By Darren Smith, Weekend Contributor
In January of 2014 we featured an article about the City of SeaTac Washington, where the Seattle Tacoma International Airport (SEA) is situated, passed a set of labor codes that included a fifteen dollar per hour minimum wage. Immediately afterward opponents filed suit in Superior Court objecting to, among other issues, that the Port of Seattle was a separate legal entity not subject under state law to Proposition 1, granting these increased wage benefits and city oversight. The trial court partially ruled in favor but struck down parts of the law’s provisions. The judge however certified the case for direct appeal to the state supreme court.
Today, the Washington Supreme Court published its opinion, siding with defendants, the City of SeaTac and Its clerk in her official capacity, in a five to four decision.
The City of SeaTac Washington enacted a proposition narrowly approved by voters (77 vote margin among approximately 6,000 total votes) that would, among other issues, raise the minimum wage of hospitality and transportation workers to $15.00 per hour; one of the highest in the United States. The minimum wage for Washington State is $9.32 and the highest among all fifty states. Supporters of the proposition argued the cost of living for those workers is forcing them to live in substandard lifestyles given their working environment and lack of benefits provided in these industries. Opponents argue the law would put an unnecessary burden upon business and force cuts in employees and a disincentive to operate within the city. Much controversy has been generated on all sides.
There are an estimated 1,600 transportation and hospitality workers employed in SeaTac and 4,700 within the Port of Seattle; mainly serving the airport. The ordinance has sparked much controversy on both labor and business interests and could have an affect on other cities throughout the state.
SeaTac is located in the vicinity of Seattle-Tacoma International Airport (SEA) south of Seattle. Adjacent to the airport, on International Boulevard, are a large number of hotels, motels, car rental agencies, and long term parking businesses that support travelers. The airport is within the city limits of SeaTac.
On Thursday the State Supreme Court decided several issues. Filo Foods LLC, BF Foods LLC, Alaska Airlines Inc., and the Washington Restaurant Association (collectively Filo Foods) first contested the validity of the number of signatures gathered to certify Proposition 1 for the November 2013 ballot. A trial court ruled in Filo’s favor but this was subsequently reversed on appeal. The measure passed by a very narrow margin and became effective on January 1st, 2015.
Filo Foods amended its complaint to challenge the notion that as a separate municipal entity, Sea-Tac International Airport under the municipal corporation of the Port of Seattle is not subject to the provisions of Proposition 1 and the labor regulating authority of the City.
There were four arguments:
Proposition 1 fails a challenge on the basis of the state constitution which mandates that all initiative measures must be of a single subject rule per initiative. Note: This argument has been on several occasions successful in bringing down citizens’ initiatives formerly.
The proposition violates the Port of Seattle’s jurisdiction over Sea-Tac airport
The initiative is preempted by federal labor and aviation laws and violates the dormant commerce clause.
The trial court held that the initiative did not violate the single-subject-rule. But did strike the portion of Proposition 1 in that it violated the Port of Seattle’s jurisdiction over the airport and was unenforceable at the airport. The trial court further ruled that Federal Law preempted the anti-retaliatory provisions of Proposition 1 but did not do so on other elements. Finally, the trial court ruled the initiative did not violate the dormant commerce clause.
Filo Foods’ direct appeal concerned the several unfavorable rulings and these are addressed by the State Supreme Court.
Succinctly, the Court held that Proposition 1 did not violate the single-subject-rule in that it considered the entire proposition to be a general modification to existing labor laws providing for the welfare of the employees and did not dissect each of elements, such as retaliation protections, minimum wage increases, etc. as being stand-alone subjects. Further in precedent with other measures and subsequent litigations such as Initiative 1183 (Liquor Privatization) the Court held that the specifics contained within those initiatives were all germane to a single goal for which the voter may review.
The court used the ordinary language of the ballot’s title and short description conveyed to the voter a proper instruction.
Proposition No. 1 concerns labor standards for certain employers.
This Ordinance requires certain hospitality and transportation employers to pay specified employees a $15.00 hourly minimum wage, adjusted annually for inflation, and pay sick and safe time of 1 hour per 40 hours worked. Tips shall be retained by workers who performed the services. Employers must offer additional hours to existing part-time employees before hiring from the outside. SeaTac must establish auditing procedures to monitor and ensure compliance. Other labor standards are established.
Should this Ordinance be enacted into law?
