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

Supreme Court briefSep 10, 2021

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No. 21-194

IN THE

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_______________

CALIFORNIA TRUCKING ASSOCIATION, INC.;

RAVINDER SINGH; AND THOMAS ODOM,

Petitioners,

ROBERT BONTA, IN HIS OFFICIAL CAPACITY AS THE

ATTORNEY GENERAL OF THE STATE 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 THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA

AS AMICUS CURIAE

IN SUPPORT OF PETITIONERS

_______________

ANDREW R. VARCOE

STEPHANIE MALONEY

U.S. CHAMBER LITIGATION CENTER

1615 H Street, N.W.

Washington, D.C. 20062

Counsel for the Chamber of

Commerce of the United States of

America

THEANE EVANGELIS

Counsel of Record

BLAINE H. EVANSON

ALEXANDER N. HARRIS

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7804

TEvangelis@gibsondunn.com

Counsel for Amicus Curiae

TABLE OF CONTENTS

INTEREST OF THE AMICUS CURIAE ...................1

INTRODUCTION AND SUMMARY OF

ARGUMENT ..........................................................3

REASONS FOR GRANTING THE PETITION .........6

THE FAAAA PREEMPTS AB5. ...............................7

A. Congress Adopted The FAAAA

Preemption Clause To Effectuate Its

Deregulation Of The Motor-Carrier

Industry. .......................................................7

B. AB5 Is Preempted Under This Court’s

Binding Precedent. .......................................9

C. The Ninth Circuit’s Decision Cements

A Split In Courts’ Application Of The

FAAAA’s Preemption Provision. ................14

II.

IMPLEMENTING AB5 WILL HARM MOTOR

CARRIERS, BUSINESSES THAT RELY ON

THEM, AND CONSUMERS. ....................................16

A. AB5 Will Harm Motor Carriers. .................16

B. AB5 Will Harm Shippers, Retailers,

And Manufacturers. ...................................17

C. AB5 Will Harm Consumers ........................20

III. IF PERMITTED TO STAND, THE NINTH

CIRCUIT’S ERRONEOUS PREEMPTION

ANALYSIS WILL EXTEND TO OTHER

PREEMPTION STATUTES .......................................22

CONCLUSION ..........................................................24

TABLE OF AUTHORITIES

Cases

Am. Airlines, Inc. v. Wolens,

513 U.S. 219 (1995) ................................................ 8

Am. Trucking Associations, Inc. v. City

of Los Angeles, 559 F.3d 1046

(9th Cir. 2009) ...................................................... 10

Bedoya v. Am. Eagle Express Inc.,

914 F.3d 812 (3d Cir. 2019) ................................. 14

Bernstein v. Virgin America, Inc.,

3 F.4th 1127 (9th Cir. 2021) .......................... 20, 21

Cal Cartage Transportation Express,

LLC v. California,

No. 20-1453 (petition filed Apr. 13,

2021) ....................................................................... 2

Cal. Trucking Ass’n v. Su,

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

Chambers v. RDI Logistics, Inc.,

65 N.E.3d 1 (Mass. 2016) ..................................... 14

Costello v. BeavEx, Inc.,

810 F.3d 1045 (7th Cir. 2016) .............................. 14

Dilts v. Penske Logistics, LLC,

769 F.3d 637 (9th Cir. 2014) ...................... 4, 14, 21

Morales v. Trans World Airlines, Inc.,

504 U.S. 374 (1992) .......... 3, 8, 9, 10, 11, 13, 15, 21

iii

Northwest, Inc. v. Ginsberg,

572 U.S. 273 (2014) ........................................ 11, 12

Pilot Life Ins. Co. v. Dedeaux,

481 U.S. 41 (1987) ................................................ 11

Rowe v. N.H. Motor Transp. Ass’n,

552 U.S. 364 (2008) ............ 3, 4, 7, 8, 10, 13, 15, 16

Schwann v. FedEx Ground Package

Sys., Inc.,

813 F.3d 429 (1st Cir. 2016) ...................... 4, 13, 14

Statutes

29 U.S.C. § 1144 ........................................................ 21

49 U.S.C. § 14501 ................................................ 3, 7, 9

49 U.S.C. § 41713 .................................................. 9, 20

Cal. Lab. Code §§ 2776–2785 .................................... 12

Pub. L. No. 96-296, 94 Stat. 811 ................................. 8

Other Authorities

Abha Bhattarai, How the Delta Variant

Stole Christmas: Empty Shelves,

Long Waits – And Yes, Higher Prices,

WASH. POST (Sept. 1, 2021),

https://wapo.st/3jRpz6L ....................................... 18

Alison Sider, Airlines Struggle With

Fuel Shortages at Some Smaller

Western U.S. Airports, WALL STREET

JOURNAL (Jul. 27, 2021),

https://on.wsj.com/3B2sWgC ............................... 19

David J. Lynch, From Ports To Rail

Yards, Global Supply Lines Struggle

Amid Virus Outbreaks In The

Developing World, WASH. POST (Jul.

