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In Anticipation Of Preemption: The U.S. Supreme Court Speaks (Sort Of . . . .) – Rail, Road & Cycling



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The transportation and logistics industry has been
widely anticipating a decision from the U.S. Supreme Court as to
whether or not it will accept for review two very significant cases
involving the scope of the Federal Aviation Administration
Authorization Act (“FAAAA”). The Court typically issues a
decision with respect to certiorari on the Monday following its
review of a case in “conference.” Both cases were
discussed at last week’s “conference” of the
justices. Today, however, the U.S. Supreme Court issued an order in
which it denied certiorari in one case and remained silent with
respect to the other. Each case is briefly summarized
below.

Freight Broker Liability

In Miller v. C.H. Robinson Worldwide, Inc., a shipper
retained a freight broker to arrange for the interstate
transportation of goods. The freight broker, in turn, retained a
motor carrier to perform the actual transportation. The motor
carrier’s driver lost control of the vehicle while driving in
icy conditions in Nevada. A third party suffered various injuries
and commenced a lawsuit in federal court against, among others, the
freight broker. The injured party claimed that the freight broker
breached a duty to select a competent motor carrier.

The freight broker moved for summary judgment on the basis that
such a claim was preempted by the FAAAA. The federal district court
granted summary judgment in favor of the freight broker and
concluded that the FAAAA preempted the plaintiff’s claim
because the claim had the effect of reshaping the level of service
that a freight broker must provide in selecting a motor carrier to
transport property. The federal district court also rejected an
exception to preemption in the FAAAA for “the safety
regulatory authority of a State with respect to motor
vehicles.”

On appeal, the United States Court of Appeals for the Ninth
Circuit reversed the federal district court. While the Ninth
Circuit agreed with the lower court that the scope of the FAAAA was
sufficiently broad to encompass the plaintiff’s claim, the
Ninth Circuit also broadly construed the so-called “safety
exception” to save the plaintiff’s claim from being
preempted. The freight broker subsequently requested that the U.S.
Supreme Court review the Ninth Circuit’s decision.

Unfortunately, today, the U.S. Supreme Court declined to review
the Ninth Circuit’s decision. As a result of this extremely
disappointing decision, the Ninth Circuit’s decision remains
the governing law in the Ninth Circuit, which encompasses Alaska,
Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and
Washington in addition to various U.S. territories. Freight brokers
doing business in the Ninth Circuit will have to evaluate the
implications of the Miller decision for their respective
operations. However, as no other federal appellate court has spoken
definitively as to the scope of the so-called safety exception
under the FAAAA and its effect upon freight broker liability, this
issue will—and should—continue to be litigated in other
courts across the country.

Independent Contractors

In contrast, the U.S. Supreme Court has not yet issued a
decision regarding whether it will accept or deny review of the
Ninth Circuit’s decision in the case of California Trucking
Association, Inc., et al. v. Robert Bonta, et al
.

By way of background, AB5 codified into statutory law a rigid
“ABC” test used for determining whether a worker is an
employee or an independent contractor. On December 24, 2019, in a
federal case brought by the California Trucking Association and
others (collectively, “CTA”), CTA moved for a temporary
restraining order to prohibit the enforcement of AB5 against motor
carriers operating in California. Among other things, CTA argued
that AB5 was preempted by the FAAAA. On December 31, 2019 (the day
before AB5 was to become effective), Judge Roger T. Benitez issued
a decision granting CTA’s request for an emergency order
enjoining the State of California from enforcing AB5 against motor
carriers. The judge found that the “B” prong of the ABC
test embodied in AB5 “is likely preempted by the FAAAA”
because AB5 “effectively mandates that motor carriers treat
owner-operators as employees, rather than as the independent
contractors that they are.” Judge Benitez later converted the
temporary restraining order into a preliminary injunction. An
appeal followed and, in April 2021, the United States Court of
Appeals for the Ninth Circuit, unfortunately, reversed the district
court’s decision, finding that AB5 was not in fact preempted by
the FAAAA. However, the appellate court stayed enforcement of its
decision pending the outcome of CTA’s request for the United
States Supreme Court to review the appellate court’s
decision.

Surprisingly, the Court has not yet ruled one way or other as to
whether it will accept or deny certiorari in CTA’s case. That
said, the legal and practical issues under FAAAA involved in
CTA’s case are quite different from the legal and practical
issues under FAAAA involved in the Miller case. In other
words, the destiny of the CTA’s case is, naturally, not
tethered to the Court’s decision not to review the
Miller case. Whether the Court will issue a decision with
respect to certiorari in CTA’s case later in the week before
the Court recesses for the summer or instead waits until the autumn
to make a decision, the status quo remains in place for the time
being. In short, at least as of today, the State of California may
not enforce AB5 against motor carriers operating in California.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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