FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

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.

No. 15-55571

D.C. No.

2:14-cv-08977-

JFW-PJW
2 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

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. 15-55572

D.C. No.

2:14-cv-08977-

JFW-PJW

ORDER AND 

OPINION

Appeal from the United States District Court

for the Central District of California

John F. Walter, District Judge, Presiding

Argued and Submitted January 13, 2017

Pasadena, California

Filed October 16, 2017

Before: Richard C. Tallman and Michelle T. Friedland, 

Circuit Judges, and William H. Orrick, III,

* District Judge.

 * The Honorable William H. Orrick III, United States District Judge 

for the Northern District of California, sitting by designation.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 3

Order;

Opinion by Judge Friedland;

Dissent by Judge Tallman

SUMMARY**

Labor Law

The panel filed (1) an order (a) granting petitions for 

panel rehearing with respect to the request that the court 

amend its opinion to affirm the district court’s denial of leave 

to amend but denying the petitions for panel rehearing in all 

other respects, (b) denying petitions for rehearing en banc, 

(c) withdrawing the opinion, and (d) directing the filing of a 

new opinion; and (2) a new opinion affirming the district 

court’s dismissal of an action brought by two air transport 

trade associations asserting that the City of Los Angeles, in 

its capacity as proprietor of Los Angeles International 

Airport, may not require businesses at the airport to accept a 

contractual condition concerning labor agreements.

In its new opinion, the panel wrote that 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. The trade 

 ** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
4 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

associations argued that, because the City operates LAX, the 

contractual conditions in LAX’s standard licensing 

agreement are effectively municipal regulations. The 

associations contended that section 25, as one such 

“regulation,” was preempted by the National Labor 

Relations Act, the Railway Labor Act, and the Airline 

Deregulation Act.

The panel held that the Airline Service Providers 

Association had associational standing to pursue all of its 

claims.

The panel held that the associations failed to state a 

preemption claim. The panel concluded that the City was 

acting as a market participant, and not a regulator, when it 

added section 25 to its LAX licensing contract because, 

under the Cardinal Towing test, the City was attempting to 

avoid disruption of its business, and the decision to adopt 

section 25 was narrowly tied to a specific proprietary 

problem. The panel also concluded that the preemption 

provisions of the NLRA, the RLA, and the ADA do not 

apply to state and local governmental actions taken as a 

market participant. 

The panel held that the district court did not err by 

denying leave to amend the complaint.

Concurring in part and dissenting in part, Judge Tallman 

agreed with the majority that the ASPA had standing to 

assert its claims. Judge Tallman disagreed with the 

majority’s conclusion that, as is, the complaint failed to state 

a plausible claim that the City enacted section 25 as a 

regulatory measure rather than a proprietary one. He wrote 

that the complaint sufficiently alleged that section 25 was an 

overly broad and facially suspect regulation of labor 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 5

relations that contravened the delicate congressional 

balancing of national labor relations policy affecting key 

facilities of interstate commerce.

COUNSEL

Michael M. Berger (argued), Matthew P. Kanny, and Maura 

Kingseed Gierl, Manatt Phelps & Phillips LLP, Los Angeles, 

California, for Plaintiff-Appellant Airline Service Providers 

Association.

Robert Span (argued), and Douglas R. Painter, Steinbrecher 

& Span LLP, Los Angeles, California; Douglas W. Hall, 

Ford and Harris LLP, Washington, D.C.; for PlaintiffAppellant Air Transport Association of America.

Richard G. McCracken (argued) and Paul L. More, Davis 

Cowell & Bowe LLP, San Francisco, California; Scott P. 

Lewis and David S. Mackey, Anderson & Krieger LLP, 

Boston, Massachusetts; for Defendants-Appellees.

ORDER

Appellants’ petitions for panel rehearing are 

GRANTED with respect to their request that the court 

amend its opinion to affirm the district court’s denial of leave 

to amend but DENIED in all other respects. The petitions 

for rehearing en banc are DENIED. No future petitions will 

be entertained. The opinion filed on August 23, 2017 is 

withdrawn and a new opinion is filed concurrently with this 

order.
6 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

OPINION

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.

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 

 1 Because the City of Los Angeles operates LAX, we refer in this 

opinion to both entities collectively as “the City.”

2 Section 25 describes broadly the type of employee organization 

that can make this request and does not require the employees to be 

unionized.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 7

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.
8 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

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 (2000) (citing Hunt v. 

Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343 

(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, 136 S. 

Ct. 1540, 1547 (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 

 3 So long as one plaintiff has standing, an appellate court has 

jurisdiction to address his claims regardless of whether other plaintiffs 

have standing. See, e.g., Rumsfeld v. Forum for Acad. & Inst’l Rights, 

Inc., 547 U.S. 47, 52 n.2 (2006). Given our conclusion that the ASPA 

has standing, we need not evaluate the Airlines’ standing.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 9

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 (1984), abrogated on 

other grounds by Lexmark Int’l, Inc. v. Static Control 

Components, Inc., 134 S. Ct. 1377 (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).

 4 Because this injury is sufficient to support standing, we need not 

consider whether the ASPA’s allegations that its members will be forced 

to accede to employee demands during negotiations triggered under 

section 25 could support standing.
10 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

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

 5 The district court’s contrary decision with respect to the ASPA’s 

ADA claim rested largely on its conclusion that the ASPA’s members 

are not subject to the ADA and, thus, that it could not assert claims that 

rely on the ADA. A plaintiff’s ability to state a claim under a particular 

statute is not a question of federal subject matter jurisdiction, however, 

but rather a question of the merits of that claim. See, e.g., Lexmark, 

134 S. Ct. at 1387 n.4.
 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 11 

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 (1985) (quoting Shaw v. 

Delta Air Lines, Inc., 463 U.S. 85, 95 (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 (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. 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.
12 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

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 of Bedford, 180 F.3d 686 (5th Cir. 1999). 

See Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 

1011, 1023 (9th Cir. 2010); accord, e.g., Engine Mfrs. Ass’n, 

498 F.3d at 1041. First, is the challenged governmental 

action undertaken in pursuit of the “efficient procurement of 

needed goods and services,” as one might expect of a private 

business in the same situation? Johnson, 623 F.3d at 1023 

(quoting Cardinal Towing, 180 F.3d at 693). Second, “does 

the narrow scope of the challenged action defeat an inference 

that its primary goal was to encourage a general policy rather 

than [to] address a specific proprietary problem”? Id. at 

1023–24 (quoting Cardinal Towing, 180 F.3d at 693). If the 

answer to either question is “yes,” the governmental entity is 

acting as a market participant. Id. at 1024. 

Johnson offers an example of how this test works. 

There, a community college district had sold bonds to fund 

construction projects. Id. at 1016. As the City did here, the 

college adopted an agreement governing labor conditions for 

contractors working on those construction projects that 

prohibited strikes, picketing, and similar labor disruptions. 

Id. at 1017. The agreement also made those unions the 

exclusive bargaining representatives for workers on the 

project, required the use of union “hiring halls” for staffing, 

established mechanisms for resolving disputes, and required 

the unions to create an apprenticeship program. Id. at 1016–

17. 

Several non-union apprentices and apprenticeship 

committees challenged those restrictions as preempted by 

the NLRA and the Employee Retirement Income Security 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 13

Act (“ERISA”). Id. We held that the college was acting as 

a market participant under both prongs of the Cardinal 

Towing test. Id. at 1024–29. Specifically, we determined 

that the college had a proprietary interest in the efficient 

procurement of construction services, including in avoiding 

labor disruptions. This was true even though the college 

may have spent some of its money unwisely, and even 

though a private actor may not have accepted terms as 

unfavorable as the college had. Id. at 1025–27. We also 

concluded that the scope of the challenged agreement was 

narrow in that it applied only to construction projects worth 

more than $200,000 funded by the bond initiative during a 

certain time period. Id. at 1028–29. Accordingly, we held 

that the college was acting as a market participant and that 

the restrictions were not preempted. See id. at 1024–29.

Applying that precedent here, we hold that the City 

satisfies both prongs of the Cardinal Towing test and so was 

acting as a market participant when it added section 25 to the 

LAX licensing contract.

1. Efficient Procurement of Goods and Services

First, like the college in Johnson, the City is attempting 

to avoid disruption of its business: If a private entity 

operated LAX, that entity would have a pressing interest in 

avoiding strikes, picket lines, boycotts, and work stoppages. 

Those interests are not any less pressing simply because the 

City rather than a private business operates the airport, and 

labor peace agreements are one way to protect those 

interests. See Boston Harbor, 507 U.S. at 231–32 (holding 

that Boston’s requiring a no-strike provision in 

subcontractor agreements was permissible market 

participation because the city was “attempting to ensure an 

efficient project that would be completed as quickly and 
14 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

effectively as possible” and because “analogous private 

conduct would be permitted”).

Plaintiffs urge the opposite conclusion on the ground that 

the City has not directly participated in the market and has 

instead dictated contract terms to others who do. The City 

does, however, participate directly in a market for goods and 

services. “[A]irports are commercial establishments . . . 

[that] must provide services attractive to the marketplace.” 

Int’l Soc’y for Krishna Consciousness, Inc. v. Lee, 505 U.S. 

672, 682 (1992) (citations omitted). If the City operates the 

airport poorly, fewer passengers will choose to fly into and 

out of LAX, fewer airlines will operate from LAX, and the 

City’s business will suffer. It must avoid commercial pitfalls 

as the proprietor of a commercial enterprise.

That fact makes this case distinguishable from, for 

example, Golden State Transit Corp. v. City of Los Angeles, 

475 U.S. 608 (1986). In Golden State, a plaintiff taxi 

company alleged that Los Angeles had interfered with labor 

negotiations by withholding the company’s license until a 

strike against the company ended. See id. at 611–12. The 

plaintiff argued that Los Angeles’s license decision was 

preempted by the NLRA, and the Supreme Court agreed. Id.

at 615–19. The Court rejected Los Angeles’s argument that 

its decision was justified by its general interest in ensuring 

“uninterrupted [citywide taxi] service to the public by 

prohibiting a strike.” Id. at 618. Los Angeles did not operate 

the taxi service at issue in Golden State, nor did it use the 

taxi company for any city functions or services. By contrast, 

here, a department of the City of Los Angeles does operate 

LAX, and it has taken action to protect its proprietary 

interest in running the airport smoothly. Cf. Boston Harbor, 

507 U.S. at 227 (“[A] very different case would have been 

presented had the city of Los Angeles purchased taxi 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 15

services from Golden State in order to transport city 

employees.”). The City is thus participating in the air 

transportation market.6

To the extent Plaintiffs argue more broadly that the City, 

as the operator of an airport, is not participating in a private

market at all, we disagree. At first blush, that argument has 

some intuitive appeal because most airports in the United 

States are run by or affiliated with a governmental entity. 

But the same is not true internationally. See generally, e.g., 

David L. Bennett, Airport Privatization After Midway, 

23 Air & Space Law. 22, 22 (2010) (noting the “trend toward 

private participation in airport ownership and operation in 

most other parts of the world”); Zane O. Gresham & Brian 

Busey, “Do As I Say and Not As I Do”—United States 

Behind in Airport Privatization, 17 Air. & Space Law. 12, 

13–14 (2002) (describing airport privatization 

internationally and experimentation with airport 

privatization in the United States). And, even domestically, 

 6 Plaintiffs relatedly argue that the City is not actually procuring any 

goods or services but is instead essentially offering licenses, which they 

describe as a “purely regulatory function.” But a private contracting 

condition may be proprietary even though it could also be called a 

licensing scheme. See, e.g., Johnson, 623 F.3d at 1017 (holding that the 

challenged contractual provisions in a project labor agreement were not 

preempted by the NLRA even though the defendant college district 

restricted contractors on the project to employing only members of a 

particular union, effectively offering a license to only one group). Nor 

does it matter that the City would not be a party to the contracts that 

included a labor peace agreement. The challenged municipal action in 

Boston Harbor also involved requiring a no-strike condition in contracts 

between third parties. 507 U.S. at 220–21. That did not stop the 

Supreme Court from concluding that Boston was acting as a market 

participant. Id. at 230–32.
16 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

Congress has enacted a “pilot program” for privatization of 

airports. See 49 U.S.C. § 47134.

Moreover, the Supreme Court and other federal appellate 

courts have recognized the inherently competitive and 

commercial nature of airport operations. See Int’l Soc’y for 

Krishna Consciousness, 505 U.S. at 682; see also Four T’s, 

Inc. v. Little Rock Mun. Airport Comm’n, 108 F.3d 909, 912–

13 (8th Cir. 1997) (holding, in response to a Commerce 

Clause challenge, that a city that operated an airport was 

acting as a participant in the market for airport rental car 

services). Airports also compete against private modes of 

transportation, like long-distance travel by train, car, or bus. 

See, e.g., Randall O’Toole, Cato Inst., Pol’y Analysis 

No. 680, Intercity Buses: The Forgotten Mode, (2011), 

available at https://www.cato.org/publications/policyanalysis/intercity-buses-forgotten-mode (noting that 

intercity buses were “America’s fastest growing 

transportation mode” between 2007 and 2010 (citation and 

internal quotation marks omitted)).

We therefore conclude that the City is acting as a market 

participant under the first prong of the Cardinal Towing test.

