Court Opinion

ID: 8917651
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:45:23.687538+00
Date Added: 2024-06-11T17:09:08.472917
License: Public Domain

WALLACE, Circuit Judge,
concurring in
part and dissenting in part:
I concur in parts V and VI, in which the majority reverses the district court’s grant of summary judgment on Klamath’s antitrust claims. In my view, the majority improperly reaches out in part VII to provide an advisory opinion on the propriety of the district court’s denial of attorneys’ fees. Because the majority reverses the district court’s summary judgment, the issue of attorneys’ fees is no longer relevant to this appeal. I dissent from parts II, III, and IV, in which the majority reverses the district court’s dismissal of Klamath’s section 1983 claims. Klamath has failed to state a claim under the taking clause of the fifth amendment, the equal protection clause, or the due process clause.
I
Klamath’s claim based on the taking clause and the unconstitutional conditions doctrine fails under Honolulu Rapid Transit Co. v. Dolim, 459 F.2d 551 (9th Cir.), cert. denied, 409 U.S. 875 (1972) (Honolulu). We held there that the unconstitutional conditions doctrine is not implicated when a governmental body and a private party negotiate the price to be paid for an exchange of property between the two, even though under the contract the government pays less than “just compensation” for the property. The reasoning for our holding is clearly set out in the passage quoted by the majority. Maj. op., at 651. When the government bargains over compensation for its own property, it is free to bargain aggressively with “due regard to [its] own interest.” Id. at 553, quoting Albrecht v. United States, 329 U.S. 599, 604, 67 S.Ct. 606, 609, 91 L.Ed. 532 (1947). Under such circumstances, there is no taking by the government; the transaction passes “out of the range of the Fifth Amendment.” Honolulu, 459 F.2d at 553, quoting Albrecht v. United States, 329 U.S. at 603, 67 S.Ct. at 608. As a result, no constitutional right has been relinquished and the unconstitutional conditions doctrine is not implicated.
Here, pursuant to its charter, the City has bargained aggressively to obtain compensation for its real property. As was the case in Honolulu, the City has conditioned the grant of a public benefit (street vacation) on Klamath’s agreement to contractual terms that Klamath alleges would allow the City to obtain its property without paying just compensation. Since Honolulu holds that a contract is constitutional even though it allegedly results in the government obtaining private property without paying just compensation, we cannot now hold that the government’s attempt to negotiate such a contract is impermissible. If the former does not constitute an unconstitutional taking, a fortiori the latter cannot.
The majority attempts to distinguish Honolulu by stating that in that ease the imposed condition was directly related to the subject of the benefit and that in this case the condition is not directly related. The majority concludes that a condition requiring an applicant for a governmental benefit to forego a constitutional right is permissible if the condition is rationally related to the benefit conferred. The majority’s unprecedented distinction distorts both our holding in Honolulu and the unconstitutional conditions doctrine.
The majority relies especially on Frost & Frost Trucking Co. v. Railroad Commission, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101 *666(1926) (Frost). In Frost, the Supreme Court struck down a state economic regulation which in effect required private carriers to become public carriers in order to use the public highways. Frost, 271 U.S. at 592-94, 46 S.Ct. at 606-07. Under prior Supreme Court precedent, requiring a private carrier to become a public carrier constituted a taking in violation of the fifth amendment. Id. at 592, 46 S.Ct. at 607; accord Michigan Public Utilities Commission v. Duke, 266 U.S. 570, 577-78, 45 S.Ct. 191, 193-94, 69 L.Ed. 445 (1925). In striking down the statute, the Court stated that the government may not impose conditions upon its grant of a privilege which require the relinquishment of constitutional rights. 271 U.S. at 593-94, 46 S.Ct. at 607. In Honolulu, after quoting extensively from Frost, we distinguished that case, not because we found a relationship between the benefit conferred and the condition imposed, but because we found that no taking had occurred. In fact, neither Frost nor Honolulu contains any analysis of the relation between condition and benefit.
