Cal. Hotels & Lodging Ass'n v. City of Oakland

• Decision Date: 26 June 2019
• Docket Number: Case No. 19-cv-01232-WHO
• Parties: CALIFORNIA HOTELS AND LODGING ASSOCIATION, Plaintiff, v. The CITY OF OAKLAND, Defendant.
• Court: U.S. District Court — Northern District of California

393 F.Supp.3d 817

CALIFORNIA HOTELS AND LODGING ASSOCIATION, Plaintiff,

v.The CITY OF OAKLAND, Defendant.

Case No. 19-cv-01232-WHO

United States District Court, N.D. California.

Signed June 26, 2019

Spencer W. Waldron, Jeffrey Richard Thurrell, Melissa Rose Shimizu, Fisher & Phillips, LLP, Irvine, CA, Aaron Franklin Olsen, Darcey Meredith Groden, Fisher & Phillips, LLP, San Diego, CA, for Plaintiff.

Karen Ann Getman, Kristen Mah Rogers, Remcho, Johansen & Purcell, LLP, Maria Bee, Oakland City Attorney's Office, Oakland, CA, Catha Alison Worthman, Nina Rachel Wasow, Feinberg Jackson Worthman & Wasow LLP, Berkeley, CA, for Defendant.

ORDER GRANTING MOTIONS TO DISMISS; DENYING MOTION FOR SUMMARY JUDGMENT

Re: Dkt. Nos. 26, 27, 28

William H. Orrick, United States District Judge

In November 2018, voters in the City of Oakland (the "City") passed Measure Z to impose new requirements on hotel operators in the City by adding Chapter 5.93 to the Oakland Municipal Code. Complaint ("Compl.") at ¶ 1 [Dkt. No. 1]. Plaintiff California Hotel & Lodging Association ("CHLA") filed a complaint to enjoin enforcement of Section 5.93.030(B) (hereinafter the "Room Cleaner Provision"), arguing that it is preempted by state occupational and health standards. CHLA also seeks to enjoin Section 5.93.040 (hereinafter the "Wage/Benefit Provision") as preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Section 1001 et seq. It seeks declaratory relief on both provisions and moves for summary judgment on its claims. Defendant City and defendant intervenor Unite Here Local 2850's (the "Union") filed separate motions to dismiss the complaint. I heard argument on each motion on June 19, 2019. Preemption does not apply, the challenged provisions are not vague, and for the reasons below, I deny CHLA's motion, grant the motions of both the City and the Union, and dismiss this case.

BACKGROUND

Measure Z asked voters the following question:

Shall the measure amending Oakland's Municipal Code to: (1) establish workplace protections and minimum hourly wage of $15 with benefits or $20 without benefits, increasing annually with inflation, for employees of Oakland hotels with 50 or more guest rooms; (2) authorize administrative enforcement standards for hotel and non-hotel workers; and (3) create City department to administratively enforce Oakland's employment standards for hotel and non-hotel workers, be adopted?

Id. at ¶ 11. After approval by the voters, Chapter 5.93 (the "Ordinance") was added to the Oakland Municipal Code. It applies to "hotel employers" and "hotel employees." A hotel employer is defined as "a person who owns, controls, and/or operates a hotel in the City of Oakland." Section 5.93.010. A hotel employee is defined as "any individual (1) who is employed directly by the hotel employer or by a person who has contracted with the hotel employer to provide services at a hotel in the City of Oakland; and (2) who was hired to or did work an average 5 hours/week for 4 weeks at one or more hotels." Id. Room cleaners are a subset of hotel employees "whose principal duties are to clean and put in order residential guest rooms in a hotel, regardless of who employs the person." Id.

Under the heading "Humane workload," the Room Cleaner Provision states:

A. Purpose. Hotel employees who clean guest rooms are frequently assigned overly burdensome room cleaning quotas and unexpected overtime, which undermines the public interest in ensuring that hotel room cleaners can perform their work in a manner that adequately protects public health and interferes with their ability to meet family and personal obligations. This provision assures that workers receive fair compensation when their workload assignments exceed proscribed limits and prohibits hotel employers from assigning hotel employees overtime work when their shifts exceed 10 hours in a day, except in emergency situations, without obtaining workers' informed consent.

