Ruling reverses district court’s denial of injunction

The U.S. Court of Appeals for the Ninth Circuit last month delivered a major victory to the American Trucking Associations in its ongoing litigation against the ports of Los Angeles and Long Beach. A three-judge panel ruled that the federal district court should have granted ATA’s request – at least in part – for an injunction against the concession agreements in place at the ports.

“In short, motor carriers should not be required to adhere to the various unconstitutional provisions in the Ports’ agreements, and are likely to suffer irrevocably if forced to do that or give up their businesses,” the court’s opinion said. The appeals court left open the possibility, however, that the federal district court could leave portions of the concessions in place while enjoining other pieces of the agreements.

The appeals court particularly was troubled by the Port of Los Angeles’ concession agreement, saying it is “the most disruptive and is likely to cause the most harm.” The key difference between the two is that the Los Angeles concession agreement forces motor carriers to phase out their use of independent contractors.

If the Port of Los Angeles proceeded with that measure pending litigation, “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,” the appeals court ruled.

A key question in the litigation is whether the ports’ concessions fall within the safety regulatory exception of the federal motor carrier preemption law. Regarding the Port of Los Angeles’ claims in support of its phase-out of independent contractors, the appeals court declared, “We see little safety-related merit in those thread-paper arguments, which denigrate small businesses and insist that individuals should work for large employers or not at all.” The Los Angeles concession also includes an on-street parking ban, which the appeals court said is unlikely to be “genuinely responsive to safety.”

Both concession agreements require numerous financial disclosures from motor carriers, including annual reports, Securities and Exchange Commission filings, balance sheets, income tax statements and pending legal actions. The appeals said it was unlikely that the financial disclosure requirements in both ports’ agreements could be justified “under any conceivable safety rationale.” The court likewise faulted a provision in the Port of Long Beach agreement requiring motor carriers to notify drivers of available health insurance. “Again, this has no discernable safety purpose.”