California Trucking Association v. Julie A. Su

The Federal Aviation Administration Authorization Act of 1994 (FAAAA) completed Congress’ deregulation of the transportation industry. To ensure that States would not undo federal deregulation through their own laws, the FAAAA provides that a state “may not enact or enforce a law . . . related to a price, route, or service of any motor carrier . . . with respect to transportation of property.” 49 U.S.C. § 14501(c)(1). Despite this Congressional edict, the California Labor Commissioner uses California policy judgments to determine employment status of truck owners contracting with motor carriers. Contracts between these truck owners—referred to as “owner-operators” in the trucking industry—and motor carriers reflect the service and price terms on which the parties agree to transport property. The California Labor Commissioner’s employment determination disrupts these voluntarily undertaken contractual arrangements. California Trucking Association filed this case to enjoin the Labor Commissioner from interfering with these free market transportation agreements. The Ninth Circuit concluded the FAAAA did not preempt the Labor Commissioner’s actions because Congress only intended to deregulate the transportation industry’s interactions with consumers and her actions do not “bind” motor carriers to a particular service or price. Did the Ninth Circuit err by holding the FAAAA does not preempt California’s interference with contractual agreements between motor carriers and owner-operators based on its creation of a “workforce exclusion” to preemption?