Cta v. Rob Bonta ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CALIFORNIA TRUCKING No. 20-55106
ASSOCIATION; RAVINDER SINGH;
THOMAS ODOM, D.C. No.
Plaintiffs-Appellees, 3:18-cv-02458-
BEN-BLM
v.
ROB BONTA*, in his official capacity
as the Attorney General of the State
of California; ANDRE SCHOORL, in
his official capacity as the Acting
Director of the Department of
Industrial Relations of the State of
California; JULIE A. SU, in her
official capacity as Secretary of the
California Labor Workforce and
Development Agency; PATRICK W.
HENNING, in his official capacity as
the Director of the Employment
Development Department; LILIA
GARCIA-BROWER, in her official
capacity as Labor Commissioner of
the State of California, Division of
Labor Standards Enforcement,
Defendants-Appellants,
*
Rob Bonta has been substituted for his predecessor, Xavier
Becerra, as California Attorney General under Fed. R. App. P 43(c)(2).
2 CALIFORNIA TRUCK ASS’N V. BONTA
and
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS,
Intervenor-Defendant.
CALIFORNIA TRUCKING No. 20-55107
ASSOCIATION; RAVINDER SINGH;
THOMAS ODOM, D.C. No.
Plaintiffs-Appellees, 3:18-cv-02458-
BEN-BLM
v.
ROB BONTA, in his official capacity OPINION
as the Attorney General of the State
of California; ANDRE SCHOORL, in
his official capacity as the Acting
Director of the Department of
Industrial Relations of the State of
California; JULIE A. SU, in her
official capacity as Secretary of the
California Labor Workforce and
Development Agency; PATRICK W.
HENNING, in his official capacity as
the Director of the Employment
Development Department; LILIA
GARCIA-BROWER, in her official
capacity as Labor Commissioner of
the State of California, Division of
Labor Standards Enforcement,
Defendants,
CALIFORNIA TRUCK ASS’N V. BONTA 3
and
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS,
Intervenor-Defendant-Appellant.
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
**
The Honorable Douglas P. Woodlock, United States District Judge
for the District of Massachusetts, sitting by designation.
4 CALIFORNIA TRUCK ASS’N V. BONTA
SUMMARY***
Federal Aviation Administration Authorization
Act Preemption
Reversing the district court’s order preliminarily
enjoining enforcement, against any motor carrier doing
business in California, of California’s Assembly Bill 5, which
codified the judge-made “ABC test” for classifying workers
as either employees or independent contractors, the panel
held that application of AB-5 to motor carriers is not
preempted by the Federal Aviation Administration
Authorization Act of 1994.
In Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903(2018), the California Supreme Court adopted the ABC test.
The California legislature enacted AB-5, codifying the ABC
test, in September 2019. California Trucking Association, a
trade association representing motor carriers that hire
independent contractors who own their own trucks, and two
independent owner-operators filed suit, seeking to enjoin
enforcement of AB-5. The district court granted a
preliminary injunction against enforcement of AB-5 against
any motor carrier doing business in California.
The panel held that California Trucking Association and
its members had standing to bring this suit because they
demonstrated that their policies were presently in conflict
with the challenged provision, and they had a concrete plan
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
CALIFORNIA TRUCK ASS’N V. BONTA 5
to violate AB-5. In addition, CTA established that there was
a threat to initiate proceedings against its members.
The panel held that the district court abused its discretion
by enjoining the State of California from enforcing AB-5
against motor carriers doing business in California on the
ground that such enforcement is preempted by the FAAAA.
The panel held that 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, it is not
preempted by the FAAAA.
Dissenting, Judge Bennett wrote that AB-5 both affects
motor carriers’ relationship with their workers and
significantly impacts the services motor carriers are able to
provide to their customers, and it therefore is preempted as
applied to California Trucking Association’s members.
COUNSEL
Jose A. Zelidon-Zepeda (argued), Deputy Attorney General;
Tamar Pachter and Benjamin M. Glickman, Supervising
Deputy Attorneys General; Thomas S. Patterson, Senior
Assistant Attorney General; Attorney General’s Office, San
Francisco, California; for Defendants-Appellants.
Andrew Kushner (argued) and Stacey M. Leyton, Altshuler
Berzon LLP, San Francisco, California, for Intervenor-
Defendant-Appellant.