With regard to whether or not Proposition 1 may be applicable to the Port of Seattle’s Sea-Tac Airport the trial court held that Prop 1 conflicted the jurisdiction between the Port District and the City under RCW 14.08.330. The statute reads:
RCW 14.08.330
Jurisdiction of municipality over airport and facilities exclusive — Concurrent jurisdiction over adjacent territory — Fire code enforcement by agreement.
Every airport and other air navigation facility controlled and operated by any municipality, or jointly controlled and operated pursuant to the provisions of this chapter, shall, subject to federal and state laws, rules, and regulations, be under the exclusive jurisdiction and control of the municipality or municipalities controlling and operating it. The municipality or municipalities shall have concurrent jurisdiction over the adjacent territory described in RCW 14.08.120(2). No other municipality in which the airport or air navigation facility is located shall have any police jurisdiction of the same or any authority to charge or exact any license fees or occupation taxes for the operations. However, by agreement with the municipality operating and controlling the airport or air navigation facility, a municipality in which an airport or air navigation facility is located may be responsible for the administration and enforcement of the uniform fire code, as adopted by that municipality under RCW 19.27.040, on that portion of any airport or air navigation facility located within its jurisdictional boundaries.
Citing Heinsma v. City of Vancouver, 144 Wn.2d 556, 564, 29 P.3d 709 (2001), the Court stated that it had a duty to harmonize conflicting laws between local and state codes and laws unless it directly and irreconcilably conflicts. As such, based upon the operation and administration of the airport, the Port of Seattle could not argue that the implementation of Proposition 1 would interfere functional differences between cities and special purpose districts. The court concluded that Proposition 1 can be harmonized with RCW 14.08.330 because the Port of Seattle does not show that Proposition 1 would interfere with airport operations.
On the topic of preemption of federal labor laws we quote directly from the published opinion due to numerous intricacies:
Separate from challenging the jurisdictional reach of Proposition 1, Filo Foods challenges its substantive provisions on federal preemption grounds. It contends that three federal statutes preempt Proposition 1 : the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151-169; the Airline Deregulation Act of 1978 (ADA), Pub. L. No. 95-504, 92 Stat. 1705 (1978) (codified as amended in scattered sections of 49 U.S.C.); and the Railway Labor Act (RLA), 45 U.S.C. §§ 151-188. We hold that none of those statutes preempt Proposition 1. We will address each statute in turn.
A. The NLRA Does Not Preempt Proposition 1
Filo Foods contends that the NLRA preempts Proposition 1 in its entirety, or at least specifically preempts Proposition 1 ‘s worker-retention provision and its antiretaliation provision, SEATAC MUNICIPAL CODE 7.45.060, .090. The trial court held that the NLRA does not preempt Proposition 1 entirely but does preempt the antiretaliation provision. We hold that the NLRA does not preempt any aspect of Proposition 1.
Two provisions in the NLRA establish substantive rights and prohibitions. Section 7 protects an employee’s right to organize and bargain collectively and to refrain from doing so. 29 U.S.C. § 157. Section 8 prohibits certain “[u]nfair labor practice[s]” of employers and labor organizations. 29 U.S.C. § 158. The NLRA does not have a preemption clause, but the United States Supreme Court has developed case law concerning when the NLRA preempts state and local laws. The Court recognizes two forms ofNLRA preemption: Garmon preemption and Machinists preemption. See San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 79 S. Ct. 773,3 L. Ed. 2d 775 (1959); Lodge 76, Int’l Ass’n of Machinists & Aerospace Workers v. Wis. Emp’t Relations Comm ‘n, 427 U.S. 132, 96 S. Ct. 2548, 49 L. Ed. 2d 396 (1976).