2. Narrow Scope

The City’s actions independently qualify as market 

participation under Cardinal Towing’s second prong. The 

decision to adopt section 25 is narrowly tied to a “specific 

proprietary problem,” Johnson, 623 F.3d at 1024 (quoting 

Cardinal Towing, 180 F.3d at 693): service disruptions at 

LAX, which the City manages as proprietor. Nothing in the 

text of section 25 or in the Complaint’s allegations suggests 

that section 25 will be enforced throughout the rest of the 

City’s jurisdiction or that section 25 will hamper service 

providers’ operations elsewhere.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 17

Plaintiffs argue otherwise, asserting that section 25 is in 

reality a preempted labor regulation because it gives labor 

unions a powerful bargaining chip, applies broadly to all 

service providers at LAX, and governs any organization that 

requests a labor peace agreement.7 We find these arguments 

unpersuasive for reasons that become apparent in 

considering the three cases Plaintiffs primarily rely upon to 

support their position. Compared to the regulations imposed 

in those decisions, section 25 reaches a much narrower swath 

of commercial activity and focuses on specific proprietary 

needs.

First, Plaintiffs rely on Wisconsin Department of 

Industry, Labor & Human Relations v. Gould Inc., 475 U.S. 

282 (1986). In that case, the Supreme Court affirmed a 

decision enjoining a Wisconsin law that barred all state 

procurement agents from transacting with repeat NLRA 

violators. See id. at 283–84. The Court held that 

Wisconsin’s spending policy swept too broadly to constitute 

a permissible exercise of market participation, particularly 

given the lack of an obvious proprietary concern animating 

the debarment scheme. Id. at 289–91. By contrast, section 

25 does not govern all of the City’s contractual 

relationships,8 and the City has a clear proprietary interest in 

avoiding labor disruptions of airport services.

 7 The ASPA also argues that the Service Employees International 

Union lobbied for section 25, demonstrating a pro-union motivation for 

its adoption. As discussed infra in Part IV, such motive does not matter 

to the preemption analysis.

8 The dissent suggests that section 25 may affect employment 

relationships outside LAX, but, as discussed further below, Plaintiffs 

have not alleged any such effects.
18 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

Second, Plaintiffs cite Chamber of Commerce of the 

United States of America v. Brown, 554 U.S. 60 (2008). 

There, the Supreme Court analyzed a preemption challenge 

against a California law that prohibited employers who 

received state funds from using those funds to “assist, 

promote, or deter union organizing.” Id. at 63. The Court 

held that the law did not represent permissible market 

participation because it was “neither ‘specifically tailored to 

one particular job’ nor a ‘legitimate response to state 

procurement constraints or to local economic needs.’” Id. at 

70 (quoting Gould, 475 U.S. at 291). The law’s preamble 

even explicitly declared that its purpose was to prevent 

employers from supporting or opposing union organization. 

Id. at 62–63. The law also imposed onerous requirements 

for segregating funds and record keeping, and created a right 

of action for any private taxpayer to sue suspected violators. 

Id. at 72.9 Section 25, by comparison, is limited to 

addressing the needs of LAX and does not announce any sort 

of regulatory policy, require complicated recordkeeping, or 

create litigation risks.

Third, Plaintiffs point to Metropolitan Milwaukee 

Association of Commerce v. Milwaukee County 

(Metropolitan Milwaukee II), 431 F.3d 277 (7th Cir. 2005). 

That case involved a Milwaukee County ordinance 

governing businesses the county had hired to provide 

transportation and other services to elderly and disabled 

residents. Id. at 277–78. Like section 25, the Milwaukee 

 9 The dissent suggests that the broad effects the Supreme Court 

discussed in Brown may have been discerned through discovery, but the 

Supreme Court’s analysis focused solely on the text of the challenged 

law. See 554 U.S. at 71–73. The Supreme Court made clear that effects 

the law would have were obvious on its face. See Id. Here, the text of 

section 25 suggests no obvious overbroad effects, and Plaintiffs have 

alleged none.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 19

ordinance required those businesses to sign labor peace 

agreements, but unlike section 25, it imposed several 

additional conditions favorable to union organizing and did 

little to avoid service interruptions. See id. at 278, 281; see 

also Metro. Milwaukee Ass’n of Commerce v. Milwaukee 

County. (Metropolitan Milwaukee I), 325 F.3d 879, 880–81 

(7th Cir. 2003).

The Seventh Circuit held that the ordinance was 

preempted by the NLRA. Metropolitan Milwaukee II, 

431 F.3d at 282. It rejected the county’s argument that the 

ordinance was proprietary, in large part because the 

ordinance’s impact would not be restricted to contracts with 

the county. See id. at 279–82. For example, the ordinance 

prohibited contractors from scheduling meetings designed to 

discourage any of their employees from joining a union, 

regardless of whether those employees worked on county 

contracts. Id. at 280. The Seventh Circuit also reasoned that 

the county could have achieved its goal of avoiding service 

interruptions by other means, see id. at 282, and that several 

of the requirements it imposed focused on union organizing 

in particular, see id. at 278, 280–81; see also Metropolitan 

Milwaukee I, 325 F.3d at 880–81. Here, by contrast, there is 

no allegation that the purposes of section 25 could be 

achieved by other means or that the licensing provision will 

have spillover effects on the service providers’ operations 

beyond their work for LAX. Rather, the nature of the 

businesses at issue—services performed at LAX—by 

definition allows for natural divisions between work for the 

City and work for private parties: A job is either performed 
20 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

at LAX or it is not, and a strike or other disruption either 

occurs at LAX or it does not.10

These arguments are more specific instances of 

Plaintiffs’ broader allegation that section 25 cannot truly be 

aimed at minimizing service disruptions because it is a poor 

fit for that job. Under our previous decisions, evidence that 

an alternative strategy could more effectively or cheaply 

accomplish the same goals “bears only on whether [a state 

or local government] made a good business decision, not on 

whether it was pursuing regulatory, as opposed to 

proprietary, goals.” Johnson, 623 F.3d at 1025. Similarly, 

we have held that a state or local government may entertain 

non-economic purposes and yet rely on the market 

participant doctrine. See Engine Mfrs. Ass’n, 498 F.3d at 

1046 (“That a state or local governmental entity may have 

policy goals that it seeks to further through its participation 

in the market does not preclude the doctrine’s application, so 

long as the action in question is the state’s own market 

participation.”). And although, as the dissent points out, the 

Seventh Circuit decided Metropolitan Milwaukee II partially 

in reliance on an obvious mismatch between the county’s 

asserted purpose and its means of achieving that purpose, the 

same court later emphasized that lurking political motives 

are an inevitable part of a public body’s actions and are not 

“a reason for invalidity.” N. Ill. Chapter of Associated 

 10 We disagree with the dissent that section 25 is written so broadly 

as to reach the entirety of a given labor organization’s membership. In 

context, it is clear that the provision in question, which refers to “binding 

and enforceable provision(s) prohibiting the Labor Organization and its 

members from engaging in” certain disruptive action, is meant to govern 

service providers at LAX. Section 25 repeatedly refers to operations at 

LAX, employees at LAX, and the LAX licensing program specifically.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 21

Builders & Contractors, Inc. v. Lavin, 431 F.3d 1004, 1007 

(7th Cir. 2005).