Andrew E. Tauber (argued), Miriam R. Nemetz, and Evan M.
Tager, Mayer Brown LLP, Washington, D.C.; Robert R.
6 CALIFORNIA TRUCK ASS’N V. BONTA
Roginson and Alexander M. Chemers, Ogletree Deakins Nash
Smoak & Stewart P.C., Los Angeles, California; for
Plaintiffs-Appellees.
David A. Rosenfeld, Weinberg Roger & Rosenfeld, Alameda,
California, for Amicus Curiae California Labor Federation
AFL-CIO.
Michael N. Feuer, City Attorney; Kathleen A. Kenealy, Chief
Assistant City Attorney; Michael J. Bostrom, Assistant City
Attorney; Danielle L. Goldstein and Christopher S. Munsey,
Deputy City Attorneys; Office of the City Attorney, Los
Angeles, California; Barbara J. Parker, City Attorney; Maria
Bee, Erin Bernstein, Malia McPherson, Caroline Wilson, and
Nicholas DeFiesta, Attorneys; Office of the City Attorney,
Oakland, California; for Amici Curiae Office of the Los
Angeles City Attorney and the City of Oakland.
Shannon Liss-Riordan and Harold Lichten, Lichten & Liss-
Riordan P.C., Boston, Massachusetts, for Amicus Curiae
California Employment Lawyers Association (CELA).
Joshua S. Lipshutz, Gibson Dunn & Crutcher LLP, San
Francisco, California; Christopher D. Dusseault, Michelle L.
Maryott, and Dhananjay S. Manthripragada, Gibson Dunn &
Crutcher LLP, Los Angeles, California; for Amici Curiae Cal
Cartage Transportation Express LLC, CMI Transportation
LLC, and K&R Transportation California LLC.
Patrick J. Whalen, Ellison Whalen & Blackburn, Sacramento,
California, for Amici Curiae American Dream Coalition and
Western States Trucking Association.
CALIFORNIA TRUCK ASS’N V. BONTA 7
Karen A. Booth and Jason D. Tutrone, Thompson Hine LLP,
Washington, D.C., for Amici Curiae American Chemistry
Council, Consumer Brands Association, Institute of Scrap
Recycling Industries Inc., National Industrial Transportation
League, National Shippers Strategic Transportation Council,
and Fertilizer Institute.
Theane Evangelis, Blaine H. Evanson, and Max E. Schulman,
Gibson Dunn & Crutcher LLP, Los Angeles, California;
Steven P. Lehotsky and Emily J. Kennedy, U.S. Chamber
Litigation Center, Washington, D.C.; Deborah White and
Kathleen McGuigan, Retail Litigation Center Inc.,
Washington, D.C.; Stephanie Martz, National Retail
Federation, Washington, D.C.; for Amici Curiae Chamber of
Commerce of the United States of America, Retail Litigation
Center Inc., and National Retail Federation.
Richard Pianka, ATA Litigation Center, Arlington, Virginia,
for Amici Curiae American Trucking Associations Inc.,
Arizona Trucking Association, Nevada Trucking Association,
Oregon Trucking Association, Washington Trucking
Associations, Intermodal Association of North America,
National Tank Truck Carriers, and Truckload Carriers
Association.
Paul D. Cullen Sr., Paul D. Cullen Jr., Gregory R. Reed, and
Daniel E. Cohen, The Cullen Law Firm PLLC, Washington,
D.C., for Amicus Curiae Owner-Operator Independent
Drivers Association Inc.
8 CALIFORNIA TRUCK ASS’N V. BONTA
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
CALIFORNIA TRUCK ASS’N V. BONTA 9
important 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
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).
10 CALIFORNIA TRUCK ASS’N V. BONTA
“the worker performs work that is outside the 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”:
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).
CALIFORNIA TRUCK ASS’N V. BONTA 11
(A) The person is free from the control and
direction of the hiring entity in connection
with the performance of the work, both under
the contract for the performance of the work
and in fact. (B) The person performs work
that is outside the usual course of the hiring
entity’s business. (C) The person is
customarily engaged in an independently
established trade, occupation, or business of
the same nature as that involved in the work
performed.
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).
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 AB-5 that set forth the ABC test itself.
