Court Opinion

ID: 7006065
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:50:42.416929+00
Date Added: 2024-06-11T16:10:04.402335
License: Public Domain

WALLACE, Circuit Judge,
dissenting:
I respectfully disagree with the majority’s analysis in Part II.B, in which the majority holds that the City and County of San Francisco (City) may, consistent with the Airline Deregulation Act (Act), use its monopoly over property at the San Francisco International Airport (Airport) to compel the Arlines to provide benefits on an equal basis to their employees. Because I believe that the Act preempts the City’s use of its monopoly power to enforce Chapter 12B of the San Francisco Administrative Code (Ordinance), I would reverse the judgment of the district court without reaching the other issues discussed by the majority.
I.
First, I address the suggestion made in the majority opinion that the Airlines failed to raise the Airport monopoly argument in the district court. See Majority Opinion at 12820. The district court explained that “[the Airlines] argue that carriers will be forced to cease operating out of the Arport if they refuse to accept the contract terms required by the Ordinance.” Air Transp. Ass’n of Am. v. City & County of S.F., 992 F.Supp. 1149, 1187 (N.D.Cal.1998). Thus, the Arlines did argue before the district court that the City’s control over Airport property would require them to agree to the terms of the Ordinance or lose their access to key Airport property. The district court held, however, that the Airlines would be forced to cease operating out of the Arport “only *1080if the potential cost or other burden of bringing a carrier’s benefit plans into compliance with the otherwise-valid portions of the Ordinance is so great that air carriers will be coerced into changing their routes.” Id. In other words, the district court required the Airlines to show that, rather than succumb to the City’s monopoly, they would pull out of the Airport because of the costs of implementing the terms of the Ordinance. Because the parties had not provided briefing on this new requirement, the district court deferred deciding the crossmotion for summary judgment on this issue in order for them to present evidence. Id. Thus, it was in order to comply with the district court’s test that the Airlines took the position “that the costs and burdens of complying with the Ordinance might force them to change their routes and services.” See Majority Op. at 12821-22. On appeal, the Airlines argue that the district court’s test fails to provide the full preemption protection afforded them by Congress.
II.
We have explained that “Congress’s •clear and manifest purpose in enacting the [Act] was to achieve ... the economic deregulation of the airline industry. Specifically, the [Act] ... was designed to promote maximum reliance on competitive market forces.” Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1265 (9th Cir.1998) (en banc) (second omission in original; internal quotation marks omitted). The majority is correct that general nondiscrimination laws enforced through a governmental entity’s police powers or through court action are not preempted by the Act. Majority Op. at 1072-73; see Newman v. Am. Airlines, Inc., 176 F.3d 1128, 1131 (9th Cir.1999); Aloha Islandair Inc. v. Tseu, 128 F.3d 1301, 1303 (9th Cir.1997); Abdu-Brisson v. Delta Air Lines, Inc., 128 F.3d 77, 84 (2d Cir.1997). However, it is equally clear that outright bans on airline flights or the denial of access to key Airport facilities (unless the action falls within the limited proprietary powers exception which is not involved here) are preempted by the Act as an obvious restriction on competitive market forces. See Arapahoe County Public Airport Auth. v. Fed. Aviation Admin., 242 F.3d 1213, 1222 (10th Cir.2001) (“We easily conclude the Authority’s ban is connected with and relates to both services and routes. By banning scheduled passenger service, the Authority has affirmatively curtailed an air carrier’s business decision to offer a particular service in a particular market.”) (citations omitted); see also Air Transport Ass’n, 992 F.Supp. at 1187 (“[I]f the City applies the Ordinance to leases or other contracts that are essential to a carrier’s operations at the Airport .... it certainly undermines the deregulatory goals of the [Act].”).
The instant case deals with neither a general anti-discrimination statute nor an outright denial of airport access. The majority opinion focuses on the components of the Ordinance that are akin to garden-variety nondiscrimination statutes and causes of action. I disagree with that approach. I would hold that the Ordinance both refers to and has a connection with routes and services because if the Airlines refuse to comply with its terms, the City, by virtue of its monopoly at the Airport, would be authorized to deny the Airlines effective access to one of our nation’s busiest transportation markets. I do not believe that Congress intended for municipalities to have the ability to bully Airlines into submission to local social policy, however laudable that policy might be, by threatening denial of market access.
A.
The Supreme Court has held that a state or local law is “related to” a price, *1081route, or service if it has “[1] a connection with, or [2] reference to” a price, route, or service. Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 223, 115 S.Ct. 817, 130 L.Ed,2d 715 (1995) (internal quotation omitted). “Reference to” preemption occurs “[w]here a State’s law acts immediately and exclusively upon [price, route, or service] ... or where the existence of [a price, route, or service] is essential to the law’s operation.” Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A, Inc., 519 U.S. 316, 325, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997); see also Morales v. Trans World Airlines, Inc., 504 U.S. 374, 388, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). The paradigmatic “reference to” preemption case is IngersolL-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), in which the Supreme Court held that ERISA preempted “a state common law claim that an employee was unlawfully discharged to prevent his attainment of benefits under a plan covered by ERISA.” Id. at 135, 111 S.Ct. 478. The Supreme Court reasoned,
The Texas cause of action makes specific reference to, and indeed is premised on, the existence of a pension plan. In the words of the Texas court, the cause of action “allows recovery when the plaintiff proves that the principal reason for his termination was the employer’s desire to avoid contributing to or paying benefits under the employee’s pension fund.” Thus, in order to prevail, a plaintiff must plead, and the court must find, that an ERISA plan exists and the employer had a pension-defeating motive in terminating the employment. Because the court’s inquiry must be directed to the plan, this judicially created cause of action “relate[s] to” an ERISA plan.