26, 2021), https://wapo.st/3szzsZv ....................... 19

Fact Sheet: Rural Opportunities to Use

Transporation for Economic Success,

U.S. Dep’t of Transp.,

https://bit.ly/3z6QWyR......................................... 20

Grace Kay, From Trash Bags To

Kitchen Appliances, Here’s A Slew Of

Household Staples That Are About

To Get More Expensive, BUSINESS

INSIDER (May 17, 2021),

https://bit.ly/3y15ONT ......................................... 19

Grace Kay, The US Shipping Crisis Is

Not Going Away As 33 Cargo Ships

Float Off The Coast Of LA Waiting

To Dock, Business Insider (Jul. 26,

2021), https://bit.ly/3j5JyhF ................................ 17

H.R. Conf. Rep. No. 103-677 (1994) ........ 7, 8, 9, 10, 13

Jennifer Smith, Chip Shortage Curtails

Heavy-Duty Truck Production, WALL

STREET JOURNAL (Sept. 3, 2021),

https://on.wsj.com/3yMccJa ................................. 17

Jennifer Smith, Truckers Expect U.S.

Transport Capacity Crunch to

Persist, WALL STREET JOURNAL (May

2, 2021),

https://on.wsj.com/3mmWt0K ........................ 17, 18

Jennifer Smith, Trucking Failures

Surged Last Year Under Pandemic,

WALL STREET JOURNAL (Feb. 8,

2021), https://on.wsj.com/38WKTRO .................. 18

Michael Laris, Trucker Shortage Leads

To Possible Fuel Shortages At Some

Airports, Airline Industry Says,

WASH. POST (Jul. 26, 2021),

https://wapo.st/3ybeml3 ....................................... 19

Paul Berger, U.S. Ports See Shipping

Logjams Likely Extending Far Into

2022, WALL STREET JOURNAL (Sept.

5, 2021),

https://on.wsj.com/3DVCXOV .............................. 17

Robert Sprague, Using the ABC Test to

Classify Workers, 11 William & Mary

Bus. L.R. 733 (2020) ............................................. 14

Susan Helper & Evan Soltas, Why the

Pandemic Has Disrupted Supply

Chains, The White House (June 17,

2021), https://bit.ly/3B3Fgx4 ............................... 17

Rules

Rule 37.2(a).................................................................. 1

INTEREST OF THE AMICUS CURIAE 1

The Chamber of Commerce of the United States of

America (the “Chamber”) is the world’s largest

business federation. It represents approximately

300,000 direct members and indirectly represents the

interests of more than three million companies and

professional organizations of every size, in every

industry sector, and from every region of the

country—including throughout California.

important function of the Chamber is to represent the

interests of its members in matters before Congress,

the Executive Branch, and the courts. To that end,

the Chamber regularly files amicus curiae briefs in

cases, like this one, that raise issues of concern to the

nation’s business community.

Amicus curiae has a strong interest in this case

because it raises important and recurring questions

concerning the extent to which States may interfere

with the prices, routes, and services of motor carriers

in the face of Congress’s decision to expressly preempt

such interference. Many of the Chamber’s members

are motor carriers themselves or rely on the services

of motor carriers in their day-to-day business. Indeed,

the motor carrier industry affects nearly every

business in the United States, whether directly or

indirectly, as well as American consumers.

Counsel for petitioners and respondents received timely notice

of the intent to file this brief, and both parties have consented to

its filing. See Rule 37.2(a). Pursuant to Rule 37.6, amicus curiae

states that no counsel for any party authored this brief in whole

or in part, and no person or entity, other than amicus curiae, its

members, or its counsel, made any monetary contribution

intended to fund the preparation or submission of this brief.

Granting the Petition for a Writ of Certiorari and

reversing the Ninth Circuit’s decision below is

necessary to resolve the clear split between the First

Circuit and Ninth Circuit on the application of the

Federal Aviation Administration Authorization Act of

1994 (“FAAAA”) to worker classification laws

affecting the motor carrier industry. As the split

currently stands, substantially similar worker

classification laws are preempted by the FAAAA in

First Circuit jurisdictions, but not in Ninth Circuit

jurisdictions. As a result motor carriers can contract

with independent contractors in some markets but not

others. This significantly hampers the national

shipping market and prevents motor carriers from

competing freely and efficiently, with prices, routes,

and services dictated by the marketplace instead of by

state regulation. It also increases costs for businesses

and consumers alike, as motor carriers are forced to

cope with the expense of regulatory burdens that

Congress prohibited in passing the FAAAA.

Granting the petition and reversing would also

ensure that, consistent with Congress’s goals,

businesses and consumers continue to enjoy a full

range of services at prices determined largely by the

free market. The Court should not allow California to

dictate particular business models for the national

transportation marketplace.2

The same question regarding the FAAAA preemption

provision’s interpretation is also presented in Cal Cartage

Transportation Express, LLC v. California, No. 20-1453 (Petition

filed Apr. 13, 2021), further underscoring the need for this

Court’s guidance on whether motor carriers may continue to use

an independent contractor business model in all jurisdictions.

INTRODUCTION AND

SUMMARY OF ARGUMENT

The FAAAA expressly preempts any state “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). This broad

preemption

provision

serves

the

FAAAA’s

“overarching goal”: to “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 v. N.H. Motor Transp.

Ass’n, 552 U.S. 364, 371 (2008) (quoting Morales v.

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

The Ninth Circuit’s decision deepens a circuit split

over interpretation of the FAAAA’s preemption

provision, and violates this Court’s clear instruction

that the preemption provision applies broadly. The

Ninth Circuit held in a split decision that a “generally

applicable law” that “affect[s] a motor carrier’s

relationship with its workforce”—like California’s

Assembly Bill 5 (“AB5”) and its ABC test—is “not

significantly related to rates, routes or services,” and

therefore is not preempted.