Under the Garmon preemption doctrine, the NLRA’s text may affirmatively conflict with and thus preempt a state or local law. “Garmon pre-emption forbids States to ‘regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.”‘ Chamber of Commerce of US. v. Brown, 554 U.S. 60, 65, 128 S. Ct. 2408, 171 L. Ed. 2d 264 (2008) (quoting Wis. Dep ‘t of Indus., Labor & Human Relations v. Gould Inc., 475 U.S. 282, 286, 106 S. Ct. 1057, 89 L. Ed. 2d 223 (1986)). By contrast, under the Machinists preemption doctrine, the NLRA’ s text need not affirmatively conflict with a state or local law, but rather the United States Supreme Court has held that the NLRA’ s structure implies that Congress intended certain
aspects of labor relations to remain unregulated. That is, preemption under Machinists “forbids … States to regulate conduct that Congress intended ‘be unregulated [and] left “to be controlled by the free play of economic forces.””‘ !d. (quoting Machinists, 427 U.S. at 140 (quoting Nat’! Labor Relations Bd. v. Nash-
Finch Co., 404 U.S. 138, 144, 92 S. Ct. 373, 30 L. Ed. 2d 328 (1971))). “Machinists pre-emption is based on the premise that ‘”Congress struck a balance of protection, prohibition, and laissez-faire in respect to union organization, collective bargaining, and labor disputes.”‘” Id. (quoting Machinists, 427 U.S. at 140 n.4 (quoting Archibald Cox, Labor Law Preemption Revisited, 85 HARV. L. REv. 1337, 1352 (1972))).
Filo Foods first argues that under the Machinists doctrine, the NLRA preempts Proposition 1 in its entirety. Filo Foods contends that because Proposition 1 “imposes onerous substantive requirements” that all “favor employees and are typically issues negotiated in a collective bargaining agreement[,] [m]andating [the substantive labor requirements] runs afoul of federal labor policy.” Am. Answering Br. & Opening Cross-Appeal Br. ofFilo Foods (Filo Foods’s Opening Br.) at 33-34. The United States Supreme Court has rejected this type of argument. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 19-23, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987); Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747-58, 105 S. Ct. 2380,
85 L. Ed. 2d 728 (1985). In Fort Halifax Packing Co., for example, a Maine statute required employers to provide a onetime severance payment to employees in the event of a plant closing. 482 U.S. at 3-4 & n.1. An employer challenged the statute, arguing, as Filo Foods argues here, that the statute “intrudes on the bargaining activities of the parties because the prospect of a statutory obligation undercuts an employer’s ability to withstand a union’s demand for severance pay.” !d. at 20. The Court rejected this argument, holding that
the NLRA is concerned with ensuring an equitable bargaining process, not with the substantive terms that may emerge from such bargaining. “The evil Congress was addressing thus was entirely unrelated to local
or federal regulation establishing minimum terms of employment.” Such regulation provides protections to individual union and nonunion workers alike, and thus “neither encourage[s] nor discourage[s] the collective-bargaining processes that are the subject of the NLRA.” Furthermore, pre-emption should not be lightly inferred in this area, since the establishment of labor standards falls within the traditional
police power of the State. . . . It is true that the Maine statute gives employees something for which they otherwise might have to bargain. That is true, however, with regard to any state law that substantively
regulates employment conditions. Both employers and employees come to the bargaining table with rights under state law that form a “backdrop” for their negotiations …. [T]he mere fact that a state statute pertains to matters over which the parties are free to bargain cannot support a claim of pre-emption, for “there is nothing in the NLRA … which expressly forecloses all state regulatory power with respect to those issues … that may be the subject of collective bargaining.”
!d. at 20-22 (some alterations in original) (citations and internal quotation marks omitted) (quoting Metro. Life Ins. Co., 471 U.S. at 754-55; Malone v. White Motor Corp., 435 U.S. 497, 504-05, 98 S. Ct. 1185, 55 L. Ed. 2d 443 (1978)). We similarly conclude that Proposition 1, which establishes a minimum wage and other employee protections, “is not pre-empted by the NLRA, since its establishment of a minimum labor standard does not impermissibly intrude upon the collective-bargaining process.” Id. at 23.
Filo Foods further argues that Proposition 1 is not a permissible minimum labor standard because of its waive-out provision. The waive-out provision permits employers and employees to agree to waive Proposition 1 ‘s substantive requirements, but only “in a bona fide collective bargaining agreement.” SEATAC MUNICIPAL CODE 7.45.080. This, Filo Foods contends, “upsets the balance of power between labor and management by placing non-union employers in positions where they will be required to recognize unions in order to avoid the Ordinance.” Filo Foods’s Opening Br. at 37. Yet again, in Fort Halifax Packing Co., the United States Supreme Court considered and rejected this argument:
Appellant maintains that this case is distinguishable from Metropolitan Life. It points out that, unlike Metropolitan Life, the statutory obligation at issue here is optional, since it applies only in the absence of an agreement between employer and employees. Therefore, the Company argues, the Maine law cannot be regarded as establishing a genuine minimum labor standard. The fact that the parties are free to devise their own severance pay arrangements, however, strengthens the case that the statute works no intrusion on collective bargaining. . . . If a statute that permits no collective bargaining on a subject escapes NLRA
pre-emption, see Metropolitan Life, surely one that permits such bargaining cannot be pre-empted.
