Airline Serv. Providers Ass'n v. L.A. World Airports

• Decision Date: 23 August 2017
• Docket Number: No. 15-55572,No. 15-55571,15-55571
• Citation: 869 F.3d 751
• Parties: AIRLINE SERVICE PROVIDERS ASSOCIATION, Plaintiff–Appellant, and Air Transport Association of America, Inc., DBA Airlines of America, Plaintiff, v. LOS ANGELES WORLD AIRPORTS; City of Los Angeles, Defendants-Appellees. Airline Service Providers Association, Plaintiff, and Air Transport Association of America, Inc., DBA Airlines for America, Plaintiff-Appellant, v. Los Angeles World Airports; City of Los Angeles, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

869 F.3d 751

AIRLINE SERVICE PROVIDERS ASSOCIATION, Plaintiff–Appellant,

and

Air Transport Association of America, Inc., DBA Airlines of America, Plaintiff,

v.LOS ANGELES WORLD AIRPORTS; City of Los Angeles, Defendants-Appellees.

Airline Service Providers Association, Plaintiff,

and

Air Transport Association of America, Inc., DBA Airlines for America, Plaintiff-Appellant,

v.Los Angeles World Airports; City of Los Angeles, Defendants-Appellees.

No. 15-55571

No. 15-55572

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 13, 2017 Pasadena, California

Filed August 23, 2017

FRIEDLAND, Circuit Judge:

We must decide whether the City of Los Angeles, which operates Los Angeles International Airport ("LAX"), can require businesses at the airport to accept certain contractual conditions aimed at preventing service disruptions.¹ Two air transport trade associations argue that the conditions are, in effect, municipal regulations preempted by federal labor law. We hold that the City may impose the conditions in its capacity as proprietor of LAX and thus affirm dismissal of the Complaint.

I. Background

Airlines that operate out of LAX hire third-party businesses to refuel and load planes, take baggage and tickets, help disabled passengers, and provide similar services. The City licenses those service providers using a contract that imposes certain conditions. One such condition, section 25, requires service providers to enter a "labor peace agreement" with any employee organization that requests one.² If such an agreement is not finalized within sixty days, then the dispute must be submitted to mediation and, if mediation is unsuccessful, to binding arbitration. Any labor peace agreement that results from this process must include "binding and enforceable" provisions that prohibit picketing, boycotting, stopping work, or "any other economic interference."

It might seem at first glance that a labor peace agreement would be detrimental to employees' interests because it deprives them of labor rights. In practice, however, if an employer may not operate without such an agreement, the employer may need to give benefits to its employees to induce them to enter the agreement. Employees have an incentive to trigger negotiations toward labor peace agreements to obtain such benefits. Indeed, here, at least one organization of service employees advocated for inclusion of section 25 when the City was revising its standard LAX licensing contract.

Two trade associations who have members that operate at LAX brought suit in the United States District Court for the Central District of California to challenge section 25: Airline Service Providers Association ("ASPA"), an association of third-party service providers; and the Air Transport Association of America ("Airlines"), an association of American airlines. The associations argue that, because the City of Los Angeles operates LAX, the contractual conditions in LAX's standard licensing agreement are effectively municipal regulations. The associations contend that section 25, as one such "regulation," is preempted by two federal labor statutes — the National Labor Relations Act ("NLRA") and the Railway Labor Act ("RLA") — and by the Airline Deregulation Act ("ADA").

The district court dismissed the Complaint without leave to amend. It dismissed the labor law preemption claims for failure to state a claim and the ADA claim for lack of standing.

II. Standing

The City challenges aspects of Plaintiffs' standing, and, in any event, we have an independent obligation to ensure that we have subject matter jurisdiction. See, e.g., United States v. McIntosh, 833 F.3d 1163, 1173 (9th Cir. 2016). For the reasons that follow, we hold that the ASPA has standing to pursue all of its claims.³

An association like the ASPA has standing if (1) its individual members would have standing in their own right, (2) the interests at stake in the litigation are germane to the organization's purposes, and (3) the case may be litigated without participation by individual members of the association. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 181, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)).

To have standing in their own right, an association's members must have "suffered an injury in fact," that injury must be "fairly traceable to the challenged conduct of the defendant," and the injury must be "likely to be redressed" by a decision in their favor. Spokeo, Inc. v. Robins, ___ U.S. ___, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016).

