Cal. Grocers Ass'n v. City of Los Angeles

• Decision Date: 18 July 2011
• Docket Number: No. S176099.,S176099.
• Citation: 52 Cal.4th 177,127 Cal.Rptr.3d 726,254 P.3d 1019
• Court: California Supreme Court
• Parties: CALIFORNIA GROCERS ASSOCIATION, Plaintiff and Respondent,v.CITY OF LOS ANGELES, Defendant and Appellant;Los Angeles Alliance for a New Economy, Intervener and Appellant.

52 Cal.4th 177

254 P.3d 1019

127 Cal.Rptr.3d 726

191 L.R.R.M. (BNA) 2267

161 Lab.Cas. P 61,166

11 Cal. Daily Op. Serv. 8995

2011 Daily Journal D.A.R. 10,759

CALIFORNIA GROCERS ASSOCIATION, Plaintiff and Respondent,

v.CITY OF LOS ANGELES, Defendant and Appellant;Los Angeles Alliance for a New Economy, Intervener and Appellant.

No. S176099.

Supreme Court of California

July 18, 2011.

OPINION TEXT STARTS HERE Rockard J. Delgadillo and Carmen A. Trutanich, City Attorneys, Laurie Rittenberg, Assistant City Attorney, John A. Carvalho and Gerald Masahiro Sato, Deputy City Attorneys, for Defendant and Appellant.Schwartz, Steinsapir, Dohrmann & Sommers, Los Angeles, Margo A. Feinberg and Henry M. Willis for Intervener and Appellant. Altshuler Berzon, Michael Rubin, Scott Kronland, San Francisco, and Jennifer Sung, Los Angeles, for American Federation of Labor and Congress of Industrial Organizations and Service Employees International Union as Amici Curiae on behalf of Defendant and Appellant and Intervener and Appellant.Jones Day, Richard S. Ruben, Irvine, Craig E. Stewart and Nathaniel P. Garrett, San Francisco, for Plaintiff and Respondent.Deborah J. La Fetra and Timothy Sandefur, Sacramento, for Pacific Legal Foundation as Amicus Curiae on behalf of Plaintiff and Respondent.Mitchell Silberberg & Knupp, Los Angeles, Adam Levin, Tracy L. Cahill, Taylor S. Ball; National Chamber Litigation Center, Inc., Robin S. Conrad and Shane B. Kawka for Employers Group and Chamber of Commerce of the United States of America as Amici Curiae on behalf of Plaintiff and Respondent.Davis, Cowell & Bowe, San Francisco, Richard G. McCracken and Andrew J. Kahn for East Bay Alliance for a Sustainable Economy and Unite Here as Amici Curiae.WERDEGAR, J.

[52 Cal.4th 186 , 254 P.3d 1022]

The City of Los Angeles, like numerous other municipalities in California and elsewhere, regulates the ability of certain employers to summarily replace the workforce upon acquiring a new business. Is such a worker retention ordinance preempted as intruding upon either matters of health and safety already regulated by the state or matters of employee organization and collective bargaining fully occupied by federal law? We conclude it is not. As well, we conclude the challenged ordinance is fully consistent with both the state and federal equal protection clauses. As the Court of Appeal found the ordinance preempted, we reverse.

Factual and Procedural Background

In December 2005, the City of Los Angeles (City) adopted the Grocery Worker Retention Ordinance (Ordinance). (L.A. Ord. No. 177,231, adding ch. XVIII, § 181.00 et seq. to L.A.Mun.Code.) ¹ For grocery stores of a specific size (15,000 square feet or larger) that undergo a change of ownership, the Ordinance vests current employees with certain individual rights during a 90–day transition period. First, the incumbent owner is to prepare a list of nonmanagerial employees with at least six months' employment as of the date of transfer in ownership, and the successor employer must hire from that list during the transition period. (L.A.Mun.Code, § 181. 02.) Second, during that same period, the hired employees may be discharged only for cause. ( id., § 181.03(A)-(C).) third, at the conclusion of the transition period, the successor employer must prepare a written evaluation of each employee's performance. The Ordinance does not require that anyone be retained, but if an employee's performance is satisfactory, the employer must “consider” offering continued employment. ( Id., § 181.03 (D).) If the workforce is unionized, however, the union and the employer may agree on terms that supersede the Ordinance. ( Id., § 181.06.)

Plaintiff California Grocers Association (Grocers) filed a complaint against the City seeking to enjoin enforcement of the Ordinance on the grounds that it was preempted by provisions of the Health and Safety Code, the Labor Code, and federal labor law, and that it violated the equal protection provisions of the state and federal Constitutions. The Los Angeles Alliance for a New Economy, a nonprofit organization, intervened to defend the Ordinance.

After a two-day bench trial, the trial court entered a judgment enjoining enforcement of the Ordinance, declaring it void on two of the four asserted grounds. The court concluded the Ordinance affected health and sanitation standards for retail food establishments, an area fully occupied by state law, and was on that basis preempted, and further concluded the Ordinance violated equal protection because there was no rational basis for its differential treatment of grocery stores smaller than 15,000 square feet or its permitting employers and unions to contract around the Ordinance's terms.