482 U.S. at 22; see also Livadas v. Bradshaw, 512 U.S. 107, 131-32 & n.26, 114 S. Ct. 2068, 129 L. Ed. 2d 93 (1994) (holding that the NLRA “cast[s] no shadow on the validity” of an opt-out provision for minimum labor standards). Consistent with United States Supreme Court authority, we hold Proposition 1 is not preempted because of its waiver provision.
Next, Filo Foods argues that the NLRA preempts Proposition 1 in its entirety because labor organizations used the political process to achieve rights that they may have otherwise achieved through collective bargaining. It contends, “Where unions have tried to obtain certain conditions through collective bargaining and have failed to do so effectively, a political body … should not reach a solution for them.” Filo Foods’s Opening Br. at 35-36. We reject this argument. Even putting aside the labor organizations’ rights of petition and of political expression under the First Amendment to the United States Constitution, the United States Supreme Court has held that section 7 of the NLRA itself protects labor organizations’ right to seek substantive protection through the political process. Eastex, Inc. v. Nat’! Labor Relations Bd., 437 U.S. 556, 565-66, 98 S. Ct. 2505, 57 L. Ed. 2d 428 (1978) (holding
that “employees’ appeals to legislators to protect their interests as employees are within the scope” of the employees’ right under section 7 of the NLRA to engage in “‘mutual aid or protection”‘). We hold that the NLRA does not preempt Proposition 1 in its entirety.
We turn now to Filo Foods’s preemption challenges to specific provisions of Proposition 1. Filo Foods first argues that under the Machinists doctrine, the NLRA preempts Proposition 1 ‘s worker-retention provision. SEATAC MUNICIPAL CODE 7.45.060. This provision applies to “successor employer[s],” id., which appears to
mean the surviving company after a business acquisition or merger.7 Under SeaTac Municipal Code 7 .45.060, successor employers have duties to retain certain workers of the predecessor employer for a limited period of time:
B. Retention Offer. Except as otherwise provided herein, the successor employer shall offer employment to all qualified retention employees. A successor employer who is a hospitality employer shall, before hiring off the street or transferring workers from elsewhere, offer employment to all qualified retention employees of any predecessor employer that has provided similar services at the same facility. If the successor employer does not have enough positions available for all qualified retention employees, the successor employer shall hire the retention employees by seniority within each job classification. For any additional positions which become available during the initial ninety (90) day period of the new contract, the successor employer will hire qualified retention employees by seniority within each job classification.
C. Retention Period. A successor employer shall not discharge a retention employee without just cause during the initial ninety (90) day period of his/her employment.
SEATAC MUNICIPAL CODE 7.45.060. The trial court held that the NLRA does not preempt these provisions. We affirm the trial court in this respect.
Filo Foods argues that Proposition 1 ‘s worker-retention provisions are preempted under the Machinists doctrine because the “U.S. Supreme Court recognizes a successor employer’s right to operate its business in the manner in which it best sees fit” in terms of its hiring and firing decisions. Filo Foods’s Opening Br. at 40. But the United States Supreme Court cases Filo Foods relies on do not support its argument. These cases involved application of the National Labor Relation Board’s (NLRB) successorship doctrine, which holds that if, under the doctrine’s fact intensive case law, the employer is found to be a successor, then the employer has a duty to bargain with the predecessor’s union. See Nat’l Labor Relations Bd. v. Burns
Int’l Sec. Servs., Inc., 406 U.S. 272, 92 S. Ct. 1571, 32 L. Ed. 2d 61 (1972); Howard Johnson Co. v. Detroit Local Joint Exec. Bd., Hotel & Rest. Emps. & Bartenders Int’l Union, 417 U.S. 249, 94 S. Ct. 2236, 41 L. Ed. 2d 46 (1974); Fall River Dyeing & Finishing Corp. v. Nat’l Labor Relations Bd., 482 U.S. 27, 107 S. Ct. 2225, 96 L. Ed. 2d 22 (1987). None addressed Machinists preemption or held that temporary worker-retention was a subject matter Congress intended to leave unregulated. The cases are not particularly instructive to the issue at hand.
