialized equipment on hand because

of the capital costs associated with acquiring

this equipment. As a result, employee-based

motor carriers will be unable to offer services

requiring such equipment services currently

available through owner-operator based motor carriers.

Dist. Ct. Dkt. No. 54-2 at 8. This lack of specialization

will deprive motor carriers’ consumers of particular

services—consumers who depend on motor carriers to

hire independent contractors to transport unwieldy,

hazardous, or otherwise unusual goods that could not

be transported with typical trucks and equipment.

Second, the record also demonstrates that by requiring motor carriers to hire employee drivers, AB-5

will eliminate motor carriers’ flexibility to accommodate fluctuations in supply and demand, given that

California’s IWC Wage Order No. 4-2001(9)(B) requires employers to supply their employees’ tools and

equipment. Stefflre’s declaration also elaborates on

this predictable outcome:

The use of owner-operators permits expansion

in times of plenty and contraction during

shortages in business. Employee driver fleets

cannot expand and contract as easily and certainly not as inexpensively as independent

42a

contractor fleets. To use employee drivers, one

needs to acquire trucks. Even if leased, such

leases require fixed terms when establishing

price so the size of the fleet cannot be lowered

without incurring penalties. In owned fleets,

the unused tractors become a completely nonproductive asset and a drain on profitability.

Owner-operator fleets can relatively easily expand and contract. When existing business

goes to a competitor, the owner-operators

working with the incumbent simply move to

the successful bidder eliminating the drain

that would occur with an employee fleet.

Dist. Ct. Dkt. No. 54-2 at 7-8. Thus, as further explained by the declaration of Shawn Yadon, the CEO

of CTA, hiring only employee drivers will limit motor

carriers to “obtaining just enough equipment and employee drivers to meet the typical demand,” so that

they “[can]not provide additional resources to provide

truck services during times of peak demand.” Dist. Ct.

Dkt. No. 54-3 at 6. Again, this inability to meet temporary rises in demand will deprive motor carriers’

consumers of particular services—consumers such as

farmers and retail sellers who depend on motor carriers to seasonally hire independent contractors during

harvests and peak retail seasons, respectively. Dist.

Ct. Dkt. No. 54-3 at 6; Dist. Ct. Dkt. No. 54-5, Ex. B at

12.

The majority mischaracterizes my argument as

suggesting “that AB-5’s impact is so significant that it

indirectly determines… services,” Majority Opinion at

28 (emphasis added), an argument that the majority

then brushes aside because “[w]e have routinely rejected similar arguments that the F4A preempts California labor laws that impose such indirect effects,”

43a

Majority Opinion at 29. However, rather than suggesting that AB-5 determines services, I argue that

AB-5 determines the means of providing said services,

thereby significantly impacting them—which is

enough to trigger F4A preemption. Cf. Miller, 976

F.3d at 1024-25 (“We have occasionally suggested that

preemption occurs only when a state law [binds motor

carriers to specific prices, routes, or services].… But

even these cases acknowledged that the scope of [F4A]

preemption is broader than this language suggests.”).

Furthermore, although “[w]e have routinely rejected”

arguments that the F4A preempts California labor

laws that indirectly affect prices, routes, or services—

by raising wages, requiring brief meal and rest

breaks, or causing motor carriers to take “into account” state standards for labeling workers as independent contractors—these arguments are not “similar” to my argument that an “all or nothing” rule mandating the very means by which a motor carrier can

provide its services is preempted. My argument is

more akin to the Supreme Court’s holding in Rowe,

that a state law has a significant impact on services

not only when it determines said services, but also

when it regulates “the essential details of a motor carrier’s system for picking up, sorting, and carrying

goods essential details of the carriage itself” Rowe, 552

U.S. at 373.

The majority concedes that “our precedents do not

rule out the possibility that a generally applicable law

could so significantly impact the employment relationship between motor carriers and their employees

that it effectively binds motor carriers to specific

prices, routes, or services at the consumer level.” Majority Opinion at 31. In fact, this court has twice endorsed my position that “all or nothing” rules requir-

44a

ing the use of employee rather than independent contractor drivers are preempted by the F4A. In American Trucking Associations v. City of Los Angeles, 559

F.3d 1046 (9th Cir. 2009), we considered a city-imposed concession agreement requiring that motor carriers transition from using independent contractors to

employees in order to operate at the Port of Los Angeles. Id. at 1049. We made clear at the outset: “That the

Concession agreements relate to prices, routes or services of motor carriers can hardly be doubted. Thus,

we fully agree with the district court that it is likely

that ATA will establish that proposition.” Id. at 1053

(emphasis added). The district court had concluded

that preemption was likely because the “concession

agreements [would possibly] force motor carriers to

change their prices, routes, or services in a way that

the market would not otherwise dictate.” Am. Trucking Ass’ns, Inc. v. City of L.A., 577 F. Supp. 2d 1110,

1117 (C.D. Cal. 2008).

In Su, we considered the ABC test at issue here,

as a counterpoint to Borello’s totality of the circumstances test. We began by characterizing American

Trucking Associations as “stand[ing] for the obvious

proposition that an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers… was likely preempted.” 903 F.3d at 964. We then

explained: “Like American Trucking, the ‘ABC’ test may

effectively compel a motor carrier to use employees for

certain services because, under the ‘ABC’ test, a worker

providing a service within an employer’s usual course of

business will never be considered an independent contractor.” Id.

Two other circuits have also held or signaled that

all or nothing rules like California’s ABC test are or

should be preempted. In Schwann, the First Circuit

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held that the F4A preempts Prong 2 of Massachusetts’s 1-2-3 test.3 See 813 F.3d at 442. The First Circuit recognized the obvious reality that “Prong 2

would significantly affect how [motor carriers] provide[] good and efficient service” by “mandat[ing] that

[motor carriers] classify… individual contractors as

employees,” thereby “significant[ly] impact[ing] ... the

actual routes followed for the pick-up and delivery of

packages.” Id. at 439 (emphasis added). The court

held that such “regulatory interference” would not be

“peripheral.” Id. at 438. Rather, “[s]uch an application

of state law [would] pose[] a serious potential impediment to the achievement of the [F4A’s] objectives because a court, rather than the market participant,

would ultimately determine what services that company provides and how it chooses to provide them.” Id.

In Bedoya, the Third Circuit upheld New Jersey’s

ABC test against an F4A preemption defense. 914

F.3d at 824. New Jersey’s test is identical to California’s and Massachusetts’s tests with one key difference: the New Jersey test does not “categorically prevent[] carriers from using independent contractors”

because its Prong B includes an “alternative method

for reaching independent contractor status . .. by

demonstrating that the worker provides services outside of the putative employer’s places of business.” Id.;

see id. at 816-17. The Third Circuit thus held that New

Jersey’s ABC test was not preempted because it “[did]

not have a significant effect on prices, routes, or services,” “[did] not bind [motor carriers] to a particular

method of providing services,” and “[did] not mandate

a particular course of action”—“unlike the preempted

3 The only difference between the 1-2-3 test and the ABC test is

the name—all three prongs are identical. Compare Mass. Gen.

Laws ch. 149, § 148B(a), with Cal. Lab. Code § 2750.3(a)(1).

46a

Massachusetts law at issue in Schwann.” Id. at 824-25

(emphasis added).