B. A hotel employer shall not require a room cleaner to clean rooms amounting to more than 4,000 square feet of floorspace, or more than the maximum floor space otherwise specified in his Section, in any one, eight-hour workday unless the hotel employer pays the room cleaner twice his or her regular rate of pay for all hours worked by the room cleaner during the workday. If a room cleaner works fewer than eight hours in a workday, the maximum floor space shall be reduced on a prorated basis. When a room cleaner during a workday is assigned to clean any combination of seven or more checkout rooms or additional bed rooms, the maximum floorspace to be cleaned shall be reduced by 500 square feet for each such checkout or additional-bed room over six. The limitations contained herein apply to any combination of spaces, including guest rooms and suites, meeting rooms or hospitality rooms, and apply regardless of the furniture, equipment or amenities in any room.

Section 5.93.030. The Room Cleaner Provision went into effect on December 21, 2018. Compl. at ¶ 12.

Measure Z also supplemented enforcement mechanisms codified in Section 5.92.050 to include a $50 penalty per employee, per day, for violations of the Room Cleaner Provision, with the penalty amount to be updated annually for inflation. Section 5.92.050(G)(2). Hotel employees were also given a private right of action to seek damages and could recover penalties for alleged violations, attorneys' fees, and costs if they were the prevailing party in a civil action. Section 5.92.050(G)(3).

The Wage/Benefit Provision states:

A. Effective July 1, 2019, hotel employers shall pay hotel employees a wage of no less than $15.00 per hour with health benefits, not including gratuities, service charge distributions, or bonuses, or $20.00 per hour without health benefits, not including gratuities, service charge distributions, or bonuses.

B. Health benefits under this Section shall consist of the payment of the difference between the higher wage and lower wage under Section 5.93.040(A) towards the provision of hear care benefits for hotel employees and their dependents. Proof of the provision of these benefits must be kept on file by the hotel employer, if applicable.

C. The wage rates set forth in this Section shall be adjusted for inflation annually in the manner set forth in Section 5.92.020(B).

Section 5.93.040. It is effective on July 1, 2019. Compl. at ¶ 12. Hotel employers are required to maintain detailed records and "proof of health benefits" for three years. Section 5.93.050(A). If the hotel employer does not provide access to these records, "it shall be presumed ... [that] the hotel employer paid the hotel employee no more than the applicable federal or minimum wage." Section 5.93.050(B)(3).

On March 7, 2019, CHLA filed a complaint against the City containing four causes of action. The first cause of action is for declaratory relief and an injunction against the Room Cleaner Provision as preempted by the California Occupational Safety and Health Act of 1973. Compl. at ¶¶ 34-55. The second cause of action seeks declaratory relief and an injunction against both the Room Cleaner Provision and the Wage/Benefit Provision for being unconstitutionally vague under the United States Constitution's due process clause. Id. at ¶¶ 56-63. The third cause of action is duplicative of the second cause of action but is based on the California Constitution's due process clause. Id. at ¶¶ 64-71. The fourth cause of action seeks declaratory and injunctive relief against the Wage/Benefit Provision as being preempted by ERISA. Id. at ¶¶ 72-78.

On April 19, 2019, I issued an order granting the Union's unopposed motion to intervene. [Dkt. No. 21]. On May 10, 2019, CHLA moved for summary judgment on all of its claims. [Dkt. No. 26]. That same day, the Union and the City filed separate motions to dismiss. [Dkt. Nos. 27, 28]. Because the three motions depend on essentially the same arguments, they will be considered together.

LEGAL STANDARD

Motion for Summary Judgment

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify "specific facts showing there is a genuine issue for trial." Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby , 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

On summary judgment, the court draws all reasonable factual inferences in favor of the non-movant. Id. at 255, 106 S.Ct. 2505. In deciding a motion for summary judgment, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp. , 594 F.2d 730, 738 (9th Cir. 1979).

Motion to Dismiss for Lack of Subject Matter Jurisdiction

A motion to dismiss filed pursuant to Rule 12(b)(1) is a challenge to the court's subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). "Federal courts are courts of limited jurisdiction," and it is "presumed that a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). The party invoking the jurisdiction of the federal...