Amicus Curiae Brief — California Trucking Association, Inc., et al., Petitioners v. Rob Bonta, Attorney General of California, et al.

No. 21-194

I N THE

Supreme Court of the United States

____________

CALIFORNIA TRUCKING ASSOCIATION, INC., ET AL.,

Petitioners,

v.

ROBERT BONTA, ATTORNEY GENERAL OF

CALIFORNIA, ET AL.,

Respondents.

____________

On Petition for a Writ Of Certiorari to

the United States Court Of Appeals for the

Ninth Circuit

____________

BRIEF FOR AMICI CURIAE

SHIPPER TRADE ASSOCIATIONS

SUPPORTING PETITIONERS

____________

KARYN A. BOOTH

Counsel of Record

JASON D. TUTRONE

THOMPSON HINE LLP

1919 M St. NW, Suite 700

Washington, DC 20036

(202) 331-8800

Karyn.Booth@

ThompsonHine.com

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

Table of Authorities................................................... ii

Interest of the Amici Curiae ...................................... 1

Introduction and Summary of Argument .................. 4

Reasons for Granting the Petition ............................. 9

I. Congress Enacted FAAAA Preemption to

Facilitate the Free Flow of Interstate

Commerce by Preventing State Interference

in the Trucking Market. ....................................... 9

II. AB-5’s Impact on Trucking Services Will

Place a Significant Burden on Interstate

Commerce and the American Economy. ............ 11

A.

AB-5 impairs trucking capacity

that is critical to many industries

and to supply-chain resiliency. ........... 12

B.

Changes to the California

trucking market from AB-5 will

have national impacts......................... 16

C.

Businesses will have to make

California-specific changes to

their supply chains. ............................ 18

Conclusion ................................................................ 21

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Dan’s City Used Cars, Inc. v. Pelkey,

569 U.S. 251 (2013) .............................................. 10

Nw., Inc. v. Ginsberg,

572 U.S. 273 (2014) .............................................. 11

Rowe v. N.H. Motor Transp. Ass’n,

552 U.S. 364 (2008) ...................................... passim

Schwann v. FedEx Ground Package

Sys., Inc.,

813 F.3d 429 (1st Cir. 2016) .................................. 8

Statutes and Regulations

49 U.S.C. § 13101(2)(C), (D) ........................................ 9

49 U.S.C. § 14501(c) .............................................. 1, 10

49 U.S.C. § 41713(b)(1) ............................................. 10

Federal Aviation Administration

Authorization Act of 1994, Pub. L.

103-305, § 601(a)(1), 108 Stat. 1569,

1605 (1994) ........................................................... 10

Motor Carrier Act of 1980, Pub. L. 96296, 94 Stat. 793 (1980) ......................................... 9

iii

TABLE OF AUTHORITIES—continued

Page(s)

Hazardous Materials Regulations, 49

C.F.R. Parts 171-180............................................ 14

Cal. Lab. Code § 2775 .................................................. 1

Other Authorities

Abha Bhattarai, How the Delta Variant

Stole Christmas: Empty Shelves,

Long Waits – and Yes, Higher Prices,

Wash. Post (Sept. 1, 2021, 7:49 AM),

https://www.washingtonpost.com/

business/2021/09/01/holidayshipping-delays-inflation/ .................................... 14

About, Port of L.A., https://

www.portoflosangeles.org/business/

statistics/facts-and-figures (last

visited Sept. 10, 2021 ............................................. 7

Am. Chemistry Council, 2021 Guide to

the Business of Chemistry 19 (2021),

https://www.americanchemistry.com/

chemistry-in-america/data-industrystatistics/resources/2021-guide-tothe-business-of-chemistry .................................... 15

iv

TABLE OF AUTHORITIES—continued

Page(s)

Ari Hawkins, A Trucking Crisis Has the

U.S. Looking for More Drivers

Abroad, Bloomberg (Aug. 2, 2021,

10:00 AM), https://

www.bloomberg.com/news/articles/

2021-08-02/a-trucking-crisis-has-theu-s-looking-for-more-drivers-abroad ..................... 7

Austen Hufford, Kyle Kim & Andrew

Levinson, Why Is the Supply Chain

Still So Snarled? We Explain, With a

Hot Tub, Wall St. J. (Aug. 26, 2021,

10:18 AM), https://www.wsj.com/

articles/why-is-the-supply-chainstill-so-snarled-we-explain-with-ahot-tub-11629987531 ........................................... 16

Bureau of Transp. Statistics & U.S.