Rather than being preempted under Machinists, we believe Proposition 1 ‘s worker-retention provision fits comfortably within the category of minimum labor standards held to be valid under Fort Halifax Packing Co. and Metropolitan Life Insurance Co. Just as the state of Maine could require certain employers to provide
severance pay to employees upon their businesses closing, in Fort Halifax Packing Co., the city of SeaTac may require successor employers to retain for three months ( 1) “qualified” retention employees, (2) to the extent that there are “enough positions available for all qualified retention employees,” (3) unless there is “just cause” for termination. SEATAC MUNICIPAL CODE 7.45.060(B), (C). Indeed, as section 7.45.060’ s qualifications illustrate, a successor employer in the city of SeaTac has substantial flexibility in avoiding the three-month retention period. We hold that SeaTac Municipal Code 7.45.060 [The codification of Proposition 1] is a minimum labor standard that simply sets the “backdrop” against which labor negotiations proceed. See R.I. Hospitality Ass ‘n v. City of Providence, 667 F.3d 17,32 (1st Cir. 2011) (upholding a worker-retention ordinance similar to SeaTac Municipal Code 7.45.060 against a Machinists preemption challenge) (quoting Fort Halifax Packing Co., 482 U.S. at 21). Accordingly, it is not preempted under the Machinists doctrine.
Filo Foods next argues that under the Garmon doctrine, the NLRA preempts Proposition 1 ‘s antiretaliation provision, SeaTac Municipal Code 7.45.090. That provision states:
A. It shall be a violation for a hospitality employer or transportation employer or any other person to interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right protected under this chapter.
B. It shall be a violation for a hospitality employer or transportation employer to take adverse action or to discriminate against a covered worker because the covered worker has exercised in good faith the rights
protected under this chapter.
SEATAC MUNICIPAL CODE 7.45.090. The trial court determined the NLRA preempts these provisions insofar as they create a ‘”supplemental sanction for violations of the NLRA.”‘ Clerk’s Papers at 1961. The court reasoned that “[t]hese provisions of the Ordinance directly infringe on the NLRB’s exclusive jurisdiction under §8 of the NLRA, which already makes it an unfair labor practice for an employer ‘to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in’ §7.” Id. (quoting 29 U.S.C. § 158(a)(l); NLRA § 8(a)(1)). We reverse in this respect.
The NLRA does indeed preempt state or local laws that create supplemental sanctions for violations of the NLRA. “[T]he Garmon rule prevents States … from providing their own regulatory or judicial remedies for conduct prohibited or arguably prohibited by the Act.” Gould Inc., 475 U.S. at 286. For example, in Gould Inc., the United States Supreme Court held that a Wisconsin statute that prohibited businesses that were repeat violators of the NLRA from doing business in Wisconsin was a supplemental sanction for violation of the NLRA and was therefore preempted. I d. at 283. Proposition 1 creates no such supplemental sanction for violations of the NLRA. Rather than providing an employee a remedy for illegal retaliation for exercising
rights protected under the NLRA, Proposition 1 provides an employee a remedy for illegal retaliation for exercising rights protected under Proposition 1. The two are not the same. Proposition 1 is self-contained. If an employer takes an adverse action against an employee because the employee reported a minimum wage violation under Proposition 1, the employer violates Proposition 1 ‘s antiretaliation provision. But in
this scenario, the employer does not necessarily violate the NLRA’s antiretaliation provision nor become subject to a new sanction for a NLRA violation. Proposition 1 ‘s antiretaliation provision is thus not a supplemental sanction appended to the NLRA but instead protects against retaliation for the exercise of rights under its provisions. We hold SeaTac Municipal Code 7.45.090 is not NLRA preempted.
B. The RLA Does Not Preempt Proposition 1
The trial court did not analyze whether the RLA preempts Proposition 1 because it concluded that an RLA preemption analysis would be the same as an NLRA analysis, and it had already found that the NLRA did not preempt Proposition 1. Filo Foods, along with amicus Airlines for America, argue that the RLA and NLRA preemption analyses differ because the RLA requires industry-wide unions while the NLRA does not. It argues that this industry-wide union requirement usually makes it difficult for a group of employees at a single airport to unionize, and that in most cases a group of employees at a single airport would need their employer to voluntarily recognize them in order to have a legitimate union. Filo Foods contends that Proposition 1 forces employers to voluntarily recognize unions at SeaTac because the only way for an employer to get out of the ambit of Proposition 1 is to negotiate a collective bargaining agreement. However, Filo Foods’s argument is essentially a reformulation of the argument we rejected in the NLRA context above-that Proposition 1 “upsets the balance of power between labor and management by placing
non-union employers in positions where they will be required to recognize unions in order to avoid the Ordinance.” Filo Foods’s Opening Br. at 37. Like our conclusion above, we hold that the RLA does not preempt Proposition 1 and we affirm the trial court.
