Golden State Transit Corp. v. City of Los Angeles

• Decision Date: 26 February 1985
• Docket Number: No. 83-6441,83-6441
• Citation: 754 F.2d 830
• Parties: 118 L.R.R.M. (BNA) 2801, 102 Lab.Cas. P 11,461 GOLDEN STATE TRANSIT CORPORATION a California corporation, Plaintiff/Appellant, v. CITY OF LOS ANGELES, a municipal corporation, Defendant/Appellee. CA
• Court: U.S. Court of Appeals — Ninth Circuit

Page 830

754 F.2d 830

118 L.R.R.M. (BNA) 2801, 102 Lab.Cas. P 11,461

GOLDEN STATE TRANSIT CORPORATION a California corporation, Plaintiff/Appellant, v. CITY OF LOS ANGELES, a municipal corporation, Defendant/Appellee.

CA No. 83-6441.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 3, 1984.

Decided Feb. 26, 1985.

Zachary D. Fasman, Kathleen Johnson Raynsford, David B. Siegel, Crowell & Moring, Washington, D.C., Daniel R. Shulman, Patricia A. Knipe, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., for plaintiff-appellant.

John F. Haggerty, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before FARRIS, ALARCON and NORRIS, Circuit Judges.

FARRIS, Circuit Judge:

Golden State Transit purchased the assets of the bankrupt Yellow Cab Company in 1977 and the City thereafter approved the transfer of Yellow Cab's franchise. On March 31, 1980, Golden State made a timely application for renewal of its taxicab franchise to become effective upon its expiration on March 31, 1981. The City's Department of Transportation reported that Golden State was in full compliance with all of the terms and conditions of its franchise. Acting on this report, the Board of Transportation Commissioners recommended approval of the franchise renewal to the Transportation and Traffic Committee of the City Council on September 4, 1980 and again on January 26, 1981. The Transportation and Traffic Committee recommended to the City Council that Golden State be granted a five-year renewal franchise.

An ordinance approving Golden State's franchise as well as ordinances approving twelve other taxicab franchises operating within the City were placed on the City Council calendar for February 11, 1981. In October 1980, Golden State's agreement with the Teamster's Union expired and they failed to reach a new agreement. On February 5, 1981, the Teamsters informed the City of the labor dispute. On February 11, 1981, Golden State drivers went out on strike.

All pending franchises except Golden State's were renewed on February 11, 1981, including one that had been disapproved by the Department of Transportation. The ordinance pertaining to Golden State was continued to February 17, 1981 to take effect if the Council found, on or before March 27, 1981, that the extension was in the best interest of the City.

On March 23, 1981, the City Council considered a motion to adopt a finding that the 30-day extension of Golden State's franchise was in the best interests of the City. The motion was defeated eleven votes to one. Golden State brought suit in district court, charging that the City's action was preempted by the NLRA, as well as being violative of the due process and equal protection clauses of the United States Constitution. The district court granted Golden State's request for a preliminary injunction preserving its status as a franchised operation on the basis of its preemption claim. See Golden State Transit Corp. v. City of Los Angeles, 520 F.Supp. 191, 194 (C.D.Cal.1981). We reversed. Golden State, 686 F.2d 758, 760-761 (9th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 954 (1983).

Golden State thereafter amended its complaint to allege a violation of the Sherman Act by the City. The district court granted summary judgment against Golden State on the grounds that the City was immune from antitrust liability. Golden State, 563 F.Supp. 169, 172 (C.D.Cal.1983). We affirmed. Golden State, 726 F.2d 1430 (9th Cir.), cert. denied, ---- U.S. ----, 105 S.Ct. 1865, ---- L.Ed.2d ---- (1985). We denied the petition for rehearing and en banc review. The district court then granted summary judgment against Golden State on its remaining claims. Golden State appealed.

Two questions are presented for our de novo review:

Was the City preempted from refusing to renew Golden State's taxicab franchise?

Did Golden State allege a sufficient constitutionally protected property interest to justify a trial on the question of a due process violation?

We answer both questions negatively and affirm.