Census Bureau, 2017 Commodity

Flow Survey 29 tbl. A1a (2020),

https://www.census.gov/content/dam/

Census/library/publications/2017/

econ/ec17tcf-us.pdf ................................................. 6

v

TABLE OF AUTHORITIES—continued

Page(s)

Eun-Young Jeong & Dan Strumpf,

From Tablets to Sex Toys, the Chip

Shortage Is Far-Reaching, Wall St.

J. (Apr. 30, 2021, 7:45 AM),

https://www.wsj.com/articles/expanding-from-autos-to-appliances-andsex-toys-the-chip-shortage-is-farreaching-11619783117 ......................................... 17

Facts & Figures, Port of L.A., https://

www.portoflosangeles.org/business/

statistics/facts-and-figures (last

visited Sept. 10, 2021) .......................................... 17

Freight Analysis Framework, Nat’l

Transp. Rsch. Ctr., https://

faf.ornl.gov/faf5/SummaryTable.aspx

(last visited Sept. 10, 2021) (follow

“2017” hyperlink for “Tonnage/Value

for shipments Within, From, and To

State by Trade Type and Mode”

table) ................................................................. 7, 18

H.R. Rep. No. 103-677 (1994).............................. 10, 20

vi

TABLE OF AUTHORITIES—continued

Page(s)

Jeanna Smialek & Madeleine Ngo,

What an Adult Tricycle Says About

the World’s Bottleneck Problems,

N.Y. Times (Aug. 30, 2021), https://

www.nytimes.com/2021/08/23/

business/economy/supply-chainbottlenecks-coronavirusinflation.html ....................................................... 17

Jennifer Smith, Truckers Expect U.S.

Transport Capacity Crunch to

Persist, Wall St. J. (May 2, 2021,

8:00 AM), https://www.wsj.com/

articles/truckers-expect-u-stransport-capacity-crunch-to-persist11619956801 ........................................................ 16

Paul Davidson, Shoppers Face

Shortages of Cars, Shirts and Smart

Speakers Amid Covid-19 Shipping

Delays, USA Today (Feb. 1, 2021,

2:50 PM), https://www.usatoday.com/

story/money/2021/02/01/covid-delaysshoppers-face-shortages-higherprices-amid-pandemic/4311962001/ ...................... 5

vii

TABLE OF AUTHORITIES—continued

Page(s)

Peter S. Goodman, Hurricane Ida Could

Make the Supply Chain Disaster

Even Worse, N.Y. Times (Sept. 1,

2021), https://www.nytimes.com/

2021/08/31/business/hurricane-idasupply-chain-shortages.html ............................... 15

Press Release, Bureau of Econ.

Analysis, U.S. Dep’t of Commerce,

Gross Domestic Product by State, 1st

Quarter 2021 tbl. 3 (June 25, 2021),

https://www.bea.gov/sites/default/

files/2021-06/qgdpstate0621.pdf. ......................... 18

Rail, Port of L.A., https://

www.portoflosangeles.org/business/

supply-chain/rail (last visited Sept.

10, 2021) ........................................................... 7, 18

1

INTEREST OF THE AMICI CURIAE1

The amici curiae are eight trade associations that

represent a broad cross-section of U.S. businesses who

operate supply chains that depend on competitive and

efficient trucking services. Amici’s members are manufacturers, distributors, wholesalers, retailers, and

receivers of many different types of goods shipped in

interstate commerce, including within or through California. Amici’s members regularly contract with motor carriers for interstate trucking services and have

varied demands for trucking capacity and specialized

services, such as hazardous materials and refrigerated shipments. Simply stated, amici represent the

customers of the trucking industry.

Amici have a strong interest in preserving the

competitive, efficient, and flexible trucking services

that Congress afforded U.S. businesses by deregulating the trucking industry. Amici’s interest includes

ensuring that the Federal Aviation Administration

Authorization Act (FAAAA), 49 U.S.C. § 14501(c), is

enforced to nullify state laws, such as California’s Assembly Bill 5 statute (AB-5), Cal. Lab. Code § 2775,

that indirectly regulate trucking services, routes, and

1 Counsel of record for all parties have received timely notice of

amici’s intent to file this brief pursuant to Rule 37.2(a) and have

consented to the filing of this brief. No counsel for any party has

authored this brief in whole or in part, and no person other than

amici, their members, and their counsel, have made a monetary

contribution intended to fund the preparation or submission of

this brief.

2

prices in a manner that would substantially disrupt

the efficient flow of interstate commerce.

