Nw. Grocery Ass'n v. City of Seattle

• Citation: 526 F.Supp.3d 884
• Decision Date: 18 March 2021
• Docket Number: CASE NO. C21-0142-JCC
• Parties: NORTHWEST GROCERY ASSOCIATION, et al., Plaintiffs, v. CITY OF SEATTLE, Defendant.
• Court: U.S. District Court — Western District of Washington

526 F.Supp.3d 884

NORTHWEST GROCERY ASSOCIATION, et al., Plaintiffs,

v.CITY OF SEATTLE, Defendant.

CASE NO. C21-0142-JCC

United States District Court, W.D. Washington, Seattle Division.

Signed March 18, 2021

Tritia Murata, Pro Hac Vice, Morrison & Foerster, Los Angeles, CA, Vanessa Soriano Power, Adam S. Belzberg, Stoel Rives, Seattle, WA, William Francis Tarantino, Pro Hac Vice, Morrison & Foerster, San Francisco, CA, for Plaintiffs.

Derrick Anthony De Vera, Erica R. Franklin, Seattle City Attorney's Office, Jeremiah Miller, Seattle City Attorney, Seattle, WA, for Defendant.

ORDER

John C. Coughenour, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Plaintiffs’ motion for a preliminary injunction (Dkt. No. 10) and Defendant's motion to dismiss (Dkt. No. 23). Having thoroughly considered the parties’ briefing, oral arguments, and the relevant record, the Court hereby GRANTS Defendant's motion to dismiss and DENIES Plaintiffs’ motion for a preliminary injunction for the reasons explained herein.

I. BACKGROUND

On January 25, 2021, in response to concerns for the health and welfare of grocery employees, the Seattle City Council unanimously passed the Hazard Pay for Grocery Employees Ordinance ("Ordinance"). (Dkt No. 1 at 2.) The Ordinance "establish[es] labor standards requirements for additional compensation for grocery employees working in Seattle," Ordinance, Preamble,¹ and mandates that covered grocery store employers in the City provide "additional compensation" of four dollars per hour to covered employees as "hazard pay."² Ordinance §§ 100.010, 100.025. The Ordinance applies to "grocery businesses that employ 500 or more employees worldwide regardless of where those employees are employed." Ordinance § 100.020. "Grocery business" includes any retail store operating in Seattle that is either (1) "[o]ver 10,000 square feet in size and that is primarily engaged in retailing groceries for offsite consumption" or (2) "[o]ver 85,000 square feet and with 30 percent or more of its sales floor area dedicated to sale of groceries[.]" Ordinance § 100.010. The hazard pay requirements are structured as temporary measures which remain in effect "for the duration of the civil emergency proclaimed by the Mayor on March 3, 2020." Ordinance § 100.025(C). Finally, the Ordinance prohibits employers from circumventing its effect by reducing wages to counteract the hazard pay increase, providing the following limitation:

No employer shall, as a result of this ordinance going into effect, take steps to reduce employee compensation so as to prevent, in whole or in part, employees from receiving hazard pay at a rate of four dollars per hour for each hour worked in Seattle in addition to those employees’ other compensation. Employers shall maintain records to establish the reason(s) for any reduction in employee compensation pursuant to Section 100.040.

Ordinance § 100.025.A.1.

On February 3, 2021, the day the Ordinance took effect, Plaintiffs Northwest Grocery Association ("NWGA") and Washington Food Industry Association ("WFIA") brought this action against Defendant City of Seattle ("City"), seeking declaratory and injunctive relief against enforcement of the Ordinance. (Dkt. No. 1 at 3.) Plaintiffs argue the Ordinance is invalid, alleging that it is preempted by the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151 – 169, and that it violates the Equal Protection and Contracts Clauses of the federal and state constitutions.

II. DISCUSSION

A. Legal Standard for a Motion to Dismiss

A defendant may move to dismiss when plaintiffs "fail[ ] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal , 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A claim has facial plausibility when plaintiffs plead factual content that allows a court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 678, 129 S.Ct. 1937. Although the court must accept as true a complaint's well-pleaded facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper Rule 12(b)(6) motion. Vasquez v. Los Angeles Cnty. , 487 F.3d 1246, 1249 (9th Cir. 2007) ; Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001). Plaintiffs are obligated to provide grounds for their entitlement to relief that amount to more than labels and conclusions or a formulaic recitation of the elements of a cause of action, Bell Atl. Corp. v. Twombly , 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and "[d]ismissal can be based on the lack of a cognizable legal theory." Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988).

