California’s AB5 independent contractor law and its implementation in the state’s trucking sector wasn’t the only state vs. federal question that the U.S. solicitor general weighed in on earlier this week.
In another case involving the question of whether the federal statute known as F4A can preempt state laws or legal precedents, the solicitor general, as it did with the AB5 case, said the Supreme Court should not review a trucking-focused decision by an appellate court.
If the court declines to review the two cases, the transportation sector will find itself on the losing side.
In the other transportation-focused request for review, what’s at stake is the role of a broker and whether the Federal Aviation Administration Authorization Act (F4A) should be interpreted in such a way that a broker’s liability in an accident that left a motorist as a quadriplegic is preempted by the federal law.
The case involves a 2016 incident in Nevada in which a truck operated by RT Service, hauling freight for Costco, crossed the median and collided with a vehicle driven by Allen Miller, who suffered severe injuries.
RT Service had been contracted to move the freight by C.H. Robinson (NASDAQ: CHRW), and that’s where the liability under F4A comes into play.
In the lawsuit that followed the collision, Miller argued that C.H. Robinson should be part of the litigation because it hired RT Service, even though, according to the lawsuit, C.H. Robinson “knew or should have known” about questions regarding RT Service’s safety record.
C.H. Robinson moved for summary judgment on the grounds that F4A preempted Miller’s action, citing the core of F4A as it related to trucking: States can’t take action that would impact prices, routes or service. C.H. Robinson’s argument was that by making it responsible for the actions of the carrier, it would affect the three-headed limits at the heart of F4A.
The District Court in Nevada granted that request.
In a subsequent appeal, a 9th U.S. Circuit Court of Appeals panel rejected the argument that F4A protected C.H. Robinson. Its decision quoted a section of F4A — which went into effect in 1994 — saying that “matters not covered … shall not restrict the safety regulatory authority of a state with respect to motor vehicles.” In the court’s interpretation, local safety laws preempted F4A.
The appeals court noted that it was on virgin ground: “No circuit court has yet considered an FAAAA preemption challenge brought by a broker, and district courts have reached differing conclusions as to whether negligence claims like Miller’s are ‘related to’ broker services,” the appellate court wrote. The use of the term “related to” is lifted directly from the language in F4A, which says no laws or regulations may be passed by a state “related to” prices, routes and services.
The law specifically says a broker or freight forwarder is covered by the law, as are motor carriers. Whether a broker fell under F4A was not in question.
But the appellate court ultimately held that the safety exception should prevail. “We find nothing in the FAAAA’s legislative history that suggests Congress intended to eliminate this important component of the States’ power over safety,” the court wrote.
The appeals court also rejected C.H. Robinson’s claim that because it didn’t own the vehicle that struck Miller or hire the driver, the brokerage did not fall under the “respect to motor vehicles” clause of the safety exemption. Citing an earlier precedent, the appellate court said that negligence claims against brokers, “to the extent that they arise out of motor vehicle accidents, have the requisite ‘connection with’ motor vehicles.” It said the safety exception in F4A does apply to Miller’s claim against C.H. Robinson.
The solicitor general agreed. The safety exception, as interpreted by the solicitor general, has nothing that “demonstrates a ‘clear and manifest purpose’ that such state authority over safety can be preempted,” the court wrote, citing language in a separate, earlier precedent. Given that, the solicitor general wrote, the Supreme Court should not take up a review of the earlier appellate decision.
The end result of the two solicitor general opinions is that the Supreme Court now has a pair of review requests regarding the intersection of trucking and the preemption issues raised by F4A. And in both of those cases, the solicitor general recommended the full court not review the lower court decisions, which went against the interests of the trucking and brokerage sectors.
In a note published after the solicitor general’s opinion on AB5 was handed down, the trucking-focused law firm of Scopelitis said the two opinions are not the end of the road. “Although the SG’s brief is very influential and often tracks the Court’s ultimate determination, the ultimate decision remains with the Court and takes four Justices to vote to hear the case,” the firm wrote.
But it added, “this is not a positive development in the effort to reverse the 9th Circuit opinion.” Both the C.H. Robinson case and the California Trucking Association case against AB5 lost on appeal in the 9th Circuit.
The Scopelitis brief also laid out a timeline for the AB5 case. The California Trucking Association and the state have 14 days to file briefs in response to the solicitor general’s recommendations.
The request for review in the AB5 case will be considered at a court conference, which would be at least two weeks from last Tuesday, when the solicitor general opinion was filed.
“Given the timing, it is possible that the petition will not be considered before the Court recesses for the summer at the end of June, in which case the next currently scheduled conference is October 6,” Scopelitis said.
If review is denied, AB5 will be implemented in California’s trucking sector immediately. If it rolls over until the next Supreme Court session, it will allow the law to stay in place at least until the second half of 2022 and maybe into 2023. Although the appellate court overturned the injunction, it granted a stay while the appeals process continued to the Supreme Court.