Vrc LLC v. City of Dallas

• Decision Date: 09 August 2006
• Docket Number: No. 05-10116.,05-10116.
• Parties: VRC LLC, Plaintiff-Appellant, v. CITY OF DALLAS; Don Bearden; Marcus Currie; Does 1-30, Defendants, City of Dallas, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 607

460 F.3d 607

VRC LLC, Plaintiff-Appellant, v. CITY OF DALLAS; Don Bearden; Marcus Currie; Does 1-30, Defendants, City of Dallas, Defendant-Appellee.

No. 05-10116.

United States Court of Appeals, Fifth Circuit.

August 9, 2006.

Rehearing Denied September 8, 2006.

James C. Mosser (argued), Byron Kevin Henry, Mosser Mallers, Dallas, TX, for Plaintiff-Appellant.

James Bickford Pinson, Asst. City Atty. (argued), Jason G. Schuette, Asst. City Atty., Dallas, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, BARKSDALE, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

The Plaintiff-appellant, VRC LLC, provides non-consent towing services from private property in Dallas, Texas. VRC sued the City of Dallas for declaratory relief and a permanent injunction preventing enforcement of a city ordinance regulating such activities. The challenged ordinance, Dallas City Code Chapter 48A section 48A-36, requires that signs warning of the threat of towing be posted on private property when, and for twenty-four hours before, a vehicle is towed without the vehicle owner's consent.¹ The ordinance contains specific requirements regarding the content and placement of the signs.² The ordinance is penal in nature and is punishable by a fine of $200-$500 subject to doubling or trebling for subsequent offenses. DALLAS, TEX. CITY CODE Ch. 48A § 48A-50. The City stipulated that the ordinance was enforced against VRC.

VRC argues that § 48A-36 is preempted by federal law, the Interstate Commerce Commission Termination Act of 1995, specifically 49 U.S.C. § 14501(c). VRC further argues that the ordinance is not exempted from preemption by subsection (c)(2)(A) of that statute. The statute's relevant general preemption rule, 49 U.S.C. § 14501(c), says:

(c) Motor carriers of property. —

(1) General rule. — Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States 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 any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

The parties agreed in the trial court that the city ordinance is preempted by this general rule, as applied without the safety regulation exception found in subsection (c)(2)(A). On appeal, however, the City seeks to raise an issue about whether the city ordinance relates to a "service of any motor carrier," such that the general preemption rule applies. Of course, the parties continue to dispute whether the safety regulation exception in subsection (c)(2)(A) applies to exempt the ordinance from preemption under the general rule.

The safety regulation exception in subsection (c)(2)(A) says:

(2) Matters not covered. — Paragraph (1) . . .

(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle, or the authority of a State to regulate carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.

49 U.S.C. § 14501(c). The City argues that the ordinance is a safety regulation because it prevents violent confrontations between the owners of cars being towed from private property and tow truck drivers and because it cuts down on the number of false reports of stolen cars, which waste police resources that could be better spent protecting public safety. VRC argues that the regulation is merely an economic regulation dressed up as a safety regulation to avoid federal preemption by section 14501.

The preamble to the city ordinance recites a safety purpose. Specifically, it provides:

WHEREAS, the city council finds that the proposed regulations governing persons performing nonconsensual tows from private property, which regulations include, but are not limited to, licensing, signage, reporting, inspection, vehicle equipment, insurance, and rate requirements, are all safety-related or otherwise fall within the 49 U.S.C. § 14501(c) exception; and

WHEREAS, the city council believes that the proposed safety-related regulations for non-consensual tows would promote the public safety of both visitors and residents of the city of Dallas by contributing to a decrease in the potential for confrontation and violence between vehicle owners and the persons who tow their vehicles; a decrease in bodily injury and property damage caused by faulty tow truck vehicles and equipment or by incompetent, negligent, and criminal actions of tow truck operators and drivers; a decrease in the number of false auto theft reports processed by the police department, thereby allowing the police to devote more time to responding to more critical public safety situations; and a decrease in auto theft incidences and an increase in the recovery of stolen autos by allowing the police to more quickly and efficiently determine when a car has been stolen, rather than towed, and take appropriate action; . . . .

