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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) XAVIER BECERRA Attorney General of California TAMAR PACHTER Supervising Deputy Attorney General JOSE A. ZELIDON-ZEPEDA Deputy Attorney General State Bar No. 227108 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102-7004 Telephone: (415) 510-3879 Fax: (415) 703-1234 E-mail: Jose.ZelidonZepeda@doj.ca.gov Attorneys for Defendants Attorney General Xavier Becerra, Acting Director André Schoorl, and Labor Commissioner Julie A. Su, in their official capacities IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA CALIFORNIA TRUCKING ASSOCIATION; ET AL., Plaintiffs, v. ATTORNEY GENERAL XAVIER BECERRA; ET AL., Defendants. 3:18-cv-02458-BEN-BLM REPLY SUPPORTING DEFENDANTS’ MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: April 2, 2019 Time: 10:30 a.m. Courtroom: Courtroom 5A, Fifth Floor Judge: The Honorable Roger T. Benitez Trial Date: Not set Action Filed:October 25, 2018 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.359 Page 1 of 17 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 TABLE OF CONTENTS Page i Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) INTRODUCTION ..................................................................................................... 1 ARGUMENT ............................................................................................................. 1 I. Plaintiffs’ Allegations Do Not Establish Standing. .............................. 1 II. The FAAAA Claim Fails as a Matter of Law. ...................................... 2 A. There Is No Private Right of Action Under the FAAAA. .......... 2 B. Plaintiffs Fail to State a Claim Under the FAAAA. ................... 4 III. The Dormant Commerce Claim Fails Under Rule 12. ......................... 7 IV. This Court Lacks Authority to Award Relief Under the Federal Motor Carrier Safety Act. ..................................................................... 9 CONCLUSION ........................................................................................................ 10 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.360 Page 2 of 17 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 TABLE OF AUTHORITIES Page ii Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) CASES Air Transport Ass’n of Am. v. Pub. Utilities Comm’n of Cal. 833 F.2d 200 (9th Cir. 1987) ................................................................................. 2 Alliance for Nonprofits for Ins., Risk Retention Grp. v. Kipper 712 F.3d 1316 (9th Cir. 2013) ............................................................................... 2 Am. Promotional Events, Inc.-Northwest v. City & Cty. Of Honolulu 796 F. Supp. 2d 1261 (D. Haw. 2011) .................................................................. 8 Armstrong v. Exceptional Child Ctr., Inc. __ U.S. __, 135 S. Ct. 1378 (2015) ....................................................................... 4 Ashcroft v. Iqbal 556 U.S. 662 (2009) .............................................................................................. 5 Calif. for Safe & Competitive Dump Truck Transp. v. Mendonca 152 F.3d 1184 (9th Cir. 1998) ............................................................................... 6 City of Columbus v. Ours Garage and Wrecker Service 536 U.S. 424 (2002) .............................................................................................. 3 City of Tacoma v. Taxpayers of Tacoma 357 U.S. 320 (1958) ............................................................................................ 10 Clark v. Busey 959 F.22d 808, 811 (9th Cir. 1992) ..................................................................... 10 Costello v. BeavEx, Inc. 810 F.3d 1045 (7th Cir. 2016) ............................................................................... 7 Dep’t of Revenue of Ky. v. Davis 553 U.S. 328 (2008) .............................................................................................. 8 Dilts v. Penske Logistics, LLC 769 F.3d 637 (9th Cir. 2014) ............................................................................. 6, 7 Exxon Corp. v. Governor of Md. 437 U.S. 117 (1978) .............................................................................................. 8 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.361 Page 3 of 17 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 TABLE OF AUTHORITIES (continued) Page iii Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) Gonzaga Univ. v. Doe 536 U.S. 273 (2002) .......................................................................................... 3, 9 Hawaii Disability Rights Ctr. v. Cheung 513 F. Supp. 2d 1185 (D. Haw. 2007) .................................................................. 4 Henry’s Wrecker Service Co. of Fairfax Cty., Inc. v. Prince George’s Cty. 214 F. Supp. 2d 541 (D. Md. 2002) ...................................................................... 