Court Opinion

ID: 2805139
Source: CourtListenerOpinion
Date Created: 2015-06-02 20:01:31.959436+00
Date Added: 2024-06-11T12:04:12.566593
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                              JUN 02 2015

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

CALOP BUSINESS SYSTEMS, INC.,                    No. 13-56992

              Plaintiff - Appellant,             D.C. No. 2:12-cv-07542-MMM-
                                                 RZ
 v.

CITY OF LOS ANGELES,                             MEMORANDUM*

              Defendant - Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                  Margaret M. Morrow, District Judge, Presiding

                        Argued and Submitted May 6, 2015
                              Pasadena, California

Before: NOONAN, WARDLAW, and MURGUIA, Circuit Judges.

      The City of Los Angeles’s Living Wage Ordinance (“LWO”), L.A. Admin.

Code §§ 10.37–10.37.14, requires contractors who operate at the City’s airports to

pay their employees $14.80 per hour, or $10.30 per hour if the contractor provides

health benefits. L.A. Admin. Code § 10.37.2(a). The City’s Office of Contract

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Compliance found that Calop Business Systems, Inc., violated the LWO over a

twelve-day period in January 2010, in which Calop paid its employees only $11.55

per hour and made no health benefit contributions. Calop filed suit against the

City, asserting that the LWO is unconstitutionally vague in violation of the due

process guarantees of the United States and California Constitutions. Calop also

contends that the LWO is preempted by three federal statutes: the Employee

Retirement Income Security Act (“ERISA”),1 the Airline Deregulation Act,2 and

the Railway Labor Act.3 The district court granted summary judgment for the City

on all of Calop’s claims. We have jurisdiction under 28 U.S.C. § 1291, and affirm

in part and dismiss in part.

                                          I

      The district court correctly held that Calop lacks standing to argue that the

phrase “health benefits” is unconstitutionally vague. Calop paid its employees

$11.55 per hour without paying any health benefits at all, and therefore engaged in

“‘conduct that is clearly proscribed’” by the LWO. See Hunt v. City of L.A., 638
F.3d 703, 710 (9th Cir. 2011) (quoting Holder v. Humanitarian Law Project, 561

      1
          29 U.S.C. §§ 1001–1461.
      2
        Pub. L. 95-504, 92 Stat. 1705 (1978) (codified as amended in scattered
sections of 49 U.S.C.).
      3
          45 U.S.C. §§ 151-188.
                                          2
U.S. 1, 20 (2010)).

      The district court also correctly held that Calop lacks standing to attack the

LWO’s supersession provision, which allows employers and unions to opt out of

the LWO’s minimum wage in a collective bargaining agreement. L.A. Admin.

Code § 10.37.12. As the district court observed, because Calop has not shown that

the City ever attempted to enforce that provision against it, Calop cannot show that

it suffered an injury as a result of the LWO’s supersession clause. In addition, the

higher overtime rate that the LWO imposes on employers who do not pay health

benefits does not confer standing on Calop because it is “fairly traceable” to the

City’s interpretation of the LWO’s minimum wage term, not to any ambiguity in

the minimum wage and supersession provisions. See Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560–61 (1992). Calop therefore has not demonstrated that

it has standing to argue that the minimum wage and supersession terms are

unconstitutionally vague. See id.

      We dismiss for lack of jurisdiction Calop’s claim that the LWO is

unconstitutionally vague.

                                          II

      ERISA preempts any state law that “has a connection with or a reference to”

an employee benefits plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983).

                                          3
The district court properly held that the LWO does not fulfill either condition of

ERISA preemption. First, the LWO does not have a “reference to” employee

benefits plans merely because it takes into account what health benefits employers

offer in “calculating the cash wage that must be paid.” See WSB Elec., Inc. v.

Curry, 88 F.3d 788, 793–94 (9th Cir. 1996). Second, the LWO’s provision for

collecting reports on employee compensation from employers does not create a

“connection with” employee benefits plans because the provision imposes no

obligations on plans themselves. See id. at 794–96. Third, the LWO does not give

rise to a “connection with” benefits plans merely by creating economic incentives

to offer certain kinds of benefits, again because it imposes no affirmative

obligation with respect to those plans. See id. at 795–96.4

                                         III

      The district court correctly granted summary judgment for the City on

Calop’s claim that the Airline Deregulation Act preempts the LWO. Because

Calop has produced no evidence that the LWO affects any airline’s “price, route,

      4
        Calop argues that ERISA preempts a provision of the LWO that prohibits
employees from waiving their employers’ health coverage under certain
circumstances. See L.A. Admin. Code § 10.37.3(a). Calop lacks standing to
challenge this provision because it has not shown that it offers a benefits plan, and
therefore cannot show that the provision caused it any concrete injury. See Lujan,
504 U.S. at 560. To the extent that Calop argues that ERISA preempts the LWO’s
no-waiver provision, we dismiss the claim for lack of jurisdiction.
                                          4
or service,” see 49 U.S.C. § 41713(b)(1); Air Transp. Ass’n v. City & Cnty. of S.F.,

266 F.3d 1064, 1072 (9th Cir. 2001), Calop has not demonstrated that the LWO

“acutely interfer[es] with the forces of competition” in the airline industry, see

Californians for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F.3d
1184, 1189 (9th Cir. 1998).

                                          IV

      Finally, the district court correctly granted summary judgment for the City

on Calop’s claim that the LWO is preempted by the Railway Labor Act. The Act

does not preempt state and local laws that, like the LWO, impose minimum

substantive requirements while permitting employers and unions to bargain around

them. See Firestone v. S. Cal. Gas. Co., 219 F.3d 1063, 1067–68 (9th Cir. 2000).5

                                           ~

      Calop’s claim that the LWO is unconstitutionally vague, and its ERISA

preemption claim to the extent it attacks section 10.37.3(a) of the Los Angeles

Administrative Code, are DISMISSED for lack of jurisdiction. In all other

respects, the judgment of the district court is AFFIRMED.

      5
        Firestone held that a state labor regulation that permitted employers and
unions to opt out was not preempted by either the Labor Management Relations
Act or the National Labor Relations Act. See 219 F.3d at 1067–68. Opinions
addressing preemption by these statutes also bear on preemption by the Railway
Labor Act. See Air Transp., 266 F.3d at 1075–76.
                                           5