Air Transport Assoc of Am. v. City & County of San Francisco

• Decision Date: 11 September 2001
• Docket Number: PLAINTIFFS-APPELLANTS,DEFENDANTS-APPELLEES,No. 99-16391,99-16391
• Citation: 266 F.3d 1064
• Parties: (9th Cir. 2001) AIR TRANSPORT ASSOCIATION OF AMERICA; AIRLINE INDUSTRIAL RELATIONS CONFERENCE; FEDERAL EXPRESS CORPORATION; UNITED AIR LINES, INC.,, v. CITY AND COUNTY OF SAN FRANCISCO; SAN FRANCISCO HUMAN RIGHTS COMMISSION; SAN FRANCISCO AIRPORTS COMMISSION,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1064

266 F.3d 1064 (9th Cir. 2001)

AIR TRANSPORT ASSOCIATION OF AMERICA; AIRLINE INDUSTRIAL RELATIONS CONFERENCE; FEDERAL EXPRESS CORPORATION; UNITED AIR LINES, INC., PLAINTIFFS-APPELLANTS, v. CITY AND COUNTY OF SAN FRANCISCO; SAN FRANCISCO HUMAN RIGHTS COMMISSION; SAN FRANCISCO AIRPORTS COMMISSION, DEFENDANTS-APPELLEES.

No. 99-16391

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted November 14, 2000

Filed September 11, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Brendan Dolan (argued), Cecily A. Waterman, Tracy Thompson, Brobeck, Phleger & Harrison Llp, San Francisco, California, for the plaintiffs-appellants.

Dennis Aftergut (argued), Chief Assistant City Attorney, Louise H. Renne, City

Attorney, Adrienne Go, Ellen M. Foman, Joseph M. Quinn, Deputy City Attorneys, San Francisco, California; Stewart H. Foreman, Sanford Svetcov, Landels, Ripley & Diamond, Llp, San Francisco, California; G. Scott Emblidge, Moscone, Emblidge & Quadra, Llp, San Francisco, California; Therese M. Stewart, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, San Francisco, California, for the defendants-appellees.

Kevin T. Snider, Gary G. Kreep, William G. Gillespie, Escondido, California, for amicus curiae United States Justice Foundation, in support of the plaintiffs-appellants.

Matthew A. Coles, New York, New York, for the amicus curiae American Civil Liberties Union Foundation, Inc.; Robert Kim, San Francisco, California, for amicus curiae American Civil Liberties Union Foundation of Northern California; Jennifer C. Pizer, Los Angeles, California, for amicus curiae Lambda Legal Defense & Education Fund, in support of the defendants-appellees.

Appeal from the United States District Court for the Northern District of California Claudia Wilken, District Judge, Presiding. D.C. No. CV-97-01763-CW

Before: J. Clifford Wallace, Raymond C. Fisher and Johnnie B. Rawlinson, Circuit Judges.

Opinion by Judge Fisher; Dissent by Judge Wallace

Fisher, Circuit Judge

The Air Transport Association of America, Airline Industrial Relations Conference, Federal Express Corporation, and United Air Lines, Inc. (together, "Airlines") appeal from a summary judgment in favor of the City and County of San Francisco ("City"). The Airlines argue that Chapter 12B of the San Francisco Administrative Code ("Ordinance") is preempted by the Airline Deregulation Act, the Railway Labor Act and California law. The Ordinance conditions all City contracts, including airport property lease agreements, on the contractor's promise not to discriminate on the basis of race, color, creed, religion, national origin, ancestry, age, sex, sexual orientation, gender identity, disability, HIV/AIDS status, domestic partner status or marital status. This promise not to discriminate also extends to the provision of employment benefits to the domestic partners of employees, either married or registered with a government entity. The district court had jurisdiction under 28 U.S.C. §§ 1331. We have jurisdiction pursuant to 28 U.S.C. §§ 1291. We affirm.

I.

The City, through its Airport Commission, owns and operates the San Francisco International Airport ("Airport" or "SFO"), which is located outside the City's territorial jurisdiction in San Mateo County. The Air Transport Association of America ("ATA") is the principal trade organization for airlines based in the United States. In 1997, 16 of its members operated routes to and from the Airport, including appellants United Air Lines, Inc. ("United") and Federal Express Corporation ("FedEx"). The Airline Industrial Relations Conference ("AIRCON") is another airline trade organization. United is the largest carrier at the Airport, occupying 43 gates and paying more than $40 million annually in rent and fees to the City. FedEx is one of the nation's largest cargo carriers and also has extensive operations at the Airport. To facilitate their transportation and cargo service at the Airport, the Airlines, or their members, contract with the City for terminal space hangars and other aircraft facilities, and landing gate permits.