Pet.

App. 17a.

Narrowing the FAAAA, the panel majority explained

that a state law may be preempted only if it “‘binds

the carrier to a particular price, route or service’” and

“compels a result at the level of the motor carrier’s

relationship with its customers or consumers”—

regardless of whether it upends motor carriers’

business models, increases costs, and leads to carriers

curtailing services and raising rates. Id. (citations

omitted).

In so holding, the Ninth Circuit ignored this

Court’s FAAAA preemption precedent by upholding a

state law that “produces the very effect that the

federal law sought to avoid, namely, 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.” Rowe, 552 U.S. at 372 (quoting Morales, 504

U.S. at 378) (emphasis added). As Judge Bennett

noted in his dissent, by “brush[ing]” aside Rowe and

other “binding precedent from the Supreme Court,”

the panel majority “undermine[d] the balance of state

and federal power contemplated by the [FAAAA].”

Pet. App. 46a–47a.

Further, the Ninth Circuit solidified a split in the

circuit courts’ approach to the FAAAA’s express

preemption provision, acknowledging that the First

Circuit has come to the opposite conclusion on the

exact same question: whether the FAAAA preempts

the ABC worker classification test as applied to motor

carriers, because it prevents them from using

independent contractors to provide trucking services.

The panel majority recognized that the First

Circuit had held the Massachusetts ABC test

preempted “because interfering with the [motor

carrier’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.” Pet. App. 30a (citing Schwann v. FedEx

Ground Package Sys., Inc., 813 F.3d 429, 438–39 (1st

Cir. 2016)). Nonetheless, the majority rejected the

First Circuit’s ruling as “contrary to our precedent”

because “such indirect consequences have ‘only a

tenuous, remote, or peripheral connection to rates,

routes or services.’” Id. (quoting Dilts v. Penske

Logistics, LLC, 769 F.3d 637, 643 (9th Cir. 2014)).

Thus, after the Ninth Circuit’s ruling, a motor carrier

operating in California is subject to that state’s ABC

test, while a carrier in Massachusetts is not subject to

that state’s virtually identical classification test. See

also id. at *17–18 (Bennett, J., dissenting) (noting

circuit split).

If allowed to stand, the Ninth Circuit’s decision

and AB5 will directly impede the free and uniform

flow of interstate commerce in the nationwide

marketplace that Congress established in the FAAAA.

The already consequential harms to businesses and

workers across the country will grow if the existing

split in application of the FAAAA is not corrected.

I. AB5 exerts an impermissible significant

impact on motor carriers’ prices, routes, and services,

as this Court’s precedent establishes. The Ninth

Circuit’s contrary decision cements an intractable

split in the courts to have addressed the issue, with

the First Circuit and Massachusetts Supreme Judicial

Court holding that the FAAAA does preempt the ABC

test, and the Ninth Circuit and California Supreme

Court holding that the same ABC test is not

preempted. Permitting California to impose its own

preferred model for driver classification, which would

necessarily distort the national market for motor

carrier services, would thwart the FAAAA’s core

deregulatory purpose and resurrect the very problems

Congress sought to eliminate.

II. Motor carriers and the businesses and

consumers that rely on them, including many of the

Chamber’s members, face irreparable harm from the

imminent state-mandated restructuring of the entire

motor carrier industry in California. If the Court of

Appeal’s decision is permitted to stand, AB5 will

impose on motor carriers an impossible choice

between violating the law, backed by potential

criminal penalties, and incurring unrecoverable costs

from the forced restructuring of business operations.

Moreover, it would irrevocably disrupt and harm

companies’ business reputations and goodwill; exert a

negative impact on customers and businesses relying

on motor carriers’ services; and encumber a national

delivery and supply chain that continues to operate

under acute burdens during a time of ongoing

economic uncertainty.

III. If the Ninth Circuit’s FAAAA preemption

analysis is permitted to stand, the harm will not be

limited to the trucking industry.

Because the

FAAAA’s preemption language is expressly borrowed

from the Airline Deregulation Act (“ADA”) and also

closely mirrors the Employee Retirement Income

Security Act of 1974’s (“ERISA”) preemption

provision, the Ninth Circuit’s faulty reasoning can be

replicated—and in fact already has been replicated—

in those contexts, too. Therefore, the Court can

ensure the even and faithful application of its

preemption precedents to multiple statutory contexts,

affecting multiple industries, by granting the petition

and reversing.

REASONS FOR GRANTING THE PETITION

This Court should grant the petition and reverse

the Ninth Circuit’s decision striking down the district

court’s

preliminary

injunction

against

the

enforcement of AB5 against motor carriers in

California.

The FAAAA Preempts AB5.

The FAAAA’s preemption clause was central to

the statute’s aim of deregulating the motor-carrier

industry. Congress already had abolished the old

regime, under which a federal agency oversaw motor

carriers’ prices, routes, and services. But Congress

recognized the need to ensure that individual States

did not try to re-impose something like the old

regime—not only because Congress favored

deregulation as a policy matter, but also because a

patchwork of inconsistent state-law motor-carrier

regulations would be in many ways worse than

overbearing federal regulations.

The uniform,

nationwide approach of the FAAAA (with specified

exceptions not relevant here) facilitates interstate

commerce, efficiency, and competition. This Court

has followed Congress’s directive, repeatedly holding

state laws invalid where those laws “relate[] to” a

protected “price, route, or service” (49 U.S.C.