3 In re Stac Elec. Sec. Litig. 89 F.3d 1399 (9th Cir. 1996) ................................................................................. 5 JAV Auto Ctr., Inc. v. Behrens 418 F. Supp. 2d 439 (S.D.N.Y. 2005) ................................................................... 2 Loyal Tire & Auto Center, Inc. v. Town of Woodbury 445 F.3d 136 (2d Cir. 2006) .................................................................................. 2 Lujan v. Defenders of Wildlife 504 U.S. 555 (1992) .............................................................................................. 2 Mason & Dixon Lines, Inc. v. Steudle 761 F. Supp. 2d 611 (E.D. Mich. 2011) ................................................................ 3 Mason and Dixon Lines, Inc. v. Steudle 683 F.3d 289 (6th Cir. 2012) ................................................................................. 3 Mega Renewables v. Shasta Cty. 644 F. Supp. 491 (E.D. Cal. 1986) ...................................................................... 10 Montauk-Caribbean Airways, Inc. v. Hope 784 F.2d 91 (2d Cir. 1986) .................................................................................... 3 Nat’l Ass’n of Optometrists & Opticians LensCrafters, Inc. v. Brown 567 F.3d 521 (9th Cir. 2009) ................................................................................. 8 Nat’l Ass’n of Optometrists & Opticians v. Harris 682 F.3d 1144 (9th Cir. 2012) ............................................................................... 8 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.362 Page 4 of 17 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 TABLE OF AUTHORITIES (continued) Page iv Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) North Carolina Motorcoach Ass’n v. Guilford Cnty Bd. of Educ. 315 F. Supp. 2d 784 (M.D.N.C. 2004) .................................................................. 9 Northwest v. Ginsberg 572 U.S. 273 (2014) .............................................................................................. 7 Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of State of Or. 511 U.S. 93 (1994) ................................................................................................ 7 Owner-Operators Indep. Drivers Ass’n of Am., Inc. v. Skinner 931 F.2d 582 (9th Cir. 1991) ............................................................................... 10 People ex rel. Harris v. Pac Anchor Transport., Inc. 59 Cal.4th 772 (Cal. 2014) .................................................................................... 6 Phillips v. Roadrunner Intermodal Serv. No. 16-cv-01072-SVW, 2016 WL 9185401 (C.D. Cal. Aug. 16, 2016) ..................................................................................... 7 Pike v. Bruce Church, Inc. 397 U.S. 137 (1970) .............................................................................................. 8 Plum Creek Timber Co., Inc. v. Trout Unlimited 255 F. Supp. 2d 1159 (D. Idaho 2003) .................................................................. 9 Rowe v. New Hampshire Motor Transport Association 552 U.S. 364 (2008) .......................................................................................... 3, 6 San Diego Cty. Gun Rights Committee v. Reno 98 F.3d 1121 (9th Cir. 1996) ................................................................................. 1 Schwann v. FedEx Ground Package System 813 F.3d 429 (1st Cir. 2016) ............................................................................. 6, 7 Skelly Oil Co. v. Phillips Petroleum Co. 339 U.S. 667 (1950) .............................................................................................. 9 Stengel v. Medtronic Inc. 704 F.3d 1224 (9th Cir. 2013) ............................................................................... 7 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.363 Page 5 of 17 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 TABLE OF AUTHORITIES (continued) Page v Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) Syngenta Seeds, Inc. v. Bunge North Am. Inc. 820 F. Supp. 2d 953 (N.D. Iowa 2011) ................................................................. 4 Tennessee v. U.S. Dep’t of Transportation 326 F.3d 729 (6th Cir. 2003) ............................................................................... 10 Valadez v. CSX Intermodal Terminals, Inc. No. 15-cv-05433, 2017 WL 1416883 (N.D. Cal. Apr. 10, 2017) ......................... 7 Webster v. Fall 266 U.S. 507 (1925) .............................................................................................. 3 Yoder v. Western Express, Inc. 181 F. Supp. 3d 704 (C.D. Cal. 2015) ................................................................... 9 STATUTES 28 U.S.C. § 1331 .................................................................................................................... 