The majority brushes all of these cases aside: “We

did not have occasion in American Trucking Associations to address the question whether the concession

agreements related to the motor carrier’s prices,

routes, or services, because that issue was not on appeal.” Majority Opinion at 33. And “[b]ecause Su did

not make a deliberate decision to adopt a rule regarding the ABC test—and indeed expressly disclaimed

doing so—we are neither bound nor meaningfully assisted for analytical purposes by its statements made

without reasoned consideration.” Majority Opinion at

35 (quotation marks and citation omitted). As for

Schwann and Bedoya, the majority claims that they

are “contrary to our precedent,” citing Dilts. Majority

Opinion at 36. But Dilts did not address an “all or

nothing rule” like California’s ABC test, and even if

the majority is correct as to the cases’ precedential

value, the majority understates or ignores each case’s

persuasive value. I agree that it can “hardly be

doubted” that an “all or nothing” rule requiring motor

carriers to hire employees rather than independent

contractors relates to motor carriers’ services and is

thus preempted. No one—not even the majority—argues that AB-5 will not compel motor carriers to use

employees rather than independent contractors.

The majority’s holding undermines the balance of

state and federal power contemplated by the F4A and

in doing so, unnecessarily creates a circuit split.4 AB4 The majority charges that I “would tip the balance of power

against the states and in favor of the federal government by holding that federal law preempts AB-5, a state law clearly within an

area of traditional state power, without citing any evidence that

47a

5 is preempted as applied to CTA’s members, a conclusion compelled by binding precedent from the Supreme Court and our circuit. That ends the inquiry.

But even were the question close (and it isn’t), we

would have no basis for reversing here, given the

standard of review and given that the majority does

not even try to suggest that the district court abused

Congress clearly and expressly intended to do so.” Majority Opinion at 38 n.14 (citing Miller, 976 F.3d at 1021). However, in Rowe,

the Supreme Court held that “state service-determining laws”

are “inconsistent with Congress’ major legislative effort to leave

such decisions, where federally unregulated, to the competitive

marketplace.” 552 U.S. at 373. The Court reiterated in Dan‘s City

that the “target at which [the F4A] aimed was a State’s direct

substitution of its own governmental commands for competitive

market forces in determining (to a significant degree) the services that motor carriers will provide.” 569 U.S. at 263. As already explained with the support of record evidence, AB-5 will

determine the services that motor carriers are able to provide to

their customers. Therefore, it is not my dissent, but rather AB-5

and the majority’s decision to uphold it that conflict with the balance of state and federal power mandated by the F4A. The majority attempts to distinguish this case from Rowe with the conclusory statement that the law at issue was “clearly the sort of

‘service-determining law’ that Congress intended to preempt,”

whereas “AB-5 does not mandate that motor carriers ... withhold

any service.” Majority Opinion at 38 n.14. The majority seems to

forget its own acknowledgment only two sentences prior that the

law at issue in Rowe also did not mandate that motor carriers

withhold any service, but instead “required, among other things,

that a driver delivering tobacco products verify the identity and

age of the recipient of the package, and obtain the recipient’s signature.” Majority Opinion at 38 n.14. In other words, the law at

issue in Rowe was a “service-determining law” preempted by the

F4A because it regulated “the essential details of a motor carrier’s system for picking up, sorting, and carrying goods,” 552

U.S. at 373—exactly the same as AB-5.

48a

its discretion in finding that the other injunction factors—irreparable harm,5 balance of the equities, and

the public interest6—favor the plaintiff.

The majority concludes that “[b]y failing to follow

our precedent regarding labor laws of general applicability, the district court committed a legal error to

which we cannot defer, even at the preliminary-injunction stage.” Majority Opinion at 39. But as I have

shown, none of the cases on which the majority relies

dealt with a law like AB-5, which affects motor carriers’ relationships with their workers and significantly

impacts their services. In the absence of directly applicable precedent, I do not see how the district court

could have abused its discretion after thoroughly analyzing our F4A precedent and applying the exact

standard the majority adopts to the facts of this case.7

5 “Plaintiffs have shown that irreparable harm is likely because

without significantly transforming their business operations to

treat independent-contractor drivers as employees for all specified purposes under California laws and regulations, they face

the risk of governmental enforcement actions, as well as criminal

and civil penalties.” Cal. Trucking, 433 F. Supp. 3d at 1169.

6 “The Court recognizes the Legislature’s public interest in pro-

tecting misclassified workers, which it attempted to further address with AB-5. That public interest, however, ‘must be balanced against the public interest represented in Congress’s decision to deregulate the motor carrier industry, and the Constitution’s declaration that federal law is to be supreme.’ American

Trucking Associations, 559 F.3d at 1059-60. Therefore, the public

interest tips sharply in Plaintiffs’ favor.” Cal. Trucking, 433 F.

Supp. 3d at 1171.

7 The district court and the majority agree as to the law govern-

ing this case. Like the majority, the district court described the

applicable legal standard as follows: “Congress did not intend to

preempt laws that implement California’s traditional labor protection powers, and which affect carriers’ rates, routes, or services in only tenuous ways. Still, where a state law significantly

49a

impacts a carrier’s prices, routes, or services, it is forbidden.” Cal.

Trucking, 433 F. Supp. 3d at 1163-64 (quotation marks and citations omitted). Cf. Majority Opinion at 22 (“[W]e have attempted

to draw a line between laws that are significantly related to

rates, routes, or services, even indirectly, and thus are

preempted, and those that have only a tenuous, remote, or peripheral connection to rates, routes, or services, and thus are not

preempted.” (quotation marks and citation omitted)). The district

court and the majority disagree only as to the application of that

law to the facts of this case. Whereas the majority believes that

“AB-5 is a generally applicable labor law that impacts [only] the

relationship between a motor carrier and its workforce, and does

not bind, compel, or otherwise freeze into place a particular price,

route, or service of a motor carrier at the level of its customers,”

Majority Opinion at 38-39, the district court reached the opposite

conclusion: “Plaintiffs have shown the ABC test is ... likely

preempted by the [F4A] because it compels a certain result—by

compelling a motor carrier to use employees for certain services.”

Cal. Trucking, 433 F. Supp. 3d at 1168 (quotation marks, citation, and alteration omitted). The district court elaborated that

unlike Mendonca, Dilts, and Su, the facts of this case show that

AB-5 will significantly impact not only motor carriers’ relationships to their workers, but also their prices, routes, or services:

[T]he present case concerns the test used to classify workers

for the purpose of determining whether all of California employment laws do or do not apply, rather than a small group

of those laws, such as the meal break regulations in Dilts.

Thus, the combined effect of all such laws has a significant

impact on motor carriers’ prices, routes, or services. Accordingly, Dilts and other similar cases are distinguishable because they focus on whether discrete wage-and-hour laws and

regulations had more than a tenuous impact on motor carriers’ prices, routes, or services, not whether the combined impact of applying all of California’s employment laws to independent owner-operators had more than a tenuous impact on

motor carries’ prices, routes, or services.

Id. at 1168-69.

50a

See Am. Trucking, 559 F.3d at 1052 (“As long as the

district court got the law right, [its preliminary injunction] will not be reversed simply because the appellate court would have arrived at a different result

if it had applied the law to the facts of the case.” (citation and alteration omitted)). The majority’s holding

that the district court abused its discretion is especially perplexing given the abundance of opinions by

our court and sister circuits holding or strongly suggesting that the F4A preempts “all or nothing” rules

like the AB-5, and given the majority’s own concession

that “our precedents do not rule out the possibility

that a generally applicable law could so significantly

impact the employment relationship between motor

carriers and their employees that it effectively binds

motor carriers to specific prices, routes, or services at

the consumer level,” Majority Opinion at 31.

