Airline Service Providers Ass'n v. Los Angeles World Airports
873 F.3d 1074
| 9th Cir. | 2017Background
- The City of Los Angeles, which operates LAX, requires service providers (baggage, fueling, wheelchair assistance, etc.) to sign a standard LAX license containing §25, a labor-peace requirement. §25 requires a requested labor organization and a provider to negotiate an LPA within 60 days, then mediation, and if necessary binding arbitration; resulting LPAs must bar strikes, pickets, boycotts, and similar economic interference.
- ASPA (an association of third-party service providers) and Airlines sued, alleging §25 is effectively a municipal regulation preempted by the NLRA and RLA and violates the ADA by affecting airline service, and sought to enjoin enforcement.
- The district court dismissed the complaint without leave to amend (labor preemption claims dismissed for failure to state a claim; ADA claim dismissed for lack of standing as to some plaintiffs).
- On appeal the Ninth Circuit held ASPA had associational standing (members suffered concrete costs from compelled negotiations/mediation/arbitration traceable to §25 and redressable by injunction).
- The court concluded the City acted as a market participant (not a regulator) when adopting §25 under the Cardinal Towing two-prong test (efficient procurement and narrow scope) and therefore federal preemption doctrines (NLRA, RLA, ADA) do not apply to this proprietary action.
- The court affirmed dismissal and upheld the district court’s denial of leave to amend because plaintiffs represented they had no factual basis to allege spillover/regulatory effects that would save the complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of ASPA | ASPA members will incur concrete costs (time, negotiation, arbitration) and thus have injury-in-fact | City contended standing was lacking for some plaintiffs | ASPA has associational standing; alleged costs are concrete, traceable, and redressable |
| Whether §25 is preempted by the NLRA/RLA (labor preemption) | §25 effectively regulates labor relations by compelling LPAs and binding arbitration, altering bargaining power and displacing federal labor law | City acted as proprietor of LAX and thus was a market participant; proprietary actions are not preempted absent clear congressional intent | §25 is a proprietary market-participant action; NLRA and RLA do not preempt it under these pleadings |
| Whether §25 is preempted by the ADA | §25 has the force/effect of law related to airline service and thus is preempted by ADA | §25 is proprietary conduct; ADA preemption targets regulatory action, not market participation | ADA does not preempt §25 as applied to the City’s proprietary conduct |
| Denial of leave to amend | Plaintiffs argued discovery might show spillover/regulatory effects | City argued complaint cannot be cured; plaintiffs conceded lack of new facts | Denial of leave to amend affirmed: plaintiffs represented no additional facts could save the complaint |
Key Cases Cited
- Boston Harbor, 507 U.S. 218 (1993) (market-participant exception permits proprietary contracting even when actions affect labor, absent congressional intent to the contrary)
- Wisconsin Dep't of Indus., Labor & Human Relations v. Gould Inc., 475 U.S. 282 (1986) (state procurement restrictions that sweep broadly into labor relations can be preempted)
- Chamber of Commerce v. Brown, 554 U.S. 60 (2008) (state spending restrictions that, in operation, regulate labor organizing are preempted)
- Golden State Transit Corp. v. City of Los Angeles, 475 U.S. 608 (1986) (municipal action conditioning licensing on settlement of labor disputes can be preempted)
- Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011 (9th Cir. 2010) (applying Cardinal Towing test; public entity acting as market participant when procuring services and using project labor terms)
- Am. Trucking Ass'ns v. City of Los Angeles, 569 U.S. 641 (2013) (interpretation of preemption language to distinguish regulatory action from proprietary conduct)