This is not to say that a state’s supposedly proprietary 

actions cannot become regulatory if enacted or enforced 

overbroadly. Preventing such overbreadth is the purpose of 

the second prong of the Cardinal Towing test. See Johnson, 

623 F.3d at 1023–24. Concerns about overbreadth were 

largely what led the Supreme Court to strike down the statewide spending restrictions at issue in Brown and Gould. See 

Brown, 554 U.S. at 70–71; Gould, 475 U.S. at 289–91. But 

no state-wide restrictions—or, indeed, city-wide 

restrictions—are even alleged to be at issue here. The City 

has merely imposed a contract term on those who conduct 

business at LAX, which the City operates, and that contract 

term serves a cabined purpose.11 We therefore conclude that 

the second prong of the Cardinal Towing test is satisfied, and 

 11 We briefly note our disagreement with two additional arguments 

Plaintiffs advance. First Plaintiffs (and the dissent) argue that section 25 

does not specifically address disruptions by non-union employees. That 

omission alone does not suggest that the City has advanced a pro-union 

regulatory policy rather than a proprietary interest. The LAX licensing 

scheme includes other protections against non-union disruptions. For 

example, if the airport believes it is necessary to hire police or to take 

other steps to protect the “efficient operation of LAX” in the event of a 

violation of section 25 or some other legal or regulatory violation, the 

service providers may have to reimburse the airport regardless of what 

or who caused the disruption. Service providers also guarantee the 

quality of their work, and the City may demand the removal of a service 

provider’s employees or agents.

Second, Plaintiffs argue that section 25 is overbroad because it 

applies to all operations at LAX. But LAX would hardly avoid service 

disruptions by requiring labor peace agreements from some service 

providers and not others. A contract term that applied to fewer than all 

of the service providers at LAX would risk disruptions attributable to 

whatever service providers were not required to accept section 25.
22 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

that, in imposing section 25, the City has acted as a market 

participant, not as a regulator.

The Presumption Is Not Rebutted by the NLRA, the 

RLA, or the ADA

Having concluded that the City is acting as a market 

participant, we must next consider whether there is “any 

express or implied indication,” Engine Mfrs. Ass’n., 

498 F.3d at 1042 (quoting Boston Harbor, 507 U.S. at 231), 

that Congress intended the NLRA, the RLA, or the ADA to 

preempt actions taken by states and local governments in 

their capacity as market participants. Absent such an 

indication, the presumption that preemption applies only to 

regulatory conduct remains in place. See id.

We begin with the NLRA. In Boston Harbor, the 

Supreme Court held that the NLRA does not preempt state 

or local government actions taken as a market participant. 

See 507 U.S. at 231–32 (“In the absence of any express or 

implied indication by Congress that a State may not manage 

its own property when it pursues its purely proprietary 

interests, and where analogous private conduct would be 

permitted, this Court will not infer such a restriction.”); see 

also id. at 227 (“We have held consistently that the NLRA 

was intended to supplant state labor regulation, not all 

legitimate state activity that affects labor.”). Because the 

City is acting as a market participant here, Plaintiffs have 

thus not stated a claim for preemption under the NLRA. 

We likewise conclude that Plaintiffs have failed to state 

a claim for preemption under the RLA. We look to decisions 

interpreting the NLRA to ascertain the RLA’s preemptive 

extent. See Bhd. of R.R. Trainmen v. Jacksonville Terminal 

Co., 394 U.S. 369, 383 (1969); Air Transp. Ass’n v. City & 

Cty. of San Francisco, 266 F.3d 1064, 1075–76 & n.4; Beers 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 23

v. S. Pac. Transp. Co., 703 F.2d 425, 428 (9th Cir. 1983); 

see also, e.g., Hull v. Dutton, 935 F.2d 1194, 1197–99 (11th 

Cir. 1991); McCall v. Chesapeake & Ohio Ry. Co., 844 F.2d 

294, 301–02 (6th Cir. 1988). For that reason, relying on the 

fact that the NLRA does not preempt market participation by 

state or local governments, we have stated that the RLA 

likewise does not preempt such conduct. See Air Transp. 

Ass’n, 266 F.3d at 1076 n.4 (explaining that the “RLA would 

not preempt actions taken by [a municipal government 

operating an airport] as a proprietor” (citing Dillingham 

Const. N.A., Inc. v. Cty. of Sonoma, 190 F.3d 1034, 1037 (9th 

Cir. 1999) (addressing NLRA preemption))).

Finally, we reach the same conclusion about the ADA. 

Congress enacted the ADA to deregulate “the airline 

industry through ‘maximum reliance on competitive market 

forces and on actual and potential competition.’” Northwest, 

Inc. v. Ginsberg, 134 S. Ct. 1422, 1428 (2014) (quoting 

49 U.S.C. § 40101(a)(6)). The statute expressly preempts 

states and their subdivisions from “enact[ing] or enforc[ing] 

a law, regulation, or other provision having the force and 

effect of law related to a price, route, or service of an air 

carrier.” 49 U.S.C. § 41713(b)(1).

We and the Supreme Court have interpreted the phrases 

“force and effect of law” or “effect of law” in preemption 

clauses in other statutes as applying to governmental action 

that is regulatory in nature and thus as not preempting market 

participation. See, e.g., Am. Trucking Ass’ns v. City of Los 

Angeles, 133 S. Ct. 2096, 2102–03 (2013) (interpreting the 

Federal Aviation Administration Authorization Act of 

1994); Associated Gen. Contractors, 159 F.3d at 1182–83 

(interpreting ERISA). Under these cases, we conclude that 

Congress did not intend the ADA to upset proprietary 
24 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

conduct like that at issue here.12 See Am. Trucking Ass’ns, 

133 S. Ct. at 2102. Plaintiffs therefore have not stated a 

claim under the ADA.

* * * 

In sum, given the allegations presented in Plaintiffs’ 

Complaint, we conclude that the City was acting as a market 

participant when it added section 25 to its LAX licensing 

contract, and that the preemption provisions of the NLRA, 

the RLA, and the ADA do not apply to state and local 

governmental actions taken as a market participant.13 We 

therefore affirm the dismissal of Plaintiffs’ preemption 

claims for failure to state a claim on which relief may be 

granted.

Leave to Amend

Having concluded that dismissal of the Complaint was 

appropriate, all that is left for us to consider is whether the 

district court erred by denying leave to amend. Plaintiffs 

have represented that remand for the purpose of amendment 

would, in their view, serve no purpose. Specifically, 

Plaintiffs have represented that nothing has occurred in the 

years since section 25 took effect that would enable them to 

amend their Complaint to add allegations of spillover effects 

 12 Our conclusion is bolstered by the inclusion of an express 

statutory carve-out in the ADA that preserves the ability of a 

governmental actor to “carry[] out its proprietary powers and rights.” 