Nonetheless, California will now be free to enforce

its preempted law. CTA’s members will now suffer irreparable injury. And the damage to the policies mandated by Congress will likely be profound. Thus, I respectfully dissent.

51a

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Case No. 3:18-cv-02458-BEN-BLM

CALIFORNIA TRUCKING ASSOCIATION,

et al.,

Plaintiffs,

v.

ATTORNEY GENERAL XAVIER BECERRA, et al.,

Defendants,

INTERNATIONAL BROTHERHOOD

OF TEAMSTERS,

Intervenor-Defendant.

ORDER GRANTING PRELIMINARY

INJUNCTION

Plaintiffs California Trucking Association,

Ravinder Singh, and Thomas Odom move for a preliminary injunction. Having carefully considered the

parties’ arguments, the motion is GRANTED.

I.

BACKGROUND

The following facts are taken from the Second

Amended Complaint and the declarations filed related

to Plaintiffs’ preliminary injunction motion.1 Plaintiff

1 Plaintiffs and Intervenor filed various declarations and numer-

ous evidentiary objections, Docs. 56, 74. Notably, “a preliminary

injunction is customarily granted on the basis of procedures that

are less formal and evidence that is less complete than in a trial

on the merits.” Univ. of Texas v. Camenisch, 451 U.S. 390, 395

52a

California Trucking Association (“CTA”) is an association of licensed motor-carrier companies that manage, coordinate, and schedule the movement of property throughout California. Many of CTA’s motor-carrier members contract with owner-operators as independent contractors. Plaintiff Ravinder Singh is one

example. He owns and operates his own truck, and he

contracts as an independent contractor with different

motor carriers and brokers in California to perform

various trucking services. Plaintiff Thomas Odom also

owns and operates his own truck. He contracts as an

independent contractor with a national motor carrier

to haul property within California and between California and Texas.

For decades, the trucking industry has used an

owner-operator model to provide the transportation of

property in interstate commerce. That model generally involves a licensed motor carrier contracting with

an independent contractor driver to transport the carrier-customer’s property. The volume of trucking services needed within different industries can vary over

time based on numerous factors. For example, in the

agriculture industry, demand for trucking services

varies depending on the time of year, the price at

which the produce can be sold, the available markets,

the length of the growing season, and the size of the

crop, which itself varies based on temperature, rainfall, and other factors. Motor carriers offer many types

(1981). Thus, “the Federal Rules of Evidence do not strictly apply

to preliminary injunction proceedings.” Disney Entertainment,

Inc. v. VidAngel, Inc., 224 F. Supp. 3d 957, 966 (C.D. Cal. 2016),

aff’d. 869 F.3d 848 (9th Cir. 2017). Moreover, evidentiary issues

at this stage properly go to weight rather than admissibility, see

id. at 966, and the Court can easily assess the weight of the evidence without the parties’ arguments.

53a

of trucking services, including conventional trucking,

the transport of hazardous materials, refrigerated

transportation, flatbed conveyance, intermodal container transport, long-haul shipping, movement of

oversized loads, and more. Motor carriers meet the

fluctuating demand for highly varied services by relying upon independent-contractor drivers.

Individual owner-operators use a business model

common in both California and across the country.

They typically buy or lease their own trucks, a significant personal investment considering that the record

reflects a single truck can cost in excess of $100,000.

See, e.g., Doc. 54-2 at 5. Then, the owner-operators

typically work for themselves for some time to build

up their experience and reputation in the industry.

Once the owner-operator is ready to expand their

business, they contract for or bid on jobs that require

more than one truck, at which time, the owner-operator will subcontract with one or more other owner-operators to complete the job. Many individual owneroperators have invested in specialized equipment and

have obtained the skills to operate that equipment efficiently.

Whether certain laws and regulations in the California Labor Code apply to truck drivers, generally,

depends on their status as employees or independent

contractors. S.G. Borello & Sons, Inc. v. Dep’t of Indus.

Relations, 48 Cal. 3d 341, 350 (1989). For nearly three

decades, California courts have used a test, based on

the Borello decision, to determine whether workers

are correctly classified as employees or independent

contractors. See id. at 341. The Borello standard considers the “right to control work,” as well as many

other factors, including (a) whether the worker is engaged in a distinct occupation or business, (b) the

54a

amount of supervision required, (c) the skill required,

(d) whether the worker supplies the tools required, (e)

the length of time for which services are to be performed, (f) the method of payment, (g) whether the

work is part of the regular business of the principal,

and (h) whether the parties believe they are creating

an employer-employee relationship. Id. at 355. In

April of 2018, the California Supreme Court replaced

the Borello classification test for Wage Order No. 9

with the “ABC test.” Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018).

California’s Assembly-Bill 5 (“AB-5”) codified the

ABC test adopted in Dynamex and expanded its reach

to contexts beyond Wage Order No. 9, including workers’ compensation, unemployment insurance, and disability insurance. As applied to the motor carrier context, AB-5 provides a mandatory test for determining

whether a person driving or hauling freight for another contracting person or entity is an independent

contractor or an employee for all purposes under the

California Labor Code, the Industrial Welfare Commission wage orders, and the Unemployment Insurance Code. See Cal. Labor Code § 2750.3(a)(1). Under

AB-5’s ABC test, an owner-operator is presumed to be

an employee unless the motor carrier establishes each

of three requirements:

(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.

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(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.

AB-5 also includes certain exceptions that were not

part of the Dynamex test, including an exception for

“business-to-business contracting relationship[s].”2

Id. at § 2750.3(a)(1)(e). The statute additionally provides that “[i]f a court of law rules that the three-part

[ABC] test… cannot be applied to a particular context”

due, for example, to federal preemption, “then the determination of employee or independent contractor

status in that context shall instead be governed by

[Borello].” Id. at § 2750.3(a)(1)(3).

On September 18, 2019, California Governor

Gavin Newsom signed AB-5 into law. AB-5 went into

effect on January 1, 2020. On December 2, 2019,

Plaintiffs filed their motion for a preliminary injunction with a hearing set for December 30, 2019. When

the Court continued the hearing to January 13, 2020,

Plaintiffs filed a motion for a temporary restraining

order on December 24, 2019. After considering the

parties’ arguments in their briefing, the Court granted

the temporary restraining order and enjoined Defendants from enforcing AB-5 as to any motor carrier operating in California until this Court’s resolution of Plaintiffs’ motion for a preliminary injunction. On January

13, 2020, the Court heard argument on Plaintiffs’ motion for a preliminary injunction. At the hearing, the

Court extended the temporary restraining order until

2 The statute identifies numerous exempted occupations to which

Borello, rather than the ABC test, will continue to apply. The

exempted occupations include doctors, lawyers, accountants, investment advisers, commercial fishermen, and others. See Cal.

Labor Code § 2750.3(b)(1)-(6). Motor carriers are not exempted.

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the date of the Court’s decision on Plaintiffs’ motion.

For the following reasons, the Court finds a preliminary

injunction is warranted.

II.

DISCUSSION

In support of their motion for preliminary injunction, Plaintiffs argue they are highly likely to show

AB-5 is preempted by the FAAAA and by the Dormant

Commerce Clause. According to Plaintiffs, unless the

Court enjoins Defendants from enforcing AB-5, its

members will suffer irreparable injury, including constitutional injuries, as well as enforcement actions imposing civil and criminal penalties. The State Defendants oppose, contending that Plaintiffs are unlikely to

succeed on the merits of their claims, that Plaintiffs’

delay in seeking injunctive relief undermines their

claim of irreparable injury, and that the public interest weighs in the State Defendants’ favor. IntervenorDefendant International Brotherhood of Teamsters

opposes on the same grounds as the State Defendants

but with the additional contention that Plaintiffs CTA

and Odom lack standing.3 Accordingly, as a threshold

matter, the Court first addresses Plaintiffs’ standing

and then the four elements required for a preliminary

injunction.

