California Trucking Association et al v. Becerra et al

RESPONSE in Opposition re MOTION to Dismiss Defendants' Notice of Motion and Motion to Dismiss First Amended Complaint, 29 MOTION to Dismiss Plaintiffs' First Amended Complaint

S.D. Cal.March 11, 2019

Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx SPENCER C. SKEEN, CA Bar No. 182216 spencer.skeen@ogletree.com OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 4370 La Jolla Village Drive, Suite 990 San Diego, CA 92122 Telephone: 858.652.3100 Facsimile: 858.652.3101 ROBERT R. ROGINSON, CA Bar No. 185286 robert.roginson@ogletree.com ALEXANDER M. CHEMERS, CA Bar No. 263726 alexander.chemers@ogletree.com OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 400 South Hope Street, Suite 1200 Los Angeles, CA 90071 Telephone: 213.239.9800 Facsimile: 213.239.9045 Attorneys for Plaintiffs CALIFORNIA TRUCKING ASSOCIATION, RAVINDER SINGH, and THOMAS ODOM UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA RAVINDER SINGH, THOMAS ODOM, and CALIFORNIA TRUCKING ASSOCIATION, Plaintiffs, v. XAVIER BECERRA, 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; and JULIE A. SU, in her official capacity as Labor Commissioner of the State of California, Division of Labor Standards Enforcement, Defendants. Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS Date: March 11, 2019 Time: 10:30 a.m. Place: Courtroom 5A Complaint Filed: October 25, 2018 Trial Date: Not Set District Judge: Hon. Roger T. Benitez Courtroom 5A, 221 W. Broadway, San Diego Magistrate Judge: Hon. Barbara L. Major 11th Floor, 333 W. Broadway, San Diego Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.302 Page 1 of 44 i Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx TABLE OF CONTENTS Page I. INTRODUCTION .................................................................................... 1 II. BACKGROUND ...................................................................................... 3 III. LEGAL STANDARDS ............................................................................ 4 IV. PLAINTIFFS HAVE ALLEGED FACTS SUFFICIENT TO ESTABLISH SUBJECT-MATTER JURISDICTION ............................. 5 A. Motor Carriers Face a Constant Threat of Misclassification Suits. ................................................................... 5 1. The State Defendants Are Charged with Enforcing Wage Order No. 9. ............................................................... 5 2. The State Has Enforced Wage Order No. 9 and Sought Enforcement of Dynamex. ....................................... 6 3. There Is Also an Imminent Threat of Enforcement Actions by Private Attorney Generals. ................................ 7 B. Plaintiffs Have Pled Sufficient Facts to Establish Standing. ......................................................................................... 9 1. The Individual Plaintiffs Have Sufficiently Pled Standing. ............................................................................. 10 2. CTA Has Sufficiently Pled Associational Standing. ......... 11 3. Plaintiffs Have Sufficiently Pled Imminent Harm. ............ 13 4. The Court Should Not Decline to Exercise Its Jurisdiction. ........................................................................ 16 V. PLAINTIFFS PLAUSIBLY STATE A CLAIM UNDER THE FAAAA ................................................................................................... 17 A. Plaintiffs May Sue To Enforce Their Rights Under the FAAAA. ....................................................................................... 17 B. Plaintiffs Have Adequately Alleged a Violation of § 14501(c)(1). .................................................................................. 20 1. Prong B Is Preempted, Whether or Not Wage Order No. 9 Is a Law of General Applicability. ........................... 21 2. Prong B Impermissibly Compels the Use of Employees Rather Than Owner-Operators. ....................... 23 a. The FAC Alleges that Prong B Effectively Prohibits the Use of Owner-Operators. ................... 23 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.303 Page 2 of 44 ii Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx b. California May Not Prohibit the Use of Owner-Operators. .................................................... 24 3. The FAC Alleges a Significant Effect on Prices, Routes, and Services. ......................................................... 27 4. The ABC Test Is Also Impliedly Preempted. .................... 29 VI. PLAINTIFFS HAVE ADEQUATELY PLED THEIR DORMANT COMMERCE CLAUSE CLAIM ...................................... 30 VII. PLAINTIFFS SEEK DECLARATORY RELIEF BASED ON THE FMCSA’S PREEMPTION ORDER .............................................. 33 VIII. CONCLUSION ....................................................................................... 35 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.304 Page 3 of 44 iii Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx TABLE OF AUTHORITIES Page(s) Federal Cases Alvarez v. XPO Logistics Cartage LLC, 2018 WL 6271965 (C.D. Cal. 2018) ..................................................................... 26 Am. Trucking Ass’ns, Inc. v. Michigan Pub. Serv. Comm’n, 545 U.S. 429 (2005) .............................................................................................. 31 American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995) .............................................................................................. 23 American Trucking Ass’ns, Inc., v. City of Los Angeles, 577 F. Supp. 2d 1110 (C.D. Cal.), 2008 WL 2944166 ......................................... 20 American Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009) ............................................................. 14, 15, 16, 26 Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378 (2015) ..................................................................................... 20, 35 Babbit v. United Farm Workers Nat’l Union, 442 U.S. 289 (1979) .............................................................................................. 13 Bedoya v. American Eagle Express Inc., 914 F.3d 812 (3d Cir. 2019) .................................................................................. 27 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................. 21 Bennett v. Spear, 520 U.S. 154 (1997) ................................................................................................ 4 Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (2001) .............................................................................................. 30 California Trucking Ass’n v. Su, 903 F.3d 953 (9th Cir. 2018) ............................................................... 23, 25, 26, 27 Californians for Safe and Competitive Dump Truck Transportation v. Mendonca, 152 F.3d 1184 (9th Cir. 1998) ............................................................................... 22 In re Cell Tower Litig., No. 07-cv-399 BEN (WVG), 2010 WL 3419516 (S.D. Cal. Aug. 27, 2010) ...................................................................................................................... 23 China Neighborhood Association v. Harris, 794 F.3d 1136 (9th Cir. 2015) ............................................................................... 32 City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424 (2002) ........................................................................................ 18, 20 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.305 Page 4 of 44 iv Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx Clapper v. Amnesty International USA, 568 U.S. 398 (2013) ................................................................................................ 9 Colon Health Ctrs. of Am., LLC v. Hazel, 733 F.3d 535 (4th Cir. 2013) ................................................................................. 31 Cotter v. Lyft, Inc., 176 F. Supp. 3d 930 (N.D. Cal. 2016) ..................................................................... 7 Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363 (2000) .............................................................................................. 29 Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. 2014) ................................................................................. 21 Federal Express Corp. v. California Public Utilities Commission, 936 F.2d 1075 (1991) ............................................................................................ 18 FW/PBS, Inc. v. City of Dallas, 493 U.S. 215 (1990) .............................................................................................. 10 Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) ........................................................................................ 19, 20 Government Employees Insurance Co. v. Dizol, 133 F.3d 1220 (9th Cir. 1998) ............................................................................... 16 Indep. Towers of Washington v. Washington, 350 F.3d 925 (9th Cir. 2003) ................................................................................. 21 League of Women Voters of Cal. v. Kelly, No. 17-cv-02665-LB, 2017 WL 3670786 (N.D. Cal. Aug. 25, 2017) .................. 13 Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) .............................................................................................. 9 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ................................................................................................ 9 Mason & Dixon Lines, Inc. v. Steudle, 761 F. Supp. 2d 611 (E.D. Mich. 2011) ................................................................ 17 Maya v. Centex Corp., 658 F. 3d 1060 (9th Cir. 2011) ................................................................................ 5 Mendis v. Schneider Nat’l Carriers Inc., 2016 WL 6650992 (W.D. Wash. 2016) ................................................................ 31 Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) .................................................................................. 21, 22, 23 N.H. Motor Transp. Ass’n v. Rowe, 377 F. Supp. 2d 197 (D. Maine), 2003 WL 25556125 ......................................... 18 NAACP v. Ameriquest Mortgage Co., 635 F. Supp. 2d 1096 (C.D. Cal. 2009) ................................................................. 13 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.306 Page 5 of 44 v Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144 (9th Cir. 2012) ......................................................................... 31, 33 National Council of La Raza v. Cegavske, 800 F.3d 1032 (9th Cir. 2015) .............................................................................. 12 Navarro v. Block, 250 F.3d 729 (9th Cir. 2001) ................................................................................... 5 Navegar, Inc. v. U.S., 103 F.3d 994 (D.C. Cir. 1997) ................................................................................. 7 Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) ........................................................................................ 31, 33 Puerto Rico v. Franklin Cal. Tax-Free Tr., 136 S. Ct. 1938 (2016) ........................................................................................... 17 Raymond Motor Transp. v. Rice, 434 U.S. 429 (1978) .............................................................................................. 33 Estate of Ronnie Paul Sandoval v. Cty. of San Diego, No. 16cv1004-BEN(RBB), 2016 WL 4491598 (S.D. Cal. Aug. 5, 2016) ...................................................................................................................... 30 Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364 (2008) ............................................................................ 18, 20, 21, 22 S.D. Myers, Inc. v. City & County of San Francisco, 253 F.3d 461 (9th Cir. 2001) ........................................................................... 31, 33 Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429 (1st Cir. 2016) ........................................................................... 22, 26 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ................................................................................................ 20 Skaff v. Meridien North Am. Beverly Hills, LLC, 506 F.3d 832 (9th Cir. 2007) ............................................................................. 9, 10 Sullivan v. Oracle Corp., 662 F.3d 1265 (9th Cir. 2011) ............................................................................... 31 Summers v. Earth Island Inst., 555 U.S. 488 (2009) .............................................................................................. 12 Tennessee v. U.S. Dep’t of Transp., 326 F.3d 729 (6th Cir. 2003) ................................................................................. 35 Thomas v. Anchorage Equal Rights Commission, 220 F.3d 1134 (9th Cir. 2000) (en banc) ......................................................... 13, 14 United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 261 F.3d 245 (2d Cir. 2001) .................................................................................. 31 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.307 Page 6 of 44 vi Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330 (2007) .............................................................................................. 33 United States v. Washington, 759 F.2d 1353 (9th Cir. 1985) ............................................................................... 16 Yoder v. W. Express, Inc., 181 F. Supp. 3d 704 (C.D. Cal. 2015) ............................................................. 31, 33 Zuber v. Allen, 396 U.S. 168 (1969) .............................................................................................. 20 California Cases Arias v. Superior Court, 46 Cal. 4th 923 (2009) ....................................................................................... 8, 14 Children & Families Com. of Fresno County v. Brown, 228 Cal. App. 4th 45 (2014) .................................................................................... 5 Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) ................................................................................. 1, 3, 4, 26 People ex rel. Harris v. Pac Anchor Transportation, Inc., 59 Cal. 4th 772 (2015) ............................................................................................. 6 Huff v. Securitas Security Services USA, Inc., 23 Cal. App. 5th 745 (2018) .................................................................................... 8 S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989) ............................................................................................ 26 Other State Cases Chambers v. RDI Logistics, Inc., 65 N.E.3d 1 (Mass. 2016) ...................................................................................... 27 Federal Statutes 42 U.S.C. § 1983 .................................................................................................................... 20 49 U.S.C. § 14501(c) ....................................................................................................... passim § 31141 .................................................................................................................. 34 § 41713 .................................................................................................................. 22 79 Stat. 793 ................................................................................................................... 3 California Statutes Cal. Code Regs. § 11090(1) .............................................................................................................. 22 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.308 Page 7 of 44 vii Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37719365_1.docx Cal. Lab. Code §§ 61 and 1193.5 ..................................................................................................... 5 § 90.5 ................................................................................................................... 5, 6 § 95 .......................................................................................................................... 6 § 517 ........................................................................................................................ 5 § 1182 ...................................................................................................................... 5 § 1775 .................................................................................................................... 22 § 2698 et seq. ........................................................................................................ 7-8 Other State Statutes 815 Ill. Comp. Stat. § 505 (1992) ........................................................................................................... 23 N.J. Stat. Ann. §§ 43:21-19(i)(6)(B) .............................................................................................. 27 Other Authorities 49 C.F.R. § 1.87(f) ...................................................................................................... 33 83 Fed. Reg. 67470 (Dec. 28, 2018) ........................................................................... 34 1994 U.S.C.C.A.N. 1755 ............................................................................................ 19 1994 U.S.C.C.A.N. 1760 ............................................................................................ 19 Analysis of SB 1402, California Senate Committee on Appropriations (May 7, 2018) .......................................................................................................... 6 H.R. Rep. No. 103–677 (1994) (Conf. Rep.), as reprinted in 1994 U.S.C.C.A.N. 1715 ......................................................................................... passim Labor Code Private Attorneys General Act Resources, https://lao.ca.gov/publications/report/3403 (last accessed March 11, 2019) ........................................................................................................................ 8 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.309 Page 8 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Plaintiffs California Trucking Association (“CTA”), Ravinder Singh, and Thomas Odom (collectively, “Plaintiffs”) respond to the Motion to Dismiss (ECF No. 28) filed by defendants Attorney General Xavier Becerra, Acting Director Andre Schoorl, and Labor Commissioner Julie A. Su (together, the “State”), as well as the Motion to Dismiss (ECF No. 29) filed by intervenor-defendant International Brotherhood of Teamsters (“IBT”) (collectively, “Movants”). I. INTRODUCTION The First Amended Complaint (“FAC”) (ECF No. 25) alleges the following key facts, which must be presumed true for purposes of the pending motions: (1) CTA’s motor-carrier members rely on independent-contractor owner- operators like plaintiffs Singh and Odom to fulfill their customers’ specialized needs and respond to the fluctuating demand for services. See, e.g., FAC ¶¶ 28-30. (2) Under prior law, motor carriers were able to contract with owner- operator drivers without incurring the obligation to treat them as employees. See id. ¶ 36. Under Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018), however, owner-operator drivers are deemed the employees of motor carriers that contract with them, and their relationship is governed by Industrial Welfare Commission Wage Order No. 9. See id. ¶¶ 37-39. (3) It would be impracticable for CTA’s motor-carrier members to continue contracting with owner-operators like Singh and Odom while treating them as employees under Wage Order No. 9. See id. ¶¶ 40-41. CTA’s motor-carrier members therefore must choose between continuing to use owner-operators without complying with Wage Order No. 9 (exposing them to substantial civil and criminal liability) or switching to employee drivers. Id. (4) Effectively compelling motor carriers to stop using independent- contractor drivers in California will significantly affect the prices, routes, and services that they can offer and will impede the transportation of goods across California’s borders. See id. ¶¶ 42-45. Furthermore, owner-operators like plaintiffs Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.310 Page 9 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Singh and Odom will be harmed. See id. ¶¶ 41. These essential facts are sufficient to establish Plaintiffs’ standing and their claims. Movants’ premature arguments either fail to accept these allegations as true or are legally erroneous. First, Movants argue that Plaintiffs’ suit is premature because there is supposedly no imminent risk of prosecution. The FAC squarely alleges that CTA’s members face incurring substantial liability if they continue to use independent- contractor drivers. Furthermore, the State has an obligation to enforce Wage Order No. 9, has already used the Dynamex decision against motor carriers, has adjudicated thousands of misclassification claims through the DLSE’s hearing process using the legal test that preceded Dynamex, and has deputized tens of thousands of “private attorney generals” to bring suits. Second, Movants contend that Plaintiffs have not sufficiently established standing. Movants rely on a series of decisions in which courts evaluated the sufficiency of evidence to support standing at summary judgment, but such a detailed showing is not required at the pleadings stage. Third, Movants contend that laws of general application cannot be preempted by the Federal Aviation Administration Authorization Act of 1994 (the “FAAAA”), 49 U.S.C. § 14501(c)(1). Wage Order No. 9, however, is not a law of general applicability; it applies exclusively to the “Transportation Industry.” Under binding Supreme Court precedent, moreover, even laws of general applicability are subject to preemption under the FAAAA. Here, Wage Order No. 9 as construed in Dynamex is preempted, both because it would impermissibly force motor carriers to stop using independent contractors to conduct their business, and because forcing motor carriers to treat all drivers as employees will significantly affect the prices, routes, and services that they offer to their customers. Fourth, Movants argue that Plaintiffs cannot prove that Wage Order No. 9 has had a sufficient impact on interstate commerce to support a challenge under the Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.311 Page 10 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx dormant Commerce Clause. Movants’ challenge is premature, as resolution of this claim requires the Court to weigh the law’s claimed discriminatory impact against the proposed legitimate local purpose underpinning that law. At the pleadings stage, it is sufficient that Plaintiffs have pled sufficient facts which, if presumed to be true, establish that Wage Order No. 9 has a discriminatory impact on interstate commerce. Fifth, Movants contend Plaintiffs cannot seek relief through the Federal Motor Carrier Safety Administration’s (“FMCSA”) recent order finding that California’s meal and rest break rules are preempted. In doing so, they misconstrue Plaintiffs’ claim. Because the FMCSA has already conclusively found that the meal and rest break rules are preempted, Plaintiffs are asking this Court to enforce that order. Even if there was no private right of action to obtain a preemption determination, affected parties can seek relief based on an existing preemption determination. For these reasons and others, the Motions to Dismiss should be denied. II. BACKGROUND In 1980, Congress passed the Motor Carrier Act, which deregulated interstate trucking so that the rates and services offered by licensed motor carriers and related entities would be set by the market rather than by federal or state regulation. Id. ¶ 20; see also 79 Stat. 793. In keeping with this approach, the FAAAA expressly preempts state regulation of the trucking industry, including any law, regulation, or other provision affecting a “price, route, or service of any motor carrier. . . .” See FAAAA, 49 U.S.C. § 14501(c)(1). Wage Order No. 9 applies to “employees” in the “Transportation Industry” and imposes rules related to meal periods, rest breaks, overtime, and the like. In Dynamex, the California Supreme Court adopted a new standard, call the “ABC test” to determine whether a worker is an employee or independent contractor for purposes of Wage Order No. 9. Dynamex, 4 Cal. 5th at 916-917. Prong B of the ABC test provides that a worker is considered an employee, not an independent contractor, unless the hiring entity establishes “that the worker performs work that is Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.312 Page 11 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx outside the usual course of the hiring entity’s business.” Id. at 916-917 (emphasis added). If the worker is deemed an employee, then California’s expansive requirements for employment attach, including significant financial liabilities for the hiring entity. Id. at 913-14. As Plaintiffs have alleged, “[b]ecause drivers perform work that is within rather than outside the usual course of a motor carrier’s business, the unavoidable effect of Prong B is to automatically classify every driver who works for a motor carrier as an ‘employee’ under Wage Order No. 9, no matter the actual and contractual relationship between the driver and the motor carrier.” FAC ¶ 39 (emphasis added). Thus, under Wage Order No. 9 as construed by Dynamex, “all motor carriers operating in California, including CTA’s motor carrier members, are required to extend to all drivers, including owner-operators who heretofore have been lawfully treated as independent contractors under prior law, the full range of benefits mandated by Wage Order No. 9 and