PREEMPTION ISSUE

The Supreme Court has articulated two distinct bases for preemption of state action by the NLRA. The first, which is founded on the primary jurisdiction of the NLRB, preempts state action concerned with conduct that is at least arguably prohibited or protected by the Act. See San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959). The state action will not, however, be preempted if the conduct regulated is only a peripheral concern The district court granted Golden State a preliminary injunction based upon its preemption claim. On interlocutory appeal, we held that the power of taxicab franchise renewal was a matter of such local interest that preemption "must rest upon 'compelling congressional direction.' " 686 F.2d at 760 (citation omitted). Finding no such evidence, we vacated the district court's grant. ¹ Then, in opposition to the City's motion for summary judgment, Golden State introduced legislative history of an amendment to the NLRA and alleged that it demonstrated Congress' specific intent to preempt actions such as the City's. The district court found the legislative history unpersuasive and granted the City's motion.

                of the Act or touches interests deeply rooted in local feeling and responsibility.   Id. at 243-44, 79 S.Ct. at 778-79.  A supplemental branch of preemption prohibits state action concerning conduct that was intended to be unregulated because it was considered a proper economic weapon for use by parties to a labor dispute.   Lodge 76, Int'l Ass'n of Machinists & Aerospace Workers v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 140, 96 S.Ct. 2548, 2553, 49 L.Ed.2d 396 (1976)
                

Initially, Golden State argued on this appeal that the district court erred in finding that the legislative history cited by Golden State did not demonstrate a "compelling congressional direction" to preempt the City's action. Golden State now argues that application of the local interest exception to NLRA preemption in this case was inappropriate. We agree with Golden State. Because the district court's decision is supported by other grounds, however, we affirm its grant of summary judgment on the preemption issue. ²

The City's renewal of taxicab franchises was held to fall within the local interest exception because we found NLRA preemption harder to infer when a state is regulating such a " 'traditionally local matter' " as the "use of streets and highways." 686 F.2d at 760 (citing Allen-Bradley Local No. 1111 v. Wisconsin Employment Relations Board, 315 U.S. 740, 749, 62 S.Ct. 820, 825, 86 L.Ed. 1154 (1942), quoted in Lodge 76, 427 U.S. at 136 n. 2, 96 S.Ct. at 2551 n. 2). Our reliance on Allen-Bradley was misplaced. ³ That case dealt with a violent and unruly picket outside of the employer's factory in which the strikers were blocking the streets and threatening The First Circuit has extended the local interest exception to hospital cost containment legislation. See Massachusetts Nursing Ass'n v. Dukakis, 726 F.2d 41, 44 (1st Cir.1984). That decision, however, was also based upon strong congressional support for such programs and the indirect effect the challenged legislation had on labor relations. Id. at 43-45. Supreme Court precedent and the distinguishing circumstances in Dukakis cause us to conclude that the extension of the local interest exception to this case was unwarranted. This conclusion does not, however, resolve the matter.

                working employees.  Moreover, the Supreme Court has strictly limited the local interest exception to matters involving violence and tort actions, such as libel and intentional infliction of emotional distress.   See, e.g., New York Telephone Co. v. New York State Labor Dep't, 440 U.S. 519, 550-51, 99 S.Ct. 1328, 1346, 59 L.Ed.2d 553 (1979) (Blackmun, J., joined by Marshall, J., concurring in plurality opinion);  Lodge 76, 427 U.S. at 136, 96 S.Ct. at 2551 (focus of local interest exception is the "[p]olicing of actual or threatened violence ... or destruction of property").  There are no allegations of violent, destructive, or tortious conduct in this case
                

The peripheral concern exception to labor preemption recognizes that the NLRA "does not withdraw 'from the States ... power to regulate where the activity regulated [is] a merely peripheral concern of the [act].' " Lodge 76, 427 U.S. at 137, 96 S.Ct. at 2551-52 (footnote omitted). This exception allows states to regulate matters when there is only a remote possibility of conflict between such regulation and national labor policy. See id. at 137-38 n. 3, 96 S.Ct. at 2551-52 n. 3. Preemption is thus required only when a state "enforce[s] statutes or rules of decision resting upon its views concerning accommodation of the same interests" focused upon by the NLRA. Lodge 76, 427 U.S. at 140 n. 4, 96 S.Ct. at 2553 n. 4 (quoting Cox, Labor Law Preemption Revisited, 85 Harv.L.Rev. 1337, 1352 (1972). Similarly, in New York Telephone, the Court held that New York's unemployment compensation program, which authorized payments to striking workers, was not preempted, in part, because the program was not intended to regulate labor relations "but instead to provide an efficient means of insuring employment security." 440 U.S. at 533, 99 S.Ct. at 1337 (Stevens, J., plurality opinion). ⁴ Nothing in the record indicates that the City's refusal to renew or extend Golden State's franchise until an agreement was reached and operations resumed was not concerned with transportation. Such a concern does not implicate or conflict with federal labor policy. There is therefore no basis to preempt the City's action.

In any regulated industry, a myriad of governmental decisions from rate-setting to the establishment of safety standards are bound to affect labor relations in that industry. If...