A. Article III Standing

“One of the essential elements of a legal case or

controversy is that the plaintiff have standing to sue.”

Trump v. Hawaii, 138 S.Ct. 2392, 2416 (2018). To

demonstrate Article III standing, a plaintiff must

show a “concrete and particularized” injury that is

“fairly traceable” to the defendant’s conduct and “that

3 Throughout this Order, the Court refers to the State Defend-

ants and Intervenor-Defendant collectively as “Defendants.”

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is likely to be redressed by a favorable decision.”

Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547-48 (2016).

“At least one plaintiff must have standing to seek each

form of relief requested, and that party bears the burden of establishing the elements of standing with the

manner and degree of evidence required at the successive stages of the litigation.” City & Cty. of San Francisco v. U.S. Dept. of Homeland Security, 944 F.3d 773,

786-87 (9th Cir. 2019) (internal quotation marks and

citations omitted). “At this very preliminary stage,

plaintiffs may rely on the allegations in their Complaint and whatever other evidence they submitted in

support of their preliminary-injunction motion to

meet their burden.” Id. at 787.

Intervenor attacks Plaintiffs’ standing on three

grounds, none of which have merit. First, Intervenor

argues that Plaintiffs lack standing because they do

not establish the ABC test will be used against them,

and thus, they do not establish the requisite actual or

imminent injury. For the same reasons discussed in

the Court’s Order granting Plaintiffs’ temporary restraining order, the Court disagrees. Plaintiffs have

satisfied the imminent injury requirement where, assuming their interpretation of AB-5 is correct, they

face the choice of either implementing significant,

costly compliance measures or risking criminal and

civil prosecution. See, e.g., Cal. Unemp. Ins. Code §

2117; Cal. Labor Code § 1199.5; Cal. Labor Code §§

226.6 and 226.8. Indeed, as recently as December 23,

2019, Defendants expressly declined to withhold enforcement of AB-5, even for a short time. That is sufficient for standing in a pre-enforcement challenge.

See, e.g., Susan B. Anthony List v. Driehaus, 573 U.S.

149, 168 (2014) (finding petitioners in pre-enforcement challenge demonstrated an injury-in-fact sufficient for Article III standing); see also id. at 158

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(“When an individual is subject to [the threatened enforcement of a law], an actual arrest, prosecution, or

other enforcement action is not a prerequisite to challenging the law.”).

Next, Intervenor contends that to show a concrete

injury, CTA must definitively show that some of its

members’ drivers would be classified as independent

contractors under the pre-AB-5 Borello classification

test. The Court is not persuaded that such proof is required at this very preliminary stage. In other words,

Plaintiffs need not show with complete certainty that

a CTA member would be harmed by the ABC test but

not by the Borello test; rather, plaintiffs “need only establish a risk or threat of injury to satisfy the actual

injury requirement.” City & Cty. of San Francisco, 944

F.3d at 787 (quoting Harris v. Bd. of Supervisors, 366

F.3d 754, 762 (9th Cir. 2004) (emphasis in original)).

CTA has done so here by claiming that many of its

members contract with independent-contractor drivers, who can no longer be classified as independent

contractors under the ABC test.

Regardless, even if CTA were held to the higher

standard proposed by Intervenor, CTA would satisfy

it. In response to Intervenor’s challenge, CTA offers

evidence showing that some of its members’ drivers

have been classified as independent contractors under

Borello or tests like Borello.4 Furthermore, Intervenor’s apparent position—that CTA members’ drivers

4 Plaintiffs’ request for judicial notice of Exhibits A-C [Doc. 73-3]

is GRANTED. “[A] court may take judicial notice of its own records in other cases, as well as the records of an inferior court in

other cases.” United States v. Wilson, 631 F.2d 118, 119 (9th Cir.

1980). The Court is not persuaded by Intervenor’s arguments opposing judicial notice, particularly where Plaintiffs offered their

evidence in response to Intervenor’s attack on their standing.

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will always be classified as employees under Borello

and thus, the new ABC test’s classification of them as

employees cannot harm them—is undermined by the

Ninth Circuit’s own observations about the two tests.

See, e.g., California Trucking Ass’n v. Su, 903 F.3d

953, 964 (9th Cir. 2018) (distinguishing Borello test as

“contrary” to ABC tests adopted in other states because under Borello, “[w]hether the work fits within

the usual course of an employer’s business is one factor among many—and not even the most important

one”) (“[T]he Borello standard does not compel the use

of employees or independent contractors.”). Accordingly, the Court finds that, at this very preliminary

stage, Plaintiffs have carried their burden to show

some of its members face the risk of having their drivers, who would be classified as independent contractors under Borello, instead be misclassified as employees under the ABC test.

Finally, Intervenor argues that CTA lacks “associational standing” because it has not identified any

single CTA member who will be injured by use of the

ABC test to determine whether drivers are employees.

In support, Intervenor cites Summers v. Earth Island

Inst., which held that an association has standing to

represent its members’ interests when “at least one

identified member had suffered or would suffer

harm.” 555 U.S. 488, 498 (2009). Intervenor further

reasons that, if Defendants were enjoined from enforcing the ABC test, employment status would be decided

based on the prior Borello test. Thus, again, Interve-

Nonetheless, Intervenor’s request for judicial notice, [Doc. 78], is

GRANTED for the same reasons as Plaintiffs’ request, but Intervenor’s cases do not compel a different conclusion as to Plaintiffs’

standing.

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nor contends that because CTA does not submit evidence that any of its members’ drivers are not employees under Borello, there is no evidence that the ABC

test injures a single CTA member.

The Court disagrees. “[A]n 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

Com’n, 432 U.S. 333, 343 (1977). Associational standing is present here where CTA claims that many of its

members use independent-contractor drivers to provide interstate trucking services to customers in California and other states, and that, as a result, those

members have a concrete interest in knowing whether

they must fundamentally change their longstanding

business structure by shifting to using only employee

drivers when operating within California.

Moreover, Summers is distinguishable from

CTA’s case. Summers involved a dispute about a timber project that had settled, and “no other project

[was] before the court in which respondents were

[even] threatened with injury in fact.” Summers, 555

U.S. at 491-92. Unlike Summers, the dispute here facing CTA’s members is still very much alive because

without preliminary injunctive relief, AB-5 will apply

to them and likely be enforced against CTA’s members

to the full extent of the law. The Ninth Circuit, too,

has expressed doubt that “Summers, an environmental case brought under the National Environmental

Policy Act, stands for the proposition that an injured

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member of an organization must always be specifically identified in order to establish Article III standing for the organization.” Nat’l Council of La Raza v.

Cegavske, 800 F.3d 1032, 1041 (9th Cir. 2015). The

Ninth Circuit explained:

where it is relatively clear, rather than merely

speculative, that one or more members have

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

not know the identity of a particular member

to understand and respond to an organization’s claim of injury, we see no purpose to be

served by requiring an organization to identify by name the member or members injured.