The majority’s reliance on Stephenson v. Binford, 287 U.S. 251, 53 S.Ct. 181, 77 L.Ed. 288 (1932) (Stephenson), also is misplaced. In quoting from Frost and Stephenson, see maj. op., at 652-653, the majority confuses unconstitutional conditions analysis with analysis of whether an economic regulation furthers a legitimate state interest. In upholding the state regulation in Stephenson, the Court first distinguished Frost by finding that the statute before the Court in Stephenson did not convert private carriers into common carriers; hence, no taking was involved. Id. at 265-68, 53 S.Ct. at 184-85. The Court later analyzed whether the state had asserted a legitimate state interest and whether the imposed condition was rationally related to that interest. Id. at 212-76, 53 S.Ct. at 187-89. Because Stephenson, like Frost, was decided in the era of economic substantive due process, the state was required to demonstrate that its regulation advanced a legitimate state interest; if it did not, the regulation violated the due process clause by interfering with private contractual relations. Id. at 263, 274, 53 S.Ct. at 184, 188. The Court in Stephenson stated that the statute involved in Frost was not designed to regulate the public highways, a legitimate state purpose, but to “protect the business of those who were common carriers in fact by controlling competitive conditions,” id. at 275, 53 S.Ct. at 188, then considered an illegitimate state purpose. Thus, the Court in Stephenson interpreted the statute in Frost as advancing only an impermissible state interest.
Even assuming this means/ends analysis is still sound today, it cannot be argued that the City’s interest in developing geothermal power is an impermissible governmental interest or that its requirement that Klamath give up wells in exchange for a street vacation is not rationally related to that interest. Moreover, by requiring a further nexus between the condition and the benefit, the majority goes beyond Frost and Stephenson and seeks to force the City to “compartmentalize” its legitimate state interests.
United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243 (1940), on which the majority also relies for its proposed distinction, is not relevant for the same reason. In that case, federal statutory and licensing provisions regarding a hydroelectric dam were challenged as violative of both the commerce clause and the taking clause of the fifth amendment. Id. at 421, 61 S.Ct. at 305. In separate analyses, the Court found (1) that the license conditions were related to the federal commerce power, and (2) that the conditions did not violate the fifth amendment. Id. at 426-28, 61 S.Ct. at 308-09. The majority mixes the two analyses together in an attempt to justify its conclusion that the government can require relinquishment of a constitutional right provided its imposed condition is related to the benefit withheld.
The weakness of the majority’s proposed distinction is demonstrated by the facts of this case. The majority states that the City is free to bargain aggressively. Maj. op., at 652. Indeed, it apparently condones the City’s charging Klamath over two and a *667half times the amount it ordinarily charges for street vacation. Thus, under the majority’s analysis, the City could have charged Klamath enough money for the street vacation that it could then have condemned Klamath’s wells and still had money left over. Its mistake was requesting that Klamath pay for the street vacation with its wells rather than with money. This reasoning turns upside down the unconstitutional conditions doctrine which is designed to prevent the government from doing indirectly what it cannot do directly. See Perry v. Sindermann, 408 U.S. 593, 597, 92 S.Ct. 2694, 2697, 33 L.Ed.2d 570 (1972); Frost, 271 U.S. at 592-93, 46 S.Ct. at 606-07.
Likewise, the majority would apparently uphold a contract in which the City required, in exchange for the street vacation, that Klamath construct street lights or finance some other project connected with streets, even though such obligations would require expenditures for the City’s benefit. It will not, however, allow the City to seek to acquire the wells in exchange for the street vacation. This distinction is meaningless; in either case, the government uses the same leverage to coerce concessions from the private party. Under Honolulu such “coercion” is permissible because it is not based on the government’s power to take, but on its role as a market participant. The City is given the same prerogatives as any other party to bargain aggressively; to hold otherwise would restrict the government’s ability to bargain for exchanges of property. Honolulu, 459 F.2d at 553. Thus, the majority’s analogies to a government’s withholding parking permits or business licenses to exact concessions are inapposite because those are not areas in which the City bargains for compensation.
It may be argued that because of its inherently superior bargaining power a governmental body should not be given such wide latitude when bargaining over compensation for its property. Nevertheless, this argument is rejected by our holding in Honolulu and we are bound by this prior precedent. Because I cannot find an adequate distinction between Honolulu and the case before us, I find that Klamath has failed to state a cause of action under the taking clause vof the fifth amendment.
II
Klamath also fails to establish its claim under the equal protection clause. Since this case involves neither a suspect classification nor the infringement of a fundamental . right, the City need only demonstrate that its discriminatory treatment of Klamath bears a rational relationship to a legitimate governmental purpose. San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 40, 93 S.Ct. 1278, 1300, 36 L.Ed.2d 16 (1973); Ybarra v. Town of Los Altos Hills, 503 F.2d 250, 254 (9th Cir.1974).
