Ufo Chuting of Hawaii, Inc. v. Smith

Decision Date28 November 2007
Docket NumberNo. 05-16545.,05-16545.
Citation508 F.3d 1189
PartiesUFO CHUTING OF HAWAII, INC., a Hawaii corporation; K.M.B.S., Inc., a Hawaii corporation d/b/a Kaanapali Tours, Plaintiffs-Appellants, v. Allan A. SMITH, in his capacity as Chair of the Board of Land and Natural Resources, State of Hawaii, and Acting Director of the Department of Land and Natural Resources, State of Hawaii; Stephen Thompson; Ed Underwood, in his capacity as Administrator, Division of Boating and Ocean Recreation, Department of Land and Natural Resources, State of Hawaii,<SMALL><SUP>*</SUP></SMALL> Defendants-Appellees, United States Department of Commerce; National Marine Fisheries Service, Defendants-Intervenors-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Dennis Niles, Paul, Johnson, Park & Niles, Wailuku, HI, for the plaintiffs-appellants.

William J. Wynhoff, Deputy Attorney General, Department of the Attorney General, State of Hawaii, Honolulu, HI, for the defendants-appellees.

Appeal from the United States District Court for the District of Hawaii; Susan Oki Mollway, District Judge, Presiding. D.C. No. CV-03-00651-SOM.

Before: DAVID R. THOMPSON, MARSHA S. BERZON, and RICHARD C. TALLMAN, Circuit Judges.

TALLMAN, Circuit Judge:

UFO Chuting of Hawaii, Inc. and K.M.B.S., Inc. (collectively "UFO") appeal the district court's summary judgment in favor of Defendants, the State of Hawaii and the United States as Intervenor (collectively "State"). We have jurisdiction under 28 U.S.C. § 1291, and we affirm. We hold that UFO's right to operate vessels under its federal maritime coasting licenses does not preempt Hawaii law prohibiting parasailing off the coast of Maui during limited portions of the year to protect mating humpback whales. Because UFO does not qualify as a "prevailing party," the district court did not abuse its discretion in denying UFO's motion for attorney's fees.

I

UFO operates a commercial parasailing business offering parasailing excursions to adventure seekers off the coast of Maui and the Big Island of Hawaii. Parasailing is an "activity in which an individual is transported or carried aloft by a parachute, sail, or other material attached to a towline which is towed by a vessel." Haw. Code R. § 13-250-5. The United States Coast Guard inspects and licenses UFO's two vessels —the M/V UFO and the M/V CASEY ANN—to carry up to twelve passengers in the "coastwise" trade between McGregor Point and Lipoa Point on the western coast of Maui. A portion of this area is located within the "Maui Humpback Whale Protected Waters." See Haw. Code R. § 13-256-112.

Between December 15 and May 15 of each year, when humpback whales are mating, bearing calves, and caring for their young, Hawaii state law prohibits any person from "operat[ing] a thrill craft, or engag[ing] in parasailing, water sledding, or commercial high speed boating, or operat[ing] a motor vessel towing a person engaged in water sledding or parasailing on the west and south shore of Maui." Haw.Rev.Stat. § 200-37(i). Together with Hawaii Revised Statute § 200-38(c), state law, in effect, prohibits parasailing activity in all navigable waters surrounding Maui between December 15 and May 15 of each year.

On July 9, 2004, the United States District Court for the District of Hawaii granted UFO's motion for summary judgment on the basis that the federal Marine Mammal Protection Act ("MMPA") preempted Hawaii state law. See UFO Chuting of Haw., Inc. v. Young, 327 F.Supp.2d 1220 (D.Haw.2004).1 The district court granted UFO's motion for a permanent injunction barring enforcement of the parasailing provision on September 29, 2004. The State appealed.

Subsequent to the district court's published decision, President George W. Bush signed into law the Fiscal Year 2005 Omnibus Appropriations Bill, Pub.L. No. 108-447, § 213, 118 Stat. 2809 (2004) ("Omnibus Bill"). Section 213 of the Omnibus Bill provides:

[N]othwithstanding any other Federal law related to the conservation and management of marine mammals, the State of Hawaii may enforce any State law or regulation with respect to the operation in State waters of recreational and commercial vessels, for the purpose of conservation and management of humpback whales, to the extent that such law or regulation is no less restrictive than Federal law.