4 42 U.S.C. § 1983 ................................................................................................................ 3, 4 49 U.S.C. § 5125(f) .............................................................................................................. 10 § 14501(c) .......................................................................................................... 2, 3 § 14501(c)(1) ..................................................................................................... 2, 4 § 31141 .................................................................................................................. 9 § 31141(f) ............................................................................................................ 10 OTHER AUTHORITIES Airline Deregulation Act .................................................................................... 2, 3, 7 Declaratory Judgment Act .......................................................................................... 9 Federal Aviation Act, § 1006 ................................................................................... 10 Federal Motor Carrier Safety Act ............................................................................... 9 Hazardous Materials Transportation Act .................................................................. 10 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.364 Page 6 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) INTRODUCTION Plaintiffs have not established their standing to challenge a state labor rule that has not been enforced against them, and the First Amended Complaint fails to state claim. Moreover, Plaintiffs have not shown that they have a private right of action under the Federal Aviation Administration Authorization Act (FAAAA), or the Federal Motor Carrier Safety Act (FMCSA). Plaintiffs’ opposition attempts to defeat dismissal by re-casting legal conclusions about Dynamex’s effects as factual allegations, but courts are not required to take such legal conclusions at face value. Plaintiffs also contend that these issues are not proper for determination at the motion to dismiss stage, but their failure to state a legal claim is readily apparent from the FAC. For these reasons, the Court should dismiss the FAC. ARGUMENT I. PLAINTIFFS’ ALLEGATIONS DO NOT ESTABLISH STANDING. Plaintiffs lack standing because they do not allege a concrete legal dispute, but instead seek an advisory opinion as to whether the potential application of the ABC test adopted in Dynamex against them might violate their rights under federal law. (ECF No. 25 at 16 ¶ 49.) Although the FAC and the opposition to the motion to dismiss claim that Plaintiffs will suffer harm “when Wage Order No. 9 is enforced as construed in Dynamex,” they cite no such enforcement. (Id. at 20 ¶ 63.) In opposing dismissal, Plaintiffs argue that the Department of Industrial Relations can enforce Wage Order No. 9, and that the Attorney General can pursue litigation in the state’s interest, but do not cite any enforcement action against them. (ECF No. 34 at 5-6.) Plaintiffs also argue that the Attorney General has urged application of the Dynamex decision in state court litigation, and that they are under threat of enforcement actions under the private attorney general statute. (Id. at 6-7.) But that there might be enforcement attempts against other parties does not give Plaintiffs standing here. San Diego Cty. Gun Rights Comm. v. Reno, 98 F.3d 1121, Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.365 Page 7 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) 1124-25 (9th Cir. 1996) (party that could show no legal injury lacked standing to challenge constitutionality of state law). Ultimately, Plaintiffs have not shown injury-in-fact to a legally protected interest. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). II. THE FAAAA CLAIM FAILS AS A MATTER OF LAW. A. There Is No Private Right of Action Under the FAAAA. Plaintiffs cite no Ninth Circuit authority holding that the FAAAA creates a private right of action, instead relying on inapposite caselaw, and ask this Court to disregard caselaw squarely holding that an identical provision of the Airline Deregulation Act does not create a private right of action. (ECF No. 34 at 18.) They also mistakenly conflate the private right of action question with jurisdiction. (Id. at 20.) Courts have explicitly held that there is no private right of action under the FAAAA. “No private cause of action can be implied under [49 U.S.C. § 14501(c)].” JAV Auto Ctr., Inc. v. Behrens, 418 F. Supp. 2d 439, 443 (S.D.N.Y. 2005). In Loyal Tire & Auto Center, Inc. v. Town of Woodbury, 445 F.3d 136 (2d Cir. 2006), a towing company argued that a municipal law was preempted by section 14501(c), and the Second Circuit concluded there is no private right of action. “Section 14501(c)(1) requires state and local authorities to refrain from regulating motor carriers of property but does not expressly grant any rights to individual motor carriers,” nor is it “phrased in terms of the persons benefitted.” Id. at 150 (citation omitted). Further, because it “focuses on the regulated actors (state and local authorities), it has an aggregate, rather than an individual focus.” Id. The Ninth Circuit has cited Loyal Tire with approval. Alliance for Nonprofits for Ins., Risk Retention Grp. v. Kipper, 712 F.3d 1316, 1327 n.13 (9th Cir. 2013) (“[C]ourts have repeatedly declined to recognize that preemption provisions give rise to a non- specific right to be free from state law that can be enforced under § 1983.”). Additionally, in Air Transport Ass’n of Am. v. Pub. Utilities Comm’n of Cal., 833 Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.366 Page 8 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) F.2d 200, 207 (9th Cir. 1987), the Ninth Circuit held that a nearly-identical preemption provision under the Airline Deregulation Act does not create a private right of action. See also Montauk-Caribbean Airways, Inc. v. Hope, 784 F.2d 91, 97-98 (2d Cir. 1986). Plaintiffs argue that the Supreme Court has “clearly, albeit implicitly found a private right of action” under the FAAAA, yet cite no case actually so holding. (ECF No. 34 at 18.) The cases they cite do not discuss the private right of action question, much less hold that the FAAAA creates such a right. City of Columbus v. Ours Garage and Wrecker Service, 536 U.S. 424 (2002), involved whether a state can delegate to municipalities its authority to establish safety regulations for motor carriers under 49 U.S.C. § 14501(c), while Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364 (2008), held that the FAAAA preempts a Maine tobacco law. (ECF No. 34 at 18.) As courts consistently hold, “[q]uestions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” Webster v. Fall, 266 U.S. 507, 511 (1925).1 Nor can Plaintiffs bring an FAAAA preemption claim under 42 U.S.C. § 1983, which the Supreme Court has held requires “an unambiguously conferred right to support a cause of action.” Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). Thus, to bring their preemption claim under section 1983, Plaintiffs must establish both that Congress intended to create a federal right through the FAAAA, and once it is shown that the statute is phrased in “explicit rights-creating terms,” Plaintiffs must show that the statute also manifests an intent “to create not just a private right but also a private remedy.” Id. at 284 (citation omitted). As Henry’s Wrecker 1 Plaintiffs rely on Mason & Dixon Lines, Inc. v. Steudle, 761 F. Supp. 2d 611 (E.D. Mich. 2011). (ECF No. 34 at 17.) But the Court of Appeals decision in that case did not address the private right of action issue, and thus the district court’s decision on that point is of limited utility, particularly given more direct authority on point discussed above. See Mason & Dixon Lines, Inc. v. Steudle, 683 F.3d 289, 297 (6th Cir. 2012). Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.367 Page 9 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) Service Co. of Fairfax Cty., Inc. v. Prince George’s Cty., 214 F. Supp. 2d 541, 545 (D. Md. 2002), held, “Plaintiffs’ contention that § 14501(c)(1) grants individual rights remediable by § 1983 fails because the statute’s text does not ‘unambiguously,’ with ‘rights-creating language,’ convey Congress’ intent to confer individual rights to motor carriers.” Finally, Plaintiffs confuse federal jurisdiction to hear an actionable claim with the threshold question of whether there is an actionable claim. They make the undeniable point that under 28 U.S.C. § 1331, federal courts have jurisdiction to decide actions for injunctive relief based on a claim that state regulation is preempted by federal law. (ECF No. 34 at 20 [citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)].) This misses the point-the issue here is the lack of a private right of action, not a lack of federal jurisdiction for the preemption claim. Section 1331 “is applicable only when the plaintiff sues under a federal statute that creates a right of action in federal court.” Hawaii Disability Rights Ctr. v. Cheung, 513 F. Supp. 2d 1185, 1190 (D. Haw. 2007) (quoting Williams v. United Airlines, Inc., 500 F.3d 1019, 1021-23 (9th Cir. 2007)). “Thus, 28 U.S.C. § 1331 does not alone serve as a basis for federal jurisdiction, absent a federal statute creating a right of action in federal court.” Id.; Syngenta Seeds, Inc. v. Bunge North Am. Inc., 820 F. Supp. 2d 953, 978 (N.D. Iowa 2011) (“[T]he Supreme Court has recognized that a ‘jurisdictional’ provision, conferring jurisdiction on the courts of the United States or any state, does not itself create a private cause of action, but simply confirms jurisdiction for a pre-existing right of action established elsewhere in the statute.”).2 B. Plaintiffs Fail to State a Claim Under the FAAAA. Plaintiffs’ FAAAA claim hinges on their allegation that Dynamex “impermissibly compels the use of employees rather than owner-operators,” (ECF 2 Plaintiffs also argue that the FAAAA is “directly enforceable under the Supremacy Clause.” (ECF No. 34 at 20.) But the Supreme Court has explicitly held that the “Supremacy Clause is not the source of any federal rights . . . and certainly does not create a cause of action.” Armstrong v. Exceptional Child Ctr., Inc., __ U.S. __, 135 S. Ct. 1378, 1383 (2015) (citation omitted). Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.368 Page 10 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) No. 34 at 23), “effectively prohibits” motor carriers from utilizing independent contractors, and increases carriers’ cost of doing business. (ECF No. 25 at 14 ¶ 44.) Plaintiffs contend that these are factual allegations entitled to the presumption of truth. This argument fails. First, Plaintiffs’ allegations are not entitled to a presumption of truth because they are legal, not factual, allegations. “[N]aked assertions” devoid of “factual enhancement” do not suffice under Rule 12. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also In re Stac Elec. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (“Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.”). Second, courts have already concluded that California’s employment rules-under the Borello test predating Dynamex-do not compel use of employees or owner-operators. Su, 903 F.3d at 964 (rejecting challenge to the Borello standard for determining whether an individual is an employee or an independent contractor under California law, and noting that “the Borello standard does not compel the use of employees or independent contractors”). By contrast, the Ninth Circuit found likely preempted a local directive that specifically required that carriers use only employee drivers and give hiring preference to drivers with more experience in American Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046, 1054-55 (9th Cir. 2009). As the court pointed out in Su, “an ‘all or nothing’ rule requiring services be performed by certain types of employee drivers and motivated by a State’s own efficiency and environmental goals was likely preempted.” 903 F.3d at 964 (discussing American Trucking).3 Without this premise, Plaintiffs’ preemption claim fails. As the motion to dismiss points out, the California Supreme Court rejected the argument that the 3 While it theorized how the ABC test might play out under certain situations, the court in Su nevertheless noted that the question whether this test is preempted by the FAAAA was not presented, and disavowed any ruling on that point. 903 F.3d at 964 n.9 (“[W]e need not and do not decide whether the FAAAA would preempt using the ‘ABC’ test to enforce labor protections under California law.”). Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.369 Page 11 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) FAAAA preempts Order No. 9. People ex rel. Harris v. Pac Anchor Transport., Inc., 59 Cal.4th 772, 783 (Cal. 2014), cert. denied, 135 S. Ct. 1400 (2015). Likewise, the Ninth Circuit has held that general state labor laws, like Order No. 9, are not preempted. Calif. for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir. 1998). Either as written or as interpreted by the California Supreme Court in Dynamex, Order No. 9 does not refer to motor carrier prices, routes, or services. It is a labor regulation generally applicable to all employers in the state. Rowe, 552 U.S. at 375-76 (noting that the FAAAA does not preempt general state regulations, i.e., “state regulation that broadly prohibits certain forms of conduct and affects, say, truckdrivers, only in their capacity as members of the public”); see also Dilts v. Penske Logistics, LLC, 769 F.3d 637, 646 (9th Cir. 2014) (noting “in deregulating motor carriers and promoting maximum reliance on market forces, Congress did not intend to exempt motor carriers from every state regulatory scheme of general applicability.”). Order No. 9 does not impermissibly “aim directly at the carriage of goods,” or some other field where carriage by commercial motor vehicles “play[] a major role,” or otherwise “require motor carrier operators to perform certain services.” Rowe, 552 U.S. at 375-376. As noted in Dilts, where “law does not refer directly to rates, routes, or services, ‘the proper inquiry is whether the provision, directly or indirectly, binds the carrier to a particular price, route or service and thereby interferes with the competitive market forces within the industry.’” 