Id. Such is the case here. Intervenor offers no reason

why it cannot address the predominately legal claims

brought by CTA without the identification of a particular CTA member. Thus, for the previous reasons, the

Court is satisfied that Plaintiffs have standing at this

very preliminary stage.5

B. Preliminary Injunction

“Generally, the purpose of a preliminary injunction is to preserve the status quo and the rights of the

parties until a final judgment issues in the cause.”

City & Cty. of San Francisco, 944 F.3d at 789. Plaintiffs can obtain a preliminary injunction where they

5 At the January 13, 2020 oral argument, Plaintiffs’ counsel clar-

ified that they seek relief only as to their motor carrier members.

Thus, the Court need not consider Intervenor’s challenge to

owner-operator Odom’s standing. Odom’s standing bears no relevance on whether the Court can enjoin enforcement of AB-5’s

ABC test as to motor carriers because Odom is not a motor carrier.

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establish four factors: “(1) that [they are] likely to succeed on the merits, (2) that [they are] likely to suffer

irreparable harm in the absence of preliminary relief,

(3) that the balance of equities tips in [their] favor,

and (4) that an injunction is in the public interest.” Id.

at 788-89 (quoting Winter v. NRDC, 555 U.S. 7, 22

(2008)). In the alternative, however, “‘serious questions going to the merits’ and a balance of hardship

that tips sharply towards the plaintiff[s] can support

issuance of a preliminary injunction, so long as the

plaintiff[s] also show[] that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 789 (quoting All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011)).

1. Likelihood of Success on the Merits

To prevail on their motion for a preliminary injunction, Plaintiffs must establish, at a minimum,

that there are “serious questions” on the merits of at

least one of their challenges to AB-5’s ABC test. See

Cottrell, 632 F.3d at 1135. For the following reasons,

Plaintiffs have done so with their FAAAA preemption

challenge.6

Within the FAAAA, Congress included an express

preemption provision, which provides that 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… with

respect to the transportation of property.” 49 U.S.C. §

14501(c)(1). The preemption provision is a broad one.

“The phrase ‘related to’ embraces state laws ‘having a

6 For purposes of preliminary injunctive relief, Plaintiffs have

satisfied this prong based on the FAAAA preemption ground.

Thus, the Court declines at this time to analyze Plaintiffs’ alternative Dormant Commerce Clause challenge to AB-5.

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connection with or reference to’ carrier ‘rates, routes,

or services,’ whether directly or indirectly.” Cal.

Trucking Ass’n v. Su, 903 F.3d 953, 960 (9th Cir.

2018). As the Ninth Circuit has explained, “[t]here can

be no doubt that when Congress adopted the FAAA

Act, it intended to broadly preempt state laws that

were ‘related to a price, route or service’ of a motor

carrier.” Am. Trucking Ass’ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1053 (9th Cir. 2009) (emphasis

added).

Similarly, the First Circuit has explained that

Congress had “dual objectives” for adopting a “broad

reach” by copying the language of the Airline Deregulation Act of 1978 into the FAAAA’s preemption

clause: (1) “to ensure that the States would not undo

federal deregulation with regulation of their own” and

(2) “to avoid a patchwork of state service-determining

laws, rules, and regulations.” Schwann v. FedEx

Ground Pkg. System, Inc., 813 F.3d 429, 436 (1st Cir.

2016) (internal quotation marks and citations omitted). To be sure, the breadth of the FAAAA’s preemption clause “does not mean the sky is the limit”: “Congress did not intend to preempt laws that implement

California’s traditional labor protection powers, and

which affect carriers’ rates, routes, or services in only

tenuous ways.” Su, 903 F.3d at 960-61 (emphasis

added) (citing Dilts v. Penske Logistics, LLC, 769 F.3d

637, 647-50 (9th Cir. 2014) (meal and rest break laws)

and Californians for Safe & Competitive Dump Truck

Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir.

1998) (prevailing wage law)); see also id. at 960 (“[T]he

FAAAA does not preempt state laws that affect a carrier’s prices, routes, or services in only a tenuous, remote or peripheral manner with no significant impact

on Congress’s deregulatory objectives.”) (internal quo-

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tation marks omitted). Still, where a state law “significantly impacts a carrier’s prices, routes, or services,”

it is “forbidden.” Id.

Whether the FAAAA preempts AB-5 and its ABC

test is a matter of first impression in this circuit, but

Ninth Circuit jurisprudence touching on the issue

strongly suggests preemption. For example, in American Trucking Associations, Inc. v. City of Los Angeles,

the Ninth Circuit reversed the district court’s denial

of American Trucking Association’s (“ATA”) motion

for a preliminary injunction and even took the unusual step of remanding with instructions to the district court to issue a preliminary injunction. 559 F.3d

1046, 1060-61 (9th Cir. 2009). ATA contended that the

FAAAA preempted various provisions in the Port’s

mandatory concession agreements for drayage trucking services at ports. As to the provision requiring motor carriers to use employee drivers rather than independent-contractor drivers, the Ninth Circuit concluded it could “hardly be doubted” that the FAAAA

preempted the provision and that, unless the Port

could demonstrate an exception to the FAAAA’s

preemption provision applied, the motor carriers

would likely prevail on their challenge.7 Id. at 1053.

The Ninth Circuit went on to conclude that the concession agreement’s provision requiring the “phasing

out” of thousands of independent contractors “is one

likely to be shown to be preempted.” Id. at 1056.

California Trucking Association v. Su offers additional guidance. 903 F.3d 953 (9th Cir. 2018). There,

7 Here, Defendants do not argue a similar exception to the

FAAAA’s preemption provision applies to the ABC test; instead,

they contend the ABC test does not fall within the broad scope of

the FAAAA’s preemption provision.

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the Ninth Circuit considered whether the FAAAA

preempted the Borello multi-factor test for distinguishing between employees and independent contractors. In so doing, the Ninth Circuit noted the “obvious proposition” for which American Trucking stood:

“that an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers…was

likely preempted [by the FAAAA].” Id. at 964. The

court then distinguished the Borello test as “wholly

different from [the provision at issue in] American

Trucking” because neither the Borello standard or

“the nature of the Borello standard compell[ed] the

use of employees to provide certain carriage services.”

Id. The Ninth Circuit distinguished the Borello test

from the ABC test adopted in other states, noting “the

application of which courts have then held to be

preempted.” Id. It did so by explaining that, “[l]ike

American Trucking, the ‘ABC’ test may effectively

compel a motor carrier to use employees for certain

services because, under the ‘ABC’ test, a worker

providing a service within an employer’s usual course

of business will never be considered an independent

contractor.” Id. (emphasis added). The court further

explained that, under Borello and in contrast to the

ABC test, “whether the work fits within the usual

course of an employer’s business is one factor among

many—and not even the most important one.” Id. (emphasis added).

Although not binding on this Court, the First Circuit’s recent analysis of an ABC test identical to California’s is persuasive. In Schwann v. FedEx Ground

Package System, Inc., the First Circuit held the

FAAAA preempted Massachusetts’ ABC test’s Prong B

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as applied to FedEx.8 813 F.3d 429 (1st Cir. 2016). In

so holding, the First Circuit reasoned:

The regulatory interference posed by Plaintiffs’ application of Prong 2 is not peripheral.

The decision whether to provide a service directly, with one’s own employee, or to procure

the services of an independent contractor is a

significant decision in designing and running

a business.… Such an application of state law

poses a serious potential impediment to the

achievement of the FAAAA’s objectives because a court, rather than the market participant, would ultimately determine what services that company provides and how it

chooses to provide them.

Id. at 438.