The RLA was originally designed to prevent labor disputes from hindering interstate commerce in the railroad industry, and Congress extended the RLA to cover the airline industry in 1936. 45 U.S.C. § 152; Act of Apr. 10, 1936, ch. 166, 49 Stat. 1189 (currently codified as 45 U.S.C. § 181). The act itself states that it is the duty of both employers and employees in those industries to
exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or
otherwise, in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees therof.
45 U.S.C. § 152. The act generally promotes collective bargaining and “sets up a mandatory arbitral mechanism to handle disputes ‘growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions.'” Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 248, 114 S. Ct. 2239, 129 L. Ed. 2d 203 (1994) (quoting 45 U.S.C. § 153(i)). The United States
Supreme Court articulated the government’s role regarding the RLA as follows: “The Railway Labor Act, like the National Labor Relations Act, does not undertake governmental regulation of wages, hours, or working conditions. Instead it seeks to provide a means by which agreement may be reached with respect to them.”
Terminal R.R. Ass’n ofSt. Louis v. Bhd. ofR.R. Trainmen, 318 U.S. 1, 6, 63 S. Ct. 420, 87 L. Ed. 571 (1943) (footnote omitted). Although the RLA and NLRA are similar, one of the differences between the two acts, as Filo Foods notes, is that the RLA requires employees to collectively bargain on an industry-wide basis. Summit Airlines, Inc. v. Teamsters Union Local No. 295, 628 F.2d 787, 795 (2d Cir. 1980).
That minor difference notwithstanding, the RLA is like the NLRA for preemption purposes, in that “substantive protections provided by state law, independent of whatever labor agreement might govern, are not pre-empted under the RLA.” Hawaiian Airlines, 512 U.S. at 257. Thus, our preemption analysis is the
same as above. We hold that Proposition 1, which establishes a minimum wage and other employee protections, is not preempted by the RLA. Therefore, we affirm the trial court.
C. The ADA Does Not Preempt Proposition 1
The trial court did not analyze whether the ADA preempts Proposition 1 because it found that state law preempted Proposition 1 at the Seattle-Tacoma International Airport. Filo Foods argues that the ADA preempts Proposition 1 because Proposition 1 “has the force and effect of law related to air carrier services … and … ‘prices’ … by dictating how much carriers must pay for the workers who provide … services.” Filo Foods’s Opening Br. at 45. We hold that the ADA does not preempt Proposition 1 because Proposition 1 is not sufficiently “related to” airline services and prices.
Congress enacted the ADA in 1978, “determining that ‘maximum reliance on competitive market forces’ would best further ‘efficiency, innovation, and low prices’ as well as ‘variety [and] quality … of air transportation services.”‘ Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992) (alterations in original) (quoting former 49 U.S.C. App. §§ 1302(a)(4), (9), recodified
as 49 U.S.C. §§ 40101(a)(6), (12)). The ADA contains a preemption provision to prevent States from undoing federal deregulation. 49 U.S.C. 41713(b)(1). Under that provision, states “may not enact or enforce a law … related to a price, route, or service of an air carrier.” Id.
The United States Supreme Court has interpreted that preemption language broadly, holding that “[s]tate enforcement actions having a connection with, or reference to, airline ‘rates, routes, or services’ are pre-empted.” Morales, 504 U.S. at 384 (quoting former 49 U.S.C. App. § 1305(a)(1), recodified as 49 U.S.C. §
41713(b)(1)9). Thus, even laws that affect rates indirectly could be preempted. See id. at 386. However, the Court noted that not all state laws will be preempted. “‘[S]ome state actions may affect [airline fares] in too tenuous, remote, or peripheral a manner’ to have pre-emptive effect.” !d. at 390 (alterations in original) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n.21, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1983)). The Court in Morales did not draw the line for what state actions would be too tenuous to have preemptive effect.
