Golden State Transit Corp. v. City of Los Angeles

• Citation: 660 F. Supp. 571
• Decision Date: 23 April 1987
• Docket Number: No. CV 81-1519-AAH(Gx).,CV 81-1519-AAH(Gx).
• Parties: GOLDEN STATE TRANSIT CORPORATION, a California corporation, doing business as Yellow Cab of Los Angeles, Plaintiff, v. The CITY OF LOS ANGELES, a municipal corporation, Defendant.
• Court: U.S. District Court — Central District of California

660 F. Supp. 571

GOLDEN STATE TRANSIT CORPORATION, a California corporation, doing business as Yellow Cab of Los Angeles, Plaintiff, v. The CITY OF LOS ANGELES, a municipal corporation, Defendant.

No. CV 81-1519-AAH(Gx).

United States District Court, C.D. California.

April 23, 1987.

Crowell & Moring, Washington, D.C. by Zachary D. Fasman, and Luther Ziegler, and Paul, Hastings, Janofsky & Walker, Los Angeles, Cal. by Nicholas DeWitt, for plaintiff.

James K. Hahn, City Atty. by John F. Haggerty, Asst. City Atty., Los Angeles, Cal., for defendant.

DECISION AND ORDER

HAUK, Senior District Judge.

This matter came on for hearing before the Court on October 20, 1986 following the issuance of an opinion by the United States Supreme Court, Golden State Transit Corp. v. City of Los Angeles, ___ U.S. ___, 106 S.Ct. 1395, 89 L.Ed.2d 616 (1986), reversing the decision of the Ninth Circuit Court of Appeals in this matter, Golden State Transit Corp. v. City of Los Angeles, 754 F.2d 830 (9th Cir.1986), cert. granted 472 U.S. 1016, 105 S.Ct. 3475, 87 L.Ed.2d 611 (1985), and remanding the case for further proceedings consistent with the Supreme Court opinion, and pursuant to the filing and spreading by this Court of the mandate of the Ninth Circuit Court of Appeals, directing this Court to undertake further proceedings not inconsistent with the Supreme Court opinion.

The Court, having fully considered the points and authorities and proposed orders submitted by counsel for the parties, and the lengthy arguments presented by counsel at the October 20, 1986 hearing, and good cause appearing, hereby issues its Decision and Order herein.

I. BACKGROUND AND PROCEDURAL HISTORY

This case arises out of the conduct of defendant City of Los Angeles ("City") in interjecting itself into a labor dispute between plaintiff Golden State Transit Corporation ("Golden State") and its taxicab drivers in 1981 by refusing to renew Golden State's taxicab franchise until Golden State settled the labor dispute with its drivers. Since that time, this case has had a complex, and sometimes tortured, procedural history culminating now in this decision and order by the Court.

In 1980, Golden State was the largest taxicab company in Los Angeles, operating approximately 400 cabs. On March 30, 1980, Golden State — along with twelve other taxi companies operating in Los Angeles—applied for renewal of its franchise, scheduled to expire on October 29, 1980. Subsequent to the applications for renewal, the Los Angeles City Council extended all taxi franchises to March 31, 1981 to allow for an evaluation of the City's overall taxicab situation and a recommendation as to renewal by the City's Board of Transportation Commissioners.

On September 4, 1980, the City's Board of Transportation Commissioners recommended the renewal of Golden State's franchise. Meanwhile, in October 1980 — while Golden State's franchise application was awaiting further evaluation and approval by the City Council — Golden State's collective bargaining agreement with its Teamster drivers expired. In order to allow operations to continue during negotiations for a new agreement, Golden State and its drivers signed an interim collective bargaining agreement. The interim agreement was to expire on February 10, 1981, the day before the full City Council was scheduled to act on the franchise renewal applications.

On February 2, 1981, the City Council's Transportation and Traffic Committee endorsed the franchise renewals recommended by the Board of Transportation Commissioners. The Committee's report stated that Golden State and five other companies were in full compliance with all terms and conditions for franchise renewal.

On February 11, 1981, the interim collective bargaining agreement between Golden State and its drivers expired and the drivers went out on strike. As scheduled, the City Council met on that date to consider the franchise renewal applications. A Teamster representative appeared at the February 11 City Council meeting and argued that Golden State's franchise should not be renewed because of the pending labor dispute. The City Council approved the renewal applications of the five other franchisees whose applications had been endorsed by the Transportation Committee and postponed consideration of Golden State's application until February 17, 1981.

At the February 17 meeting, the City Council — after again hearing the opposition of the Teamsters to approval of Golden State's franchise — granted Golden State a franchise extension to April 30, 1981 but only on the condition that the City Council expressly find on or before March 27, 1981 that such franchise extension was in the best interest of the City.