to otherwise comply with Wage Order No. 9’s requirements with respect to such drivers.” Id. Furthermore, “[m]otor carriers that fail to do so face the significant risk of civil and criminal liability arising from the violation of Wage Order No. 9.” Id. Thus, Prong B represents an “all or nothing” rule requiring that services in the “Transportation Industry” be performed by drivers who are classified as employees. Plaintiffs seek injunctive and declaratory relief restraining defendants from enforcing that aspect of the Dynamex decision as it applies to Wage Order No. 9. III. LEGAL STANDARDS A complaint may be dismissed for lack of subject-matter jurisdiction if a plaintiff fails to plead that: (1) he or she has suffered a “concrete and particularized” injury to a cognizable interest; (2) which is “fairly traceable to the challenged action of the defendant”; and (3) which likely can be redressed by a favorable decision. Bennett v. Spear, 520 U.S. 154, 167 (1997). A complaint may be dismissed for failure to state a claim “only where there is Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.313 Page 12 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). At the pleadings stage, a court will “accept as true all material allegations of the complaint” and “construe the complaint in favor of the complaining party.” Maya v. Centex Corp., 658 F. 3d 1060, 1068 (9th Cir. 2011). IV. PLAINTIFFS HAVE ALLEGED FACTS SUFFICIENT TO ESTABLISH SUBJECT-MATTER JURISDICTION In this section, Plaintiffs first discuss the background law regarding enforcement of wage claims, and then address Movants’ arguments that Plaintiffs’ lack standing. A. Motor Carriers Face a Constant Threat of Misclassification Suits. Movants assert that there is no “injury” because the State does not plan to enforce the Dynamex decision, and falsely suggest that Plaintiffs have conceded there is no risk of an enforcement action. In reality, as Plaintiffs have squarely pled (FAC ¶ 46), they face a real risk of incurring substantial liability if they fail to treat all drivers as employees. 1. The State Defendants Are Charged with Enforcing Wage Order No. 9. Wage Order No. 9 emanated from the Industrial Welfare Commission (“IWC”), a five-member body within the Department of Industrial Relations (“DIR”). The IWC is charged by statute with promulgating wage orders for various industries. Cal. Labor Code § 517. The DIR is charged with defending, amending, and republishing California’s wage orders. Cal. Labor Code § 1182. Likewise, “it is the Attorney General’s job to pursue litigation that is in the general interest of the state’s population . . . .” Children & Families Com. of Fresno County v. Brown, 228 Cal. App. 4th 45, 59 (2014). Finally, the Division of Labor Standards Enforcement (“DLSE”) is specifically empowered by the Legislature to enforce the wage orders, including investigating complaints, initiating enforcement actions, and adjudicating wage claims through its hearing process. See Cal. Labor Code §§ 61 and 1193.5.1 1 For example, Labor Code § 90.5 announces “[i]t is the policy of this state to Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.314 Page 13 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx In sum, the State is charged with enacting, implementing, and enforcing Wage Order No. 9 as interpreted in Dynamex. 2. The State Has Enforced Wage Order No. 9 and Sought Enforcement of Dynamex. In keeping with its statutory obligations, the State brings enforcement actions against motor carriers that are purportedly violating Wage Order No. 9. Indeed, the State’s moving papers cite People ex rel. Harris v. Pac Anchor Transportation, Inc., 59 Cal. 4th 772 (2015). (ECF No. 28-1, pp. 14-18.) In People ex rel. Harris, the California attorney general alleged that a motor carrier misclassified drivers as independent contractors and violated state law, including Wage Order No. 9. 59 Cal. 4th at 776.2 In that case, Attorney General Xavier Becerra (one of the defendants here) has already argued that a trial court should apply Dynamex. Request for Judicial Notice, Ex. A, p. 2:27 (Opp’n to Motion in Limine No. 1) (arguing that “[t]his court should apply the rules set forth in Dynamex.”). The State also ignores the thousands of wage claims which the DLSE routinely adjudicates. IBT’s moving papers admit that the DLSE’s administrative law judges have resolved the misclassification claims of more than 1,150 drayage drivers3 since 2010. (ECF No. 29-1, p. 5:11-13.) There have been roughly 150 misclassification claims per year in the drayage truck community alone, and the CTA’s membership encompasses a much wider range of trucking providers. In sum, the State is obligated to defend the wage order, actively engaged in vigorously enforce minimum labor standards in order to ensure employees are not required or permitted to work under substandard unlawful conditions . . . ,” and requires the Labor Commissioner to establish a “field enforcement unit,” to adopt an “enforcement plan,” and to report annually to the Legislature. Cal. Labor Code § 90.5 (emphasis added). Likewise, Labor Code § 95 authorizes the DLSE to “enforce the provisions of this code and all labor laws of the state the enforcement of which is not specifically vested in any other officer, board, or commission.” Cal. Labor Code § 95 (emphasis added). 2 People ex rel. Harris involved an unfair competition claim, since Section 17204 of the Business & Professions Code specifically authorizes the Attorney General to initiate such actions, further demonstrating the State’s ability to enforce Dynamex. 3 Drayage drivers transport goods (generally containers) a short distance to and from ocean ports. Analysis of SB 1402, California Senate Committee on Appropriations (May 7, 2018) Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.315 Page 14 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx enforcement actions, and has already argued that courts should apply Dynamex to Wage Order No. 9. In light of this evidence, the State cannot reasonably suggest it will refuse to enforce Wage Order No. 9 if motor carriers continue to treat drivers as independent contractors.4 Plaintiffs do not need to wait until an enforcement actually is initiated against them before filing suit: To imagine that the government would conduct itself in so chimerical a fashion would be to declare in effect that federal courts may never, in the absence of an explicit verbal “threat,” decide preenforcement challenges to criminal statutes. This has never been the law. To require litigants seeking resolution of a dispute that is appropriate for adjudication in federal court to violate the law and subject themselves to criminal prosecution before their challenges may be heard would create incentives that are perverse from the perspective of law enforcement, unfair to the litigants, and totally unrelated to the constitutional or prudential concerns underlying the doctrine of justiciability. Navegar, Inc. v. U.S., 103 F.3d 994, 1000-1001 (D.C. Cir. 1997).5 3. There Is Also an Imminent Threat of Enforcement Actions by Private Attorney Generals. The State’s contention that there is “there is no threatened government action”6 ignores the practical reality that California’s wage-and-hour laws are also enforced by plaintiffs functioning as private attorney generals. In particular, the Private Attorneys General Act of 2004 (“PAGA”), Labor Code § 2698 et seq., allows a plaintiff to “stand[] in the shoes of the State.” Cotter v. Lyft, Inc., 176 F. Supp. 3d 930, 941 (N.D. Cal. 2016). He or she does so “as the proxy or agent of the state’s labor law enforcement agencies. . . . In a lawsuit brought under the act, the employee plaintiff represents the same legal right and interest as state labor law enforcement 4 Ironically, the State’s suggestion that it might not seek to enforce the Dynamex decision only compounds the uncertainty and harm to CTA’s member companies and heightens the need for this Court to definitively determine whether Prong B of the ABC test can be enforced or is, instead, preempted. 5 Although Navegar involved a criminal statute, its reasoning applies with equal force to Wage Order No. 9, since violations of that statute can result in both civil and criminal liability. For example, Section 20 of Wage Order No. 9 incorporates by reference Labor Code § 1199, which states that certain violations are “a misdemeanor and [are] punishable by a fine of not less than one hundred dollars ($100) or by imprisonment for not less than 30 days, or by both.” 6 ECF No. 28-1, p. 10:12-13. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.316 Page 15 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx agencies—namely, recovery of civil penalties that otherwise would have been assessed and collected by the Labor Workforce Development Agency [‘LWDA’].” Arias v. Superior Court, 46 Cal. 4th 923, 986 (2009). Prior to filing a PAGA action, a worker must provide written notice to the LWDA and then wait 65 days to see whether the LWDA opens an investigation. Labor Code § 2699.3(2)(A). The LWDA receives six thousand or more of these PAGA notices each year—“less than half of [the] PAGA notices were reviewed, and [the] LWDA estimates that less than 1 percent of PAGA notices have been reviewed or investigated since PAGA was implemented.”7 Id. Thus, the DIR and DLSE have partially ceded their role in enforcing Wage Order No. 9 to private plaintiffs. These plaintiffs collectively file thousands of lawsuits each year and are free to pursue misclassification claims under Dynamex.8 Consequently, CTA’s members are exposed to a substantial risk of state-sponsored misclassification claims, through the DLSE’s hearing process and/or representative actions under PAGA. CTA’s members are also exposed to class action lawsuits challenging a motor carrier’s use of independent contractors under Wage Order No. 9. The probability of such actions is not speculative. Indeed, in just one of California’s 58 counties, more than 10 class action lawsuits expressly based on Dynamex were filed within the first several months following the Dynamex decision.9 7 The 2016-2017 Budget: Labor Code Private Attorneys General Act Resources, https://lao.ca.gov/publications/report/3403 (last accessed March 11, 2019) (identifying 6,047 PAGA notices in 2012, 7,626 PAGA notices in 2013, and 6,307 PAGA notices in 2014). 8 The California Court of Appeal recently concluded in Huff v. Securitas Security Services USA, Inc., 23 Cal. App. 5th 745, 757 (2018) that: “For PAGA standing a plaintiff need only have been employed by the violator and affected by ‘one or more’ of the alleged violations.” As a result, any plaintiff could theoretically bring misclassification claims through PAGA, even if he or she worked as an employee and not as an independent contractor. 9 Cortez v. Maplebear Inc. (d/b/a Instacart), 2018 WL 2266685 (Cal. Super.) San Francisco County No. CGC-18-566596; Talbot v. Lyft Inc., 2018 WL 2149279 (Cal. Super.) San Francisco County No. CGC-18-566392; Magana v. Doordash Inc., 2018 WL 2216206 (Cal. Super.) San Francisco County No. CGC-18-566404; Lawson v. Deliv, Inc., 2018 WL 2322391 (Cal. Super.) San Francisco County No. CGC- 18-566577; Lee v. Postmates, Inc., 2018 WL 2149278 (Cal. Super.) San Francisco Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.317 Page 16 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx B. Plaintiffs Have Pled Sufficient Facts to Establish Standing. Movants argue that Plaintiffs have failed to allege that they possess the requisite standing. In doing so, they rely on a series of summary judgment decisions that are inapplicable to a motion to dismiss. For example, the State and IBT both cite the Supreme Court’s decision in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), where the Supreme Court considered the sufficiency of affidavits submitted at the summary judgment stage. The United States Supreme Court has cautioned litigants that “Lujan, since it involved the establishment of injury in fact at the summary judgment stage, required specific facts to be adduced by sworn testimony; had the same challenge to a generalized allegation of injury in fact been made at the pleading stage, it would have been unsuccessful.” Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1012 n.3 (1992) (emphasis added). Indeed, Lujan itself instructs that, “[a]t the pleading stage, general factual allegations of injury resulting from the defendant’s conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace those specific facts that are necessary to support the claim.’” 