American Chemistry Council (ACC) represents

the leading companies in the business of chemistry.

ACC members apply the science of chemistry to make

innovative products and services that make people’s

lives better, healthier, and safer. The business of

chemistry is a $565 billion enterprise and a key element of the nation’s economy.

Council of Supply Chain Management Professionals (CSCMP) is the preeminent worldwide professional association of supply chain management professionals. The Mission of CSCMP is to lead the

Supply Chain profession by connecting, educating,

and developing the world’s Logistics and Supply

Chain Management Professionals throughout their

careers. The National Shippers Strategic Transportation Council (NASSTRAC), a division of CSCMP, is an

association for transportation and logistics professionals who manage freight across all modes. Its member

companies range from consumer products, retail,

pharmaceutical, chemicals, and cosmetics to machinery, medical, printing, publishing, durable goods, and

food and beverage.

Institute of Scrap Recycling Industries, Inc. (ISRI)

represents approximately 1,300 companies operating

in nearly 4,000 locations in the United States and 41

countries worldwide that process, broker, and consume scrap commodities, including metals, paper,

plastics, glass, rubber, electronics, and textiles.

National Association of Chemical Distributors

(NACD) is the premier trade association for the U.S.

3

chemical distribution industry, representing nearly

430 chemical distributors and their supply chain partners. NACD members represent more than 85 percent

of the chemical distribution capacity in the nation and

generate 90 percent of the industry’s gross revenue.

NACD members blend, re-package, warehouse,

transport, and market chemical products made by

large-quantity manufacturers to 750,000 end-users in

nearly every industry sector, from cosmetics to automotive and from paints and coatings to food and water

treatment.

National Association of Manufacturers (NAM) is

the largest manufacturing association in the United

States, representing small and large manufacturers

in every industrial sector and in all 50 states. Manufacturing employs more than 12 million people, contributes roughly $2.35 trillion to the U.S. economy annually, has the largest economic impact of any major

sector, and accounts for nearly two-thirds of privatesector research and development in the nation. NAM

is the voice of the manufacturing community and the

leading advocate for a policy agenda that helps manufacturers compete in the global economy and create

jobs across the nation.

National Industrial Transportation League

(NITL) was founded in 1907 and is one of the nation’s

oldest associations representing purchasers of transportation services, i.e. shippers of all kinds of commodities, in domestic and international commerce. Its

mission is to advance the views of shippers on freight

transportation issues and policy and enhance their

professional development.

4

National Retail Federation (NRF), the world’s

largest retail trade association, passionately advocates for the people, brands, policies, and ideas that

help retail thrive. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs—52

million working Americans. For over a century, NRF

has been a voice for every retailer and every retail job,

educating and communicating the powerful impact retail has on local communities and global economies.

The Fertilizer Institute (TFI) represents the nation’s fertilizer industry, which includes companies

that are engaged in all aspects of the fertilizer supply

chain. TFI’s members play a key role in producing and

distributing vital crop nutrients, such as nitrogen,

phosphorus, and potassium. These products are used

to replenish soils throughout the United States and

elsewhere to facilitate the production of healthy and

abundant supplies of food, fiber, and fuel. Fertilizer is

a key ingredient in feeding a growing global population, which is expected to surpass 9.5 billion people by

2050. Half of all food grown around the world today is

made possible from fertilizer use.

INTRODUCTION AND

SUMMARY OF ARGUMENT

Petitioners are seeking this Court’s review of

whether the FAAAA precludes application of California’s “ABC” test under AB-5 to motor carriers’

longstanding practice of contracting with independent

truck operators who own commercial vehicles. Pet. 23. They explain how Prong B of the ABC test will force

motor carriers operating

in California

to

5

fundamentally restructure their business model and

service offerings by requiring contracted independent

truck operators, commonly called “owner-operators,”

to be classified as employees. Pet. 9. Petitioners are

asking this Court to grant their request for review because lower courts are split on this issue and the decision below by the Ninth Circuit that FAAAA preemption does not apply to California’s ABC test is wrong.

Pet. 3. They also describe the tremendous practical

significance of this issue, focusing primarily on the impact AB-5 will have on motor carriers and owner-operators, including their services, routes, and prices.

Pet. 3-4.