Together, these cases show that the FAAAA likely

preempts “an all or nothing” state law like AB-5 that

categorically prevents motor carriers from exercising

their freedom to choose between using independent

In both statutes, Prong B is the Achilles heel. California’s

Prong B is identical to the preempted Massachusetts test because neither test permits an alternative method for using an

independent-contractor driver. Cf. Bedoya v. Am. Eagle Express

Inc., 914 F.3d 812, 824 (3d Cir. 2019) (finding New Jersey’s ABC

test not preempted by FAAAA because New Jersey test provided

an alternative method by which a motor carrier could still use

independent contractors via the additional clause: “or [performs

such service] outside of all the places of business of [the employer]”) (emphasis added) (distinguishing between Massachusetts’ ABC test by explaining “[t]he Massachusetts statute does

not include New Jersey’s alternative method for reaching independent contractor status—that is, by demonstrating that the

worker provides services outside of the putative employer’s

‘places of business’”).

8

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contractors or employees. See also Bedoya v. Am. Eagle Express Inc., 914 F.3d 812, 824 (3d Cir. 2019)

(holding New Jersey’s ABC test is not preempted by

the FAAAA because contrary to Massachusetts’ test,

it includes an “alternative method for reaching independent contractor status—that is, by demonstrating

that the worker provides services outside of the putative employer’s ‘places of business,’” and “[n]o part of

the New Jersey test categorically prevents carriers

from using independent contractors.”). Yet, that is

precisely the case here. Because contrary to Prong B,

independent-contractor drivers necessarily perform

work within “the usual course of the [motor carrier]

hiring entity’s business,” drivers who may own and

operate their own rigs will never be considered independent contractors under California law.9 Thus, it

follows that Prong B of the ABC test requires motor

carriers to artificially reclassify all independent-contractor drivers as employee-drivers for all purposes

under the California Labor Code, the Industrial Welfare Commission wage orders, and the Unemployment

Insurance Code. See Cal. Labor Code § 2750.3(a)(1).

Indeed, the Ninth Circuit has already acknowledged

the likelihood of such a test being preempted by the

9 During the January 13, 2020 hearing, the Court repeatedly in-

vited Defendants to explain how the ABC test was not an “all or

nothing” test. Specifically, the Court invited them to explain how

a motor carrier could contract with an independent owner-operator as an independent contractor, rather than as an employee,

under the ABC test. Neither the State nor Intervenor could provide an example. Instead, Defendants repeatedly asserted that a

broker company that did not perform trucking work could plausibly contract with an independent owner-operator. Brokers,

however, are not motor carriers. Accordingly, the Court observes

that the ABC test appears to be rigged in such a way that a motor

carrier cannot contract with independent contractor owner-operators without classifying them as employees.

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FAAAA. See Su, 903 F.3d at 964 (“Like American

Trucking, the ‘ABC’ test may effectively compel a motor carrier to use employees for certain services because, under the ‘ABC’ test, a worker providing a service within an employer’s usual course of business will

never be considered an independent contractor.”) (emphasis added).

Notably, the first and only court thus far to consider an FAAAA preemption challenge to AB-5

agreed. On January 8, 2020, the Los Angeles Superior

Court ruled that because the ABC test effectively prohibits motor carriers from using independent contractors to provide transportation services, the test has a

significant, impermissible effect on motor carriers’

“prices, routes, and services,” and thus, is preempted

by the FAAAA. The People of the State of California v.

Cal Cartage Transportation Express, LLC, Case No.

BC689320 (Los Angeles Superior Court January 8,

2020). Moreover, other district courts considering

FAAAA preemption challenges to California’s ABC

test, albeit under the pre-AB-5 Dynamex standard,

have applied similar logic and found the FAAAA

preempts Prong B. See, e.g., B&O Logistics, Inc. v.

Cho, 2019 WL 2879876, at *2-4 (C.D. Cal. April 15,

2019) (holding “Su, American Trucking, and Schwann

collectively establish that the FAAAA preempts a state

law that categorically requires a motor carrier to hire

employees—and not independent contractors—as

drivers. Here, the B prong of Dynamex’s ABC test

would require Plaintiff to reclassify Defendant as an

employee for the purposes of California’s wage orders

(which regulate, inter alia, minimum wages, maximum hours, and meal and rest breaks) because Defendant performs work that is in the usual course of

Plaintiff’s business (i.e., transporting property),” and

thus, “Plaintiff may seek a declaration that the B

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prong is preempted by the FAAAA”); Valadez v. CSX

Intermodal Terminals, Inc., 2019 WL 1975460, at *7-8

(N.D. Cal. March 15, 2019) (finding the FAAAA

preempts Prong B of the ABC test in Dynamex in part

because Prong B “effectively prevents motor carriers

from using independent contractors to perform services within their usual course of business,” and “Su

strongly indicates that a state law that would prevent

a motor carrier, like Defendant, from hiring independent contractors, rather than employees, to perform its

services would be preempted by the FAAAA”); Alvarez

v. XPO Logistics Cartage LLC, 2018 WL 6271965, at

*4-5 (C.D. Cal. Nov. 15, 2018) (relying in part on Su

and finding “the ABC test [as adopted in Dynamex] ‘relates’ to a motor carrier’s services in more than a ‘tenuous’ manner and is therefore preempted by the

FAAAA”); contra. Henry v. Central Freight Lines, Inc.,

2019 WL 2465330, at *5 (E.D. Cal. June 13, 2019)

(holding the FAAAA does not preempt the Dynamex

ABC test because “[t]he Dynamex ABC test is a general classification test that does not apply to motor carriers specifically and does not, by its terms, compel a

carrier to use an employee or an independent contractor.”); Western States Trucking Ass’n v. Schoorl, 377 F.

Supp. 3d 1056, 1070-71 (E.D. Cal. 2019) (relying on

Dilts to hold the FAAAA does not preempt Dynamex’s

ABC test); Phillips v. Roadrunner Intermodal Svcs.,

2016 WL 9185401, at *4-7 (C.D. Cal. Aug. 16, 2016)

(same).

Defendants offer a variety of arguments against

FAAAA preemption, but none are persuasive. For example, Defendants argue that Su and American

Trucking have no bearing on the ABC test. In so doing, however, Defendants attempt to characterize the

ABC test as “not requir[ing] that motor carriers—or

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anyone at all—transition from independent contractors to employees,” but “[i]nstead, [as] merely

provid[ing] the applicable test to assess whether a

worker is an independent contractor or an employee.”

Doc. 55 at 18. Defendants’ curious argument is that

“the ABC test itself imposes no legal obligations” because it only sets forth the test for determining

whether California’s labor laws apply to a worker.

Doc. 58 at 19. Although it is technically true that nothing in the ABC test prohibits motor carriers from contracting with independent contractors, that argument

merely poses a distinction without a difference. Put

another way, it is true that the statute does not expressly state that motor carriers cannot contract with

independent contractors, but Prong B permits motor

carriers to contract with independent contractors only

if they classify and treat those independent contractors as employees under California law.