Although preemption under the ADA is broad, federal circuit court cases suggest that the ADA does not preempt generally applicable laws that regulate how an airline behaves as an employer, even though the law indirectly affects the airline’s prices and services. See DiFiore v. Am. Airlines, Inc., 646 F.3d 81, 87 (1st Cir. 2011); Californians for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F .3d 1184, 1189 (9th Cir. 1998). In DiFiore, porters who provided curbside baggage service (called “‘skycaps'”) at Logan Airport in Massachusetts sued American Airlines over a $2-per-bag fee. 646 F.3d at 82-83. The skycaps contended that passengers stopped tipping them because the passengers assumed that the $2 fee was a mandatory tip rather than a charge paid to the airline. Id. The skycaps sued American Airlines under a Massachusetts statute governing tips, arguing that the law required the airline to give them any “‘tip[s] or service charge[s]”‘ and that the bag fee constituted “a ‘service charge’ under state law (and must therefore go to the skycaps) because customers ‘reasonably expect[ ed]’ it to be given to the skycaps.” I d. at 84 (third alteration in original) (quoting MASS. GEN. LAWS ch. 149, § 152A(a), (b)). The First Circuit concluded that because the tip law had “a direct connection to air carrier prices and services,” the ADA preempted it. Jd. at 87. The court reasoned that if the airline wanted to avoid having the law “deem the curbside check-in fee a ‘service charge[,]’ [it] would require changes in the way the service is provided or advertised.” ld. at 88. The court recognized, though, that if the law merely regulated “how the airline behave[ d] as an employer,” the ADA would likely not preempt the law, even if the law indirectly affected fares and services. ld. at 87-88.
Likewise, in Mendonca, the Ninth Circuit held that a federal law that is analogous to the ADA for preemption purposes (the Federal Aviation Administration Authorization Act of 1994 (FAAA), 49 U.S.C. § 1450)10 did not preempt California’s Prevailing Wage Law (CPWL), CAL. LABOR CODE§§ 1770-1780, because it regulated employer-employee relationships and only indirectly affected industry prices and services. 152 F.3d at 1189. The CPWL “required contractors and subcontractors who are awarded public works contracts to pay their workers ‘not less than the general prevailing rate … for work of a similar character in the locality in which the public work is performed.'” I d. at 1186 (alteration in original) (quoting CAL. LABOR CODE§ 1771). Public works contractors sued the California agencies responsible for enforcing the CPWL, contending that the F AAA preempted the CPWL because the CPWL “related to” the contractors’ prices and services. I d. at 1189. The contractors argued that the law “increase[ d] its prices by 25%, cause[ d] it to utilize independent owner-operators, and compel[ ed] it to re-direct and re-route equipment to compensate for lost revenue.” !d. The Ninth Circuit rejected that argument, concluding that the CPWL was not a law that directly regulated prices or services instead, it regulated employer-employee relationships, and its “effect [was] no more than indirect, remote, and tenuous.” ld. Thus, the court held that the FAAA did not preempt the CPWL. ld.
We agree with the First and Ninth Circuits and hold that the ADA does not preempt Proposition 1 because Proposition 1 regulates employer-employee relationships and its affect on airline prices and services is only indirect and tenuous. As discussed above, Proposition 1 establishes minimum wage and other employee protections-it does not directly regulate airline prices and services. The fact that Proposition 1 may impose costs on airlines and therefore affect fares is inconsequential. As the First Circuit noted, holding that a state law is preempted in that circumstance “would effectively exempt airlines from state taxes, state lawsuits of many kinds, and perhaps most other state regulation of any consequence.” DiFiore, 646 F.3d at 89. Interpreting the “relate to” provision of the ADA so broadly would be “a project doomed to failure, since, as many a curbstone philosopher has observed, everything is related to everything else.” Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., NA, 519 U.S. 316, 335, 117 S. Ct. 832, 136 L. Ed. 2d 791 (1997) (Scalia, J., concurring). We refuse to adopt such a broad reading of the ADA’s preemption provision and hold that the ADA does not preempt Proposition 1.
IV Dormant Commerce Clause
Filo Foods’s final contention is that Proposition 1 violates the dormant commerce clause. U.S. CONST. art. I,§ 8, cl. 3. The trial court rejected this argument.
So do we.