§ 14501(c)(1)), even if they take “the guise of some

form of unaffected regulatory authority” (H.R. Conf.

Rep. No. 103-677, at 84 (1994); see also Rowe, 552 U.S.

at 375 (declining to exempt law from preemption

where it is intended to address health and safety

concerns)). The Ninth Circuit flouted this precedent

and entrenched a circuit split in the process.

A. Congress

Adopted

The

FAAAA

Preemption Clause To Effectuate Its

Deregulation Of The Motor-Carrier

Industry.

1. The Deregulatory Background:

Congress

enacted the FAAAA’s preemption clause as an

integral part—indeed, the culmination—of a longterm effort to deregulate air and motor carriage.

Under the preceding regulatory system, federal and

state agencies had developed a patchwork of diverse

laws. Congress recognized that, if individual States

remained free to impose their own regulations, the

benefits of deregulation would be lost. In fact, in one

key respect, state regulation was worse than the

federal regulation Congress abolished: “[t]he sheer

diversity of [state] regulatory schemes” was itself “a

huge problem for national and regional carriers

attempting to conduct a standard way of doing

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

Congress’s deregulatory effort began in 1978 with

the ADA, which deregulated domestic air

transportation. “‘To ensure that the States would not

undo federal deregulation with regulation of their

own,’ the ADA included a preemption clause”

materially identical to the one at issue in this case.

Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 222 (1995)

(quoting Morales, 504 U.S. at 378).

In 1980, two years after its successful airline

deregulation, “Congress deregulated trucking.” Rowe,

552 U.S. at 368. Congress did not adopt a preemption

clause in the 1980 legislation, but it was well aware

that certain “individual State regulations and

requirements … [we]re in many instances confusing,

lacking in uniformity, unnecessarily duplicative, and

burdensome.” Motor Carrier Act of 1980, Pub. L. No.

96-296, § 19, 94 Stat. 811. Congress directed the

relevant federal agencies to conduct a study and

develop legislative recommendations. Id.

2. The FAAAA Preemption Clause: After 14 years

of grappling with the challenges of non-uniform state

regulation, Congress decided in 1994 to make a clean

break. In enacting the FAAAA, Congress adopted a

preemption rule for trucking modeled on the

successful preemption clause for air carriers. See

Rowe, 552 U.S. at 370 (“the Congress that wrote the

[FAAAA] copied the language of the air-carrier preemption provision of the Airline Deregulation Act of

1978 …. fully aware of this Court’s interpretation of

that language”).

While it made narrow, specified exceptions

tailored to the motor-carrier industry not relevant or

asserted here, Congress drew the “[g]eneral rule” of

preemption in the FAAAA very broadly, exactly as it

had in the ADA. 49 U.S.C. § 14501(c)(1) (emphasis

added). It did so to forestall States’ “attempt[s] to de

facto regulate prices, routes or services of intrastate

trucking through the guise of some form of unaffected

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

84 (emphasis added).

Thus, in both the ADA and the FAAAA, Congress

specified that States may not adopt laws or

regulations “related to” the deregulated aspects of the

air and motor-carrier industries.

49 U.S.C.

§§ 14501(c)(1), 41713(b)(4)(A). In the case of motor

carriers, the preemption clause specifies that state

law may not relate to “a price, route, or service of any

motor carrier … with respect to the transportation of

property.”

Id. § 14501(c)(1).

This provision is

appropriately applied broadly: the “‘breadth of [the]

pre-emptive reach is apparent from [its] language,’”

and the statute accordingly has an “expansive sweep”

preempting any law “having a connection with or

reference to [motor carrier] ‘rates, routes, or services.’”

Morales, 504 U.S. at 384 (citations omitted).

B. AB5 Is Preempted Under This Court’s

Binding Precedent.

The FAAAA preempts state laws that, like AB5,

require motor carriers to “terminate [their]

independent-contractor arrangements and instead

hire only employees” (Pet. App. 9a) because such a

restriction is “related to a price, route, or service of

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

“ordinary meaning of these words is a broad one” that

encompasses not only direct effects, but indirect

effects; if Congress had intended to preempt only state

laws that explicitly regulate prices, routes, or services,

“it would have forbidden the States to ‘regulate’” those

matters. Morales, 504 U.S. at 383–85.

Instead, the FAAAA’s preemption clause is

framed in “deliberately expansive” language—

“conspicuous for its breadth” (Morales, 504 U.S. at 384

(citations omitted))—precisely because Congress was

mindful that States would “attempt to de facto

regulate prices, routes or services … through the guise

of some form of unaffected regulatory authority” (H.R.

Conf. Rep. No. 103-677, at 84).

AB5 is “related to” all three prohibited categories,

and it is therefore preempted:

First, AB5 is “related to … services”—it dictates

what type of workers (employees) must drive trucks in

California. Thus, for every motor carrier who would

prefer to continue engaging independent contractors,

AB5 impermissibly “require[s] carriers to offer a

system of services that the market does not now

provide (and which the carriers would prefer not to

offer).” Rowe, 552 U.S. at 372.

AB5 thus is a “service-determining law[]” (id. at

373), which “insist[s] on” a “particular employment

structure” favored by the State for policy reasons (Am.