Amici submit this brief to explain that applying

California’s ABC test to trucking services will frustrate the Congressional policy and purpose underlying

FAAAA preemption by allowing state regulation, rather than market forces, to dictate the manner by

which trucking services will be performed. Amici describe how California’s ABC test will have far reaching impacts beyond the trucking industry because

amici’s supply chains are configured to receive competitive and efficient interstate trucking services. If

trucking capacity is reduced, routes become more circuitous, and prices rise from AB-5, as predicted by the

trucking industry, Pet. 10-12, amici’s members that

ship goods to and from California will experience supply-chain disruption. The ripple effect from this disruption will harm consumers and the national economy, which are already grappling with delivery

delays, product shortages, and empty store shelves

caused by the Covid-19 pandemic. See Paul Davidson,

Shoppers Face Shortages of Cars, Shirts and Smart

6

Speakers Amid Covid-19 Shipping Delays, USA Today

(Feb. 1, 2021, 2:50 PM), https://www.usatoday.com/

story/money/2021/02/01/covid-delays-shoppers-faceshortages-higher-prices-amid-pandemic/

4311962001/.

The practical significance of this issue cannot be

overstated. Truck transportation is essential to the

movement of goods throughout the United States. The

vast majority of U.S. freight shipments—71% by value

and tons—travel by truck. Bureau of Transp. Statistics & U.S. Census Bureau, 2017 Commodity Flow

Survey 29 tbl. A1a (2020), https://www.census.gov/

content/dam/Census/library/publications/2017/econ/

ec17tcf-us.pdf.

Some of amici’s members’ supply chains are carefully orchestrated as “just in time” to ensure that

goods are delivered and available when and where

they are needed. Other amici’s demand for trucking

services may vary by season (such as fertilizer for

crops or retail shipments that peak before the holidays), the commodities’ markets (the value of scrap

metal fluctuates daily), or their customers’ requirements or consumer demands. Additionally, some

goods moving through amici’s members’ supply chains

require specialized equipment to transport hazardous

materials or refrigerated or over-sized goods.

To meet these variable demands for services, motor carriers have adopted a highly flexible business

model that depends extensively on the use of owneroperators. As Petitioners have explained, owner-operators enable motor carriers to add capacity during periods of heightened demand and acquire specialized

7

equipment that a motor carrier could not economically

maintain in its fleet. Pet. 5.

Petitioners also explained that, by disrupting motor carriers’ use of the owner-operator business model

in California, AB-5 will reduce available capacity to

handle truck shipments to, from, and within California. Pet. 11-12. This has national significance partly

because California’s San Pedro Bay Port Complex,

which comprises the Ports of Long Beach and Los Angeles, is the largest international gateway for US containerized ocean imports, most of which move by truck

to inland destinations throughout the country. See

About, Port of L.A., https://www.portoflosangeles.org/

business/statistics/facts-and-figures (last visited Sept.

10, 2021) (stating that the Port of Los Angeles handles

more ocean container traffic than any other ocean port

in the United States); Rail, Port of L.A., https://

www.portoflosangeles.org/business/supply-chain/rail

(last visited Sept. 10, 2021) (stating that 35% of containers use the Port of Los Angeles’ rail network). And

California is one of the leading states for truck shipments by value. Freight Analysis Framework, Nat’l

Transp. Rsch. Ctr., https://faf.ornl.gov/faf5/SummaryTable.aspx (last visited Sept. 10, 2021) (follow

“2017” hyperlink for “Tonnage/Value for shipments

Within, From, and To State by Trade Type and Mode”

table). AB-5 will also exacerbate the current truckdriver shortage, as some (perhaps many) owner-operators who favor the flexible independent-contractor

model will choose not to become motor-carrier employees. See Ari Hawkins, A Trucking Crisis Has the U.S.

Looking for More Drivers Abroad, Bloomberg (Aug. 2,

2021, 10:00 AM), https://www.bloomberg.com/news/

articles/2021-08-02/a-trucking-crisis-has-the-u-s-

8

looking-for-more-drivers-abroad (explaining that a

longstanding driver shortage has become severe).

Thus, the resulting loss of trucking capacity in California will reduce the availability of competitive and

efficient trucking services to the detriment of amici’s

members. For the American economy, this means

shortages of raw materials, shortages of finished

goods, and higher prices.

If California’s ABC test stands, other states may

follow the same path and require independent owneroperators to be classified as employees, further burdening the efficient flow of interstate commerce. Indeed, Massachusetts already attempted to pass a

worker-classification law that prohibits motor carriers from using independent owner-operators, although this was found to be preempted under the

FAAAA by the Court of Appeals for the First Circuit.