504 U.S. at 561 (quoting Lujan v. Nat’l Wildlife Federation, 497 U.S. 871, 889 (1990)); Skaff v. Meridien North Am. Beverly Hills, LLC, 506 F.3d 832, 838 (9th Cir. 2007) (citing Lujan for the proposition that “general factual allegations” are sufficient at the pleadings stage and noting that “Rule 8 eliminated the archaic system of fact pleading”).10 County No. CGC-18-566394; Marciano v. Doordash Inc., 2018 WL 3329951 (Cal. Super.) San Francisco County No. CGC-18-567869; Rimler v. Postmates Inc., 2018 WL 3329949 (Cal. Super.) San Francisco County No. CGC18-567868; Waxler v. Uber Techs., Inc., 2018 WL 3057439 (Cal. Super.) San Francisco County No. CGC18-567423; Woodle v. Square, Inc., 2018 LEXIS 10068 (Cal. Super.) San Francisco County No. CGC-18-566559; Olson v. Lyft, Inc., 2018 LEXIS 11331 (Cal. Super.) San Francisco County CGC-18-566788. Note that this only includes those complaints on Westlaw in which the Dynamex decision was expressly cited in the complaint. As the People ex rel. Harris docket confirms, motor carriers are facing claims based on Dynamex even if the complaints do not expressly reference the decision or ABC test. RJN, Ex. A. 10 The IBT rely on several other summary judgment decisions to support their standing arguments. For example, the IBT cite Clapper v. Amnesty International USA, where the Supreme Court addressed standing after both parties submitted affidavits and moved for summary judgment. 568 U.S. 398, 407 (2013). Likewise, Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.318 Page 17 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Plaintiffs’ efforts to impose a fact-pleading requirement should be rejected. 1. The Individual Plaintiffs Have Sufficiently Pled Standing. The individual plaintiffs—Ravinder Singh and Thomas Odom—set forth the necessary facts related to their claims, including, but not limited to: • Singh and Odom own and operate their own trucks. FAC ¶¶ 14-15. • Singh and Odom contract with and are treated by motor carriers as independent contractors. Id. • “Under the new interpretation of Wage Order No. 9 adopted in Dynamex, Plaintiffs SINGH and ODOM will, by operation of law, be deemed to be the employees of any motor carrier that enters into a contract with them to provide trucking services in California. Because it would be impracticable for motor carriers to contract with individual owner-operators to provide such services while ensuring compliance with Wage Order No. 9, motor carriers will risk potential liability whenever they contract with owner-operators to provide trucking services.” Id. ¶ 6. • “If they wish to avoid incurring such liability, motor carriers will be forced to cease using independent contractors to provide trucking services.” Id. ¶ 59. • “Thus, under the new rule interpreting Wage Order No. 9 . . . Plaintiffs SINGH and ODOM face the threat of losing their businesses because they are not able to lawfully contract as individual owner-operators with motor carriers to provide trucking services in California to the motor carriers’ customers.” Id. ¶ 59. • “The irreparable harm to Plaintiffs SINGH and ODOM, and other owner-operators who are similarly situated, is the loss of their respective businesses, their ability to operate and grow as independent small businesses providing trucking services, and the attendant loss of personal freedom and opportunity.” Id. ¶ 63. The above allegations vastly exceed the “general factual allegations of injury” that Lujan and other courts have recognized are sufficient at the pleadings stage. Nevertheless, the IBT argue Plaintiffs need to provide “concrete allegations” establishing every fact necessary to prove injury, including that “those trucking companies that stop hiring owner-operators must be businesses that would otherwise have contracted with Singh and Odom but for Dynamex.” (ECF No. 29-1, p. 7:1-4.) the IBT cite FW/PBS, Inc. v. City of Dallas, where the parties conducted expedited discovery and then filed cross-motions for summary judgment that were supported by affidavits. 493 U.S. 215, 221 (1990). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.319 Page 18 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Assuming arguendo that evidence of such facts will be required to prove Plaintiffs’ claims upon summary judgment or at trial, such hyper-detailed allegations are not required at the pleadings stage and run counter to the obligation to provide a “short and plain statement” of the claim. 2. CTA Has Sufficiently Pled Associational Standing. Plaintiffs have similarly set forth the necessary facts to establish that CTA has associational standing, including, but not limited to: • “Many of CTA’s members regularly contract with individual independent contractors [like Singh and Odom] who own and operate their own trucks . . . .” FAC ¶ 3. • “Before Dynamex changed the test for distinguishing between independent contractors and employees for purposes of Wage Order No. 9, CTA’s motor-carrier members operating in California could—and did—lawfully contract with and treat owner-operators as independent contractors and not as ‘employees’ within the meaning of Wage Order No. 9.” Id. ¶ 36. • “Under Prong B of the ABC test [announced in Dynamex], an individual is deemed an employee rather than an independent contractor unless he or she ‘performs work that is outside the usual course of the hiring entity’s business.’” Id. ¶ 38. • “Because drivers perform work that is within rather than outside the usual course of a motor carrier’s business, the unavoidable effect of Prong B is to automatically classify every driver who works for a motor carrier as an ‘employee’ under Wage Order No. 9, no matter the actual and contractual relationship between the driver and the motor carrier.” Id. ¶ 39 (emphasis added). • “Following Dynamex, motor carriers that continue to use individual owner-operators to provide such services face the risk of significant civil and criminal penalties arising from the violation of Wage Order No. 9.” Id. ¶ 57. • “If they wish to avoid incurring such liability, motor carriers will be forced to cease using independent contractors to provide trucking services. If they do so, licensed motor carriers will also be forced to cease providing the services of certain trucks, trailers, drivers, and equipment because they do not have them available in their own fleet or workforce.” Id. ¶ 58. • “Thus, under the new rule interpreting Wage Order No. 9, licensed motor carriers must scale back their service offerings to only those trucks, trailers, drivers, equipment, and skilled drivers for which there is regular demand, must charge higher prices for those services, or must incur the risk of enforcement and civil actions and significant civil and criminal liability.” Id. ¶ 59. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.320 Page 19 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Although these allegations and the others contained in the FAC are more than enough to satisfy the pleading standards, the IBT argue that even more factual detail is required, including specifically that CTA “‘make[s] specific allegations establishing that at least one identified member had suffered or would suffer harm.” (ECF No. 29-1, p. 4:16-19 (quoting Summers v. Earth Island Inst., 555 U.S. 488, 498 (2009) (emphasis added).) For example, the IBT argue that CTA must identify a particular member that lawfully uses independent contractors under the Borello standard. (ECF No. 20-1, p. 5:7-26.) But CTA has alleged that many of its members lawfully contracted with owner-operators under prior law. FAC ¶¶ 3, 36. Arguing that this is insufficient, IBT relies on Summers for the proposition that organizational plaintiffs need to identify specific members who have suffered harm. The Ninth Circuit, however, has severely limited this supposed requirement.11 In Summers, moreover, standing was not challenged at the pleading stage, but after the trial court granted a preliminary injunction and then a nationwide injunction based on the plaintiff’s factual showing, including affidavits from members of the environmental groups. Summers, 555 U.S. at 491, 494. Consequently, the Supreme Court was reviewing a full factual record when it observed that an organizational plaintiff may ultimately need to “make specific allegations establishing that at least one identified member had suffered or would suffer harm.” Id. at 498. That is not required at the pleadings stage since a “plaintiff does not need to 11 In National Council of La Raza v. Cegavske, the Ninth Circuit addressed whether an organization must identify its members by name to establish associational standing: “We are not convinced that Summers, an environmental case brought under the National Environmental Policy Act, stands for the proposition that an injured member of an organization must always be specifically identified in order to establish Article III standing for the organization.” 800 F.3d 1032, 1041 (9th Cir. 2015). “Where it is relatively clear, rather than speculative, that one or more members have been or will be adversely affected by a defendant’s action, and where the defendant need not know the identity of a particular member to understand and respond to an organization’s claim of injury, we see no purpose to be served by requiring an organization to identify by name the member or members injured.” Id. at 1041. The Ninth Circuit thus held that the organizations had standing even though they did not identify their members by name. Id. at 1037, 1041–42 Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.321 Page 20 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx plead its evidence; it needs only to allege a claim plausibly. The court cannot discern why—at the pleadings stage—the identity of particular members is required for fair notice of the claims.” League of Women Voters of Cal. v. Kelly, No. 17-cv- 02665-LB, 2017 WL 3670786, at *8 (N.D. Cal. Aug. 25, 2017); see also NAACP v. Ameriquest Mortgage Co., 635 F. Supp. 2d 1096, 1102 (C.D. Cal. 2009) (rejecting defendant’s contention that NAACP needed to identify specific members who were harmed and denying motion to dismiss).12 Through its FAC, CTA alleges that many of its members regularly contract with individual independent contractors (FAC ¶ 3); that CTA’s members did so lawfully prior to Dynamex (id. ¶ 4); and that CTA’s members can no longer do so (id.). CTA should not be required to identify specific members, to provide affidavits, or to provide summary-judgment-type evidence at this stage of the proceedings. 3. Plaintiffs Have Sufficiently Pled Imminent Harm. Raising the specter of an “advisory opinion,” Movants next argue that no case or controversy exists because Plaintiffs purportedly “cannot show the requisite immediacy of threatened action.” (ECF No. 28-1, p. 10:5-6; ECF No. 29-1, p. 8:7-8.) In analyzing ripeness, the question is whether Plaintiffs face “a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement,” or whether the alleged injury is too “imaginary” or “speculative” to support jurisdiction. Babbit v. United Farm Workers Nat’l Union, 442 U.S. 289, 298 (1979). The Ninth Circuit decisions cited by Movants demonstrate that Plaintiffs’ claims are ripe. First, the IBT’s brief cites Thomas v. Anchorage Equal Rights Commission, in which two landlords challenged state and municipal laws that outlawed marital status 12 Although the district court in Kelly concluded that an organizational plaintiff did not need to identify affected members by name at the pleadings stage, it granted the motion to dismiss without prejudice because the “plaintiffs allege only their ‘belief’ that members were injured.” Id. at *8. Here, there is no such equivocation in Plaintiffs’ FAC, which affirmatively alleges that CTA’s members have been injured. See, e.g., FAC ¶ 63 (identifying different types of “irreparable harm to the CTA motor carriers”). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.322 Page 21 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx discrimination. 