Trucking Associations, Inc. v. City of Los Angeles, 559

F.3d 1046, 1056 (9th Cir. 2009)). That is the core of

what the FAAAA preempts in its effort to ensure that

“[s]ervice options will be dictated by the

marketplace[,] and not by an artificial regulatory

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

Congress sought to “ensure transportation … services

[would] reflect maximum reliance on competitive

market forces” (Rowe, 552 U.S. at 371), but AB5

undermines that objective by forcing motor carriers to

use employees instead of independent contractors.

Moreover—and contrary to the Ninth Circuit’s

decision to apply a more lenient preemption analysis

to “generally applicable” laws (Pet. App. 2a)—because

AB5 has the effect of dictating that motor carriers use

employees, it makes no difference that the law

achieves that end without using those express words.

“What is important” for FAAAA preemption purposes

“is the effect of a state law, regulation, or provision,

not its form.” Northwest, Inc. v. Ginsberg, 572 U.S.

273, 283 (2014) (emphasis added). “It defies logic to

think that Congress would disregard real-world

consequences and give dispositive effect to the form of

a clear intrusion into a federally regulated industry.”

Id. at 284 (internal quotation marks omitted).

Second, AB5 is independently preempted because

it is “related to” motor carriers’ “routes.” This includes

both direct regulatory requirements, such as route

changes to ensure that drivers can comply with the

meal and rest breaks that California mandates for

employees (but not independent contractors), and

significant indirect economic impacts, such as route

consolidations to offset the increased costs of AB5’s

mandated employee-driver model.

The FAAAA

preempts state laws that “as an economic matter …

have the forbidden significant effect” on motor

carriers, which would offend Congress’s deregulatory

objectives no less than laws “actually prescribing

rates, routes, or services.” Morales, 504 U.S. at 385,

388.

The Ninth Circuit ignored these clear effects on

routes by narrowing FAAAA preemption for so-called

“generally applicable” laws, holding that such laws

are not preempted unless they “bind, compel, or

otherwise freeze into place a particular price, route, or

service of a motor carrier at the level of its customers.”

Pet. App. 32a (emphasis added). But such a myopic

approach to preemption “simply reads the words

‘relating to’ out of the statute. Had the statute been

designed to pre-empt state law in such a limited

fashion, [Congress] would have forbidden the States

to ‘regulate rates, routes, and services.’” Morales, 504

U.S. at 385 (citing Pilot Life Ins. Co. v. Dedeaux, 481

U.S. 41, 50 (1987)).

There is no exception from FAAAA preemption for

state laws of general applicability. This Court

rejected that proposed “loophole” nearly three decades

ago as “utterly irrational” because “there is little

reason why state impairment of the federal scheme

should be deemed acceptable so long as it is effected

by the particularized application of a general statute.”

Id. at 386. Instead, laws of general applicability, like

all other laws, are subject to the ordinary rules of

FAAAA preemption.3

Moreover, the Ninth Circuit’s analysis fails even under its own

invented standard, as AB5 is not a law of general applicability.

It is riddled with dozens of exemptions for various occupations,

and the vast majority of the statute’s text is spent delineating

these lobbied exceptions. See Cal. Lab. Code §§ 2776–2785. AB5

exempts millions of California workers, spanning all sorts of

vocations, skill levels, income, and education. But AB5 contains

no exemption for motor carriers.

Unsurprisingly, this Court’s precedents are rife

with examples of laws that are preempted even

though they do not directly set prices, routes, or

services.

For example, the FAAAA forbids the

application to motor carriers of “a State’s general

consumer protection laws” (id. at 383) or “state-law

claim[s] for breach of the implied covenant of good

faith and fair dealing … [that] seek[] to enlarge the

contractual obligations that the parties voluntarily

adopt” (Northwest, 572 U.S. at 276) due to those laws’

relation to motor carriers.

AB5 is similar to these laws—it will predictably

cause motor carriers to consolidate and reconfigure

their routes. For example, employee drivers must

tailor their routes to make parking available in order

to comply with California’s mandated meal and rest

breaks for employees. This will inevitably reduce and

alter the routes that the free market provides,

resulting in serious consequences for the Chamber’s

members.

Third, AB5 is also independently preempted

because it is “related to” motor carriers’ “prices.”

Congress, in enacting the FAAAA, expressed

particular concern that “[s]tate economic regulation of

motor carrier operations causes … increased costs,”

among other “significant inefficiencies.” H.R. Conf.

Rep. No. 103-677, at 87.

AB5’s mandated replacement of independent

owner-operators with a fleet of employee-drivers may

raise carriers’ costs by 150% or more. See Pet. App.

22a. This significant impact of AB5 on the industry

falls well within the bounds of FAAAA preemption,

and is obviously a far cry from those laws that, this

Court has noted, the FAAAA “might not pre-empt”

due to their “‘tenuous, remote, or peripheral’” impact

on carriers, “such as state laws forbidding gambling”

(Rowe, 552 U.S. at 371 (citation omitted)), or

“prostitution” (Morales, 504 U.S. at 390).

The Ninth Circuit erred in determining that AB5

is not preempted by the FAAAA, and the decision

below obviously and blatantly departed from this

Court’s precedents.

C. The Ninth Circuit’s Decision Cements A

Split In Courts’ Application Of The

FAAAA’s Preemption Provision.

The panel majority’s contortions to evade the

inexorable conclusion that AB5 is preempted entrench

a circuit split regarding the application of the

FAAAA’s preemption provision to the ABC test and

other so-called “generally applicable” laws.

