AB 5 Ruling in People v. Superior Court of Los Angeles
Today, the California State Court of Appeals issued a decision in People of the State of California v. Superior Court Los Angeles County. Of greatest interest is the Court’s view that California’s ABC Test is not preempted by the Federal Aviation Administration Authorization Act (FAAAA) and that motor carriers may comply with the business-to-business exemption as outlined in AB2257. Excerpt from opinion below:
“Second, the business-to-business exemption applies only if the owner-operator is “providing services directly to the [motor carrier] rather than to customers of the [motor carrier].” (Lab. Code, § 2776, subd. (a)(2).) Defendants contend this condition is impossible for an owner-operator to meet because an owner operator contracting with a motor carrier necessarily is providing services to the motor carrier’s customers by moving the customer’s goods at the customer’s direction. But defendants provide no support for their strained reading of this provision. Motor carriers — not the motor carriers’ customers — could contract with owner-operators (or other business entities meeting the requirements of the business-to-business exemption), direct their actions, and pay them. Services would be provided by the owner-operators directly to the motor carriers, notwithstanding that those services would include moving freight belonging to the motor carrier’s customers.”
Please note that this case is distinct and separate from the ongoing federal litigation CTA v. Becerra. As you will recall, in January of this year a federal district court issued a preliminary injunction preventing the enforcement of the ABC Test against motor carriers. The issuance of the preliminary injunction was appealed by the State and the matter is currently pending before the Ninth Circuit Court of Appeals which is expected to render a decision soon.