The Court is similarly unpersuaded by Defendants’ contention that this Court lacks the ability to

consider whether AB-5 is preempted because, according to Defendants, the ABC test is merely a “test for

employment.” Doc. 58 at 19. According to Defendants,

“[t]he question for purposes of Plaintiffs’ FAAAA

preemption claim is… whether California’s employment laws that attach through the ABC test are

preempted,” rather than the ABC test, itself. Doc. 58

at 19 (emphasis added). To support their theory, Defendants rely upon the unpublished district court

opinion from which the parties appealed in Su. That

opinion, however, is both not binding and lacks persuasive value, particularly in light of the Ninth Circuit’s decision. See Su, 903 F.3d at 955 (distinguishing

Borello standard from Massachusetts ABC test by explaining “the ABC test may effectively compel a motor

carrier to use employees for certain services because,

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under the ABC test, a worker providing a service

within an employer’s usual course of business will

never be considered an independent contractor”). Contrary to Defendants’ position, the Court finds that “the

question is not whether the FAAAA preempts California’s wage orders [and other employment laws]; rather, it is whether [AB-5’s] ABC test—used to interpret the wage orders [and other employment laws]—

is preempted.” Alvarez v. XPO Logistics Cartage LLC,

2018 WL 6271965, at *5 (C.D. Cal. Nov. 15, 2018).

Next, Defendants argue that the FAAAA’s

preemption provision does not apply to the ABC test

because, according to Defendants, that test is a “law

of general applicability.” First, to the extent Defendants posit that a law of general applicability cannot be

preempted, they are incorrect. See Su, 903 F.3d at 966

(“This is not to say that the general applicability of a

law is, in and of itself, sufficient to show it is not

preempted.”) (citing Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 386 (1992)). For the same reason,

the Court rejects Defendants’ reliance on People ex rel.

Harris v. Pac Anchor Transp., Inc., 59 Cal. 4th 772

(2014). Contrary to Defendants’ reading, Pac Anchor

does not foreclose FAAAA preemption of the ABC test.

As the Los Angeles Superior Court reasoned, “the better reading of Pac Anchor is not that laws of general

applicability are always immune from FAAAA

preemption. Rather, Pac Anchor left open the possibility that state laws prohibiting motor carriers from using independent owner-operator truck drivers might

be preempted—and even suggested that they would.”

Cal Cartrage, Case No. BC689320, at 11. Still, “[w]hile

general applicability is not dispositive,… it is a relevant consideration because it will likely influence

whether the effect on prices, routes, and services is

tenuous or significant.” Su, 903 F.3d at 966. The

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Ninth Circuit further explained that “[w]hat matters

is not solely that the law is generally applicable, but

where in the chain of a motor carrier’s business it is

acting to compel a certain result (e.g., a consumer or

workforce) and what result it is compelling (e.g., a certain wage, non-discrimination, a specific system of delivery, a specific person to perform the delivery).” Id.

Here, the Court is not persuaded that the ABC test is

a law of general applicability, but even if it were,

Plaintiffs have shown the ABC test is still likely

preempted by the FAAAA because it compels a certain

result—by “compel[ling] a motor carrier to use employees for certain services.” Id. at 964.

Defendants argue that Dilts v. Penske Logistics,

LLC, 769 F.3d 637, 649 (9th Cir. 2014) and Californians for Safe & Competitive Dump Truck Transp. v.

Mendonca, 152 F.3d 1184, 1189 (9th Cir. 1998) require the opposite conclusion. The preemption issues

in those cases, however, are significantly different

from the preemption issue raised here. Dilts and Mendonca concerned workers that had already been

properly classified as “employees.” In Dilts, the Ninth

Circuit held that specific California Labor Code protections for employees—meal and rest break laws—

were not preempted by the FAAAA because they were

“normal background rules for almost all employers doing business in the state of California” and did not,

either directly or indirectly “set prices, mandate or

prohibit certain routes, or tell motor carriers what services they may or may not provide, either directly or

indirectly.” Dilts, 769 F.3d at 647 (emphasis in original); see also Mendonca, 152 F.3d at 1187-89 (holding

FAAAA did not preempt California’s prevailing wage

law as applied to employees); Ridgeway et al. v.

Walmart, Inc., Case No. 17-15983 (9th Cir. Jan. 6,

2020) (holding FAAAA did not preempt California’s

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wage law requiring trucking company to pay minimum wages for driver rest time during which the company retains control over the driver because the law

did not set prices, mandate or prohibit certain routes,

or tell motor carriers what services they may provide).

In contrast, the present case concerns the test

used to classify workers for the purpose of determining whether all of California employment laws do or

do not apply, rather than a small group of those laws,

such as the meal break regulations in Dilts. Thus, the

combined effect of all such laws has a significant impact on motor carriers’ prices, routes, or services. Accordingly, Dilts and other similar cases are distinguishable because they focus on whether discrete

wage-and-hour laws and regulations had more than a

tenuous impact on motor carriers’ prices, routes, or

services, not whether the combined impact of applying

all of California’s employment laws to independent

owner-operators had more than a tenuous impact on

motor carriers’ prices, routes, or services. Moreover,

while Dilts reasoned that “applying California’s meal

and rest break laws to motor carriers would not contribute to an impermissible ‘patchwork’ of state-specific laws, defeating Congress’s deregulatory objectives,” the ABC test certainly would. Dilts, 769 F.3d at

647 (emphasis added). By effectively prohibiting motor carriers from contracting with independent-contractor drivers, AB-5 and its ABC test would transform California into its own patch in the very “patchwork” of state-specific laws Congress intended to prevent.10

10 The Court is aware of only one state, Massachusetts, that has

adopted an identical ABC test to that adopted in California’s AB-

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Finally, the Court is not persuaded by Intervenor’s brief, conclusory argument that “Plaintiffs fail to

establish that motor carriers cannot avail themselves

of AB-5’s business-to-business exception.” Doc. 58 at

25. To the extent Intervenor contends a motor carrier

could contract with an independent contractor under

AB-5’s business-to-business exception, Intervenor has

not shown how that is possible. Further, like the Los

Angeles Superior Court, this Court is skeptical that

motor carriers could, in fact, avail themselves of that

exception, particularly where the State Defendants,

who are tasked with enforcing AB-5, do not expressly

concede that the exception would apply.11 Accordingly,

the Court adopts the thorough reasoning of the Los

Angeles Superior Court’s January 8, 2020 order rejecting that argument. See Cal Cartrage, Case No.

BC689320, at 12-14 (rejecting plaintiff’s argument

that the “business-to-business” exception saves AB-5

from FAAAA preemption as applied to motor carriers).

The Court finds AB-5’s ABC test has more than a

“tenuous, remote, or peripheral” impact on motor carriers’ prices, routes, or services, particularly in light of

our Ninth Circuit jurisprudence casting serious doubt

on the type of “all or nothing rule” that AB-5 implements. Thus, for the previous reasons, Plaintiffs have

5. Notably, the First Circuit struck down the identical Massachusetts test as preempted by the FAAAA. See Schwann v. FedEx

Ground Package System, Inc., 813 F.3d 429 (1st Cir. 2016).

11 In fact, until the January 13, 2020 hearing, the State Defendants were silent on the business-to-business exception. During

the hearing, for the first time, the State Defendants expressed

that the exception could potentially apply to motor carriers, but

not that it definitively would.

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carried their burden at this preliminary stage of showing a likelihood of success on the merits as to their

FAAAA preemption challenge. In the alternative,

Plaintiffs have certainly raised “serious questions” going to the merits.