The United States Supreme Court has “long interpreted the Commerce Clause as an implicit restraint on state authority” to discriminate against or place burdens on interstate commerce. United Haulers Ass ‘n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338, 127 S. Ct. 1786, 167 L. Ed. 2d 655 (2007). The first
question under the dormant commerce clause doctrine is whether the state law “discriminates on its face against interstate commerce.” Id. “In this context, “‘discrimination” simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.”‘ I d. (quoting Or. Waste Sys., Inc. v. Dep ‘t of Envtl. Quality of Or., 511 U.S. 93, 99, 114 S. Ct. 1345, 128 L. Ed. 2d 13 (1994)). “Discriminatory laws motivated by ‘simple economic protectionism’ are subject to a ‘virtually per se rule of invalidity,’ which can only be overcome by a showing that the State has no other means to advance a legitimate local purpose.” Id. at 338-39 (citation omitted) (quoting City of Philadelphia, 437 U.S. 617,624,98 S. Ct. 2531,57 L. Ed. 2d 475 (1978)). However, if a state law does not “discriminate[] on its face against interstate commerce,” id. at 338, the law is subject to “the test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142[, 90S. Ct. 844, 25 L. Ed. 2d 174] (1970), which is reserved for laws ‘directed to legitimate local concerns, with effects upon interstate commerce that are only incidental.”‘ Id. at 346 (quoting City of Philadelphia, 437 U.S. at 624). Under the Pike test, a nondiscriminatory state statute remains valid unless the burden it imposes on interstate commerce is “‘clearly excessive in relation to the putative local benefits.”‘ I d. (quoting Pike, 397 U.S. at 142).
Filo Foods contends that Proposition 1 discriminates on its face against interstate commerce. That is so, Filo Foods contends, because Proposition 1 “distinguishes between entities that serve a principally interstate clientele and those that primarily serve an intrastate market by singling out those businesses that principally serve the Airport and air travelers.” Filo Foods’s Opening Br. at 52-53. This argument misunderstands the nature of facial discrimination. A facially discriminatory law textually identifies out-of-state persons or entities and grants them unfavorable treatment. See, e.g., Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 568 & n.2, 117 S. Ct. 1590, 137 L. Ed. 2d 852 (1997). That is not what Proposition 1 does. Proposition 1 does not distinguish between persons and entities located in Washington State and those located outside Washington State. The law accordingly does not facially discriminate against interstate commerce.
Instead, Proposition 1 must be analyzed under the Pike test because it is a facially nondiscriminatory law that may have an incidental effect on interstate commerce. But Filo Foods does not argue, much less demonstrate, that the undisputed facts establish as a matter of law that “‘the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.”‘ United Haulers Ass ‘n, 550 U.S. at 346 (alteration in original) (quoting Pike, 397 U.S. at 142). Accordingly, under the Pike test, we hold that Filo Foods has not established that Proposition 1 violates the dormant commerce clause.
In his dissent, Justice Stephens argued that the plain language of RCW 14.08.330 meant that every airport shall be under exclusive jurisdiction and control of the municipality (here the Port of Seattle) controlling and operating it. In this case Proposition one creates a singular exception where the Port of Seattle, through its control of Sea-Tac Airport which is what the legislature intended to avoid. The sole basis for the majority ruling, Justice Stephens argues, is the test on whether or not Proposition 1 Interferes with the operation of the airport, thus creating the potential for disruption for other port districts operating within cities or counties due to an erosion of the mandate of exclusive control.
It seems from an outsider’s point of view that the main thrust of the authors of Proposition 1 was to provide higher wages and employment rights to workers at Sea-Tac Airport, since there are three to four workers at the airport than there are outside yet within the boundaries of the City of SeaTac. So with that regard the Supreme Court’s ruling is a resounding victory. Yet, since the ruling is mostly favorable to the situation regarding airports it will not be fully applicable to other municipalities that are considering similar labor laws, the ruling clears possible federal pre-emption laws on a few fronts that might be challenged elsewhere. But, there is the possibility still the legislature might declare through legislation that state wage and labor laws will preempt city or county ordinances, effectively making such city specific ordinances moot.
By Darren Smith
Source:
FILO FOODS, LLC; BF FOODS, LLC; ALASKA AIRLINES, INC.; and THE WASHINGTON RESTAURANT ASSOCIATION v. THE CITY OF SEATAC; KRISTINA GREGG, CITY OF SEATAC CITY CLERIZ, in her official capacity
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