See

Petition at 15–23.

The panel majority recognized that its decision

squarely conflicts with the First Circuit’s, which held

that the identical ABC test is preempted “because

interfering with the 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.” Pet. App. 30a (citing

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

F.3d 429, 438-39 (1st Cir. 2016)). The majority

opinion below disregarded the First Circuit’s analysis

as “contrary to our precedent” because “such indirect

consequences have ‘only a tenuous, remote, or

peripheral connection to rates, routes or services.’” Id.

(quoting Dilts, 769 F.3d at 643); see also Cal. Trucking

Ass’n v. Su, 903 F.3d 953, 964 (9th Cir. 2018)

(acknowledging that “other States have adopted the

‘ABC’ test to classify workers, the application of which

courts have then held to be preempted”) (citing

Schwann, 813 F.3d at 437).

Likewise, the Ninth Circuit’s decision conflicts

with the Massachusetts Supreme Judicial Court’s

decision adopting the First Circuit’s reasoning

(Chambers v. RDI Logistics, Inc., 65 N.E.3d 1, 7–8

(Mass. 2016)); the Third Circuit’s explanation that

New Jersey’s subtly different ABC test would be

preempted if it mirrored Massachusetts’ version of the

test in prohibiting motor carriers’ use of independent

contractor drivers (Bedoya v. Am. Eagle Express Inc.,

914 F.3d 812 (3d Cir. 2019)); and the Seventh Circuit’s

similar decision explaining that a classification law

requiring a motor carrier “to switch its entire business

model

from

independent-contractor-based

employee-based” would be preempted (Costello v.

BeavEx, Inc., 810 F.3d 1045, 1056 (7th Cir. 2016)). See

also Petition at 18–23 (further detailing the split).

Thus, the petition presents the Court with an

opportunity to resolve the important question of the

FAAAA’s preemption provision’s application to the

ABC test—and to “generally applicable” laws more

broadly—affecting hundreds of thousands of

businesses and workers in states across the country,

including in at least 17 states that have so far adopted

some form of the ABC test. See Robert Sprague, Using

the

ABC

Test

Classify

Workers, 11 William & Mary Bus. L.R. 733, 748 & n.63

(2020). Permitting the Ninth Circuit’s decision to

stand, on the other hand, would enable California and

other states within the Ninth Circuit to erect new and

anticompetitive

barriers

the

interstate

transportation of property—precisely the type of rule

that Congress abolished 26 years ago.

II. Implementing AB5 Will Harm Motor

Carriers, Businesses That Rely On Them,

And Consumers.

As the district court initially found, AB5 poses

enormous harm to motor carriers and the countless

businesses that rely on them. It also poses great risks

to consumers—especially in a period of economic

uncertainty caused by COVID-19-related supply

chain disruptions and recent inflation affecting

Americans and businesses across the country.

A. AB5 Will Harm Motor Carriers.

AB5 will inflict enormous harm on motor carriers,

including the motor carriers that provide critical

support to the Chamber’s member businesses. The

impossible choice that motor carriers will face

between dramatically “restructur[ing] their business

model[s]” and facing criminal and civil penalties (Pet.

App. 76a) inflicts irreparable harm on motor carriers

and, in turn, on the Chamber’s members that rely on

them.

The benefits for motor carriers of the existing

independent-contractor relationship, as opposed to a

mandated employer-employee relationship, are

substantial.

That is why “competitive market

forces”—which Congress wanted to be the primary

factor in “determining … the services that motor

carriers will provide” (Rowe, 552 U.S. at 372 (quoting

Morales, 504 U.S. at 378))—have led numerous motor

carrier businesses in California and the nationwide

market to adopt independent contractor models. It is

often simply more efficient for a logistics company not

to be in the business of delivering packages over the

“last mile” from distribution center to doorstep.

Particularly in the logistics industry, where demand

fluctuates seasonally, maintaining flexibility to

expand and contract the workforce as needed is vital

to maintaining competitive rates and services.

Yet AB5 would preclude carriers from choosing to

contract with individual drivers to provide services to

consumers. In its wake, motor carriers may hesitate

to take on additional workers as employees, causing

severe disruption in supply and distribution chains

and leaving business customers that rely on trucking

services in a lurch. Thus, allowing AB5 to regulate

motor carriers would not only require carriers to adopt

California’s preferred business model even when it is

inefficient to do so from a business perspective, but

also spur the re-emergence of just the kind of

inconsistent, economically disruptive “patchwork of

state service-determining laws, rules and regulations”

that Congress sought to eradicate in enacting the

FAAAA. Rowe, 552 U.S. at 373.

B. AB5 Will Harm Shippers, Retailers, And

Manufacturers.

If the split is permitted to stand, the Chamber’s

members outside the motor carrier industry will face

similar harm. All retailers rely upon just-in-time

delivery to efficiently manage inventory for retail

operations. It takes years for retailers to create

reliable, efficient, and cost-effective supply chains and

distribution operations. Any disruption to motor

carriers’ services, routes, and pricing schemes would

jeopardize, if not destroy, retailers’ longstanding

business arrangements in this area. If the Ninth

Circuit’s approach to FAAAA preemption applies

going forward, retailers would be forced to change

their operations in the national transportation

marketplace to adapt to California’s aberrational

mandate.