A divided Court of Appeal affirmed. The majority agreed with the trial court that the California Retail Food Code (Retail Food Code) ( Health & Saf.Code, § 113700 et seq.) fully occupied the field of health and sanitation standards for retail food establishments, and the Ordinance had the impermissible purpose and effect of regulating in the same area. It further concluded, contrary to the trial court, that the Ordinance was also preempted by the National Labor Relations Act (NLRA or the Act) (29 U.S.C. § 151 et seq.) because, in the majority's view, federal labor law guaranteed successor employers the right to pick and choose whom they wished to employ, free of local regulation. The majority did not address the trial court's further equal protection conclusions. In contrast, the dissent argued that the Ordinance was neither preempted nor inconsistent with equal protection principles.

We granted review to resolve significant preemption and constitutional questions placing into doubt the validity of this and other similar worker retention ordinances throughout the state.

Discussion

I. State Preemption

A. Preemption Principles

Local ordinances and regulations are subordinate to state law. (Cal. Const., art. XI, § 7.) Insofar as a local regulation conflicts with state law, it is preempted and invalid. ( O'Connell v. City of Stockton (2007) 41 Cal.4th 1061, 1067, 63 Cal.Rptr.3d 67, 162 P.3d 583; Sherwin–Williams Co. v. City of Los Angeles (1993) 4 Cal.4th 893, 897, 16 Cal.Rptr.2d 215, 844 P.2d 534.) “ ‘ “A conflict exists if the local legislation ‘ “ duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication.” ’ ” [Citations.]' ” ( O'Connell, at p. 1067, 63 Cal.Rptr.3d 67, 162 P.3d 583, quoting Sherwin–Williams, at p. 897, 16 Cal.Rptr.2d 215, 844 P.2d 534; accord, American Financial Services Assn. v. City of Oakland (2005) 34 Cal.4th 1239, 1251, 23 Cal.Rptr.3d 453, 104 P.3d 813.)

Only the last of these bases for conflict, field preemption, is at issue here. “Local legislation enters an area ‘fully occupied’ by general law when the Legislature has expressly manifested its intent to fully occupy the area or when it has impliedly done so in light of recognized indicia of intent.” ( Big Creek Lumber Co. v. County of Santa Cruz (2006) 38 Cal.4th 1139, 1150, 45 Cal.Rptr.3d 21, 136 P.3d 821.) Grocers contend the Ordinance impermissibly intrudes into an area the state has, in the Retail Food Code, expressly reserved for itself. (See Health & Saf.Code, § 113705.) Express field preemption turns on a comparative statutory analysis: What field of exclusivity does the state preemption clause define, what subject matter does the local ordinance regulate, and do the two overlap? (See, e.g., Big Creek Lumber, at pp. 1152–1157, 45 Cal.Rptr.3d 21, 136 P.3d 821; Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 748–751, 29 Cal.Rptr.2d 804, 872 P.2d 143.) The burden of proving the existence of such an overlap rests on Grocers, as the party asserting preemption. ( Big Creek Lumber, at p. 1149, 45 Cal.Rptr.3d 21, 136 P.3d 821.)

B. Express Preemption

We begin with the language of the preemption clause and the Ordinance. Health and Safety Code section 113705's definition of the regulatory field it reserves for the state is clear and precise: “Except as provided in Section 113709,² it is the intent of the Legislature to occupy the whole field of health and sanitation standards for retail food facilities, and the standards set forth in this part and regulations adopted pursuant to this part shall be exclusive of all local health and sanitation standards relating to retail food facilities.” Thus, the state alone may adopt “health and sanitation standards for retail food facilities.” ( Ibid.) The remainder of the statutory scheme demonstrates by way of example the precise scope of exclusive state regulation, comprehensively detailing standards for, e.g., employee training on health matters ( id., §§ 113947–113947.3), employee health and hygiene ( id., §§ 113949–113978), food transportation, storage, and preparation ( id., §§ 113980–114057.1), food display and service ( id., §§ 114060–114083), food labeling ( id., §§ 114087–114094), the design and sanitizing of food preparation areas and utensils ( id., §§ 114095–114185.5), and the design and cleanliness of food facilities ( id., §§ 114250–114282). ³

In contrast, the Ordinance imposes no substantive food safety standards. Its provisions regulate, for certain grocery stores during ownership transitions, how a new owner may select its workforce. (See generally L.A. Mun.Code, §§ 181.02–181.04.) It does not speak to how employees must conduct themselves to ensure sanitation, how food should be handled or transported, how grocery stores should be designed or cleaned, or any of the various other topics for which the Retail Food Code sets out exclusive state standards. The face of the Ordinance thus discloses no incursion into the exclusive realm reserved for the state by Health and Safety Code section 113705; the former regulates employment, not food safety, while the latter regulates food safety, not employment.

In concluding that the Ordinance nevertheless is preempted, the Court of...