49 U.S.C. § 41713(b)(3).

13 In addition to its preemption arguments, the ASPA argues that 

section 25 is an unconstitutional condition. But the ASPA does not 

explain what constitutional right has been affected. Nor have Plaintiffs 

appealed the dismissal of their constitutional claims.
 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 25 

or other indications that section 25 operates in practice as a 

regulation. In light of these representations, we conclude 

that “the complaint could not be saved by any amendment,” 

Ariz. Students’ Ass’n v. Ariz. Bd. of Regents, 824 F.3d 858, 

871 (9th Cir. 2016). 

Conclusion 

The district court’s rulings are AFFIRMED. 

TALLMAN, Circuit Judge, concurring in part and dissenting 

in part: 

I agree with the majority that the ASPA has standing to 

assert its claims. But that is where the majority and I part 

ways. Even as is, the Complaint states a plausible claim that 

the City enacted section 25 as a regulatory measure rather 

than a proprietary one. At this stage, we must say that this 

overly broad and facially suspect regulation of labor 

relations at Los Angeles International Airport (“LAX”)—

issued by the City’s airport commission ostensibly to 

promote labor peace—contravenes the delicate 

congressional balancing of national labor relations policy 

affecting key facilities of interstate commerce. I respectfully 

dissent. 

I 

A 

It is well established that, in enacting the National Labor 

Relations Act (“NLRA”), “Congress largely displaced state 

regulation of industrial relations.” Wis. Dep’t of Indus., 

Labor, & Human Relations v. Gould Inc., 475 U.S. 282, 286 
26 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

(1986). “The purpose of the [NLRA] was to obtain ‘uniform 

application’ of its substantive rules and to avoid the 

‘diversities and conflicts likely to result from a variety of 

local procedures and attitudes toward labor controversies.’” 

NLRB v. Nash-Finch Co., 404 U.S. 138, 144 (1971) (quoting 

Garner v. Teamsters Local Union No. 776, 346 U.S. 485, 

490 (1953)). To these ends, through the NLRA, Congress 

erected “a complex and interrelated federal scheme of law, 

remedy, and administration” and “entrusted administration 

of the labor policy for the Nation to a centralized 

administrative agency.” San Diego Bldg. Trades Council v. 

Garmon, 359 U.S. 236, 242–43 (1959).

Two complementary preemption doctrines serve to 

preserve uniformity in national labor policy. The first, 

Garmon preemption, “forbids States to ‘regulate activity that 

the NLRA protects, prohibits, or arguably protects or 

prohibits.’” Chamber of Commerce v. Brown, 554 U.S. 60, 

65 (2008) (quoting Gould, 475 U.S. at 286). The second, 

Machinists preemption, “prohibits state and municipal 

regulation of areas that have been left ‘to be controlled by 

the free play of economic forces.’” Bldg. & Constr. Trades 

Council of Metro. Dist. v. Associated Builders & 

Contractors of Mass./R.I., Inc. (Boston Harbor), 507 U.S.

218, 225 (1993) (quoting Lodge 76, Int’l Ass’n of Machinists 

& Aerospace Workers v. Wis. Emp’t Relations Comm’n, 

427 U.S. 132, 140 (1976)). Together, Garmon and 

Machinists preempt state and local policies that would 

otherwise balkanize the “integrated scheme of regulation” 

and disrupt the balance of power between labor and 

management embodied in the NLRA. Golden State Transit 

Corp. v. City of Los Angeles (Golden State I), 475 U.S. 608, 

613–14 (1986).
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 27

Similarly, the Railway Labor Act (“RLA”) established a 

centralized system of labor dispute resolution for the railway 

and airline industries to promote the free flow of interstate 

commerce. Aircraft Serv. Int’l, Inc. v. Int’l Bhd. of 

Teamsters, Local 117, 779 F.3d 1069, 1073 (9th Cir. 2015). 

Machinists and Garmon preemption also apply in the RLA 

context. Bhd. of R.R. Trainmen v. Jacksonville Terminal 

Co., 394 U.S. 369, 380–81 (1969).

B

As the majority correctly notes, a “market participation” 

exception allows state and local policies to avoid preemption 

analysis altogether if those policies serve to protect a 

proprietary interest rather than regulate the labor market. 

Boston Harbor, 507 U.S. at 229–30. But by focusing solely 

on the market participant exception, the majority glosses 

over a glaring reality: if the City had no proprietary interest 

in LAX, section 25 would plainly be preempted by the 

NLRA.

Section 25 requires service providers to enter into a 

“labor peace agreement” (“LPA”)—a “binding and 

enforceable” agreement that prohibits affected employees 

“from engaging in picketing, work stoppages, boycotts, or 

any other economic interference”—with any labor 

organization that requests one. If a service provider and 

requesting labor organization cannot reach a no-strike 

agreement within sixty days, section 25 requires the parties 

to submit to binding arbitration. If a service provider refuses 

to abide by the terms of section 25, the City may revoke its 

license to do business at the airport.

Section 25 represents precisely the type of local 

interference in labor-management relations that Machinists 

preemption forbids. In Golden State I, the Supreme Court 
28 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

held that while the NLRA “requires an employer and a union 

to bargain in good faith, . . . it does not require them to reach 

agreement,” nor does it demand a particular outcome from 

labor negotiations. 475 U.S. at 616; see also 29 U.S.C. 

§ 158(d) (providing that the duty to bargain in good faith 

“does not compel either party to agree to a proposal or 

require the making of a concession”). The substance of labor 

negotiations, and the results therefrom, are among those 

areas Congress intentionally left to the free play of economic 

forces when it legislated in the field of federal labor law. See 

Golden State I, 475 U.S. at 616 (describing the NLRA as 

providing only “a framework for the negotiations”).

The facts of Golden State I are instructive—and Los 

Angeles has been in trouble before for flouting federal labor 

laws. In that case, the Supreme Court found that Machinists 

preempted the City of Los Angeles’ refusal to renew a taxi 

cab company’s license when it failed to reach an agreement 

with striking union members. Id. at 618. By conditioning 

the renewal of the taxi cab franchise on the acceptance of the 

union’s demands, the City effectively imposed a timeline on 

the parties’ negotiations and undermined the taxi cab 

company’s ability to rely on its own economic power to 

resist the strike. Id. at 615. The Supreme Court held that the 

City could not pressure the taxi cab company into reaching 

a settlement and thereby “destroy[] the balance of power 

designed by Congress, and frustrate[] Congress’ decision to 

leave open the use of economic weapons.” Id. at 619.