In fact, the Ninth Circuit’s decision could not have

come at a worse time, as it exacerbates existing stress

on retail and other goods-oriented businesses that rely

on trucking but are already stretched by COVID-19fueled materials and labor shortages, supply chain

backups, and price increases. The challenges the

shipping industry already face are enormous. For

example, a global semiconductor shortage “is shortcircuiting heavy-duty truck production” and as of July

2021, “the backlog of trucks ordered but not built has

nearly tripled from the same month a year ago, to

262,100.” Jennifer Smith, Chip Shortage Curtails

Heavy-Duty Truck Production, WALL STREET JOURNAL

(Sept. 3, 2021), https://on.wsj.com/3yMccJa. And even

where there are trucks available, there is simply too

much cargo to move and not enough infrastructure to

move it, as businesses are coping with a full-fledged

“supply-chain crisis,” including “port delays … near a

record high,” with dozens of ships carrying “tens of

thousands of shipping containers” “waiting off the

shore for weeks, pushing back delivery dates and

driving up the cost of transportation” even further.

Grace Kay, The US Shipping Crisis Is Not Going

Away As 33 Cargo Ships Float Off The Coast Of LA

Waiting To Dock, BUSINESS INSIDER (Jul. 26, 2021),

https://bit.ly/3j5JyhF.

All of this manifests itself in the form of

dramatically higher prices for businesses. Consistent

with a broader trend of inflation across the country,

U.S. freight costs are already rising disproportionate

to demand: “U.S. freight demand rose 3.4% from

February to March [2021] while … freight

expenditures rose nearly twice as fast, at 6.5%.”

Jennifer Smith, Truckers Expect U.S. Transport

Capacity Crunch to Persist, WALL STREET JOURNAL

(May 2, 2021), https://on.wsj.com/3mmWt0K. And

this trend is set to continue, as “U.S. ports expect

congestion” of the nation’s shipping routes “to

continue deep into next year,” with “logjams

stretch[ing] into warehouses and distribution

networks across the country.” Paul Berger, U.S. Ports

See Shipping Logjams Likely Extending Far Into

2022, WALL STREET JOURNAL (Sept. 5, 2021),

https://on.wsj.com/3DVCXOV.

As the Council of

Economic Advisers has explained, “[t]he situation has

been especially difficult for businesses with complex

supply chains, as their production is vulnerable to

disruption due to shortages of inputs from other

businesses.” Susan Helper & Evan Soltas, Why the

Pandemic Has Disrupted Supply Chains, The White

House (June 17, 2021), https://bit.ly/3B3Fgx4.

Adding AB5 into the mix would dramatically

increase disruption. AB5 would force motor carriers

to take on the additional expenses of converting to an

all-employee business model, which would add fixed

costs while decreasing motor carriers’ flexibility to

scale up or down as seasonal demand for their services

ebbs and flows. For some carriers, this will simply

drive them out of business. In fact, “U.S. trucking

company failures nearly tripled in 2020 from the

previous year as fallout from the pandemic deepened

pressure on smaller operators,” leading to a

staggering 3,140 trucking fleets going out of business

last year. See Jennifer Smith, Trucking Failures

Surged Last Year Under Pandemic, WALL STREET

JOURNAL

(Feb.

2021),

https://on.wsj.com/38WKTRO.

And many other

carriers simply cannot absorb these artificiallyimposed costs without passing them off to the

businesses they contract with, further exacerbating

the already-alarming cycle of inflation. See Smith,

Truckers Expect U.S. Transport Capacity Crunch to

Persist (“Manufacturers and retailers … have pointed

in recent quarterly earnings reports to rising

transport costs and tight capacity as operational

hurdles as they seek to restock inventories and meet

strong consumer demand.”).

C. AB5 Will Harm Consumers

Nor are consumers immune from the inflation

that is already affecting the shipping industry, or the

price increases that would stem from AB5’s drastic

increase in labor costs for motor carriers. Consumer

goods across the spectrum are already seeing inflation

stemming from “‘an astronomical rise in shipping

rates, a dramatic lengthening of transit times and a

logjam of cargo at every port.’” Abha Bhattarai, How

the Delta Variant Stole Christmas: Empty Shelves,

Long Waits – And Yes, Higher Prices, WASH. POST

(Sept. 1, 2021), https://wapo.st/3jRpz6L. Impacted

goods run the gamut, and include staples that affect

the household budgets of countless Americans:

antiseptic wipes, trash bags, household appliances,

baby-care products, feminine-care products, toilet

paper, soda, coffee, peanut butter, and more. Grace

Kay, From Trash Bags To Kitchen Appliances, Here’s

A Slew Of Household Staples That Are About To Get

More Expensive, BUSINESS INSIDER (May 17, 2021),

https://bit.ly/3y15ONT. “Chronic shipping delays also

are feeding inflation, just as consumers prepare to

stock up for the coming school year. Spot shortages of

clothing and footwear could appear within weeks, and

popular toys may be scarce during the holiday

season.” David J. Lynch, From Ports To Rail Yards,

Global Supply Lines Struggle Amid Virus Outbreaks

In The Developing World, WASH. POST (Jul. 26, 2021),

https://wapo.st/3szzsZv.

And it is not just retail goods—consumer-facing

services have also been affected by existing market

forces, even without the additional strain that AB5

would cause. For example, airlines “are facing

possible fuel shortages at some airports” in more

remote areas that are not well-served by rail or

pipeline infrastructure and rely on motor carriers to

consistently deliver fuel.