2. Irreparable Harm

As to the second element, the Court finds Plaintiffs have carried their burden to show the likelihood

of irreparable harm. As this Court previously concluded at the temporary restraining order stage,

Plaintiffs have shown that irreparable harm is likely

because without significantly transforming their business operations to treat independent-contractor drivers as employees for all specified purposes under California laws and regulations, they face the risk of governmental enforcement actions, as well as criminal

and civil penalties. See, e.g., Cal. Unemp. Ins. Code §

2117; Cal. Labor Code § 1198.5; Cal. Labor Code §§

226.6 and 226.8.12 Just as the Ninth Circuit noted in

American Trucking, “motor carriers are being put to a

kind of Hobson’s choice, not entirely unlike that which

faced the airlines in Morales v. Trans World Airlines,

Inc., 504 U.S. 374 (1992).” American Trucking, 559

F.3d at 1057 (9th Cir. 2009). In Morales, several

states’ attorneys general set out to regulate airline advertising and the compensation of passengers who

gave up their seats on overbooked flights. Morales,

504 U.S. at 379. Noting that the attorneys general

12 Defendants’ contention that any irreparable harm is undermined by Plaintiffs’ delay in moving for preliminary injunctive

relief does not require a different conclusion. It is true that Plaintiffs could have moved for a preliminary injunction within weeks,

rather than months, of AB-5’s adoption in September 2019, but

the Court is not persuaded that a two month delay in filing the

motion wholly undermines their showing of irreparable harm.

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“had made clear that they would seek to enforce the

challenged portions of the guidelines,” the Supreme

Court observed that injunctive relief is available

where there exists a threat of imminent proceedings

of a criminal or civil nature against parties who are

affected by an unconstitutional act. Id. at 380-81. The

Supreme Court further opined that the respondents

faced “a Hobson’s choice: continually violate the Texas

law and expose themselves to potentially huge liability; or violate the law once as a test case and suffer the

injury of obeying the law during the pendency of the

proceedings and any further review.” Id. at 381.

Similarly, in remanding to the district court to issue a preliminary injunction, the Ninth Circuit in

American Trucking found the motor carriers faced a

sort of Hobson’s choice because “a very real penalty

attaches to the motor carriers regardless of how they

proceed,” and “[t]hat is an imminent harm.” American

Trucking, 559 F.3d at 1058. Here, motor carriers

wishing to continue offering the same services to their

customers in California must do so using only employee drivers, meaning they must significantly restructure their business model, including by obtaining

trucks, hiring and training employee drivers, and establishing administrative infrastructure compliant

with AB-5. The only alternative available to motor

carriers is to violate the law and face criminal and

civil penalties. The Court is satisfied that Plaintiffs

have shown a likelihood of irreparable injury without

injunctive relief.

3. Balance of Equities; The Public Interest

If after the preliminary injunction stage, the

Court finds that AB-5 is preempted by the FAAAA,

motor carriers will have suffered harm due to AB-5’s

application to and enforcement against them. See

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American Trucking, 559 F.3d at 1059 (finding the balance of equities and public interest weighed in favor

of motor carriers, explaining, “[W]e have outlined the

hardships that motor carriers will suffer if, as is

likely, many provisions of the Concession agreements

are preempted and are, thus, being imposed in violation of the Constitution”). On the other side of the

scale, Defendants have legitimate concerns about preventing the misclassification of workers as independent contractors. Nonetheless, with or without the ABC

test, California still maintains numerous laws and

regulations designed to protect workers classified as

employees and to prevent misclassification, and the

pre-AB-5 Borello standard will continue as the applicable classification test. See Cal. Labor Code §

2750.3(a)(3) (mandating that should a court rule that

the ABC test cannot be applied to a particular context,

the pre-AB-5 Borello test will apply). Thus, on balance, the hardships faced by Plaintiffs significantly

outweigh those faced by Defendants.

Similarly, the Court finds that the public interest

supports preliminary injunctive relief. The Court recognizes the Legislature’s public interest in protecting

misclassified workers, which it attempted to further

address with AB-5. That public interest, however,

“must be balanced against the public interest represented in Congress’s decision to deregulate the motor

carrier industry, and the Constitution’s declaration

that federal law is to be supreme.” American Trucking, 559 F.3d at 1059-60. Therefore, the public interest tips sharply in Plaintiffs’ favor.

III. CONCLUSION

FAAAA preemption is broad but not so broad that

the sky is the limit: states retain the ability to execute

their police power with laws that do not significantly

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impact rates, routes, or services. Here, however, there

is little question that the State of California has encroached on Congress’ territory by eliminating motor

carriers’ choice to use independent contractor drivers,

a choice at the very heart of interstate trucking. In so

doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that

produces the patchwork of state regulations Congress

sought to prevent. With AB-5, California runs off the

road and into the preemption ditch of the FAAAA. Accordingly, Plaintiffs’ motion for a preliminary injunction is GRANTED.

It is further ORDERED:

1. Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California,

Julia A. Su, in her official capacity as the Secretary of

the California Labor and Workforce Development

Agency, Andre Schoorl, in his official capacity as the

Acting Director of the Department of Industrial Relations of the State of California, Lilia Garcia Brower,

in her official capacity as the Labor Commissioner of

the State of California, and Patrick Henning, in his

official capacity as Director of the California Employment Development Department are temporarily enjoined from enforcing Assembly Bill 5’s ABC test, as

set out in Cal. Labor Code § 2750.3(a)(1), as to any

motor carrier operating in California, pending the entry of final judgment in this action.

2. Because there is no realistic likelihood of harm

to Defendants from granting a preliminary injunction

as to the enforcement of AB-5’s ABC test, a security

bond is not required.

IT IS SO ORDERED.

Date: January 16, 2020

_________________________

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HON. ROGER T. BENITEZ

United States District Judge

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APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Nos. 20-55106-20-55107

CALIFORNIA TRUCKING ASSOCIATION;

et al.,

Plaintiffs-Appellees,

v.

ROBERT ANDRES BONTA, Esquire, in his

official capacity as the Attorney General of the State

of California; et al.,

Defendants-Appellants,

and

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS,

Intervenor-Defendant

D.C. No. 3:18-cv-02458-BEN-BLM

Southern District of California, San Diego

June 21, 2021

ORDER

Before: IKUTA and BENNETT, Circuit Judges, and

WOODLOCK1, District Judge.

Appellees’ Petition for Rehearing En Banc (Dkt.

104) is DENIED. Judge Ikuta voted to deny the petition for rehearing en banc, and Judge Woodlock so recommended. Judge Bennett voted to grant the petition

for rehearing en banc. The petition for rehearing en

The Honorable Douglas P. Woodlock, United States District

Judge for the District of Massachusetts, sitting by designation.

1

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banc was circulated to the judges of the court, and no

judge requested a vote for en banc consideration.

The petition for rehearing en banc is DENIED.

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APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Nos. 20-55106-20-55107

CALIFORNIA TRUCKING ASSOCIATION;

et al.,

Plaintiffs-Appellees,

v.

ROBERT ANDRES BONTA, Esquire, in his

official capacity as the Attorney General of the State

of California; et al.,

Defendants-Appellants,

and

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS,

Intervenor-Defendant

D.C. No. 3:18-cv-02458-BEN-BLM

Southern District of California, San Diego

June 23, 2021

ORDER

Before: IKUTA and BENNETT, Circuit Judges, and

WOODLOCK1, District Judge.

Appellees’ Motion to Stay Issuance of the Mandate

is GRANTED. Pursuant to Fed. R. App. P. 41(d)(2),

the mandate in the case is stayed to permit appellees

to file a petition for writ of certiorari in the Supreme

Court. Should the Supreme Court grant certiorari, the

The Honorable Douglas P. Woodlock, United States District

Judge for the District of Massachusetts, sitting by designation.

1

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mandate will be stayed pending its disposition of the

case. Should the Supreme Court deny certiorari, the

mandate will issue immediately. The parties shall advise this court immediately upon the Supreme Court’s

decision.