220 F.3d 1134, 1138 (9th Cir. 2000) (en banc). The Ninth Circuit concluded in Thomas that the dispute was not ripe because: (1) the landlords could not say “when, to whom, where, or under what circumstances” they would refuse to rent to someone; (2) no action had been brought against the landlords and there “ha[d] been no specific threat or even h of future enforcement or prosecution”; and (3) in “the twenty-five years that these housing laws ha[d] been on the books, the record d[id] not indicate even a single criminal prosecution, and of the two reported instances of civil enforcement, only one raised the freedom of religion issue” raised by plaintiffs. Id. at 1139-1140. The situation here could not be more different. Unlike the landlords in Thomas, Plaintiffs allege that they have extensively relied on independent owner- operators in the past, continue to do so, and that “CTA’s motor carrier members must either completely revamp their traditional business model, and change the prices, routes, and services that they offer their customers, or risk criminal and civil liability for violation of Wage Order No. 9.” FAC ¶ 46. That criminal and civil liability is not theoretical; as discussed above, the State is charged with enforcing the wage orders, has initiated enforcement actions where they seek to apply Dynamex to motor carriers, and has adjudicated (through the DLSE’s hearing process) thousands of independent contractor misclassification claims. Further, individual plaintiffs can (and do) easily become private attorney generals under PAGA and thereby serve “as the proxy or agent of the state’s labor law enforcement agencies.” Arias, 46 Cal. 4th at 986. Given the tidal wave of wage-and-hour claims filed in California (many of which involve independent contractors), the potential harm to CTA’s members from Dynamex is far from “imaginary.” Second, the State and IBT both cite American Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009) (“ATA”). The underlying issue in ATA were concession agreements implemented by the Ports of Los Angeles and Long Beach. Id. at 1049. Among other provisions, the Los Angeles version of the Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.323 Page 22 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx concession agreement required motor carriers to “transition over the course of five years from independent-contractor drivers to employees of each licensed motor carrier.” Id. As here, a trade association challenged the concession agreements under the FAAAA and Commerce Clause. On appeal, the Ninth Circuit concluded that the concession agreements “put [motor carriers] to a kind of Hobson’s choice”: [A] very real penalty attaches to the motor carriers regardless of how they proceed. That is an imminent harm. A motor carrier can refuse to sign the likely unconstitutional Concession agreements, and what will ensue, according to the record, is at the very least a loss of customer goodwill—or, indeed, of the carrier’s whole drayage business. . . . In fact, it is likely that all of that part of the carrier’s business will evaporate, even if it does other things elsewhere. As to smaller companies that cannot afford the vast increase in capital requirements for the purchase of equipment and personnel expenditures needed to turn independent contractors into employees, the result would likely be fatal. And that means that those smaller carriers, and their employees, and even independent contractors who depend upon them, will be out of work. . . . If a motor carrier, however, signs a Concession agreement, or both Concession agreements, its plight is not much better. First, it will have been forced to sign an agreement to conditions which are likely unconstitutional because they are preempted. Second, especially as to the Los Angeles Port Concession agreement, the carrier will be forced to incur large costs which, if it manages to survive those, will disrupt and change the whole nature of its business in ways that most likely cannot be compensated with damages alone. If the Concession agreements were then held to be unconstitutional, it would be faced with either continuing in that form, or, to the extent it could, unwinding that and returning to the old form. . . . Id. at 1057-1058 (emphasis added). Based on these facts, the Ninth Circuit concluded the ATA plaintiff was entitled to a preliminary injunction. Id. at 1060. Here, Plaintiffs allege a similar Hobson’s choice. FAC ¶ 46. For example, “if they are to comply with Wage Order No. 9, motor carriers must begin to acquire trucks, to hire and train employees, and to establish the administrative infrastructure necessary to ensure compliance with Wage Order No. 9.” Id. ¶ 49. On the other hand, “[m]otor carriers that fail to do so face the significant risk of civil and criminal liability arising from the violation of Wage Order No. 9.” Id. ¶ 39. As in ATA, a Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.324 Page 23 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx “very real penalty attaches to the motor carriers regardless of how they proceed” and “[t]hat is an imminent harm.” 559 F.3d at 1057. If the Ninth Circuit concluded that these types of facts were sufficient to obtain a preliminary injunction in ATA, Plaintiffs’ allegations are surely sufficient at the pleadings stage. 4. The Court Should Not Decline to Exercise Its Jurisdiction. The State argues in the alternative that the Court should exercise its discretion and not hear this case. Movants’ legal authorities and arguments, however, demonstrate why this dispute warrants judicial resolution. The State cites Government Employees Insurance Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998) (cited at ECF No. 28-1, p. 11:9-10). The Dizol court observed that “there is no presumption in favor of abstention in declaratory actions generally.” The Ninth Circuit identified certain factors to be considered in exercising the court’s discretion, including: (1) avoiding the needless determination of state law issues; (2) discouraging the filing of declaratory actions as a means of forum shopping; and (3) avoiding duplicative litigation. 133 F.3d at 1225–26. All of those factors militate in favor of jurisdiction. There is no need to determine any state law issues, since the Dynamex decision has already definitively addressed the legal test for determining employment status. There is no evidence that any party is forum shopping. Moreover, a ruling on Plaintiffs’ claims will minimize duplicative litigation, since resolving the issue of preemption and Commerce Clause violations will make it unnecessary for other courts to reach them. The State also cites United States v. Washington, 759 F.2d 1353, 1357 (9th Cir. 1985) (cited at ECF No. 28-1, p. 11:20-23), which unremarkably stated that declaratory relief is unnecessary “when it will neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties.” As set forth in the FAC, Plaintiffs face considerable uncertainty and seek the Court’s intervention in clarifying whether application of Prong B of the ABC test to owner-operators in Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.325 Page 24 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx the trucking industry is lawful or forbidden by the FAAAA. Thus, resolution of this matter will “serve a useful purpose in clarifying and settling the legal relations in dispute” and will “afford relief from the uncertainty and controversy faced by the parties.” Id. If anything, Movants’ arguments underscore the need for conclusive resolution of this issue. V. PLAINTIFFS PLAUSIBLY STATE A CLAIM UNDER THE FAAAA On the merits of Plaintiffs’ lawsuit, the State argues there is no private right of action under the FAAAA and both movants argue that the FAAAA cannot preempt the application of Dynamex to Wage Order No. 9. Neither argument is correct.13 A. Plaintiffs May Sue To Enforce Their Rights Under the FAAAA. Ignoring the legislative history and decades of case law, the State (but not IBT) contends “there is no private right of action” under the FAAAA. (ECF No. 28- 1, at 11) That is incorrect. It is also irrelevant, because Plaintiffs can proceed under 42 U.S.C. § 1983 and the Supremacy Clause in any event. “[C]ourts, including the Supreme Court, have found that section 14501(c)(1) furnishes the authority for private parties to challenge state laws and local ordinances that purport to regulate motor carrier routes.” Mason & Dixon Lines, Inc. v. Steudle, 761 F. Supp. 2d 611, 620 (E.D. Mich. 2011) (collecting cases). Indeed, Movants’ papers are replete with cases in which the Supreme Court and Ninth Circuit have resolved FAAAA preemption claims asserted by private plaintiffs; none of those cases were dismissed on the ground that the FAAAA lacks a private right of action. The State relies on old and inapplicable authority, primarily the Ninth Circuit’s 1987 decision in Air Transportation Association of America v. Public 13 The State is also mistaken when it asserts that Plaintiffs’ claims are subject to “a presumption against preemption.” (ECF No. 28-1, p. 1:23-24.) The U.S. Supreme Court recently reiterated that where, as here, “the statute ‘contains an express pre- emption clause,’” courts “do not invoke any presumption against pre-emption but instead ‘focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.’” Puerto Rico v. Franklin Cal. Tax-Free Tr., 136 S. Ct. 1938, 1946 (2016) (internal quotation marks omitted). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.326 Page 25 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Utilities Commission of State of California, 833 F.2d 200 (1987) (“Air Transport”), which concluded after minimal analysis that the preemption provision in the Airline Deregulation Act (“ADA”) “does not create a private right of action.” Id. at 207. Its reliance on Air Transport (which did not address the FAAAA) is misplaced.14 To start, the Supreme Court has clearly, albeit implicitly, found a private right of action under 49 U.S.C. § 14501(c). In City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424 (2002), a case post-dating Air Transport, the Supreme Court addressed a suit brought by a private party who claimed that § 14501(c) preempted a local ordinance. The court held that the ordinance was not categorically excluded from the exception to preemption set forth in § 14501(c)(2)(A), but nonetheless remanded the case so that the lower court could determine whether that exception covered the particular ordinance at issue, a question that “remain[ed] open” according to the Court. 536 U.S. at 442. Were there no private right of action under § 14501(c), the case would have been dismissed, not remanded. The Supreme Court’s subsequent decision in Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364 (2008) confirms that there is a private right of action under 49 U.S.C. § 14501(c). In Rowe, the plaintiff sued under § 14501(c), as well as the Supremacy Clause, challenging a state law governing the shipping and delivery of tobacco. See Compl. ¶ 3, N.H. Motor Transp. Ass’n v. Rowe, 377 F. Supp. 2d 197 (D. Maine) (No. 03-CV-178), 2003 WL 25556125. A unanimous Court sustained the plaintiff’s challenge, holding the law preempted. Rowe, 552 U.S. at 371–73. Although two justices wrote separate concurrences, none suggested the plaintiff lacked a private right of action under § 14501(c). 14 In addition to the reasons articulated below, the State’s reliance on Air Transport is unwarranted inasmuch as it is inconsistent with the Ninth Circuit’s subsequent decisions in ATA, which directed the trial court to enter an injunction in favor a private trade association that raised a challenge under § 14501(c), and Federal Express Corp. v. California Public Utilities Commission, 936 F.2d 1075 (1991), which cited Air Transport but held that a private party was entitled to injunctive relief because the ADA’s preemption provision—on which the FAAAA’s preemption provision was modeled—preempted the state law at issue. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.327 Page 26 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx In fact, the text and legislative history of § 14501(c), enacted seven years after the Ninth Circuit decided Air Transport, evince Congress’s intent to protect individual motor carriers. By its terms, the provision prevents a state from enacting or enforcing a “law related to a price, route, or service of any motor carrier.” 49 U.S.C. § 14501(c)(1) (emphasis added). By using the singular and restricting the power of states over “any” motor carrier, Congress made clear that it was conferring an enforceable right to be free of such state regulation on each motor carrier individually. Cf. Gonzaga Univ. v. Doe, 536 U.S. 273, 278–84 & n.3 (2002) (contrasting statutes that confer privately enforceable rights, such as those declaring that “no person” shall be subject to certain conduct, from statutes enacted under the Spending Clause).15 The statutory text reflects its legislative history, which explains that Congress was disturbed by state regulations that placed a particular motor carrier, UPS, “at a competitive disadvantage” vis-à-vis its competitors. H.R. Rep. No. 103–677, at 87 (1994) (Conf. Rep.), as reprinted in 1994 U.S.C.C.A.N. 1715, 1759.16 “The central purpose” of § 14501(c), Congress said, “is to extend to all . . . motor carriers . . . the identical intrastate preemption.” Id. at 83, 1994 U.S.C.C.A.N. 1755. Accordingly, Congress deliberately crafted § 14501(c) so that all motor carriers “would be able to avail themselves of the preemption” it afforded. Id. at 88, 1994 U.S.C.C.A.N. 1760.17 This confirms that, by design, § 14501(c) confers an individual right on motor carriers to be free of impermissible state regulation.18 15 The operative portion of 49 U.S.C. § 14501(c)(1) could easily be rewritten without substantive change as “no motor carrier shall be subject to a state law related to a price, route, or service offered by such motor carrier.” 16 Notably, Congress also expressed dissatisfaction at California legislation that discriminated against motor carriers “using a large proportion of owner-operators instead of company employees.” H.R. Rep. No. 103–677, at 87, 1994 U.S.C.C.A.N. 1758. 17 Congress was well aware of private entities asserting their rights under the ADA’s analogous preemption provision, expressly noting that it did “not intend to alter the broad preemption interpretation adopted by the United States Supreme Court in Morales v. Transworld Airlines, Inc., 504 U.S. [374 (1992)].” H.R. Rep. No. 103-677, at 83, 1994 U.S.C.C.A.N. 1755. 