On March 23, 1981, the City Council met to consider whether it was in the best interest of the City to grant the 30-day franchise renewal to Golden State. The ongoing strike by Golden State's drivers was the predominant theme of the meeting. The City Council heard testimony from representatives of the Teamsters regarding the labor dispute. Several council members made pro-union comments during the meeting including the council president, who remarked that "it will be very difficult to get this ordinance passed ... if the labor dispute is not settled by the end of the week." At the conclusion of the meeting, the City Council defeated a motion that the Council find that an extension of Golden State's franchise would be in the best interest of the City. Golden State's franchise thus was due to expire by its terms on March 31, 1981.

Golden State then filed the present action, seeking declaratory and injunctive relief and damages pursuant to 42 U.S.C. Section 1983 on the grounds that the City's action was preempted by the National Labor Relations Act ("NLRA") and violated Golden State's rights to due process of law and equal protection. On March 30, 1981, this Court granted Golden State's application for a temporary restraining order and on April 13, 1981, the Court issued a preliminary injunction against the City on the grounds that the City's action in conditioning the renewal of Golden State's franchise on its settlement of the labor dispute was preempted by the NLRA. Golden State Transit Corp. v. City of Los Angeles, 520 F.Supp. 191 (C.D.Cal.1981).

On appeal, the Ninth Circuit Court of Appeals vacated this Court's preliminary injunction, holding that because use of the streets and highways was a "traditionally local matter" reserved to state and local regulation under the police power, Golden State had little chance of prevailing on the merits of the preemption question. Golden State Transit Corp. v. City of Los Angeles, 686 F.2d 758 (9th Cir.1982). The United States Supreme Court denied Golden State's petition for a writ of certiorari. Golden State Transit Corp. v. City of Los Angeles, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 954 (1983).

While the above appeal was pending, the case was reassigned to then District Judge Cynthia Holcomb Hall pursuant to an order of the District Chief Judge dated December 7, 1981, creating a calendar for Judge Hall. On March 28, 1983, after Judge Hall filed and spread the mandate of the Ninth Circuit vacating the preliminary injunction issued by this Court, Golden State filed an amended complaint repeating its original causes of action and adding an additional cause of action alleging violations of Section 1 of the Sherman Act, 15 U.S.C. § 1. On April 28, 1983, Judge Hall denied Golden State's application for a preliminary injunction and granted the City summary judgment on the Sherman Act claim. Golden State Transit Corp. v. City of Los Angeles, 563 F.Supp. 169 (C.D.Cal.1983). On appeal, the Ninth Circuit affirmed Judge Hall on the Sherman Act claim. Golden State Transit Corp. v. City of Los Angeles, 726 F.2d 1430 (9th Cir.1984). The Supreme Court denied Golden State's petition for a writ of certiorari on the Sherman Act issues. Golden State Transit Corp. v. City of Los Angeles, 471 U.S. 1003, 105 S.Ct. 1865, 85 L.Ed.2d 159 (1985).

While Golden State's appeal on the Sherman Act issues was pending, Judge Hall, in an unpublished decision, granted the City summary judgment on Golden State's remaining claims, holding that the City's conduct was not preempted by the NLRA and that Golden State did not allege a sufficient constitutionally protected property interest to give rise to a claim for violation of its due process rights.¹ The Ninth Circuit affirmed Judge Hall on both points. Golden State Transit Corp. v. City of Los Angeles, 754 F.2d 830 (9th Cir.1985). The Supreme Court then granted Golden State's petition for a writ of certiorari, 472 U.S. 1016, 105 S.Ct. 3475, 87 L.Ed.2d 611 (1985), and reversed the Ninth Circuit ruling on the preemption question. Golden State Transit Corp. v. City of Los Angeles, 475 U.S. 608, 106 S.Ct. 1395, 89 L.Ed.2d 616 (1986).

In reversing the Ninth Circuit, the Supreme Court relied on the so-called "Machinists" preemption doctrine, based on its decision in Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976), which precludes state and municipal regulation of conduct that Congress intended to remain unregulated. The Court emphasized that the NLRA was purposefully structured by Congress to insure that the collective bargaining process was to be regulated only by "`"the free play of economic forces."'" 106 S.Ct. at 1398 (quoting Machinists, 427 U.S. at 140, 96 S.Ct. at 2553 (quoting in turn NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 92 S.Ct. 373, 377, 30 L.Ed.2d 328 (1971))).

Agreeing with this Court's finding that the City had conditioned renewal of Golden State's franchise on its settlement of the labor dispute, the Court held that the City's conduct was preempted under Machinists because it imposed a "positive durational limit" on the labor dispute and thereby "destroyed the balance of power designated by Congress, and frustrated Congress' decision to...