Schwann v. FedEx Ground Package Sys., Inc., 813

F.3d 429, 440 (1st Cir. 2016). This Court has determined that such a patchwork of burdensome state regulation is contrary to the intent of the FAAAA, which

reflects “Congress’ major legislative effort to leave

such decisions, where federally unregulated, to the

competitive marketplace.” Rowe v. N.H. Motor

Transp. Ass’n, 552 U.S. 364, 373 (2008).

9

REASONS FOR GRANTING THE PETITION

I.

Congress Enacted FAAAA Preemption to Facilitate the Free Flow of Interstate Commerce by Preventing State Interference in

the Trucking Market.

The FAAAA is the culmination of Congress’ efforts

to facilitate interstate commerce by ensuring that

manufacturers, retailers, and other businesses that

ship and receive goods have competitive trucking options that are not impeded by a patchwork of state regulation.

Congress initiated these efforts by enacting the

Motor Carrier Act of 1980, Pub. L. 96-296, 94 Stat. 793

(1980), upon finding that “a . . . competitive . . . motor

carrier system is vital to the maintenance of a strong

national economy.” Id. § 3(a). The Motor Carrier Act

eliminated many aspects of federal economic regulation of the trucking industry. It also established a federal truck-transportation policy “to promote competitive and efficient transportation services in order to

. . . meet the needs of shippers, receivers, and consumers” and “allow a variety of quality and price options

to meet changing market demands and diverse requirements of the shipping . . . public.” 49 U.S.C.

§ 13101(2)(C), (D).

Fourteen years after enacting the Motor Carrier

Act, Congress found that state regulation of truck

transportation “imposed an unreasonable burden on

interstate commerce, . . . impeded the free flow of

trade, traffic, and transportation of interstate commerce; and . . . placed an unreasonable cost on the

10

American consumers.” FAAAA, Pub. L. 103-305,

§ 601(a)(1), 108 Stat. 1569, 1605 (1994). At the time,

states regulated motor-carrier services, routes, and

prices “in varying degrees” resulting in a “patchwork

of regulation” that “causes significant inefficiencies,

increased costs, reduction of competition, inhibition of

innovation and technology and curtails the expansion

of markets.” H.R. Rep. No. 103-677 at 86-87 (1994)

(Conf. Rep.). For these reasons, Congress felt that

preemption of state regulation was “necessary to facilitate commerce.” Id. at 87.

Congress thus enacted the FAAAA, which

preempts any state “law . . . related to a price, route,

or services of any motor carrier . . . with respect to the

transportation of property.” 49 U.S.C. § 14501(c). This

Court has recognized that the FAAAA’s “target

. . . 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.” Dan’s City Used Cars,

Inc. v. Pelkey, 569 U.S. 251, 263 (2013) (cleaned up).

The Motor Carrier Act and the FAAAA reflect a

common principle that the truck transportation needs

of the American economy are best satisfied by placing

maximum reliance on competition to establish prices,

routes, and services of motor carriers. This Court has

explained that Congress’ ultimate goal in deregulating the trucking industry is to “stimulat[e] efficiency,

innovation, and low prices, as well as variety and

quality.” Rowe, 552 U.S. at 371 (applying the Court’s

precedent regarding the preemption provision in the

Airline Deregulation Act of 1978 (ADA), 49 U.S.C.

§ 41713(b)(1), upon which Congress based the

11

FAAAA’s preemption provision). FAAAA preemption

thus reflects Congress’ view that the best interests of

shippers and others that rely on the trucking industry

are most effectively promoted by allowing the free

market to operate. Nw., Inc. v. Ginsberg, 572 U.S. 273,

288 (2014) (“The ADA is based on the view that the

best interests of airline passengers are most effectively promoted, in the main, by allowing the free market to operate.”).

II. AB-5’s Impact on Trucking Services Will

Place a Significant Burden on Interstate

Commerce and the American Economy.

The trucking industry has long relied on owneroperators to satisfy the trucking needs of shippers.

Pet. 2. The owner-operator service model enables motor carriers to quickly and efficiently scale their operations to satisfy fluctuating demand. Pet. 5. It also enables motor carriers to economically provide services

for shipments that require specialized equipment.

Pet. 5. And it allows smaller carriers to compete for

jobs that require multiple trucks. Pet. 5. But AB-5 denies these benefits to amici’s members by effectively

prohibiting motor carriers from using the owner-operator service model. Pet. 31.