769 F.3d at 646 (citation omitted). Plaintiffs point to no provision of Dynamex or Order No. 9 “directly referring to rates, routes, or services,” or binding motor carriers to particular prices, routes, or services.4 4 Plaintiffs rely on Schwann v. FedEx Ground Package System, 813 F.3d 429 (1st Cir. 2016), (ECF No. 34 at 26-27), where the court held that a Massachusetts statute that is substantially the same as the ABC test adopted in Dynamex was preempted by the FAAAA as applied to a motor carrier that used independent contractors for the actual pick-up and delivery services for customers. The decision largely hinged on First Circuit precedent regarding how much interference state laws could impose on motor carrier activities, precedent that is inapplicable in this Circuit. Id. at 439-440. As discussed above, this Circuit’s caselaw predating Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.370 Page 12 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) In this regard, state laws are more likely to be preempted “when they operate at the point where carriers provide services to customers at specific prices.” Dilts, 769 F.3d at 646. For example, in Northwest v. Ginsberg, 572 U.S. 273 (2014), the Supreme Court held that a state law contract claim that “seeks to enlarge the contractual relationship” that the carrier and its customer had voluntarily undertaken was preempted by the Airline Deregulation Act. Id. at 276. The Seventh Circuit noted: “[T]here is a relevant distinction for purposes of FAAAA preemption between generally applicable state laws that affect the carrier’s relationship with its customers and those that affect the carrier’s relationship with its workforce.” Costello v. BeavEx, Inc., 810 F.3d 1045, 1054 (7th Cir. 2016), cert. denied, 137 S. Ct. 2289 (2017). Thus, while laws “that affect the way a carrier interacts with its customers fall squarely within the scope of FAAAA preemption,” those laws “that merely govern a carrier’s relationship with its workforce . . . are often too tenuously connected to the carrier’s relationship with its consumers to warrant preemption.” Id. The employment regulations challenged here do not speak to a carrier’s relationship with its consumers at all.5 III. THE DORMANT COMMERCE CLAIM FAILS UNDER RULE 12. The Commerce Clause generally prohibits economic protectionism and discrimination, or “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of State of Or., 511 U.S. 93, 99 (1994). Plaintiffs do not allege that the challenged state laws discriminate against interstate commerce, nor could they. Dynamex and Order No. 9 merely set out generally applicable Dynamex holds that California’s general background laws are not preempted, and courts in this circuit have rejected the Schwann approach. Phillips v. Roadrunner Intermodal Serv., No. 16-cv-01072-SVW, 2016 WL 9185401, at *7 (C.D. Cal. Aug. 16, 2016) (“[T]he unique facts in the First Circuit cases combined with current Ninth Circuit jurisprudence sufficiently distinguish this case from the First Circuit’s”); Valadez v. CSX Intermodal Terminals, Inc., No. 15-cv-05433, 2017 WL 1416883, at *6 (N.D. Cal. Apr. 10, 2017). 5 Plaintiffs’ implied preemption claim fails for these same reasons. Stengel v. Medtronic Inc., 704 F.3d 1224, 1231 (9th Cir. 2013). Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.371 Page 13 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) requirements that apply equally to in-state, multi-state, and out-of-state employers. See Nat’l Ass’n of Optometrists & Opticians LensCrafters, Inc. v. Brown, 567 F.3d 521, 525 (9th Cir. 2009). Plaintiffs claim that the challenged provisions pose an “unreasonable burden” on such commerce. (ECF No. 25 at 21 ¶¶ 67-68.) “Absent discrimination for the forbidden purpose, however, the law will be upheld unless the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.” Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 339 (2008) (citation omitted). “[A] state regulation does not become vulnerable to invalidation under the dormant Commerce Clause merely because it affects interstate commerce.” Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1148 (9th Cir. 2012). A necessary requirement is that there be a substantial burden on interstate commerce. Id. “Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). In this regard, Plaintiffs’ opposition merely rehashes their conclusory allegation that Dynamex “requir[es] that independent-contractor drivers be reclassified as employees.” (ECF No. 34 at 30-31.) As discussed above, the decision imposes no such requirement. Plaintiffs buttress their unreasonable burden argument with a claim that Dynamex will force them to stop using the owner-operator model. (ECF No. 34 at 32.) But the caselaw clearly holds that the Commerce Clause does not protect a party’s preferred business model. Exxon Corp. v. Governor of Md., 437 U.S. 117, 127 (1978); Am. Promotional Events, Inc.-Northwest v. City & Cty. Of Honolulu, 796 F. Supp. 2d 1261, 1279 (D. Haw. 2011) (“The Commerce Clause, however, does not protect Plaintiff’s method of operation in a retail market.”); Yoder v. Western Express, Inc., 181 F. Supp. 3d 704, 723 (C.D. Cal. 2015). Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.372 Page 14 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) IV. THIS COURT LACKS AUTHORITY TO AWARD RELIEF UNDER THE FEDERAL MOTOR CARRIER SAFETY ACT. Plaintiffs seek declaratory relief, based on a December 21, 2018 Order by the Federal Motor Carrier Safety Administration that California’s meal-and-rest period rules are preempted with respect to drivers subject to the federal hours-of-service rules. (ECF No. 25 at 23 ¶¶ 75-77.) But as the motion to dismiss points out, there is no private right of action or any other basis for declaratory relief in this Court for this claim. Plaintiffs’ opposition argues that this Court can “enforce the FMCSA’s order,” even though they concede that “a party cannot sue directly under Section 31141.” (ECF No. 34 at 34-35.) This argument misses the threshold analytical step of showing that this Court has jurisdiction to “enforce” or grant any relief based on the FMCSA’s order. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950) (noting that the Declaratory Judgment Act is “procedural only” and does not extend the courts’ jurisdiction); Plum Creek Timber Co., Inc. v. Trout Unlimited, 255 F. Supp. 2d 1159, 1164 (D. Idaho 2003). Instead, Plaintiffs’ argue without any statutory or caselaw authority, that after the administrative agency issued its preemption finding under the statute, “a private party is entitled to rely on it and to seek judicial relief.” (ECF No. 34 at 34.) This is incorrect-Plaintiffs must show that the FMCSA creates a privately enforceable right of action in order to sue in federal court. Gonzaga Univ., 536 U.S. at 283; North Carolina Motorcoach Ass’n v. Guilford Cnty Bd. of Educ., 315 F. Supp.2d 784, 801 (M.D.N. C. 2004) (“49 U.S.C. § 31141 provides a review procedure that preempts ‘a State law or regulation on commercial motor vehicle safety that the Secretary of Transportation decides under [§ 31141] may not be enforced”). Moreover, as Plaintiffs note, the State of California and the International Brotherhood of Teamsters petitioned for review of the FMCSA’s preemption finding in the United States Court of Appeals for the Ninth Circuit, which petitions Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.373 Page 15 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) are currently pending. (ECF No. 34 at 34.) Under the statute, that is the proper judicial forum for further proceedings. 49 U.S.C. § 31141(f). Plaintiffs urge this Court entertain a request for declaratory relief, while the substantive decision is being litigated in the Court of Appeals. This is improper under general principles of appellate jurisdiction. For example, section 1006 of the Federal Aviation Act allows for judicial review of decisions by the Administrator in the courts of appeals, and thus the Ninth Circuit holds that district courts lack jurisdiction to review such challenges. Clark v. Busey, 959 F.22d 808, 811 (9th Cir. 1992); Mega Renewables v. Shasta Cty., 644 F. Supp. 491, 499 (E.D. Cal. 1986) (statute requiring a party to contest an administrative agency decision in the courts of appeals barred judicial review in the district court); City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336 (1958). “Specific grants of exclusive jurisdiction to the courts of appeals override general grants of jurisdiction to the district courts.” Owner-Operators Indep. Drivers Ass’n of Am., Inc. v. Skinner, 931 F.2d 582, 589 (9th Cir. 1991). To hold otherwise would “encourage circumvention of Congress’s particular jurisdictional assignment,” and “would also result in fractured judicial review of agency decisions, with all of its attendant confusion, delay, and expense.” Id. Plaintiffs’ sole supporting authority is Tennessee v. U.S. Dep’t of Transportation, 326 F.3d 729 (6th Cir. 2003), which they contend “interpret[ed] [a] similar preemption provision under Hazardous Materials Transportation Act.” (ECF No. 34 at 35.) Unlike the FMCSA, the statute at issue in that case specifically provides for district court review of the administrative decision. Tennessee, 326 F.3d at 732 (noting that under 49 U.S.C. § 5125(f), parties seeking judicial review of the administrative determination may do so in federal district court). By contrast, the statute here does not confer authority for district court review. CONCLUSION For these reasons, the Court should dismiss the First Amended Complaint. Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.374 Page 16 of 17 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 Reply Supp. Defs.’ Mot. to Dism. FAC (3:18-cv-02458-BEN-BLM) Dated: March 25, 2019 Respectfully Submitted, XAVIER BECERRA Attorney General of California TAMAR PACHTER Supervising Deputy Attorney General /s/ Jose A. Zelidon-Zepeda JOSE A. ZELIDON-ZEPEDA Deputy Attorney General Attorneys for Defendants Attorney General Xavier Becerra, Acting Director André Schoorl, and Labor Commissioner Julie A. Su, in their official capacities SA2018103422 21385797.docx Case 3:18-cv-02458-BEN-BLM Document 36 Filed 03/25/19 PageID.375 Page 17 of 17