The City submits as a legitimate governmental purpose its desire to acquire Klamath’s geothermal wells for the City’s proposed geothermal heating district. Klamath admits that its wells are located within the City’s planned geothermal district and that the City’s ultimate goal in conditioning the street vacation on the dedication of the well site was to acquire the wells for the public. These concessions preclude our holding that the vacation denial violated the equal protection clause. The acquisition of Klamath’s well sites for a city-run geothermal heating district constitutes a legitimate state interest. The only additional inquiry is whether the City’s vacation denial was rationally related to the accomplishment of that regulatory purpose. It is clear from the record that the City conditioned the vacation approval and ultimately denied the request in order to acquire Klamath’s geothermal drilling rights for the public. Thus, its actions were rationally related to a legitimate state interest.
It is unclear why the majority rejects this reasoning. It apparently concludes that not only must the City’s discriminatory conduct be rationally related to a legitimate government interest, but that the asserted interest also must be related to the statute pursuant to which the City acts. In other words, the City’s discriminatory granting of street vacations can only be justified by its interest in street vacation. I see no reason to add *668this prong to the equal protection test or to force the City to compartmentalize its interests. We may only inquire whether the proffered interest is legitimate and whether the discrimination advances that interest. Otherwise, we begin to act as a super legislature, judging the wisdom of economic policy determinations. See City of New Orleans v. Dukes, 427 U.S. 297, 303-04, 96 S.Ct. 2513, 2516-17, 49 L.Ed.2d 511 (1976) (per curiam) (“[I]n the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment.”). In this case, for example, the majority’s reasoning would essentially require the City to treat all applicants for street vacation permits equally, restricting the City’s ability to bargain over the price for the vacation of its streets.
The cases cited by the majority do not substantiate its expansion of the equal protection test. In both Plyler v. Doe, 457 U.S. 202, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982), and Zobel v. Williams, 457 U.S. 55, 102 S.Ct. 2309, 72 L.Ed.2d 672 (1982), for example, the Court struck down a state statute which was discriminatory on its face because the discrimination did not further the government’s asserted purpose for passing the statute. Plyler v. Doe, 457 U.S. at 226-30, 102 S.Ct. at 2400-02; Zobel v. Williams, 457 U.S. at 61-64, 102 S.Ct. at 2313-15. Here, however, the statute pursuant to which the City acts is neutral on its face and its constitutionality is not being challenged. The state action Klamath challenges is the City’s discriminatory conduct in carrying out the statute. The City must justify this action by demonstrating that it furthers its alleged interest, Plyler v. Doe, 457 U.S. at 215-16,102 S.Ct. at 2394, and clearly it has done so in this case. None of the cases cited by the majority supports a requirement that the City’s legitimate interest be related to the statute whose constitutionality is not even disputed.
The majority admits that its conclusion on the equal protection issue is largely dependent on its resolution of the fifth amendment issue. See maj. op., at 654. Only if the attempt to obtain the wells is viewed as an impermissible government activity can Klamath sustain its argument that the City has engaged in impermissible discrimination. Since I find that no taking has occurred and the City has not violated the fifth amendment as incorporated by the fourteenth amendment in seeking to acquire Klamath’s wells, I also find that Klamath fails to state a claim under the equal protection clause.
Ill
Klamath likewise fails to establish a section 1983 action based on a violation of the due process clause. Klamath asserts that Or.Rev.Stat. § 271.100 (1981) confers upon it a property interest protectable by the due process clause. The majority is correct that this issue is controlled by Jacobson v. Hannifin, 627 F.2d 177 (9th Cir.1980). The question before us is whether the procedural requirements of the Oregon statute were intended to operate as a “significant substantive restriction” on the City’s actions, that is, whether they enhance Klamath’s “expectation of obtaining a [street vacation] to a degree sufficient to create a protectible [sic] interest.” Id. at 180.
The procedural guarantee of a formal hearing does not significantly enhance Klamath’s expectation of obtaining the requested street vacations. The City Council has the statutory authority to grant or deny a vacation petition depending upon whether it finds that “the public interest will be prejudiced by the vacation.” Or.Rev.Stat. § 271.120 (1981). The statute does not limit the substantive grounds upon which the City Council is to make this determination, and gives no assurance, conditional or otherwise, that a vacation petition will be granted. There is no measurable difference between the grant of authority to the Gaming Commission in Jacobson and that involved here: both vest the governing body with sufficient discretion to negate any claim that the state intended to create a protectable interest. In both cases, the mere fact that the state also provided for certain procedural requirements, such as a *669public hearing, does not change this conclusion. I cannot agree with the majority that the requirement that the City base its vacation decisions on “the public interest” places “significant substantive restrictions on the agency’s actions so as to confer due process rights.”