Petitioners explain that AB-5’s prohibition of the

owner-operator service model will have a substantial

adverse impact on motor carriers’ services, routes, and

prices. Pet. 10-12. It would make providing specialized

services and accommodating demand fluctuations

sometimes impossible. Pet. 33. It may put some small

motor carriers out of business and thereby reduce

competition. Pet. 11. And it would prevent trucks

12

being driven by owner-operators to California from

entering the state without switching drivers at the

California border. Pet. 33. Petitioners predict that, at

bottom, AB-5 will reduce available motor-carrier services and increase prices. Pet. 33.

For amici’s members and the broader economy,

the impact of AB-5 on motor carriers’ services will

have serious consequences, as follows.

A. AB-5 impairs trucking capacity that is

critical to many industries and to supplychain resiliency.

As stated above, Petitioners explain that AB-5’s

effective prohibition of the owner-operator service

model would sometimes make it impossible for motor

carriers to provide specialized services and accommodate demand fluctuations. Pet. 33. This reduced capacity to handle demand fluctuations or specialized

services will cause significant harm to businesses in

many industries for several reasons.

First, reduced trucking capacity means that some

goods will move at higher prices and others will not

move at all. Inadequate truck capacity forces businesses that rely on trucking to forego shipments of inbound raw materials that are essential to their operations, delay fulfillment of customer orders, or pay

higher prices for truck services. Because the price a

business can pay for a truck shipment is inevitably

limited, some shipments will not occur or will be deferred to periods of reduced demand, if any.

Second, many industries are subject to seasonal or

fluctuating customer demand that requires short-

13

term additive truck capacity. Businesses in these industries may have a single peak shipping season, multiple peak seasons, monthly or quarterly shipping

windows, or on-demand shipping needs. Examples of

the variable trucking needs of amici’s members include:



Many retail and consumer-goods manufacturing

businesses have a peak shipping season from August to October, which enables goods to be staged

in time for winter-holiday shopping.



Fertilizer businesses have short peak shipping

windows that coincide with farmers’ planting windows. During the spring planting season, fertilizer

truck shipments increase by 50%.



Chemical manufacturers and distributors experience periods of heightened shipping need depending on the commodity. Latex, for example, tends to

have seasonal trucking needs coinciding with summer paint promotions by retailers. Shipments of

refrigerants increase as outdoor temperatures increase. Crop protection chemicals require transportation during growing seasons. Also, batch production is necessary to economically produce some

chemicals. Just before these production runs

begin, manufacturers may need to receive a large

number of truck shipments carrying raw materials.



Paper manufacturers have peak seasons coinciding with the seasonality of e-commerce and agriculture, which rely on paper packaging products.



Scrap-metal recyclers commonly require high volumes of truck capacity on short notice. Since scrap-

14

metal prices fluctuate daily and margins are low,

scrap transactions and resulting shipments are

unpredictable. Also, scrap transactions typically

involve large quantities of scrap that may require

multiple trucks to transport.

If motor carriers are unable to accommodate heightened demand, businesses with variable trucking

needs in these and other industries will find that

trucks are not available when they need them most.

For some businesses, this is a make or break proposition. See Abha Bhattarai, How the Delta Variant Stole

Christmas: Empty Shelves, Long Waits – and Yes,

Higher Prices, Wash. Post (Sept. 1, 2021, 7:49 AM),

https://www.washingtonpost.com/business/2021/09/

01/holiday-shipping-delays-inflation/ (explaining that

the retail industry is facing transportation and other

challenges as it prepares for the eight-week holiday

season “that can account for more than half of a retailer’s annual sales”).

Third, businesses in many industries rely on specialized truck transportation. For example, amici’s

members in the food industry ship a wide range of

temperature-sensitive goods that require refrigerated

trucks for transportation. Members in the chemical

industry ship chemicals that must be transported in

special tank trucks that meet applicable requirements

under the Hazardous Materials Regulations, 49

C.F.R. Parts 171-180. They also ship goods that are

sensitive to cold temperatures and, thus, require

heated tanks or trailers when moving by truck. Members in the scrap and paper industries tend to ship

dense or heavy goods that can be transported

15

economically only in quantities that exceed the weight

rating of standard tractors and trailers.

Additionally, many goods that require specialized

trucking services are used to create a wide array of

other goods that are important to commerce. For instance, chemicals are a critical input for clean drinking water, building materials, electronics, and pharmaceuticals. Am. Chemistry Council, 2021 Guide to

the Business of Chemistry 19 (2021), https://

www.americanchemistry.com/chemistry-in-america/

data-industry-statistics/resources/2021-guide-to-thebusiness-of-chemistry. Interference with market

forces for these and other types of specialized

transport thus has significant downstream effects on

commerce.

