Federal District Court Rejects Trucking Companies’ Challenge to Assembly Bill 5’s Worker Misclassification Test

On March 15, 2024, the U.S. District Court of the Southern District of California issued a final decision in California Trucking Association v. Bonta, rejecting claims by the trucking industry that Assembly Bill 5’s (“AB 5”) “ABC” test for employment status is preempted by the Federal Aviation Administration Authorization Act (“FAAAA”), a federal statute that deregulated the trucking industry, or that it violates the Dormant Commerce Clause or Equal Protection Clause of the U.S. Constitution.  Under the “ABC” test, a worker is presumed to be an employee unless the employer can establish all three of the following requirements: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business.

The same federal district court had issued a preliminary injunction against the application of AB 5 in the trucking industry before the law took effect, but that decision was overturned by the Ninth Circuit in 2021.  Since then, AB 5 has been in effect, and the district court’s decision makes clear that the State is permitted to use the “ABC” test, in its entirety, to combat misclassification in the trucking industry.  Evidence presented in the case showed that driver compensation in the trucking industry has fallen steadily for decades as misclassification practices became dominant, and many misclassified drivers end up earning less than the minimum wage (causing high turnover in the industry and safety concerns).

Altshuler Berzon LLP represents the International Brotherhood of Teamsters, which intervened in the case on the side of the State to defend AB 5.  The district court’s decision can be found here.

Ninth Circuit Reaffirms McGill and Blair, Holds Mandatory Arbitration Agreement that Prohibits “Public Injunctions” Unenforceable in Consumer Class Action

On March 14, 2024, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously affirmed a decision by U.S. District Court Judge James Donato denying Defendant RAC Acceptance East, LLC’s (RAC) motion to compel arbitration.

The underlying case, McBurnie v. Acceptance Now, Case No. 3:21-cv-01429, in which Altshuler Berzon LLP is co-counsel with Dostart Hannink LLP, is a putative class action on behalf of California consumers that challenges predatory fees charged to consumers by RAC in connection with rent-to-own transactions.  Plaintiffs allege that RAC charged California consumers two unlawful fees—1) a $45 “processing fee” at the point of transaction; and 2) a $1.99 “expedited payment fee” whenever a consumer made a rental payment by telephone rather than at a store or online—in violation of California’s Karnette Act and other statutes, which prohibits companies from charging fees for rent-to-own transactions unless the fees are reasonable and cover costs actually incurred by the company. Plaintiffs seek statutory damages and a public injunction that would prohibit this practice.

In denying the motion to compel arbitration, Judge Donato rejected RAC’s argument that the United States Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), overruled prior Ninth Circuit precedent in Blair v. Rent-A-Center, Inc., 928 F.3d 819 (9th Cir. 2019), which had held that RAC’s consumer arbitration agreements were unenforceable under California law because they required consumers to waive their ability to seek public injunctive relief – a remedy the California Supreme Court in McGill had held was an unwaivable substantive statutory right.  In its published decision, the Ninth Circuit agreed with Judge Donato, holding that “[f]ar from overruling our holding in Blair, Viking River reaffirms it.”  This ruling is a key victory in clarifying post-Viking River that California consumers cannot be forced into arbitration if they would be required to give up their ability to seek public injunctive relief.

The case will now return to the district court where plaintiffs’ motion for class certification is currently fully briefed and awaiting hearing.

The decision can be found here.

Federal district court denies Aetna’s motion to dismiss class action lawsuit alleging Aetna’s fertility policies discriminate against LGBTQ people

On February 29, 2024, U.S. District Court Judge Haywood Gilliam denied Aetna’s motion to dismiss a case alleging that Aetna’s policies discriminate against LGBTQ people seeking fertility treatment coverage nationwide.

The lawsuit, which Altshuler Berzon LLP, together with the National Women’s Law Center (NWLC) and Katz Banks Kumin LLP, originally filed in April 2023, alleges that Aetna’s discriminatory infertility policy requires LGBTQ people who wish to become pregnant to pay more and wait longer before accessing the fertility benefits covered by their Aetna health plans, compared to those in heterosexual relationships. Aetna makes fertility treatments readily accessible to plan members in heterosexual relationships who seek them but requires LGBTQ plan members who wish to have children with their partners to submit proof that they have undergone six or 12 cycles (depending on age) of arduous and expensive artificial insemination treatments – among the very fertility treatments for which they seek coverage – before they can access the fertility benefits included in their health plans.

In denying Aetna’s motion to dismiss, Judge Gilliam rejected Aetna’s argument that its fertility policy is “facially neutral,” ruling that Plaintiff Mara Berton has plausibly alleged that she and others Aetna members with same-sex partners face “inherently different and more demanding burdens” under Aetna’s fertility coverage policy. Importantly, Judge Gilliam held that a policy that makes access to fertility coverage inherently more burdensome for LGBTQ plan members violates Section 1557 of the Affordable Care Act, which prohibits discrimination in health care based on sex, including sexual orientation and gender identity. This ruling is a major step forward in ensuring that LGBTQ people have equal access to health care benefits, including fertility treatment coverage.

The court’s decision can be found here, and further information is available here.