475 U.S. 608 (1986), 84-1644, Golden State Transit Corp. v. City of Los Angeles

Docket Nº:No. 84-1644
Citation:475 U.S. 608, 106 S.Ct. 1395, 89 L.Ed.2d 616, 54 U.S.L.W. 4329
Party Name:Golden State Transit Corp. v. City of Los Angeles
Case Date:April 01, 1986
Court:United States Supreme Court

Page 608

475 U.S. 608 (1986)

106 S.Ct. 1395, 89 L.Ed.2d 616, 54 U.S.L.W. 4329

Golden State Transit Corp.


City of Los Angeles

No. 84-1644

United States Supreme Court

April 1, 1986

Argued December 4, 1985




While petitioner's application to renew its franchise to operate taxicabs in respondent city of Los Angeles was pending, petitioner's drivers went on strike. The City Council then conditioned renewal of the franchise on settlement of the labor dispute by a certain date. When the dispute was not settled by that date, the franchise expired. Petitioner filed suit in Federal District Court, alleging, inter alia, that the city's action was preempted by the National Labor Relations Act (NLRA). The District Court granted summary judgment for the city, and the Court of Appeals affirmed.

Held: The city's action in conditioning petitioner's franchise renewal on the settlement of the labor dispute is preempted by the NLRA. Pp. 613-620.

(a) The NLRA preemption principle precluding state and municipal regulation concerning conduct that Congress intended to be unregulated, Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, is applicable here. Under this principle, States and municipalities are prohibited from imposing restrictions on economic weapons of self-help, unless such restrictions were contemplated by Congress. Pp. 613-615.

(b) Both the language of the NLRA and its legislative history demonstrate that the city's action contravened congressional intent. Pp. 615-619.

[106 S.Ct. 1396] (c) The settlement condition imposed by the City Council destroyed the balance of power designed by Congress in the NLRA, and frustrated Congress' decision to leave open the use of economic weapons. Pp. 619-620.

754 F.2d 830, reversed and remanded.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, WHITE, MARSHALL, POWELL, STEVENS, and O'CONNOR, JJ., joined. REHNQUIST, J., filed a dissenting opinion, post, p. 620.

Page 609

BLACKMUN, J., lead opinion

JUSTICE BLACKMUN delivered the opinion of the Court.

The city of Los Angeles, Cal., refused to renew Golden State Transit Corporation's taxicab franchise after the company's drivers went on strike. We are asked to decide whether, under Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132 (1976), the city's action is preempted by the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq.


In 1980, Golden State, which operated taxicabs under the Yellow Cab name, applied to the city for a renewal of its operating franchise eventually scheduled to lapse on March 31, 1981. That franchise had first been acquired in 1977. On September 4, 1980, the city's Board of Transportation Commissioners recommended the renewal of Golden State's franchise -- the largest, with approximately 400 cabs, of companies operating in Los Angeles -- along with the franchises of 12 other taxi companies.

In October, while the franchise renewal application was pending, Golden State's labor contract with its drivers expired. The company and the drivers, represented by Local

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572 of the International Brotherhood of Teamsters, signed a short-term contract in order that operations would continue while negotiation and mediation proceeded. This interim contract was to expire at midnight, February 10, 1981, the day before the City Council was scheduled to consider action on the franchise renewals.

On February 2, the Council's Transportation and Traffic Committee endorsed franchise renewals recommended by the Board of Transportation Commissioners. The Committee's report stated that Golden State and other companies were "in compliance with all terms and conditions of their franchise[s]." App. 39.

On February 11, the drivers struck Golden State, halting its operations. At the Council meeting that day, Teamster representatives argued against renewal of Golden State's franchise because of the pendency of the labor dispute. The Council postponed decision on Golden State's application until February 17, but, with possibly one exception, approved all other franchise renewal applications. At the February 17 meeting, when the union again opposed the renewal, the Council voted to extend Golden State's franchise from March 31 to April 30, but only if the Council expressly found, on or before March 27, that the extension was in the best interests of the city.

At its March 23 meeting, the Council held a short public hearing on whether it should grant the limited extension. By this time, the labor dispute and the franchise renewal issue had become clearly intertwined. The Teamsters opposed any extension of the Yellow Cab franchise, stating that such action would simply lengthen the strike and keep the drivers out of work. It preferred to see the franchise terminated, and to have the drivers seek jobs from Golden State's successor or from other franchise holders. As others spoke, the discussion turned to whether there was even a need for Yellow Cab, in light of the services performed by the other 12 franchised taxi companies. There were comments regarding

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an excess of cabs; the city's policy at the time, however, was not [106 S.Ct. 1397] to limit the number of taxi companies or the number of taxis in each fleet. Id. at 81-82.

The strike was central to the discussion. One Council member charged Golden State with negotiating unreasonably, id. at 71, while another accused the company of trying to "brea[k] the back of the union." Id. at 66. The sympathies of the Council members who spoke lay with the union. But rather than defeat the renewal outright, the council reached a consensus for rejection of the extension with a possibility for reopening the issue if the parties settled their labor dispute before the franchise expired the following week. Four Council members endorsed this approach, and the Assistant City Attorney said that he clearly had informed the parties that this was the city's position. Id. at 68. The Council President said:

I find that it will be very difficult to get this ordinance past (sic) to extend this franchise if the labor dispute is not settled by the end of this week.

Id. at 75. He added: "I just think that this kind of information should be put out in the open, so everybody understands it." Ibid. The Council, by a vote of 11 to 1, defeated the motion to extend the franchise, and it expired by its terms on March 31.


Golden State filed this action in the United States District Court for the Central District of California, alleging that the city's action was preempted by the NLRA and violated the company's rights to due process and equal protection. It sought declaratory and injunctive relief and damages. The District Court found that it was "undisputed that the sole basis for refusing to extend [Golden State's] franchise was its labor dispute with its Teamster drivers," 520 F.Supp. 191, 193 (1981); that the Council had "threaten[ed] to allow Yellow Cab's franchise to terminate unless it entered into a collective bargaining agreement with the Teamsters," id. at 194; and that the Council had denied the company an essential weapon

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of economic strength -- the ability to wait out a strike. On the basis of the preemption claim, the District Court granted Golden State's motion for a preliminary injunction to preserve the franchise. Ibid. The Court of Appeals for the Ninth Circuit found "ample evidence" in the record to support the District Court's finding, but nevertheless vacated the injunction. 686 F.2d 758, 759, 762 (1982). The court reasoned that Golden State had little chance of prevailing on its preemption claim or on the other grounds it asserted. This Court denied Golden State's petition for certiorari. 459 U.S. 1105 (1983).

Following litigation on unrelated issues,1 and with the company having abandoned its equal protection claim, the District Court granted summary judgment for the city. App. to Pet. for Cert. 11a. Golden State had not moved for summary judgment in its favor. The Court of Appeals affirmed, holding that the city's action was not preempted. 754 F.2d 830 (1985). The court felt that, when the activity regulated is only a peripheral or incidental concern of labor policy, traditional municipal regulation is not preempted. The court found nothing in the record to suggest that the city's nonrenewal decision "was...

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