Fourth, reduced additive truck capacity impairs

the movement of goods in response to business disruptions. Many businesses operate carefully choreographed “just-in-time” supply chains in which they receive goods when they need them. When faced with an

unforeseen event that disrupts supply, these businesses rely on additive transportation capacity to obtain raw materials from alternative sources. Additionally, businesses require additive transportation

capacity to support production surges necessary to address pent-up demand following a production disruption.

When motor carriers are unable to handle shipments necessary to mitigate or recover from business

disruptions, commerce suffers and shortages of goods

intensify. See Peter S. Goodman, Hurricane Ida Could

Make the Supply Chain Disaster Even Worse, N.Y.

Times (Sept. 1, 2021), https://www.nytimes.com/2021/

16

08/31/business/hurricane-ida-supply-chain-shortages.html (explaining that the response to Hurricane

Ida “will leave even fewer trucks available to carry

goods everywhere else, intensifying already-profound

shortages”). And transportation costs rise. Jennifer

Smith, Truckers Expect U.S. Transport Capacity

Crunch to Persist, Wall St. J. (May 2, 2021, 8:00 AM),

https://www.wsj.com/articles/truckers-expect-u-stransport-capacity-crunch-to-persist-11619956801.

At bottom, by prohibiting motor carriers from using owner-operators to meet their customers’ needs efficiently and effectively, AB-5 results in carriers offering services “that differ significantly from those that,

in the absence of the regulation, the market might dictate.” Rowe, 552 U.S. at 372. This is inconsistent with

“Congress’ overarching goal” of FAAAA preemption,

which was to “help[] ensure transportation rates,

routes, and services [] reflect maximum reliance on

competitive market forces, thereby stimulating efficiency, innovation, and low prices, as well as variety

and quality.” Id. at 371.

B. Changes to the California trucking market from AB-5 will have national impacts.

Because California truck shipments play a prominent role in U.S. commerce, AB-5’s impacts would

likely disrupt supply chains throughout the nation.

Supply chains are highly synchronized and

complex. Manufacturing a single product may require

hundreds, if not thousands, of parts that are sourced

from all over the globe. Austen Hufford, Kyle Kim &

Andrew Levinson, Why Is the Supply Chain Still So

17

Snarled? We Explain, With a Hot Tub, Wall St. J.

(Aug. 26, 2021, 10:18 AM), https://www.wsj.com/

articles/why-is-the-supply-chain-still-so-snarled-weexplain-with-a-hot-tub-11629987531

(making

a

particular hot tub requires 1,850 parts that come from

seven countries and 14 states, and travel a cumulative

887,776 miles). Shipping delays concerning a single

part could disrupt production of thousands of end

products. See Eun-Young Jeong & Dan Strumpf, From

Tablets to Sex Toys, the Chip Shortage Is FarReaching, Wall St. J. (Apr. 30, 2021, 7:45 AM),

https://www.wsj.com/articles/expanding-from-autosto-appliances-and-sex-toys-the-chip-shortage-is-farreaching-11619783117 (explaining how a shortage of

computer chips is impacting a wide range of

manufacturers who use them in their products and

also companies that do not use the chips); Jeanna

Smialek & Madeleine Ngo, What an Adult Tricycle

Says About the World’s Bottleneck Problems, N.Y.

Times (Aug. 30, 2021), https://www.nytimes.com/

2021/08/23/business/economy/supply-chainbottlenecks-coronavirus-inflation.html (“We’re sitting

on $2 million in inventory for one $30 part.”). A

disruption to the movement of goods in California

because of AB-5’s impact on the trucking market could

thus have a ripple effect to other goods and other

states.

Moreover, the large role of California in commerce

all but ensures that the impacts of AB-5 on trucking

services will be felt throughout the nation. In 2020,

31% of U.S. containerized waterborne import cargo

moved through California’s San Pedro Bay Port Complex for destinations throughout the United States.