[The plaintiff] argues that the pension plan is irrelevant to the Texas cause of action because all that is at issue is the employer’s improper motive to avoid its pension obligations. The argument misses the point, which is that under the Texas court’s analysis there simply is no cause of action if there is no plan.
Id. at 140, 111 S.Ct. 478 (internal citation omitted).
It is true that the Ordinance does not single out the Airlines or explicitly address routes and services provided at the Airport. See Morales, 504 U.S. at 386, 112 S.Ct. 2031 (A law “may relate to a [price, route, or service], and thereby be preempted, even if the law is not specifically designed to affect such [price, route, or service].” (internal quotation omitted)). However, like the Texas cause of action in Ingersollr-Rand, there would be no effective application of the Ordinance to the Airlines but for the City’s monopoly control over necessary transportation services and routes located at the Airport.
I would hold the district court fell into error by brushing aside the Airlines’ arguments on the basis that they would not in fact abandon their Airport business. As indicated above, this test misses the mark. Because of the City’s monopoly power, the Airlines must choose either to capitulate to the City’s demands or not to compete for Airport business.
B.
To determine whether a local law has a prohibited “connection with” a price, route, or service, we look “both to the objectives of the statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on [price, route, or service].” Dillingham, 519 U.S. at 325, 117 S.Ct. 832 (internal quotation and citations omitted). If a state law’s effect on price, route, or service is “too tenuous, remote or peripheral,” then the state law is not preempted. Morales, 504 U.S. at *1082390, 112 S.Ct. 2031 (internal quotation omitted). It is true, as the majority says, that “[rjecent Supreme Court ERISA cases suggest that in order for the ‘effect’ of a state law to cause preemption, the state law must compel or bind an ERISA plan administrator to a particular course of action with respect to the ERISA plan.” Majority Op. at 1071-72. I also agree with the majority’s statement that “[b]y analogy, a local law will have a prohibited connection with a price, route, or service if the law binds the air carrier to a particular price, route or service and thereby interferes with competitive market forces within the air carrier industry.” Majority Op. at 1072.
Here, I would hold that the Airlines are bound to a particular choice regarding route and service. The Ordinance presents the Airlines with a clear ultimatum: either leave the Airport or provide the required benefits program. If the Airlines had refused to comply with the Ordinance and the City were before us attempting to evict the Airlines from the Airport, it would be clear that such an action would be preempted by the Act (assuming, as is the case here, that the City is not exercising its proprietary powers within the meaning of the Act). See Arapahoe, 242 F.3d at 1222. The Supreme Court has repeatedly explained that the “broadly worded” preemption provision of the Act is meant to be “clearly expansive.” See, e.g., Egelhoff v. Egelhoff, 532 U.S. 141, 121 S.Ct. 1322, 1327, 149 L.Ed.2d 264 (2001); Morales, 504 U.S. at 384, 112 S.Ct. 2031. While the Supreme Court has cautioned against an “uncritical literalism” in applying this provision, Egelhoff, 121 S.Ct. at 1327, 121 S.Ct. 1322, I believe that the majority reads the provision too narrowly by holding that the Airlines must in fact contemplate leaving the Airport because of the costs of implementation before preemption applies.
The majority opinion cites Duncan v. Northwest Airlines, 208 F.3d 1112 (9th Cir.2000), in support of its position that the Airlines must demonstrate that the costs of implementing the Ordinance would drive them from the market before there is preemption under the Act. Majority Op. at 1075. In that case we held that a class action tort suit alleging personal injuries from second-hand smoke aboard airplanes was not preempted by the Act. Northwest argued that the lawsuit might force Northwest to prohibit smoking on its trans-Pacific flights originating in Washington state, which in turn might compel Northwest to drop such flights. Id. at 1115. We held that this connection was too tenuous because “all successful tort suits-and certainly all successful class-action tort suits-invariably carry with them an economic cost for the defendant airline.” Id. In Duncan, the possibility of any compulsion upon routes or services was remote. The plaintiffs in the lawsuit did not assert that they could directly restrict Northwest’s flights in order to stop second-hand smoke damage. Rather, they asked for damages, which, if awarded, might persuade Northwest to prohibit smoking on certain trans-Pacific flights, which might cause Northwest to be less competitive in that market, which might eventually lead Northwest to drop those flights. Here, the Airlines will lose competitive access to the Airport by simply refusing to accede to the demands of the City. The fact that the City’s monopoly is working should not be used to establish that the Ordinance has only a tenuous connection to routes and services.
In American Airlines v. Wolens, the Supreme Court held that the Act does not “shelter airlines from suits ... seeking recovery solely for the airline’s alleged breach of its own, self-imposed undertakings.” 513 U.S. at 228, 115 S.Ct. 817. The *1083Court explained that contracts freely entered into by the airlines were enforceable because of the distinction “between what the State dictates and what the airline itself undertakes.” Id. at 233, 115 S.Ct. 817. I respectfully suggest that the majority has lost sight of this distinction. The goal of the Act is “to promote maximum reliance on competitive market forces.” Charas, 160 F.3d at 1265 (internal quotation marks omitted). The Ordinance dictates to the Airlines what they must do to remain competitive in the City transportation market. It is clear to me that this mechanism for implementing social policy is preempted by the Act. I would so hold and therefore, must dissent.