Since 1966, the City has refused, as a matter of public policy, to do business with contractors that discriminate on the basis of race and other identifying factors. See Ch.12B S.F. Admin. Code; Alioto's Fish Co., Ltd. v. Human Rights Comm'n of San Francisco, 120 Cal. App.3d 594, 600 & n.4 (1981). In 1972, the City amended Chapter 12B to add gender and sexual orientation as additional prohibited bases for discrimination; in 1974 and 1977 age and disability were added. See id. Since at least 1981, the City has required the Airlines to comply with this ordinance and has expressly conditioned its Airport leases on a promise by the Airlines not to discriminate on the basis of race, gender, disability, sexual orientation and other factors.

In 1997, the City amended Chapter 12B and added the following provision:

No contracting agency of the City, or any department thereof, acting for or on behalf of the City and County, shall execute or amend any contract or property contract with any contractor that discriminates in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits as well as any [other] benefits . . . between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration . .. .

Ordinance §§ 12B.1(b). These requirements extend to "a contractor's operations on real property outside of San Francisco owned by the City," including the Airport. Id. at §§ 12B.1(d)(ii). Thus, in order to execute new airport property contracts or to amend existing airport property contracts, the Airlines must provide benefits on an equal basis to married employees and employees with registered domestic partners. They can do this by either extending benefits to employees' domestic partners or by contracting benefits to employees' spouses.

ATA and AIRCON filed suit, alleging that the Ordinance was preempted by the Airline Deregulation Act ("ADA"), the Railway Labor Act ("RLA"), the Employee Retirement Income Security Act of 1974 ("ERISA"), and California law. They also alleged that the Ordinance violated the Commerce Clause, the Due Process Clause, and the San Francisco City Charter. On cross-motions for summary judgment, the district court held (1) that the Ordinance "as applied to Airport contracts is entirely preempted insofar as it affects ERISA plans providing ERISA benefits," Air Transport Ass'n of Am. v. City & County of S.F., 992 F. Supp. 1149, 1180 (N.D. Cal. 1998), and (2) that a provision requiring contractors to abide by the Ordinance at "any of a contractor's operations elsewhere within the United States," Ordinance §§ 12B.1(d)(iv), violated the Commerce Clause "as applied to out-of-State conduct that is unrelated to the purpose of a City contract." Air Transport Ass'n, 992 F. Supp. at 1155. The City has not appealed these rulings. The district court also held the Ordinance was not preempted by the RLA because it provided minimum labor standards and did not encourage or discourage collective bargaining. Id. at 1190. It further concluded that the regulations the City promulgated under the Ordinance were not in conflict with the RLA. Id. at 1191.

The district court determined that it was necessary to take more evidence before resolving whether the Ordinance was preempted by the route provision of the ADA. Id. at 1187. The district judge did, however, hold that the proprietary powers exception to the ADA would not exempt the Ordinance from preemption; the City has not appealed that decision. Id. at 1188. The district court upheld the Ordinance in all other respects. Id. at 1155. United and FedEx then intervened as plaintiffs. On May 27, 1999, the district court disposed of the remaining ADA issue in favor of the City. It held that under the ADA preemption provision, the Airlines were required, and had failed, to provide proof that"they, or the members they represent, are seriously considering not flying in or out of San Francisco, or limiting or rejecting future business or expansion, as a result of the burdens of complying with the Ordinance." We denied injunctive relief pending appeal.

II.

The ADA provides that state and local governments "may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier." 49 U.S.C. §§ 41713(b)(1). The Airlines make two arguments as to why the Ordinance is preempted. Their first argument is that the Ordinance's requirement that contractors not discriminate in providing "travel benefits" and "employee discounts " relates to prices and services. Their second argument is that the Ordinance's method of imposing the nondiscrimination requirements--conditioning future airport property leases on compliance with the Ordinance--relates to service and routes. The district court granted summary judgment in favor of the City, holding there was no preemption. We review de novo the district court's entry of summary judgment and its decision regarding preemption. Espinal v. Northwest Airlines, 90 F.3d 1452, 1455 (9th Cir. 1996).

In determining the scope of ADA preemption, we "start with the assumption that the historic police powers of the States [are] not to be superseded by the [ADA] unless that was the clear and manifest purpose of Congress" and that "Congress does not cavalierly pre-empt state-law causes of action." Charas v. Trans World Airlines, Inc. , 160 F.3d 1259, 1265 (9th Cir. 1998) (en banc) (internal quotation marks omitted). "Congress's `clear and manifest purpose' in enacting the ADA was to achieve . . . the...