A day later, the State filed a motion to stay the permanent injunction and asked the district court to indicate whether it would entertain a motion under Federal Rule of Civil Procedure 60(b) should we issue a remand order. On December 13, 2004, before the injunction went into effect, the district court indicated that it would grant a Rule 60(b) motion because of the intervening change in the law. The district court also granted the State's motion to stay the permanent injunction. We issued a limited remand on January 10, 2005, and the district court granted the State's Rule 60(b) motion on March 31, 2005. The district court then vacated its prior judgment and entered summary judgment in favor of the State. However, because the district court failed to address UFO's Commerce Clause arguments, it granted UFO's motion for reconsideration on May 5, 2005, and issued an amended order granting summary judgment in favor of the State, now rejecting UFO's claim that the MMPA preempted state law. On July 7, 2005, the district court granted the State's motion for summary judgment on all remaining issues, rejecting UFO's last claim that its right to engage in coastwise trade under federal license preempts the parasailing restriction (as well as other Commerce Clause claims). See UFO Chuting of Haw., Inc. v. Young, 380 F.Supp.2d 1160 (D.Haw.2005).

The district court then denied UFO's motion for attorney's fees, costs and expenses. The court reasoned that UFO was not the "prevailing party" because the permanent injunction never went into effect. Consequently, UFO never received a direct benefit from the temporary relief granted by the court. UFO timely appeals both rulings.

II

We review de novo the district court's grant of summary judgment. Flint v. Dennison, 488 F.3d 816, 825 (9th Cir.2007). We view the facts in the light most favorable to UFO and draw all reasonable inferences in its favor. Id. at 825-26.

A

UFO contends that its Coast Guard license—authorizing it to carry up to twelve passengers in coastwise trade— preempts Hawaii's ban on parasailing because the license grants UFO a federal right of maritime passage that actually conflicts with Hawaii's seasonal ban. See Young v. Coloma-Agaran, 340 F.3d 1053, 1055 (9th Cir.2003) (describing the three ways federal law may preempt state law, including when state law actually conflicts with federal law). An actual conflict "occurs 'where it is impossible . . . to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Id. at 1055-56 (alteration in original) (quoting Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 115 S.Ct. 1483, 131 L.Ed.2d 385 (1995)).

"[N]o State may completely exclude federally licensed commerce." Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963); Young, 340 F.3d at 1056. However, a state "`may impose upon federal licensees reasonable, nondiscriminatory conservation and environmental protection measures otherwise within their police power.'" Young, 340 F.3d at 1056 (quoting Douglas v. Seacoast Prods., Inc., 431 U.S. 265, 277, 97 S.Ct. 1740, 52 L.Ed.2d 304 (1977)); see also Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 448, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960) (stating that so long as the federal law does not preempt state action, a state or local regulation "requires no more than compliance with an orderly and reasonable scheme of community regulation" (emphasis added)); id. at 443, 80 S.Ct. 813 ("Evenhanded local regulation to effectuate a legitimate local public interest is valid unless pre-empted by federal action....").

UFO argues that conflict preemption occurs "where state law has the effect of precluding employment of a vessel for the single purpose for which it was designed, constructed and licensed." In other words, because its two vessels were designed for parasailing, UFO contends that Hawaii cannot ban parasailing on the navigable waters in which its federal license authorizes it to engage in coastwise trade. For support, UFO cites Young, 340 F.3d 1053, and Waste Management Holdings, Inc. v. Gilmore, 252 F.3d 316 (4th Cir. 2001).

In Young, the state of Hawaii banned all commercial vessels from the Hanalei River or Hanalei Bay ocean waters at all times of the year. 340 F.3d at 1055 (discussing Haw.Code R. § 13-256-36). The plaintiffs operated commercial tour boats and held a federal license from the Coast Guard authorizing them to engage in coastwise trade. Id. The court agreed with the district court and concluded that the plaintiffs' federal license to engage in coastwise trade preempted the Hawaii rule. The plaintiffs' coasting license authorized them to engage in coastwise trade, which "includes the transportation of passengers." Id. (citing Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 214-15, 6 L.Ed. 23 (1824); see also id. ("[A] coasting license `entitles a vessel to employment in unrestricted coastwise trade.'" (quoting 46 C.F.R. § 67.19(a)))). Therefore, because Hawaii law "completely exclude[d] the plaintiffs from conducting their federally-licensed tour boat business" at all times, it "effectively rendered it impossible for the plaintiffs to comply with both federal and state law in order to ply their trade." Id. at 1057.2 Thus, federal law preempted state law and, because there was an actual conflict, we declined to determine whether the State had properly exercised its concurrent power to alleviate user conflicts. Id.

Here, in contrast to Young, the ban on parasailing is only in effect for five months of...

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