The ASPA has alleged a sufficient injury in fact. It alleges that its members will be forced into unwanted negotiations that must terminate in either an agreement or arbitral award — something virtually certain to occur given that an organization of service employees advocated for section 25, suggesting that employees plan to make use of the provision. We have recognized that "[t]he economic costs of complying with a licensing scheme can be sufficient for standing," Mont. Shooting Sports Ass'n v. Holder, 727 F.3d 975, 980 (9th Cir. 2013), even if "the extent of [the alleged] economic harm is not readily determinable," Cent. Ariz. Water Conservation Dist. v. EPA, 990 F.2d 1531, 1538 (9th Cir. 1993). Here, ASPA members will at least have to devote resources, and thus incur economic costs, to participate in negotiations, mediation, and possibly even binding arbitration over a labor peace agreement, which they would not otherwise be required to discuss. The time spent in those negotiations is itself a concrete injury.⁴

Second, the ASPA has shown a sufficient "line of causation" between the City's actions and this injury. See Allen v. Wright, 468 U.S. 737, 757, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), abrogated on other grounds by Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). The injuries it claims are directly linked to the City's conduct: The City has made section 25 a mandatory component of its standard licensing contract for service providers at LAX, and section 25 will force service providers to spend time negotiating about a labor peace agreement. This is a sufficient causal connection. See Cent. Ariz., 990 F.2d at 1538 (holding that economic injury caused by contractual obligations that stemmed from compliance with a regulation were sufficiently caused by the regulation to support standing).

Finally, the remedies the ASPA seeks would redress the harm it alleges. See Spokeo, 136 S.Ct. at 1547. If, as the Complaint requests, section 25 were enjoined on the basis of preemption by federal labor law or the ADA, the ASPA's members would not suffer any adverse consequences of complying with it. See Cent. Ariz., 990 F.2d at 1538 ("[The plaintiff's] economic injury is likely to be redressed by a favorable decision since elimination of the [rule in question] would necessarily eliminate the increased financial burden the rule causes.").

The ASPA's individual members would therefore have standing in their own right, and the first prong of the test for associational standing is satisfied.

The second and third prongs are satisfied as well. The ASPA alleges that it has an organizational interest "in the consistent enforcement of unitary federal regulation of airline industry labor relations." The association's asserted purpose is therefore related to its legal claims in this action — namely, that section 25 is preempted by federal statutes that regulate airlines — satisfying the germaneness prong. As to the third prong, the parties have identified no reason that the ASPA's members must participate individually in this case, and neither have we. The ASPA thus meets all the requirements for associational standing.⁵

III. Lack of Preemption

Having concluded that the ASPA has standing, we now turn to whether its preemption arguments state a claim on which relief may be granted. We evaluate this question de novo. Associated Gen Contractors of Am. v. Metro. Water Dist. of S. Cal., 159 F.3d 1178, 1181 (9th Cir. 1998).

"In deciding whether a federal law pre-empts a state [or local] statute, our task is to ascertain Congress'[s] intent in enacting the federal statute at issue." Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 738, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)). The Supreme Court has emphasized, however, that generally "pre-emption doctrines apply only to state [or local] regulation." Bldg. & Constr. Trades Council of Metro. Dist. v. Associated Builders & Contractors of Mass./R.I., Inc. (Boston Harbor), 507 U.S. 218, 227, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993). When a state or local government buys services or manages property as a private party would, it acts as a "market participant," not as a regulator, and we presume that its actions are not subject to preemption. See id. at 229, 113 S.Ct. 1190. Only if a statute evinces an intent to preempt such proprietary actions by a state or local government is the presumption overcome and the action preempted. See Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. Dist., 498 F.3d 1031, 1041-42 (9th Cir. 2007).

For the reasons that follow, we hold first that the City was acting as a market participant and not a regulator when it adopted section 25. Second, because nothing in the NLRA, RLA, or ADA shows that Congress meant to preempt states or local governments from actions taken while participating in markets in a non-regulatory capacity, we conclude that section 25 is not preempted by those federal statutes.

A. The City Is Acting as a Market Participant

To decide whether a state or local government is acting as a market participant or instead as a regulator, we apply the two-prong test first articulated in Cardinal Towing & Auto Repair, Inc. v. City...