Like the taxi cab company in Golden State I, service 

providers here face a Hobson’s choice plausibly inferred 

from the allegations of the Complaint. If a service provider 

refuses to negotiate an LPA with a requesting labor 

organization, it loses its right to do business at LAX. But if 

the service provider negotiates an LPA, the union knows full 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 29

well that it can hold out for significant concessions in 

exchange for its members giving up one of their most 

valuable economic weapons—the power to go on strike. If 

the union is unsatisfied with the terms the service provider 

offers, the union can request mediation and binding 

arbitration. Once forced to arbitrate, the tribunal will dictate 

the result the service provider must accept. The threat of 

binding arbitration thus seriously limits service providers’ 

ability to rely on their own “economic weapons of self-help” 

to resist a union’s demands.

By forcing unwilling service providers to negotiate and 

accept LPAs, section 25 compels a result Congress 

deliberately left to the free play of economic forces. The 

NLRA does not allow state and local governments to 

“introduce some standard of properly balanced bargaining 

power . . . or to define what economic sanctions might be 

permitted negotiating parties in an ideal or balanced state of 

collective bargaining.” Golden State I, 475 U.S. at 619 

(alteration in original) (quoting Machinists, 427 U.S. at 149–

50). Yet that is exactly what section 25 does. In doing so, it 

directly contravenes federal law.

II

A

Whether the City can enforce section 25 thus hinges 

entirely on the applicability of the market participant 

exception. The majority is willing to conclude—with little 

examination of what the full effects of section 25 will be—

that the City’s proprietary interest in LAX immunizes 

section 25 from preemption. Supreme Court precedent 

cautions us against drawing such hasty conclusions, 

particularly when serious questions persist about whether 

section 25 advances the City’s proprietary interest.
30 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

As a preliminary matter, the Supreme Court has made 

clear that not every government action escapes preemption 

simply because it touches a proprietary interest. Gould, 

475 U.S. at 287 (calling “an exercise of the State’s spending 

power rather than its regulatory power. . . . a distinction 

without a difference”). The animating concern of Gould, in 

the words of Judge Posner, was that “[t]he [state’s] spending 

power may not be used as a pretext for regulating labor 

relations.” Metro. Milwaukee Ass’n of Commerce v. 

Milwaukee County (Metropolitan Milwaukee II), 431 F.3d 

277, 279 (7th Cir. 2005) (emphasis added).

The fact that the City of Los Angeles owns and operates 

LAX through its municipal airport commission, and thus has 

an interest in minimizing disruptions to air travel, cannot 

alone qualify section 25 for the market participant exception. 

Instead we must determine, by examining section 25’s 

“actual content and its real effect on federal rights,” Livadas 

v. Bradshaw, 512 U.S. 107, 108 (1994), whether section 25’s 

“manifest purpose and inevitable effect” is to do more than 

protect the City’s proprietary interest in running the airport, 

see Gould, 475 U.S. at 291.1 Because our inquiry is

informed by how section 25 might actually work in practice, 

it “inevitably is fact-specific,” Roger C. Hartley, 

Preemption’s Market Participant Immunity—A 

Constitutional Interpretation: Implications for Living Wage 

and Labor Peace Policies, 5 U. Pa. J. Lab. & Emp. L. 229, 

 1 To be clear, examining a challenged policy’s purpose does not 

involve an investigation into policymakers’ “subjective reasons for 

adopting a regulation or agreement.” Johnson v. Rancho Santiago Cmty. 

Coll. Dist., 623 F.3d 1011, 1026 (9th Cir. 2010); see also Chamber of 

Commerce v. Reich, 74 F.3d 1322, 1336 (D.C. Cir. 1996) (clarifying that 

it was unnecessary “to question the President’s motivation in order to 

determine whether the [Executive] Order” demonstrated a regulatory 

purpose).
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 31

252 (2003), and deserves more than the surface-level review 

undertaken by the majority.

The Supreme Court’s decision in Chamber of Commerce 

v. Brown, 554 U.S. 60 (2008), illustrates the fact-sensitive 

nature of our analysis. At issue in Brown was California’s 

Assembly Bill 1889 (AB 1889), which prohibited certain 

private employers from using state funds to “assist, promote, 

or deter union organizing.” Id. at 63 (quoting Cal. Gov’t 

Code §§ 16645.1–16645.7). The Court found it “beyond 

dispute that California enacted AB 1889 in its capacity as a 

regulator rather than a market participant.” Id. at 70. As one 

obvious example, the preamble to AB 1889 announced an 

explicit regulatory purpose. Id.

The heart of the Court’s market participation analysis, 

however, focused not on AB 1889’s official purpose but on 

its practical consequences. Significantly, although AB 1889 

purported to affect only state funds, the statute’s 

combination of compliance burdens and litigation risks 

effectively deterred employers from using any funds, state 

or otherwise, to exercise speech rights protected under the 

NLRA. Id. at 72–73. In light of these realities, the Court 

held that although California had a “legitimate proprietary 

interest in ensuring that state funds are spent in accordance 

with the purposes for which they are appropriated,” in 

operation, AB 1889 “effectively reache[d] far beyond the 

use of funds over which California maintains a sovereign 

interest.”2 Id. at 70–71.

 2 The majority mischaracterizes my analysis of Brown. The critical 

lesson from Brown is that preemption analysis requires a careful inquiry 

into the actual effects of a challenged policy. Contrary to the majority’s 

interpretation, the Court’s analysis did not focus “solely on the text of 
32 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

With respect to section 25, we must be similarly sensitive 

to the ordinance’s real-world impacts. We must also 

construe the allegations in the Complaint in the light most 

favorable to the party resisting dismissal. Syed v. M-I, LLC, 

853 F.3d 492, 499 (9th Cir. 2017). Yet the majority seems 

content to decide, with little examination of how section 25 

might actually operate, that section 25 serves a purely 

proprietary function. Applying the Cardinal Towing test, the 

majority makes a conclusory finding that, “like the college 

in Johnson, the City is attempting to avoid disruption of its 

business.” And with similarly scant analysis, the majority 

decides that section 25 is “narrowly tied to [the City’s] 

specific proprietary problem.” Distinguishing between 

government as market participant and government as 

regulator, however, requires a closer look at section 25’s 

“actual content” and “real effect[s].” See Livadas, 512 U.S. 

at 108.

B

Under the first prong of Cardinal Towing, we cannot say 

that section 25 reflects the City’s interest in the “efficient 

procurement of needed goods and services,” as we might 

expect from a private entity. Johnson, 623 F.3d at 1023 

(quoting Cardinal Towing & Auto Repair, Inc. v. City of 

Bedford, 180 F.3d 686, 693 (5th Cir. 1999)). At the risk of 

 AB 1889.” Rather, its ultimate preemption holding rested on how the 

statute, once operationalized, would affect the real-world choices of 

entities receiving state funds, and the use of funds over which the state 

could claim no proprietary interest. Id. at 73 (“AB 1889’s enforcement 

mechanisms put considerable pressure on an employer either to forgo his 

‘free speech right to communicate his views to his employees,’ or else 

refuse the receipt of any state funds. In so doing, the statute . . . chills 

one side of the ‘robust debate which has been protected under the 

NLRA.’” (citation omitted)).
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 33

stating the obvious, the City here is not directly procuring 

goods and services to execute a discrete project, but rather 

providing ongoing licenses permitting a host of service 

providers handling baggage, assisting passengers, refueling 

aircraft, serving food and beverages, and otherwise keeping 

planes operating on schedule to do business at the airport. 

