979 F.3d 1220
9th Cir.2020Background
- San Francisco’s SFMTA issues taxi medallions; since 2010 there are three classes: Pre‑K (pre‑1978), Post‑K (1978–2010), and Purchased (post‑2010). Purchased medallions cost about $250,000.
- The advent of Uber/Lyft devastated medallion values; consultants found Purchased holders disproportionately harmed and taxis clustering at SFO, causing airport congestion and fewer cabs available in the City.
- In 2018 SFMTA adopted regulations giving priority at SFO to Purchased medallion holders and restricting/precluding Pre‑K and disfavoring Post‑K pickups at SFO.
- Pre‑K and Post‑K medallion holders sued under federal and state equal protection and substantive due process, CEQA, and California Government Code § 11135 (age discrimination).
- The district court granted the City’s motion for judgment on the pleadings; the Ninth Circuit affirmed the constitutional and CEQA rulings, affirmed dismissal of the § 11135 claim for failure to plead a funding nexus, and remanded to allow the district court to consider leave to amend state‑law claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Equal protection / substantive due process | Regulations impermissibly favor Purchased holders and economically discriminate against Pre‑K/Post‑K; amount to naked protectionism or irrational favoritism | Rational‑basis review applies; regulations rationally further legitimate interests: reduce SFO congestion, increase city service, mitigate harm to Purchased holders | Upheld: rational basis satisfied; no invidious discrimination; Lochner‑style substantive due process rejected |
| CEQA: whether the 2018 Regulations are a "project" | Rules will increase deadhead trips to/from SFO and thus materially affect environment/traffic | Rules only reallocate existing fares among medallion classes; do not authorize more trips or construction; environmental effects speculative | Upheld dismissal: not a CEQA "project" based on pleadings; alleged environmental effects speculative |
| Cal. Gov’t Code §11135 (age discrimination) | SFMTA receives state funding generally, so §11135 applies to taxi medallion program | §11135 requires funding/assistance directed to the specific program at issue; general/state funding to agency is insufficient | Dismissed for failure to plausibly allege a funding nexus; plaintiffs may be given leave to amend |
| Relief / procedural posture: judgment on the pleadings and amendment | Plaintiffs seek to avoid dismissal and preserve state‑law claims | City: judgment on the pleadings proper based on complaint allegations | Affirmed dismissal; remanded for district court to consider leave to amend state‑law claims |
Key Cases Cited
- City of Cleburne v. Cleburne Living Center, 473 U.S. 432 (1985) (irrational prejudice and heightened scrutiny context)
- Merrifield v. Lockyer, 547 F.3d 978 (9th Cir. 2008) (rational‑basis limits where government singles out an economic group without reasonable basis)
- Craigmiles v. Giles, 312 F.3d 220 (6th Cir. 2002) (singling out an economic group can indicate impermissible economic animus)
- Armour v. City of Indianapolis, 566 U.S. 673 (2012) (burden on challenger to negate every conceivable rational basis)
- Union of Medical Marijuana Patients, Inc. v. City of San Diego, 7 Cal.5th 1171 (2019) (CEQA "project" analysis; foreseeability of indirect environmental effects)
- Muzzy Ranch Co. v. Solano Cty. Airport Land Use Comm’n, 41 Cal.4th 372 (2007) (agency action not subject to CEQA if not a "project")
- Comunidad en Accion v. L.A. City Council, 219 Cal.App.4th 1116 (2013) (state funding must be tied to the challenged program for §11135 to apply)
- Sproles v. Binford, 286 U.S. 374 (1932) (legitimate government interest in traffic distribution and management)