The California US Court of Appeals granted the American Trucking Associations' appeal for an injunction against the Ports of Los Angeles and Long Beach on non-safety-related issues. An appeal on a separate action by the Federal Maritime Commission is still in question.
When the US District Court in the District of Columbia denied a motion by the Federal Maritime Commission (FMC) alleging the employee-driver mandate in the concession clause of the Ports' Clean Truck Program would constrain the market, Judge Richard J. Leon ruled the FMC had not established the likelihood of success for the case on its merits. This, says FMC preserved the core elements of the case. FMC was considering an appeal, but has not yet filed. It gave no indication whether the positive ruling for the ATA would influence it's own decision.
The ATA suit was different from the FMC suit in a number of ways, especially on the legal position it took. It was clear that it does not oppose the Clean Trucks Program as some opponents had alleged. Its suit was based on the Federal Aviation Administration Authorization Act and the Commerce Clause of the US Constitution and it focused on separate concession plan requirements. The ports argued, in part, the rules were exempt from federal regulation based on the fact they regulate safety, a valid argument for exemption.
The appellate court said in its decision that the lower court had erred when it concluded the agreements likely fell within the statutory exception reserving the safety regulatory authority of a state with respect to motor vehicles. The lower court also concluded the ATA had not demonstrated irreparable harm would occur without injunctive relief from the concession agreements called for under the Clean Truck Program. (Those concession agreements require dray drivers serving the port to be employees of companies which are granted concession status to operate at the port.
In reversing the lower court decision not to grant the injunctions and remanding the case, the appeals judges said the port actions forcing motor carriers into concession agreements would “likely fall before the demands of federal preemption as set forth in the Federal Aviation Administration Authorization Act (FAAA Act).”
The appellate judges said, “There can be no doubt that when Congress adopted the FAAA Act, it intended to broadly preempt state laws that were 'related to a price, route or service' of a motor carrier.” In so doing, the judges continued, “Congress intended to avoid the spectacle of state and local laws reregulating what Congress had sought to deregulate.”
It can hardly be doubted the concession agreements relate to prices, routes or services of motor carriers, said the judges. “We fully agree with the district court that it is likely that ATA will establish that proposition.”
On the matter of the safety exemption, the judges said, “If too broad a scope were given to the concept of motor vehicle safety, the exception would swallow the preemption section itself or, at the very least, cut a very wide swath through it.” They acknowledged there is no “bright line” test for what is related to safety, but court cases do offer some guidance. Among the precedents discussed was Rowe vs. The New Hampshire Transport Association where the US Supreme Court upheld the federal restriction against a state regulation which would affect price, route or service. (See Defending Transportation Deregulation.)
In part, the court said, “The mere fact that one part of a regulation or group of regulations might come within an exception to preemption does not mean that all other parts of that regulation or group are also excepted.” It added, “The narrow question, again, is whether the provision is intended to be, and is, genuinely responsive to motor vehicle safety. It is rather clear that some, indeed many, of the provisions of the Concession agreements are not likely to live in the light cast by that strobe.”
The court examined statements by the Los Angeles Board, which it said, “underscores an extensive attempt to reshape and control the economics of the drayage industry in one of the largest ports in the nation. One of its goals was to create a market of 'fewer, generally larger, and more stable [motor carriers] operating trucks' that may, by adhering to the Ports’ emissions requirements, 'enjoy competitive advantages if they can earn solid reputations for maintaining green operations.'”
The court noted, “The independent contractor phase-out provision is one highly likely to be shown to be preempted.” Further, the provisions giving preference to experienced drivers, “might have some slight tendency to ensure that drivers have a proven safety record and can be trusted to conduct business at the Ports, it is likely that the Ports are imposing the requirements in order to force drayage carriers to hire certain preferred workers over others, on the theory that new drivers are not as reliable as old drivers. It is a rather blatant attempt to decide who can use whom for drayage services, and is a palpable interference with prices and services.”
”In short, the district court legally erred in not examining the specific provisions of the Concession agreements, and it is likely that many of those provisions are preempted,” the court continued. “Although we are of the opinion that ATA has shown the likelihood that it will prevail on the merits, at least as to some of the provisions of the Concession agreements, it is not entitled to relief unless it can also show the likelihood of irreparable harm. The district court determined that ATA could not do so; we disagree. The district court correctly noted that the motor carriers had two choices: Sign the Concession agreements, or refuse to sign them.” Citing precedents, the court continued, “a very real penalty attaches to the motor carriers regardless of how they proceed. That is an imminent harm.”
Nearing its conclusion, the judges added, “In short, motor carriers should not be required to adhere to the various unconstitutional provisions in the Ports’ agreements, and are likely to suffer irrevocably if forced to do that or give up their businesses.” The court granted that the ports have significant concerns, but with or without the concession agreements in the Clean Truck Program, there are other programs and laws designed to alleviate those problems—all of which are not challenged.
“We conclude that the Concession agreements of both the Ports will likely be found to be preempted in whole or in part. The Port of Los Angeles Concession agreement does overreach considerably more than does the Port of Long Beach Concession agreement. However, each is likely to result in at least some irreparable harm to the motor carriers, and, on balance, the district court abused its discretion when it denied a preliminary injunction as to significant parts of the agreements.
The text of the appeals court's ruling is at http://www.ca9.uscourts.gov/datastore/opinions/2009/03/20/0856503.pdf
For additional background, see: