The Chairman's Corner

By John Chipman, Jr.

July 2021

Our motor carrier partners at the California Trucking Association (CTA) have been battling the State of California since 2019. You remember the case: CTA vs. Bonta, which is CTA’s ongoing fight against AB5’s three-prong worker classification test. Back in early 2020, CTA landed an early punch before the trial even got started. CTA scored a preliminary injunction against enforcement of AB5. That’s like knocking down your opponent at the weigh-in. Fast forward to this year, and the State of California struck back. On April 28, the majority of a three-judge panel of the 9th Circuit Court of Appeals (9th Circuit) ruled in CTA vs. Bonta that AB5’s could be enforced against independent contractors (ICs) operating in California. Later, on June 21, the same court denied CTA’s request for a rehearing. If this was Marvel Comics, the brightly colored paneled captions would read: “BAAAAM!” and “POOOOW!” as a superhero version of CTA dressed as a tractor-trailer got pummeled.

But, just two days later, CTA received some unexpected help.

CTA’s CEO Shawn Yadon describes the legal slugfest this way: “While we were disappointed by the 9th Circuit’s refusal to rehear the matter [en banc], we immediately filed a motion to stay the mandate, thereby allowing the preliminary injunction to remain in place. We received word on June 23 that the 9th Circuit granted our request, which is great news.”

Shawn’s remarks mean California authorities will be prevented from enforcing AB5 as to motor carriers operating in California. Although the Court’s relief is temporary – probably months – it’s a big deal. I was pleasantly shocked. For years I’ve been shaking my head about decisions coming from this West Coast based Federal Court. Now it’s time to express gratitude: “Thank you, 9th Circuit!”

CTA’s next legal round is to seek a Writ of Certiorari with the U.S. Supreme Court. To which, California Movers and Suppliers might rightly ask, “What the heck is a Writ of Certiorari? ”

For our purposes, it’s Latin gobbledygook for: “Dear Supreme Court Justices, If AB5 is enforced, Sacramento politicians will unilaterally erase the livelihood of 70,000 ICs in California, and effectively purge a service model that’s been the entrepreneurial backbone of California’s growth and prosperity for generations. Justices, if you decide not to hear CTA’s case, AB5 will spread like a diabolical plague through many other states. It’s already inflected Congress; witness the Pro Act. Motor carriers everywhere will be confronted by a conflicting patchwork of interstate laws. For example, a motor carrier’s IC can load an order in Reno, Nevada on Monday morning, and deliver the same order in Truckee, California later that afternoon, but only as a presumptive employee. This sort of Dr. Jekyll-Mr. Hyde legal fiction puts everyone in an impossible situation. If motor carriers are prevented from choosing ICs as a service model, AB5 will jackknife the U.S.’s interstate logistic supply chain. Justices, please preempt AB5!”

Will the Supreme Court agree to hear CTA’s case, and is CTA likely to prevail? As to the first question, CTA’s Yadon is optimistic: “I feel positive about our prospects with the U.S. Supreme Court should the court decide to hear us.” As to the second question, in my opinion, Yes. Judge Mark Bennett wrote a very strong, yet respectful, dissent in CTA vs. Bonta.  He thoughtfully explained if California is allowed to eliminate ICs as a service model than AB5 can’t help but run afoul of Congress’ Federal Aviation Authorization Act of 1994, which protects against significant impacts on a motor carrier’s prices, routes, or services.

If you are reading this article from the safe confines of a politically rational state, you’re thinking: “California is totally nuts; glad my IC service model is based in Texas [or Missouri, or Indiana].” Well, vanline leaders and independent movers doing pickups and deliveries in California heed me. The outcome of CTA’s case will affect you dramatically. As noted above: Your ICs will be presumptive employees when operating in California. Are you seriously going to dispatch and compensate them as both ICs and as employees? If that happens, labor lawyers will be parachuting into a federal district court near you, and IRS agents will pop up like daises.

The next big round of CTA’s fight is coming upon us like a speed trap on Highway 99. Getting a case heard by the U.S. Supreme Court is very expensive. CTA v. Bonta is projected to cost $2 million dollars by the time the briefs are drafted and submitted, and CTA’s lawyers make their oral arguments in Washington, DC.

I am asking you to help CTA.

Donate to the CTA AB5 Litigation Fund by sending checks made payable to CMSA, 10900 E. 183rd St., Ste. 300, Cerritos, CA 90703 and write “CTA–AB 5” in the memo section. All of the money collected will be sent to CTA. This would not only assist CTA, but also give CMSA more visibility with CTA which could be helpful not only for this litigation, but for future actions. Thank you for your support!

July 2021- CMSA Communicator