12 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 13
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 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
6
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
14 CALIFORNIA TRUCK ASS’N V. BONTA
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 pre-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
the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127,
1135 (9th Cir. 2011) (citation omitted).
7
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.
CALIFORNIA TRUCK ASS’N V. BONTA 15
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).
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.
16 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 17
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. 37-2019-00048731-CU-
MC-CTL (Cal. Super. Ct. Sept. 13, 2019). 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
18 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 19
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 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
20 CALIFORNIA TRUCK ASS’N V. BONTA
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 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.
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).
CALIFORNIA TRUCK ASS’N V. BONTA 21
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 pre-emptive purpose.” Id. at 383 (quoting
Black’s Law Dictionary 1158 (5th ed. 1979)). For this
reason, Morales rejected the argument that “only state laws
specifically addressed to the airline industry are pre-empted,
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 pre-emption 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
22 CALIFORNIA TRUCK ASS’N V. BONTA
else.” Cal. Div. of Lab. Standards Enf’t v. Dillingham Const.,
N.A., 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.
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
CALIFORNIA TRUCK ASS’N V. BONTA 23
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 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
24 CALIFORNIA TRUCK ASS’N V. BONTA
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, 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 TRUCK ASS’N V. BONTA 25
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 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
26 CALIFORNIA TRUCK ASS’N V. BONTA
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.
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
CALIFORNIA TRUCK ASS’N V. BONTA 27
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 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 AB-5 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.
9
CTA claims that AB-5 is not generally applicable because it
includes 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).
28 CALIFORNIA TRUCK ASS’N V. BONTA
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
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
10
IBT disputes this claim, and argues that AB-5’s business-to-
business 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.
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.
CALIFORNIA TRUCK ASS’N V. BONTA 29
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”).
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
30 CALIFORNIA TRUCK ASS’N V. BONTA
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 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,
CALIFORNIA TRUCK ASS’N V. BONTA 31
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).
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
32 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 33
(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 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
34 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 35
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 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
36 CALIFORNIA TRUCK ASS’N V. BONTA
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) 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 AB-5) 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 824–25
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 AB-5 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.
CALIFORNIA TRUCK ASS’N V. BONTA 37
(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 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
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).
38 CALIFORNIA TRUCK ASS’N V. BONTA
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
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
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 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.
CALIFORNIA TRUCK ASS’N V. BONTA 39
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.
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’
15
Because the F4A does not preempt AB-5 as applied to motor
carriers, we do not address the remaining preliminary-injunction factors.
40 CALIFORNIA TRUCK ASS’N V. BONTA
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.
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 service-determining 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 pre-
emptive 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
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.
CALIFORNIA TRUCK ASS’N V. BONTA 41
peripheral.” Id. at 390 (citation omitted). But Morales also
made clear that “pre-emption 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.
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
42 CALIFORNIA TRUCK ASS’N V. BONTA
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 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.
CALIFORNIA TRUCK ASS’N V. BONTA 43
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)).
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[’s]
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
44 CALIFORNIA TRUCK ASS’N V. BONTA
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]
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
CALIFORNIA TRUCK ASS’N V. BONTA 45
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. § 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
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).
46 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
CALIFORNIA TRUCK ASS’N V. BONTA 47
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 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 owner-operator 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.
48 CALIFORNIA TRUCK ASS’N V. BONTA
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
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 non-productive 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
CALIFORNIA TRUCK ASS’N V. BONTA 49
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,” 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
50 CALIFORNIA TRUCK ASS’N V. BONTA
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
requiring 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
CALIFORNIA TRUCK ASS’N V. BONTA 51
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 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.
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).
52 CALIFORNIA TRUCK ASS’N V. BONTA
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 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”
CALIFORNIA TRUCK ASS’N V. BONTA 53
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 AB-5 is preempted as
4
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 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
54 CALIFORNIA TRUCK ASS’N V. BONTA
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 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
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.
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 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 Associations, 559 F.3d at 1059–60.
Therefore, the public interest tips sharply in Plaintiffs’ favor.” Cal.
Trucking, 433 F. Supp. 3d at 1171.
CALIFORNIA TRUCK ASS’N V. BONTA 55
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 See Am. Trucking, 559 F.3d at 1052
7
The district court and the majority agree as to the law governing 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 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
56 CALIFORNIA TRUCK ASS’N V. BONTA
(“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.
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.