In those airports, “a

shortage of truck drivers and fuel trucks” have led to

passenger and cargo delays and flight cancellations.

See Michael Laris, Trucker Shortage Leads To

Possible Fuel Shortages At Some Airports, Airline

Industry Says, WASH.

POST (Jul. 26, 2021),

https://wapo.st/3ybeml3. For example, “[a]bout 18%

of flights at Bozeman Yellowstone International

Airport were delayed or canceled on a recent Sunday

due to slow fuel deliveries to airlines.” Alison Sider,

Airlines Struggle With Fuel Shortages at Some

Smaller Western U.S. Airports, WALL STREET

JOURNAL (Jul. 27, 2021), https://on.wsj.com/3B2sWgC.

Adding the cost-increasing and service- and routelimiting effects of AB5 would exacerbate this existing

fuel delivery issue.

Finally, the economic effects of increased trucking

costs are not evenly distributed across the country. As

the aircraft industry example above illustrates,

remote or rural areas are disproportionately

dependent on trucking as a primary mode of cargo

transportation, because they often lack rail or other

cargo-carrying infrastructure. In fact, although rural

areas account for “only 19% of the nation’s

population,” “[n]early half of all truck vehicle-milestraveled (VMT) occur on rural roads.” See Fact Sheet:

Rural Opportunities to Use Transportation for

Economic Success, U.S. Dep’t of Transp.,

https://bit.ly/3z6QWyR. Thus, rural communities

that are already underserved in myriad other respects

are even more susceptible to the shipping price

fluctuations that AB5 promises.

III. If Permitted To Stand, The Ninth Circuit’s

Erroneous Preemption Analysis Will Extend

To Other Preemption Statutes

Finally, if the Ninth Circuit’s decision

immunizing “generally applicable” laws from

preemption is permitted to stand, its reach will extend

beyond the trucking industry to other statutes with

analogous preemption provisions, such as the ADA

(upon which the FAAAA’s preemption provision was

modeled) and ERISA.

In fact, the Ninth Circuit’s carve-out for generally

applicable laws has already crept into other

preemption analyses. For example, in Bernstein v.

Virgin America, Inc., 3 F.4th 1127 (9th Cir. 2021), the

Ninth Circuit decided that California’s meal and rest

break requirements are not preempted as applied to

airlines that fly across state lines, despite the ADA’s

preemption (like the FAAAA) of any state law “related

to a price, route or service of an air carrier.” 49 U.S.C.

§ 41713(b)(1). The Bernstein panel’s reasoning is

almost identical to that of the panel majority below,

and relied on the same circuit authority to justify its

approach: “Where a law bears no [direct] reference”

to prices, routes, or services, the panel explained, “the

proper inquiry is whether the provision, directly or

indirectly, binds the carrier to a particular price,

route, or service and thereby interferes with the

competitive market forces within the industry.”

Bernstein, 3 F.4th at 1141 (quoting Dilts, 769 F.3d at

645 (emphasis added)). The panel further reasoned

that California’s break laws are “generally applicable”

and do not “bind” airlines to any service—even though

they significantly increase costs for airlines. Id.

As in the opinion below, the Bernstein panel cited

no Supreme Court precedent in applying a heightened

preemption standard to laws without a direct

reference to prices, routes, and services. Nor could

it—as this Court has made clear, “there is little reason

why state impairment of the federal scheme should be

deemed acceptable so long as it is effected by the

particularized application of a general statute,” and

“this notion … ignores the sweep of the ‘relating to’

language” in both the FAAAA’s and ADA’s express

preemption provisions. Morales, 504 U.S. at 386.

But instead of faithfully applying this precedent,

the Bernstein panel—like the court below—cited the

Ninth Circuit’s own opinion in Dilts, showing that in

the ADA context, just as in the FAAAA context, the

Ninth Circuit is forging its own preemption

framework instead of adhering to the one dictated by

this Court and applied by the other circuits. And

there is little to stop the Ninth Circuit from going

further, applying its immunity for generally

applicable laws to other preemption provisions that

hinge on whether a state law is “related to” a certain

topic, such as ERISA, which “supersede[s] any and all

State laws insofar as they . . . relate to any employee

benefit plan.” 29 U.S.C. § 1144(a); see also Morales,

504 U.S. at 383–84 (explaining that ERISA’s

preemptive scope, like the ADA’s, “clearly and

unmistakably rel[ies] on express pre-emption

principles and a construction of the phrase ‘relates

to’”). Thus, the Ninth Circuit’s analysis below poses a

risk not just to the trucking industry, but also to

airlines and any other industry governed by a

preemption provision similar to the FAAAA.

The Court should grant the petition and reverse,

resolving the entrenched circuit split and curbing the

Ninth Circuit’s disregard of this Court’s precedent

before it does additional damage to trucking and other

industries.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

ANDREW R. VARCOE

STEPHANIE MALONEY

U.S. CHAMBER LITIGATION CENTER

1615 H Street, N.W.

Washington, D.C. 20062

Counsel for the Chamber of

Commerce of the United States of

America

THEANE EVANGELIS

Counsel of Record

BLAINE H. EVANSON

ALEXANDER N. HARRIS

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7804

TEvangelis@gibsondunn.com

Counsel for Amicus Curiae

September 10, 2021

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