The City’s proprietary interest here is thus markedly 

different in kind than that in cases like Boston Harbor and 

Johnson, where local governments required project labor 

agreements that were “specifically tailored to one particular 

job.” See Boston Harbor, 507 U.S. at 232.

Furthermore, unlike the project labor agreements in 

Boston Harbor and Johnson, there is no evidence that a 

private operator of LAX would use LPAs as a means of 

ensuring labor peace. See Metro. Milwaukee II, 431 F.3d at 

282. Section 8(e)–(f) of the NLRA specifically authorizes 

the type of project labor agreements at issue in Boston 

Harbor and Johnson, indicating that such agreements “are a 

tried and true remedy for construction stoppages owing to 

labor disputes.” Id. at 281–82. Nothing in the record 

suggests the same is true for LPAs in the private 

marketplace.

Indeed, if the City’s true purpose here is to minimize 

work stoppages at LAX, section 25 seems an ill-fitted tool 

for the job. Section 25 is both too narrow and too broad as 

a means of achieving its purported objective. It is too narrow 

because, by its own terms, section 25 does not even apply to 

service providers’ employees, but only to the members of a 

labor organization that requests an LPA. Therefore, if a 

service provider’s employees currently have no recognized 

collective bargaining representative, those employees will 

not be covered by an LPA at all. Nor does section 25 apply 

to other classes of airport workers who may threaten work 
34 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

stoppages. Section 25 also applies only partial deterrence: 

it penalizes service providers, but not labor organizations, 

for violating an LPA.

At the same time, section 25 sweeps more broadly than 

necessary to achieve its goal. In order for unions to forgo 

their right to strike, common sense and long experience in 

labor negotiations tell us we would reasonably expect that 

service providers will have to make concessions favorable to 

the unions. These concessions may be totally unrelated to 

preventing strikes, and may or may not actually promote 

labor peace. Instead of forcing service providers and labor 

organizations into LPA negotiations, the City could have 

used other, more targeted mechanisms to prevent labor strife. 

In Metropolitan Milwaukee II, Judge Posner observed that

[t]he usual way of dealing with [service 

interruptions] is to include contract terms that 

by adding sticks or carrots or both give the 

provider of the service a compelling 

incentive to take effective measures to avoid 

stoppages. The buyer can offer a premium 

for timely performance and insist on the 

inclusion of a stiff liquidated-damages 

provision as a sanction for untimely 

performance; there is also, as a further 

incentive to good performance, the implicit 

threat of refusing to renew the contract if

performance is unsatisfactory.

431 F.3d at 280.3 Section 25 is far less straightforward. To 

summarize, it only covers a service provider’s employees if:

 3 The majority distinguishes Metropolitan Milwaukee II on the 

grounds that the county ordinance at issue in that case “did little to avoid 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 35

(1) those employees are already represented by a labor 

organization; (2) that labor organization requests an LPA; 

(3) the labor organization and service provider enter into 

LPA negotiations; and (4) the service provider makes 

concessions acceptable to the union, which may be totally 

unrelated to preventing strikes. If a service provider’s 

employees are not already unionized, once a labor 

organization secures an LPA, the labor organization must 

then (5) become the certified bargaining representative of the

service provider’s employees through NLRB elections. 

Compared to simple, contract-based incentives, see id.,

section 25 certainly seems a roundabout way to minimize 

labor disruptions at LAX.

These tailoring problems suggest that section 25’s 

“manifest purpose and inevitable effect” may not be to 

protect the City’s proprietary interest in the airport at all.4 

See id. (holding that tailoring problems may indicate a 

regulatory purpose); see also Hotel Emps. & Rest. Emps. 

 

service interruptions” and “imposed several additional conditions 

favorable to union organizing,” Nothing in the record establishes, 

however, that section 25 would achieve labor peace any more 

effectively. And for reasons explained infra, it is reasonable to assume 

that section 25’s practical effect is to impose conditions on service 

providers aimed at facilitating union organizing.

4 The majority suggests that the poor fit between section 25’s actual 

effects and its purported goals should play no role in our preemption 

analysis. But tailoring issues are highly relevant to our evaluation of the 

first prong of the Cardinal Towing test—whether a challenged policy 

“reflect[s] the [government] entity’s interest in its efficient procurement 

of needed goods and services.” Johnson, 623 F.3d at 1023 (quoting 

Cardinal Towing, 180 F.3d at 693). This inquiry is distinct from 

examining policymakers’ motives, which does not play a role in our 

analysis, and the narrowness of the challenged policy’s scope, which is 

relevant to Cardinal Towing prong two.
36 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

Union, Local 57 v. Sage Hosp. Res., LLC, 390 F.3d 206, 214 

(3d Cir. 2004) (noting that “[o]ther appellate courts that have 

examined the regulator/market-participant distinction also 

focus on the fit between the challenged state requirement and 

the state’s proprietary interest in a particular project or 

transaction” (citing Chamber of Commerce v. Reich, 74 F.3d 

1322 (D.C. Cir. 1996))). If section 25 does not directly 

advance the City’s proprietary interest, is it instead a pretext 

for regulating labor relations? The complaint plausibly 

alleges as much.

Historical experience with LPAs, which the majority 

does not bother to consider, also provides useful insight into 

whether section 25 reflects a proprietary interest or a 

regulatory one. That experience suggests that section 25’s 

true purpose is to alter the balance between labor and 

management. In typical LPAs, in exchange for relinquishing 

their right to strike, unions gain concessions from employers 

to support unionization of the employer’s employees. See 

Hartley, supra, at 246 (summarizing study of over one 

hundred LPAs). For example, LPAs often require an 

employer to remain neutral during union organizing drives. 