Facts & Figures, Port of L.A.,

https://

18

www.portoflosangeles.org/business/statistics/factsand-figures (last visited Sept. 10, 2021). Approximately 65% of this traffic moves inland by truck. See

Rail, Port of L.A., https://www.portoflosangeles.org/

business/supply-chain/rail (last visited Sept. 10, 2021)

(stating that 35% of containers use the Port of Los Angeles’ rail network). Additionally, California is the nation’s largest state economy. Press Release, Bureau of

Econ. Analysis, U.S. Dep’t of Commerce, Gross Domestic Product by State, 1st Quarter 2021 tbl. 3 (June

25, 2021), https://www.bea.gov/sites/default/files/

2021-06/qgdpstate0621.pdf. In 2017, it led the nation

in value of goods shipped to other states and was second to Texas in value of goods shipped intrastate and

inbound from other states. Freight Analysis Framework, Nat’l Transp. Rsch. Ctr., https://faf.ornl.gov/

faf5/SummaryTable.aspx (last visited Sept. 10, 2021)

(follow “2017” hyperlink for “Tonnage/Value for shipments Within, From, and To State by Trade Type and

Mode” table). Trucks handled approximately 77% of

shipments within California, by value; 58% of shipments outbound from California to other states; and

47% of shipments inbound from other states. Id.

C. Businesses will have to make Californiaspecific changes to their supply chains.

As Petitioners have explained, AB-5 will reduce

motor-carrier capacity to handle fluctuating demand

and provide specialized services, and it will cause

smaller carriers to close. Pet. 11. Petitioners also have

explained that those changes will increase prices for

shippers. Pet. 12. Businesses whose supply chains include California trucking will need to account for

19

these impacts or risk business disruptions and higher

costs.

Accounting for the impacts of AB-5 on the trucking market will likely involve reconfiguring supply

chains. Businesses that historically have staged goods

in California for delivery within the state and to

neighboring states may move the staging location outside California where motor-carrier capacity is less

constrained by AB-5. Businesses that source goods

from California might switch to a supplier out of the

state. And businesses whose goods move through California ports might re-route their goods through ports

outside of California.

Making these changes is risky, however. Many retailers, manufacturers, and other businesses have

spent years refining their supply chains for optimal

efficiency. For businesses that have adopted a “justin-time” model under which goods are precisely scheduled to arrive when they are needed, the margin for

error may be paper-thin. Also, making changes to suppliers or warehousing to avoid the impacts of AB-5

may expose a business to quality issues and other nontransportation risks.

These changes would make a supply chain less efficient. Without AB-5 in the first place, a supply chain

would be optimized based on the availability of additive truck capacity and competitive service offerings

afforded by the owner-operator model. However,

changes would be needed to mitigate the inefficiencies

that AB-5 introduces into the trucking market.

Of course, Congress enacted FAAAA preemption

to protect businesses from having to undertake these

20

risks and inefficiencies when motor-carrier services

are dictated by a state law, like AB-5. This Court has

recognized that Congress’s “overarching goal” in enacting FAAAA preemption was to “help[] ensure

transportation rates, routes, and services that reflect

maximum reliance on competitive market forces,

thereby stimulating efficiency, innovation, and low

prices, as well as variety and quality.” Rowe, 552 U.S.

at 371 (cleaned up). And it has found that FAAAA

preemption applied where “carriers will have to offer

. . . delivery services that differ significantly from

those that, in the absence of regulation, the market

might dictate.” Id. at 372. Here, AB-5 would dictate

how carriers provide their services, not market demand.

Additionally, by enacting FAAAA preemption,

Congress sought to free businesses dependent on

trucking from having to make these and other types

of state-specific supply-chain adjustments to account

for the impacts of laws like AB-5. Congress observed

that a “diversity of [state] regulatory schemes is a

huge problem for national and regional carriers attempting to conduct a standard way of doing business”

and that “lifting [] these [regulatory schemes] will permit our transportation companies to freely compete

more efficiently and provide quality service to their

customers.” H.R. Rep. No. 103-677 at 87-88 (1994)

(Conf. Rep.). This Court has recognized this intent to

facilitate commerce by allowing motor carriers to develop nationally-uniform business practices, stating

that “a patchwork of state service-determining laws,

rules, and regulations . . . is inconsistent with Congress’ major legislative effort to leave such decisions,

where federally unregulated, to the competitive

21

marketplace.” Rowe, 552 U.S. 373. AB-5’s regulation

creates such a patchwork of state law by prohibiting

motor carriers from contracting with independent

owner-operators in California to satisfy their customers’ service needs.

CONCLUSION

For the foregoing reasons, and those stated in the

petition for writ of certiorari, the petition should be

granted.

Respectfully submitted,

KARYN A. BOOTH

Counsel of Record

JASON D. TUTRONE

THOMPSON HINE LLP

1919 M St. NW Ste. 700

Washington, DC 20036

(202) 331-8800

Karyn.Booth@

ThompsonHine.com

Counsel for Amici Curiae

September 10, 2021