B. Defendant's Motion to Dismiss

Plaintiffs argue the Ordinance is unlawful and seek declaratory and injunctive relief preventing its enforcement, alleging violations based on (1) NLRA preemption, (2) the Equal Protection Clause of the U.S. Constitution, (3) the Equal Protection Clause of the Washington Constitution, (4) the Contracts Clause of the U.S. Constitution, and (5) the Contracts Clause of the Washington Constitution. (Dkt. No. 1.) For the reasons described below, the Court concludes that none of these arguments establish valid claims for relief and Plaintiff's complaint must be dismissed under Rule 12(b)(6).

1. Ordinance Is Not Preempted by the National Labor Relations Act

Plaintiffs assert that the Ordinance is invalid because it is preempted by the NLRA. (Dkt. No. 1 at 7–8.) The Supremacy Clause of the U.S. Constitution provides that the laws of the U.S. are "the supreme law of the land." U.S. Const. art. VI, cl. 2. Consequently, Congress may "pre-empt, i.e. , invalidate, a state law through federal legislation,"³ and it may do so expressly or implicitly. Oneok, Inc. v. Learjet, Inc. , 575 U.S. 373, 376, 135 S.Ct. 1591, 191 L.Ed.2d 511 (2015). The NLRA contains no express preemption provision, but the Supreme Court has recognized that the NLRA "implicitly mandated two types of pre-emption as necessary to implement federal labor policy." Chamber of Com. of U.S. v. Brown , 554 U.S. 60, 65, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008). Plaintiffs’ argument relies on one of these implicit preemption doctrines: Machinists preemption.⁴ See Int'l Ass'n of Machinists v. Wis. Emp. Rels. Comm'n , 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976). Machinists preemption prevents states from regulating where "Congress intended that the conduct involved be unregulated because [it should be] left ‘to be controlled by the free play of economic forces.’ " Id. at 140, 96 S.Ct. 2548 (1976) (quoting NLRB v. Nash-Finch Co. , 404 U.S. 138, 144, 92 S.Ct. 373, 30 L.Ed.2d 328 (1971) ). Specifically, this strain of preemption precludes states from imposing restrictions on the use of "economic weapons" of "self-help" permitted by federal law, such as strikes and lockouts. Id. at 147, 92 S.Ct. 373.

While neither the text nor the legislative history of the NLRA directly speak to whether Congress intended it to reach state regulations of general applicability affecting the terms over which parties may bargain, the law "is primarily concerned with establishing an equitable process for determining terms and conditions of employment, and not with particular substantive terms of the bargain that is struck." Metro. Life Ins. Co. v. Massachusetts , 471 U.S. 724, 753, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) (emphasis added). As a result, the Supreme Court has held the NLRA does not preempt "minimum labor standards" which do not affect the process of collective bargaining, but rather set the minimum terms that form the backdrop of their bargaining process. Id. at 756, 105 S.Ct. 2380 ("[T]here is no suggestion ... that Congress intended to disturb the myriad state laws then in existence that set minimum labor standards, but were unrelated in any way to the processes of bargaining or self-organization."). Such standards "affect union and nonunion employees equally, and neither encourage nor discourage the collective-bargaining processes that are the subject of the NLRA." Id. at 755, 105 S.Ct. 2380. The mere fact that a state law affects —and in effect, grants to employees—something for which they otherwise could have bargained does not give rise to NLRA preemption. Fort Halifax Packing Co. v. Coyne , 482 U.S. 1, 21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987).

Courts engaging in preemption analysis under Machinists have repeatedly found that ordinances affecting the terms over which parties might bargain—rather than the mechanics of the underlying bargaining process—are not preempted. See, e.g. , Am. Hotel and Lodging Assoc. v. City of Los Angeles , 834 F.3d 958, 963 (9th Cir. 2016) (living wage ordinance mandating higher minimum wage and paid time off for airport workers was not preempted); Metro. Life Ins. Co. , 471 U.S. at 755, 105 S.Ct. 2380 (state law mandating minimum health benefits was not preempted); Nat'l Broad. Co. v. Bradshaw , 70 F.3d 69, 71 (9th Cir. 1995) (state law mandating premium overtime wage rates for broadcast industry employees was not preempted); Babler Bros. v. Roberts , 995 F.2d 911 (9th Cir. 1993) (state law mandating premium overtime wages for non-union employees working on public construction projects was not preempted). "Indeed, this ‘general principle that governments can pass minimum labor standards pursuant to their police power without running afoul’ of the NLRA is well established." Cal. Grocers Ass'n v. City of Long Beach , 521 F.Supp.3d 902, 910 (C.D. Cal. Feb. 25, 2021) (quoting Am. Hotel & Lodging Ass'n v. City of Los Angeles , 119 F. Supp. 3d 1177, 1187 (C.D. Cal. 2015), aff'd , 834 F.3d 958 (9th Cir. 2016) ).

In Fort Halifax Packing Co. , the Supreme Court considered whether the NLRA preempted a Maine law which required employers...