Id. LPAs also often require employers to provide unions 

with employees’ contact information and access to the 

employer’s physical premises to assist with organizing 

efforts.5 Id. at 246–47. A review of LPAs in California 

 5 Under the NLRA, by contrast, employers may publicly oppose 

unionization and refuse to give labor organizations access to workplace 

facilities. 29 U.S.C. § 158(c) (permitting noncoercive employer speech 

regarding unionization); Lechmere, Inc. v. NLRB, 502 U.S. 527, 538 

(1992) (upholding general rule that employer may not be compelled to 

allow nonemployee union organizers onto the employer’s property for 

the distribution of union literature). Section 25 thus forces service 

providers to give up statutory rights that would otherwise be protected.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 37

similarly found that, in most LPAs, “employers must grant 

workplace access, provide employee information (names, 

job titles, contact information, etc.) early in the organizing 

campaign,” “refrain from making disparaging statements 

about the union,” and/or “require that employers assent to 

card check recognition and neutrality.”6 Indeed, in this case, 

counsel for the City admitted at oral argument that unions 

would likely seek neutrality from service providers as part 

of LPA negotiations. We should therefore be unsurprised 

that, as the ASPA has alleged, the Service Employees 

International Union (SEIU) lobbied heavily for section 25 

after it tried unsuccessfully to unionize service provider 

employees at LAX.

Given that LPAs are generally used to promote union 

organizing, and given counsel’s own admission at oral 

argument, we cannot conclude at this stage that section 25 

simply reflects the City’s proprietary interest in preventing 

work stoppages. Moreover, the City has failed to establish 

that it enacted section 25 to respond to legitimate concerns 

about work disruptions at LAX, as we might expect from a 

private operator of the airport. The “manifest purpose and 

inevitable effect” of section 25 thus appears to be aimed at 

altering the balance of power between service providers and 

organized labor. See Gould, 475 U.S. at 291.

C

Turning to the second prong of the Cardinal Towing test, 

we again cannot say conclusively at this stage that section 

 6 John Logan, Innovations in State and Local Labor Legislation: 

Neutrality Laws and Labor Peace Agreements in California, in The State 

of California Labor 2003 157, 184 (Ruth Milkman ed., 2003), available 

at http://www.iir.ucla.edu/publications/documents/StateofCALabor2003.pdf.
38 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

25’s real-world impacts will be sufficiently narrow to qualify 

for the market participant exception.

Even on cursory facial examination, section 25 does not 

appear narrowly drawn. In Johnson, we found that the 

challenged project labor agreement condition in that case 

was narrow in scope because it was both limited in time and 

limited to construction projects costing over $200,000. 

623 F.3d at 1028. By contrast, section 25 applies to any 

service provider at LAX, no matter how big or small the 

service provider’s operations there. And section 25 is 

unlimited in duration; service providers must comply with 

its terms as long as they want to remain licensed to do 

business at LAX.

The practical effects of section 25 must also inform our 

determination of whether its scope is narrow. A challenged 

policy exceeds a state’s proprietary interest if the policy 

effectively reaches employer conduct “unrelated to the 

employer’s performance of contractual obligations to the 

state.” Boston Harbor, 507 U.S. at 228–29; see also Brown, 

554 U.S. at 71. In Metropolitan Milwaukee II, for example, 

the court held that a Milwaukee County ordinance was 

preempted because it affected government contractors’ 

employees regardless of whether they performed work on 

government contracts. 431 F.3d at 279. The ordinance 

required government contractors to secure LPAs that would 

apply to the contractors’ “employees,” without specifying 

whether “employees” within the meaning of the ordinance 

was limited to bargaining units that worked on county 

contracts. Id. The unrestricted language left open the 

possibility that an employee who performed only some or no 

work for the county would be covered by an LPA, even for 

a labor dispute arising out of non-county work. Id.
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 39

Here, we have no assurances—besides the word of the 

City—that section 25 will have no similar spillover effects. 

The majority confidently asserts that section 25 will not 

“hamper service providers’ operations elsewhere.” That 

conclusion apparently rests on the fact that section 25 as a 

whole is aimed at operations at LAX. But we should be 

unsurprised that section 25 focuses on LAX, given that the 

airport authority lacks jurisdiction to directly regulate 

service providers beyond LAX; the City clearly cannot 

impose contracting conditions on service providers with 

whom it has no contractual relationship. The key point, 

however, is that nothing in section 25 limits private

agreements between service providers and unions from 

extending beyond LAX. Nothing in section 25, for example, 

dictates that LPAs shall cover only LAX bargaining units. 

The ordinance provides only that an LPA must apply to a 

labor organization’s “members,” regardless of whether they 

perform only some or none of their work at LAX. In LPA 

negotiations, therefore, labor organizations may seek 

concessions that affect service provider employees well 

beyond LAX. And, depending on service providers’ 

business arrangements, it may be impracticable for service 

providers to segregate their workforces so that only 

employees who work exclusively at LAX are covered by an 

LPA.7 See Metro. Milwaukee II, 431 F.3d at 279–80.

 7 Contrary to the majority’s suggestion, we have no indication that 

any “natural division” between labor performed at and outside LAX 

exists. It may be, for example, that some service provider employees 

perform work both at LAX and at one of the many other regional airports 

in the greater Los Angeles area. Should such an employee become 

involved in a labor dispute, she would be bound by an LPA entered into 

pursuant to section 25 regardless of whether the dispute arose at LAX or 

elsewhere. This type of spillover concern was central in Metropolitan 

Milwaukee II, 431 F.3d at 279–80.
40 AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS

The sheer scale of LAX may also result in 

spillover effects. According to the City, “LAX is the 

fourth busiest passenger airport in the world,” and the 

second busiest in the U.S. L.A. World Airports, General 

Information, LAX: Los Angeles World Airports, 

http://www.lawa.org/welcome_lax.aspx?id=40 (last visited 

July 14, 2017). Last year, LAX handled over 80.9 million 

passengers and nearly 700,000 aircraft takeoffs and 

landings. Id. In Reich, the D.C. Circuit held that an 

Executive Order affecting all federal contracts over 

$100,000 served as a regulation, and not market 

participation, in part because the federal government is such 

a large purchaser of goods and services. 74 F.3d at 1338. 

Here, “given the size of [LAX’s] portion of the economy,” 

labor negotiations at LAX may similarly “alter . . . behavior” 

in the wider market for worldwide airline services. See id. 

The ASPA should at least be allowed to prove these potential 

effects.

III

If we are to give effect to Congress’ intent to “avoid the 

‘diversities and conflicts likely to result from a variety of 

local procedures and attitudes toward labor controversies,’” 

Nash-Finch Co., 404 U.S. at 144, we cannot allow the 

market participation exception to become too broad. It is not 

enough to simply accept state and local governments’ 

assurances that they only seek to enforce labor policies as 

market participants, particularly when those policies would 

directly interfere with core rights protected by the NLRA, 

itself the product of careful congressional balancing of 

national labor policy in industries affecting interstate 

commerce. Even at this early stage of litigation, an inquiry 

into section 25’s “real effect on federal rights,” Livadas,

512 U.S. at 108, raises serious doubts that the City’s interest 
AIRLINE SERV. PROVIDERS V. L.A. WORLD AIRPORTS 41

in enforcing section 25 is merely about protecting its 

proprietary interest in running Los Angeles International 

Airport. Plaintiffs have pled enough to proceed to discovery. 

I respectfully dissent.