DALLAS, TEX. ORDINANCE 24175 (Jan. 20, 2000) (preamble). At a trial on the merits, Mr. Don Bearden, the Interim Administrator of Transportation Regulation, testified about his experiences as the City's administrator of the ordinance. He testified that he "ha[d] seen some of the aftermath" of confrontations between vehicle owners and tow truck drivers. He also testified that on one occasion while visiting one of the towing companies he overheard the drivers talking about bullet holes in their trucks from where the trucks had been shot and saw the bullet holes. He also testified that he was aware of other similar concerns about altercations between tow truck drivers and the public and that sometimes his offices received complaints from vehicle owners as a tow was ongoing, i.e., while the tow truck was present and preparing to tow the person's car. Mr. Bearden could not, however, produce any documentary evidence, reports, or studies of the phenomenon of vehicle owner/tow truck driver altercations. Counsel for VRC asked Mr. Bearden a series of questions about whether, given the premise that car owners are likely to become irate about their vehicles being towed, the presence of the signs can help defuse the situation. In essence, Mr. Bearden, who helped draft the ordinance, testified that he believed the signs did help reduce the likelihood of violent altercations. He testified in response to a question from VRC's attorney:

Citizens have called in and they can be very irate and didn't know why their car was towed or anything. They are basically ready to go out and do physical bodily damage to somebody. We can point out that the signs are supposed to be posted, it would tell them who has got the car. And once we got through the process of telling them what to look for, where to find the information on where the car is, they have calmed down quite a bit.

Mr. Bearden also testified that the signs helped tow truck drivers defuse situations by concretely justifying the towing company's actions as being under contract with the property owner. Further, Mr. Bearden testified that in his opinion the signs helped inform the public that their cars had been towed, not stolen, thereby reducing the number of false stolen car reports and thus the police department's workload in responding to such reports.

Larry White, the manager of VRC, testified that his company, which has contracts with over 6,000 properties in Dallas, incurs an average cost of $11,500 per month for placing and maintaining the signs as required by Section 48A-36. This makes the monthly average cost about $1.92 per property. The company would likely incur at least some of these costs regardless of the statute because, as Mr. White also testified, it would be in VRC's best interests to post signs warning that unauthorized vehicles would be towed, and informing hapless vehicle owners where to retrieve their cars.

The district court found that § 48A-36 was sufficiently safety-related and filed findings of fact and conclusions of law in favor of the City of Dallas. VRC timely appealed.

Standard of Review

Generally, the denial of a permanent injunction is reviewed for abuse of discretion. North Alamo Water Supply Corp. v. City of San Juan, Tex., 90 F.3d 910, 916 (5th Cir.1996); Thomas v. Texas Dept. of Criminal Justice, 220 F.3d 389, 396 (5th Cir.2000). In an express preemption case, however, the court reviews a district court's preemption determinations de novo. White Buffalo Ventures, LLC v. Univ. of Texas at Austin, 420 F.3d 366, 370 (5th Cir.2005); Baker v. Farmers Elec. Coop., Inc., 34 F.3d 274, 278 (5th Cir.1994) ("Preemption is a question of law reviewed de novo."). Therefore, the ultimate issue in this case is reviewed de novo.

Discussion

The party seeking a permanent injunction must meet a four-part test. It must establish (1) success on the merits; (2) that a failure to grant the injunction will result in irreparable injury; (3) that said injury outweighs any damage that the injunction will cause the opposing party; and (4) that the injunction will not disserve the public interest. Dresser-Rand, Co. v. Virtual Automation, Inc., 361 F.3d 831, 847-48 (5th Cir.2004) (citing Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 546 n. 12, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987)). In an express preemption case, however, "the finding with respect to likelihood of success carries with it a determination that the other three requirements have been satisfied." Trans World Airlines, Inc. v. Mattox, 897 F.2d 773, 783 (5th Cir.1990); see also Greyhound Lines, Inc. v. City of New Orleans, 29 F.Supp.2d 339, 341 (E.D.La.1998)....