18 “A committee report”—particularly a conference report—“represents the considered and collective understanding of those Congressmen involved in drafting Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.328 Page 27 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Further, even if there were no private right of action under § 14501(c) itself (but see Rowe, 552 U.S. at 371–73; Ours Garage, 536 U.S. at 442), Plaintiffs could bring suit—as they have (see FAC ¶ 9)—under 42 U.S.C. § 1983, which provides a right of action to any person deprived under color of state law “of any rights, privileges, or immunities secured by the Constitution and laws” of the United States. Where, as here, “a statute confers an individual right, the right is presumptively enforceable by § 1983.” Gonzaga, 536 U.S. at 283. In fact, the suit that ultimately resulted in the Ninth Circuit’s ATA decision holding that § 14501(c)(1) preempted a Port of Los Angeles concession agreement was brought under § 1983. See Compl. ¶ 10, American Trucking Ass’ns, Inc., v. City of Los Angeles, 577 F. Supp. 2d 1110 (C.D. Cal.) (No. 08-CV-4920), 2008 WL 2944166. Regardless, the preemptive language in § 14501(c)(1) is directly enforceable under the Supremacy Clause. “A plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, . . . presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983); see also Rowe, 552 U.S. at 371–73 (ruling in favor of plaintiff who challenged state law under § 14501(c) and the Supremacy Clause).19 In sum, Plaintiffs are entitled to vindicate their rights under 49 U.S.C. § 14501(c)(1). B. Plaintiffs Have Adequately Alleged a Violation of § 14501(c)(1). To avoid dismissal, Plaintiffs need only allege “enough facts to state a claim to and studying proposed legislation.” Zuber v. Allen, 396 U.S. 168, 186 (1969). 19 Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1383 (2015), cited by Movants, is not to the contrary. It addressed a challenge to a Spending Clause statute, which, by definition, implicates the relationship between a State and Congress, not between a State and an individual. Longstanding precedent distinguishes “spending legislation” from statutes such as 49 U.S.C. § 14501(c)(1), which confer rights on individuals. Gonzaga, 536 U.S. at 279–80. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.329 Page 28 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plaintiffs’ FAC easily satisfies this standard. The scope of FAAAA preemption is broad. The FAAAA provides that a state “may not enact or enforce a law, regulation, or other provision having the force and effect of 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). The phrase “related to” is “deliberately expansive” and “conspicuous for its breadth” (Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383–84 (1992) (interpreting analogous preemption provision in the ADA)), and is thus “interpreted quite broadly.” Indep. Towers of Washington v. Washington, 350 F.3d 925, 930 (9th Cir. 2003). Although § 14501(c)(1) “does not pre-empt state laws that affect rates, routes, or services in ‘too tenuous, remote, or peripheral a manner,’” it does preempt laws “with a ‘significant impact’ on carrier rates, routes, or services.” Rowe, 552 U.S. at 375 (quoting Morales, 504 U.S. at 388, 390). That is true whether the law’s “effect is direct or indirect.” Dilts v. Penske Logistics, LLC, 769 F.3d 637, 644 (9th Cir. 2014); accord Rowe, 552 U.S. at 375; Morales, 504 U.S. at 386. Here, Plaintiffs’ FAC alleges facts plausibly suggesting that application of Prong B under Dynamex will effectively compel motor carriers to use employees rather than owner-operators to conduct their business, and that compelling motor carriers to do so will significantly affect the prices, routes, and services that they offer their customers. Thus, the FAC sufficiently pleads a violation of § 14501(c). 1. Prong B Is Preempted, Whether or Not Wage Order No. 9 Is a Law of General Applicability. The State argues that Plaintiffs’ claim under § 14501(c) must fail because, supposedly, the provision does not preempt “‘generally applicable background regulations that are several steps removed from prices, routes or services.’” (ECF 28-1, at 15 (quoting Dilts, 769 F.3d at 644).) That argument fails, because Wage Order No. 9 is not a generally applicable background regulation, and because it would be subject to preemption even if it were. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.330 Page 29 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Contrary to what the State suggests, Wage Order No. 9 is not a generally applicable background regulation. Rather than apply to employees in all industries, Wage Order No. 9 applies only to “persons employed in the transportation industry.” 8 Cal. Code Regs. § 11090(1).20 Because it specifically targets motor carriers and others in the transportation industry, Wage Order No. 9 is unlike Cal. Labor Code § 1775, the prevailing wage law at issue in Californians for Safe and Competitive Dump Truck Transportation v. Mendonca, 152 F.3d 1184 (9th Cir. 1998) (cited in ECF 28-1, at 14), which applies to all public works contractors, regardless of the industry in which they operate. Regardless, Wage Order No. 9 as construed in Dynamex is subject to preemption under § 14501(c) even if it is deemed a law of general applicability. There is no dispute (cf. ECF No. 28-1, pp. 12–13 & n.4) that § 14501(c), the FAAA’s preemption provision, was modeled after—and is to be interpreted consistent with—49 U.S.C. § 41713, the ADA’s preemption provision. See Rowe, 552 U.S. at 370 (when drafting § 14501(c), Congress “copied the language of the air- carrier pre-emption provision of the Airline Deregulation Act”); Schwann v. FedEx Ground Package Sys., Inc., 813 F.3d 429, 436 (1st Cir. 2016) (“FAAAA preemption is . . . informed by interpretations of ADA preemption”); H.R. Conf. Rep. 83. And there can be no doubt that the Supreme Court has interpreted the ADA’s preemption provision as preempting laws of general applicability. In Morales, for example, the Supreme Court held that the ADA preempted efforts to enforce “a State’s general consumer protection laws.” 504 U.S. at 383. In so holding, the Morales court expressly rejected the contention that “only state laws specifically addressed to the airline industry are pre-empted” and the corollary assertion that “the ADA imposes no constraints on laws of general applicability.” Id. at 386. It found the contention and its corollary “irrational” because “there is little 20 The Industrial Welfare Commission has promulgated 16 additional Wage Orders that apply to various other industries and occupations. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.331 Page 30 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx reason why state impairment of the federal scheme should be deemed acceptable so long as it is effected by the particularized application of a general statute.” Id. Furthermore, the court found the contention and its corollary contrary to the statutory text, because they “ignore[] the sweep of the ‘relating to’ language.” Id. Similarly, in American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), the Supreme Court held that the ADA preempted application of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. § 505 (1992), a statute that is undoubtedly a law of general applicability. 513 U.S. at 227–28. Indeed, that holding prompted a lone dissent from Justice Stevens, who decried applying ADA preemption to “laws of general applicability.” Id. at 236–37 (Stevens, J., dissenting). But, as Justice Stevens’s dissent makes clear, Wolens—like Morales—holds that the ADA preempts laws of general applicability. Thus, by extension, the FAAAA likewise preempts laws of general applicability.21 2. Prong B Impermissibly Compels the Use of Employees Rather Than Owner-Operators. a. The FAC Alleges that Prong B Effectively Prohibits the Use of Owner-Operators. IBT argues that Plaintiffs’ well-pleaded allegations “about the effect of Dynamex should not be credited, even on a motion to dismiss.” (ECF No. 29-1, at 6.) But, “[w]hen considering a motion to dismiss, the Court must accept the truth of all well-pleaded factual allegations, draw any reasonable inferences from those allegations, and construe the complaint in the light most favorable to the plaintiff.” In re Cell Tower Litig., No. 07cv399 BEN (WVG), 2010 WL 3419516, at *2 (S.D. Cal. Aug. 27, 2010) (citing Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1122 (9th Cir. 2008)). Here, the FAC’s well-pleaded allegations establish that application of Prong B will effectively compel motor carriers “to discontinue using the owner-operator 21 Notably, the Ninth Circuit recently acknowledged that a law’s “general applicability is not dispositive” of the preemption question under the FAAAA. California Trucking Ass'n v. Su, 903 F.3d 953, 966 (9th Cir. 2018) (“CTA v. Su”). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.332 Page 31 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx model and instead use only employees to provide trucking services to their customers.” FAC ¶ 40. For example, the FAC alleges that “[e]mployers must exercise sufficient control over the working conditions of employees covered by Wage Order No. 9 to ensure that the employees are provided the protections set forth in Wage Order No. 9.” Id. ¶ 35. The FAC further alleges that the “requisite control includes, among other things, tracking all hours worked by the employee to fulfill the recordkeeping and minimum wage requirements, . . . managing the employee’s tasks and work schedule to ensure compliance with the meal and rest-period requirements as well as the reporting time requirements, and identifying, providing and maintaining the tools and equipment necessary to the performance of the job.” Id. With respect to motor carriers in particular, the FAC alleges that a “motor carrier must exercise significant control over each driver’s route and working conditions in order to ensure the obligations under Wage Order 9 are satisfied.” Id. ¶ 40. And it alleges that “[i]t would be impracticable if not impossible for CTA’s motor-carrier members to continue using the owner-operator model, under which they contract with independent drivers to perform particular shipments, while exercising the degree of control over the drivers that would be required to ensure compliance with Wage Order No. 9.” Id. Thus, at this stage of the proceedings, the Court “must accept” that application of Prong B will, in effect, force motor carriers “to discontinue using the owner-operator model.” Id. b. California May Not Prohibit the Use of Owner-Operators. Both case law and legislative history establish that § 14501(c)(1) preempts any state law—such as Wage Order No. 9 as interpreted in Dynamex—that would prohibit motor carriers from using owner-operators to conduct their business. When it adopted § 14501(c)(1), Congress made clear that it was doing so in part to counteract state discrimination against motor carriers using particular business models. Indeed, when explaining “[t]he need” for § 14501(c)(1), Congress specifically identified California’s discrimination against motor carriers using the Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.333 Page 32 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx owner-operator model as one justification for the provision’s adoption: California enacted legislation in October of 1993, which extended the exemption enjoyed by Federal Express as a result of its court victory [in FedEx, 936 F.2d 1075] to its competitors that are motor carriers affiliated with direct air carriers. The California legislation denied this exemption, however, to those using a large proportion of owner-operators instead of company employees, thereby denying the exemption to Roadway Package System, even though the Roadway holding company includes an air operation. H.R. Conf. Rep. 87, 1994 U.S.C.C.A.N. 1759 (emphasis added). Congress concluded that disparate treatment of motor carriers depending on their business model “causes significant inefficiencies, increased costs, reduction of competition, inhibition of innovation and technology and curtails the expansion of markets.” H.R. Conf. Rep. 87, 1994 U.S.C.C.A.N. 1759. Thus, in enacting the FAAAA, Congress sought to eliminate California’s efforts to discriminate against motor carriers that used independent contractors.22 Given this background, it is not surprising that courts have repeatedly concluded that § 14501(c)(1) preempts application of Prong B and other regulatory devices that would directly or indirectly bar motor carriers from using the owner- operator model. Indeed, the Ninth Circuit itself recently recognized the “obvious proposition that an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers . . . [is] likely preempted.” CTA v. Su, 903 F.3d at 964 (emphasis added). As the following list shows, a long line of cases—both within the Ninth Circuit and outside it—recognize that the FAAAA prevents or likely prevents states from requiring that services be provided by employee drivers rather than independent contractors: 22 As the State acknowledges (ECF No. 28-1, at 14), Congress was also determined to eliminate barriers to entry, finding that “entry controls often . . . restrict new applicants from directly competing for any given route and type of trucking business.” H.R. Conf. Rep. 86, 1994 U.S.C.C.A.N. 1758. Inasmuch as application of Prong B would prevent motor carriers from contracting with owner-operators (see FAC ¶¶ 35, 40), it would work as an impermissible barrier to entry, because it is “the owner-operator model” that “enables small businesses to grow from one-truck, one- driver operations to larger fleets with multiple trucks.” Id. ¶ 32. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.334 Page 33 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx • In ATA, the Ninth Circuit confronted a Port of Los Angeles concession agreement that required motor carriers to gradually eliminate the use of independent contractor drivers. Reversing the district court’s denial of injunctive relief, the court said, “as we see it, the independent contractor phase-out provision is one highly likely to be shown to be preempted.” 559 F.3d at 1056 (emphasis added). • In CTA v. Su, the Ninth Circuit concluded that the FAAAA did not preempt California’s common-law test for employment as set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989), because that standard “does not, by its terms, compel a carrier to use an employee or an independent contractor.” 903 F.3d at 964. It recognized, however, that “the ‘ABC’ test [established in Dynamex] may effectively compel a motor carrier to use employees for certain services because, under the ‘ABC’ test, a worker providing a service within [a motor carrier’s] course of business will never be considered an independent contractor.” Id. Because the issue was not before the court, it did “not decide whether the FAAAA would preempt using the ‘ABC’ test,” but, as noted above, observed that a rule prohibiting the use of owner-operators is “likely preempted.” Id. & n.9. • In Alvarez v. XPO Logistics Cartage LLC, 2018 WL 6271965 (C.D. Cal. 2018), the district court, relying on CTA v. Su, concluded that “the ABC test—as adopted by the California Supreme Court—‘relates’ to a motor carrier’s services in more than a ‘tenuous’ manner and is therefore preempted by the FAAAA.” Id. at *5. • In Schwann v. FedEx Ground Package System, Inc., 813 F.3d 429 (1st Cir. 2016), the First Circuit addressed an ABC test identical to the one now in effect in California.23 Finding that the use of independent contractors “would be largely foreclosed” by application of Prong B (which it referred to as “Prong 2”), the court held that Prong B “is thus preempted by § 14501(c)(1).” Id. at 439-40. 23 In fact, Dynamex expressly “adopt[ed] . . . the Massachusetts version of the ABC test.” Dynamex, 4 Cal.5th at 956 n.23. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.335 Page 34 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx • In Bedoya v. American Eagle Express Inc., 914 F.3d 812 (3d Cir. 2019), the Third Circuit addressed New Jersey’s version of the ABC test. It agreed with the First Circuit that a state cannot “b[ind] the carrier to provide its services using employees and not independent contractors.” Id. at 822.24 • In Chambers v. RDI Logistics, Inc., 65 N.E.3d 1 (Mass. 2016), the Massachusetts Supreme Judicial Court held that the state’s ABC’s test was preempted by FAAAA because Prong B, which it described as a “de facto ban,” creates “an impossible standard for motor carriers wishing to use independent contractors.” Id. at 9. Tacitly acknowledging the case law supporting Plaintiffs’ claims, Movants devote considerable energies to attacking or distinguishing these decisions, including IBT spending three pages of its brief arguing Schwann case is incompatible with Ninth Circuit decisions. These arguments are unpersuasive. In CTA v. Su, the Ninth Circuit specifically cited the Schwann decision and, citing its prior decision in ATA, agreed with the First Circuit’s conclusion that “all-or-nothing” rules forbidding the use of independent contractor drivers are susceptible to preemption. 903 F.3d at 964. 3. The FAC Alleges a Significant Effect on Prices, Routes, and Services. Not only have Plaintiffs adequately alleged that application of Prong B will effectively compel them to abandon the owner-operator model, they have also pled facts sufficient to plausibly suggest that the forced abandonment of the owner- operator model will significantly impact the prices, routes, and/or services carriers offer their customers. That is enough to state a claim under § 14501(c)(1). 24 In contrast to the ABC test adopted in California and Massachusetts, New Jersey’s version of Prong B provides that an individual is deemed an employee if the individual renders a service that “is either outside the usual course of the business for which such service is performed, or … is performed outside of all the places of business of the enterprise for which such service is performed.” N.J. Stat. Ann. §§ 43:21-19(i)(6)(B) (emphasis added). The Third Circuit in Bedoya concluded that because New Jersey’s version of Prong B does not automatically render every driver an employee, and thus does not “requir[e] carriers to use employees rather than independent contractors,” it is “unlike the preempted” version of Prong B adopted in Massachusetts (and now California). 914 F.3d at 824–25. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.336 Page 35 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx The FAC alleges there is “fluctuating demand for highly varied services” in the trucking industry “depending on the season, consumer demand, overseas orders, natural disasters, type of truck, and a multitude of other factors[.]” FAC ¶ 28. It further alleges that to accommodate this fluctuation “motor carriers need to be able to expand and contract their capacity to provide transportation services at a moment’s notice,” and that, “[g]iven the sizable investment that is necessary to acquire and maintain a truck,” motor carriers cannot “maintain a fleet of trucks operated by employee drivers that is sufficiently large to service their customers’ needs for specialized trucking services or haulage during time of peak demand,” whereas “a motor carrier that is permitted to use independent contractor owner- operators could simply contract with individual owner-operators to provide the [number of] additional trucks needed.” Id. ¶¶ 29–30. Building on these foundational allegations, the FAC alleges facts plausibly suggesting that application of Prong B will have a significant impact on prices, routes, and services:  Prices: The FAC alleges that because “a motor carrier incurs significantly more expenses maintaining a fleet of trucks and employee drivers than it does using individual owner-operators driving trucks that they own, forcing motor carriers to hire employees rather than contracting with independent contractors will materially increase motor carriers’ costs.” FAC ¶ 45. It further alleges that because “the demand for trucking services is relatively inelastic,” “much of the increased cost that motor carriers will incur . . . will be passed on to their customers and reflected in higher shipping prices.” Id.; see also ¶ 58 (a motor carriers who invest in specialized equipment previously supplied by owner-operators on an as-needed basis “will have to charge its customers higher prices than before for those specialized services”).  Routes: The FAC alleges that “[e]ffectively prohibiting motor carriers from contracting with individual owner-operators and requiring that such drivers be treated as employees entitled to the protections of Wage Order No. 9 . . . directly impacts the routes that a motor carrier must use when providing services to its Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.337 Page 36 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx customers.” FAC ¶ 44. It explains that this is true because “routes must be reconfigured by the motor carriers to ensure drivers are able to park the trucks legally and safely in order to take the meal and rest periods mandated under Wage Order No. 9,” and because “motor carriers will have to reconfigure and possibly consolidate routes to minimize, through increased efficiency, the effect of the higher fixed costs associated with owning vehicles and using employee drivers.” Id.  Services: The FAC alleges that “compelling motor carriers to cease contracting with independent owner-operators and to instead use only employee drivers will significantly impact the services that motor carriers provide to their customers.” FAC ¶ 43. The FAC explains that if motor carriers are “forced to cease using independent contractors to provide trucking services,” they “will also be forced to cease providing the services of certain trucks, trailers, drivers, and equipment,” because “[i]t is cost-prohibitive for motor carriers to acquire every possible type of truck, trailer, and equipment that might possibly be needed at any given time, especially those that are only utilized occasionally.” FAC ¶ 58; see also id. ¶ 59 (application of Prong B will force motor carriers to “scale back their service offerings to only those trucks, trailers, drivers, equipment, and skilled drivers for which there is regular demand”). These well-pleaded factual allegations are more than enough to plausibly state a claim under § 14501(c)(1). 4. The ABC Test Is Also Impliedly Preempted. There can be no dispute that a state law is impliedly preempted whenever, “under the circumstances of [a] particular case, [the challenged state law] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000) (internal quotation marks omitted). Here, the FAC asserts that Wage Order No. 9 as interpreted in Dynamex is impliedly preempted because it “effectively bar[s] CTA motor-carrier members from using individual owner-operators to provide trucking Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.338 Page 37 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx services to their customers,” and is thus “an obstacle to the achievement of ‘Congress’ overarching goal’ of ‘helping [en]sure transportation rates, routes, and services that reflect “maximum reliance on competitive market forces.”’ FAC ¶ 7 (quoting Rowe, 552 U.S. at 371); id. ¶ 60. The State does not dispute that state law is impliedly preempted when it is an obstacle to the accomplishment of Congress’s objectives. Nor does the State dispute that Wage Order No. 9 as interpreted in Dynamex would be impliedly preempted if it forbade the use of independent contractors and thus hindered Congress’s goal of maximizing reliance on market forces in the trucking industry. Rather, the State moves to dismiss Plaintiffs’ implied-preemption claim on the ground that, supposedly, “neither Dynamex nor Wage Order No. 9 dictate whether a motor carrier must use an independent contractor or an employee to provide its services.” (ECF No. 28-1, at 18.)25 But that assertion is flatly contrary to the FAC’s well-pleaded factual allegations (see supra at Section V.B.2.A)), which “must be accepted as true at this stage.” Estate of Ronnie Paul Sandoval v. Cty. of San Diego, No. 16cv1004-BEN(RBB), 2016 WL 4491598, at *1 n.1 (S.D. Cal. Aug. 5, 2016). Assuming the truth of the FAC’s factual allegations, as this Court must, Plaintiffs have stated an implied-preemption claim. VI. PLAINTIFFS HAVE ADEQUATELY PLED THEIR DORMANT COMMERCE CLAUSE CLAIM The second cause of action in the FAC alleges that Dynamex’s across-the- board rule requiring that independent-contractor drivers be reclassified as employees 25 The State also asserts that there cannot be implied preemption in this case because, supposedly, “various courts have concluded that general state labor laws do not conflict with the goals of the FAAAA.” (ECF No. 28-1, at 18.) But none of the cases cited by the State addressed an implied-preemption claim; each addressed only an express-preemption claim. It is, however, well-established that a statute that survives express preemption might nevertheless be impliedly preempted, because “neither an express pre-emption provision nor a saving clause ‘bar[s] the ordinary working of conflict preemption principles.’” Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 352 (2001) (quoting Geier v. Am. Honda Motor Co., 529 U.S. 861, 869 (2000)). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.339 Page 38 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 31 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx imposes an unreasonable burden on interstate commerce in violation of the dormant Commerce Clause. See, e.g., FAC ¶¶ 67-68. As both the State and IBT recognize, this claim requires that the burden on interstate commerce be compared to the rule’s putative local benefits. See Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). Such claims are inherently “fact-intensive” and therefore not appropriate for resolution as a matter of law, let alone at the pleadings stage. United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 261 F.3d 245, 263-64 (2d Cir. 2001); accord Colon Health Ctrs. of Am., LLC v. Hazel, 733 F.3d 535, 545 (4th Cir. 2013) (explaining that “[t]he fact-intensive character of [the dormant Commere Clause] inquiry . . . counsels against a premature dismissal”). Indeed, all but one of the cases cited by the State and IBT were decided either at the summary-judgment stage after plenary discovery or after trial.26 The one 26 See Am. Trucking Ass’ns, Inc. v. Michigan Pub. Serv. Comm’n, 545 U.S. 429, 434 (2005) (noting that “the record contains little, if any, evidence that the [challenged] $100 fee imposes any significant practical burden on interstate trade” and citing affidavits from court of claims proceedings) (emphasis added); Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1155 (9th Cir. 2012) (affirming order granting defendants summary judgment on plaintiffs’ dormant commerce clause challenge because plaintiffs had not produced evidence of a significant burden on interstate commerce); Sullivan v. Oracle Corp., 662 F.3d 1265, 1271 (9th Cir. 2011) (reversing grant of summary judgment in favor of Oracle in suit alleging failure to pay overtime and rejecting Oracle’s argument that application of California Labor Code to plaintiffs’ work in California would violate dormant Commerce Clause); S.D. Myers, Inc. v. City & County of San Francisco, 253 F.3d 461, 471-72 (9th Cir. 2001) (affirming order granting defendant summary judgment on dormant Commerce Clause challenge to city ordinance); Alaska Airlines, Inc. v. City of Long Beach, 951 F.2d 977 (9th Cir. 1991) (per curiam) (affirming order permanently enjoining local noise ordinance issued after ten years of litigation); Mendis v. Schneider Nat’l Carriers Inc., 2016 WL 6650992, *6 (W.D. Wash. 2016) (denying defendant’s motion for summary judgment on rest-break claim and noting that defendant had not contended that rest-break provision imposed a clearly excessive burden on interstate commerce); Yoder v. W. Express, Inc., 181 F. Supp. 3d 704, 722 (C.D. Cal. 2015) (denying defendant’s motion for summary judgment in wage-and- hour class action because, “on the record before it,” the court was “not prepared” “to hold that the application of California’s wage and hour laws to work performed Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.340 Page 39 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 32 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx exception is China Neighborhood Association v. Harris, 794 F.3d 1136 (9th Cir. 2015). That case involved a facial challenge to a California law that prohibited possession or sale of shark fins in the State. The Ninth Circuit affirmed the dismissal of the challengers’ Commerce Clause claim after determining that they “cannot establish a significant burden on interstate commerce.” Id. at 1146. Here, in contrast, Plaintiffs have pled in great detail—and will be able to prove—that the Dynamex rule will impose very significant burdens on interstate commerce. For example, the FAC alleges that “[f]orced by Dynamex to cease using the owner-operator model, motor carriers will no longer have the ability to provide the diverse and specialized services they were able to provide prior to adoption of the ABC test for purposes of identifying employees within the meaning of Wage Order No. 9.” FAC ¶ 42. The FAC further alleges “Dynamex[] significantly impairs motor carriers[’] ability to provide – and their customers’ ability to obtain – timely, peak, and/or specialized trucking services.” Id. ¶ 43. And it alleges that “for motor carriers that contract with owner-operators to provide interstate trucking services originating or terminating in other states, such motor carriers must reconfigure routes to arrange for the transfer and movement of any cargo within California by employee drivers only.” Id. ¶ 44; see also id. ¶¶ 36-40, 44-46, 50, 67-68. Citing Alaska Airlines, Inc. v. City of Long Beach, 951 F.2d 977, 983 (9th Cir. 1991) (per curiam), the IBT contend Plaintiffs must show the burdens of the Dynamex rule so outweigh the rule’s putative local benefits as to make the rule “unreasonable or irrational.” (ECF No. 29-1, pp. 21-22.) But the statement from Alaska Airlines on which the IBT rely was manifestly dictum, since the Ninth Circuit upheld the injunction imposed by the district court on other grounds and addressed the issue “[i]n order to avoid unnecessary future litigation.” Id. at 981. Moreover, within the state is a ‘clearly excessive’ burden on interstate commerce relative to the legitimate local public interest California has in regulating employment matters”). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.341 Page 40 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 33 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx the “unreasonable or irrational” standard finds no support in Pike, subsequent decisions of the Supreme Court, or other decisions in this Circuit. Instead, both the Supreme Court and courts within the Ninth Circuit consistently articulate the standard as being whether the burden on interstate commerce substantially outweighs the putative local benefits—without imposing an “unreasonable or irrational” filter.27 Even if there were an “unreasonable or irrational” threshold in the Ninth Circuit, that would still not warrant dismissing the FAC, since a fair inference from the allegations in the FAC is that the burdens on interstate commerce are so substantial as to render Dynamex’s across-the-board prohibition of the use of an independent-contractor model “unreasonable,” if not “irrational.” In sum, the FAC more than adequately alleges that the burdens on interstate commerce resulting from the Dynamex rule substantially outweigh the rule’s putative local benefits. Accordingly, there is no basis for dismissing the dormant Commerce Clause claim at this early stage of the litigation. VII. PLAINTIFFS SEEK DECLARATORY RELIEF BASED ON THE FMCSA’S PREEMPTION ORDER Plaintiffs’ third cause of action asks this Court to apply the FMCSA’s December 2018 Order. Acting as the Secretary of Transportation’s delegate (see 49 27 See, e.g., Pike, 397 U.S. 145 (“the State’s tenuous interest in having the company’s cantaloupes identified as originating in Arizona cannot justify the requirement that the company build and operate an unneeded $200,000 packing plant in the State”); United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 345-47 (2007) (reviewing benefits of local waste flow-control ordinances and holding that “any arguable burden the ordinances impose on interstate commerce does not exceed their public benefits”); Raymond Motor Transp. v. Rice, 434 U.S. 429, 441 (1978) (Pike test “necessarily involves a sensitive consideration of the weight and nature of the state regulatory concern in light of the extent of the burden imposed on the course of interstate commerce”); Harris, 682 F.3d at 1150 (“The threshold issue in this appeal is whether Plaintiffs have produced sufficient evidence that the challenged laws, though non-discriminatory, impose a significant burden on interstate commerce.”); S.D. Myers, 253 F.3d at 471-72 (holding that “the burden on interstate commerce evidenced in the record does not clearly outweigh the City’s legitimate interest in applying the Ordinance to those with whom it contracts”); see also Yoder, 181 F. Supp. 3d at 718-19 (“the extent or strength of [California’s interest in regulating employment practices within the state] must be balanced with the burden, if any, that exists on interstate commerce”). Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.342 Page 41 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 34 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx C.F.R. § 1.87(f)) pursuant to the Secretary’s authority under 49 U.S.C. § 31141(c), the FMCSA found that California’s meal and rest period laws “are preempted pursuant to 49 U.S.C. § 31141” because they conflict with the FMCSA’s Hours-of- Service (“HOS”) regulations and unreasonably burden interstate commerce. 83 Fed. Reg. 67470 (Dec. 28, 2018); see also FAC ¶¶ 75-77. The FMCSA’s Order is dispositive, because, by statute, “[a] State may not enforce a State law or regulation on commercial motor vehicle safety that the Secretary of Transportation decides under this section may not be enforced.” 49 U.S.C. § 31141(a). Movants may not challenge the FMCSA Order in this action; nor may this Court disregard it. The Order is binding on the State and this Court so long as it remains in force. The State’s only recourse is to challenge the Order on direct appeal. See 49 U.S.C. § 31141(f). And, in fact, the State and IBT have filed petitions for review asking the Ninth Circuit to reverse the FMCSA’s Order. But, as of now, the Order stands. It will remain binding unless and until it is reversed on appeal. Movants argue Plaintiffs’ claim must be dismissed because § 31141 does not create a private right of action. This argument misses the mark. Plaintiffs do not seek relief under Section 31141, nor do they ask this Court to determine de novo whether California’s meal and rest period rules are preempted as to property-carrying commercial motor vehicles subject to the HOS rules. That determination has already been made by the FMCSA in its December 2018 Order. Here, Plaintiffs are simply asking the Court to enforce the FMCSA’s Order. This distinction—between (1) asking the Court to make a preemption determination under Section 31141 and (2) asking the Court to enforce the FMCSA’s Order—is significant. For purposes of these motions, Plaintiffs do not dispute that a party cannot sue directly under Section 31141, since the statute enables a party to petition the FMCSA for an order preempting state law. After an order is issued, however, a private party is entitled to rely on it and to seek judicial relief. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.343 Page 42 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 35 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx Movants’ legal authority once again undermines their arguments. IBT relies (ECF No. 29-1, at 23-24) on Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378 (2015), which is inapposite. At issue in Armstrong were allegations that Idaho violated § 30(a) of the Medicaid Act by paying insufficient rates to providers of rehabilitation services. Id. at 1382. The “sole remedy” for violations of the Medicaid Act was provided by 42 U.S.C. § 1396c, which allowed the Secretary of Health and Human Services to withhold future Medicaid funds. Id. at 1385. Despite § 1396c being the exclusive remedy, providers of rehabilitation services sued the State of Idaho seeking an injunction requiring it to pay higher rates under § 30(a). Id. at 1382. The Supreme Court concluded that the plaintiffs could not circumvent the Medicaid Act through a private right of action, since “[t]heir relief must be sought initially through the Secretary rather than through the courts.” Id. at 1387. The differences between this case and Armstrong are telling. In contrast to what happened in Armstrong, here motor carriers (including the American Trucking Associations, of which CTA is a member) did seek relief initially through the FMCSA. Unlike Armstrong, here the relevant agency (the FMCSA) did fulfill its statutory obligations, including reviewing the state laws in question. Unlike Armstrong, here the FMCSA did exercise its authority in finding that California’s meal and rest period rules were preempted. With this process complete, CTA’s members are now entitled to rely on the FMCSA’s Order since it was issued pursuant to “an appropriate—and constitutionally valid—method designed to permit enforcement of federal legislation implementing the Commerce Clause of the United States Constitution.” Tennessee v. U.S. Dep’t of Transp., 326 F.3d 729, 736 (6th Cir. 2003) (interpreting similar preemption provision under Hazardous Materials Transportation Act). As with a court order, Plaintiffs can seek relief based on the FMCSA’s Order. VIII. CONCLUSION For the foregoing reasons, the Motions to Dismiss should be denied. Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.344 Page 43 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36 Case No. 3:18-cv-02458-BEN-BLM PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ AND INTERVENOR’S MOTIONS TO DISMISS 37719365_1.docx DATED: March 11, 2019 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. By: /s/ Alexander M. Chemers Spencer C. Skeen Robert R. Roginson Alexander M. Chemers Attorneys for Plaintiffs CALIFORNIA TRUCKING ASSOCIATION, RAVINDER SINGH, and THOMAS ODOM Case 3:18-cv-02458-BEN-BLM Document 34 Filed 03/11/19 PageID.345 Page 44 of 44