Sierra Northern Railway v. Port of West Sacramento

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8 UNITED STATES DISTRICT COURT

9 FOR THE EASTERN DISTRICT OF CALIFORNIA

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11 SIERRA NORTHERN RAILWAY, No. 2:24-cv-01899-DJC-JDP

12 Plaintiff,

13 v. ORDER ISSUING PRELIMINARY

INJUNCTION

14 PORT OF WEST SACRAMENTO and

RAMCON ENGINEERING &

15 ENVIRONMENTAL CONSULTING,

INC.,

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Defendants.

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18 Following the issuance of a Temporary Restraining Order, the Court now

19 considers Plaintiff’s Motion for a Preliminary Injunction pending resolution of this case.

20 Plaintiff has provided sufficient evidence to show entitlement to a preliminary

21 injunction under the “serious questions” test. As discussed below, there is a

22 significant factual dispute between the Parties that may determine the outcome of

23 Plaintiff’s claims. If Plaintiff is ultimately able to establish the facts in its favor, then

24 Plaintiff is likely to succeed on the merits. Considering the allegations in the

25 Complaint and the facts in the record, the Court concludes that Plaintiff has

26 established at least serious questions about the merits of its claims. Without issuance

27 of a preliminary injunction, Plaintiff will be irreparably harmed, while Defendants have

28 articulated no real hardship if the status quo is maintained for the duration of the

1 litigation. The balance of hardships, therefore, “tips sharply in the plaintiff’s favor”

2 warranting issuance of the injunction. The Court accordingly GRANTS the Motion for

3 Preliminary Injunction.

4 I. Background

5 A. Factual Background

6 Plaintiff Sierra Northern Railway (“SNR”), a common carrier railroad, brings the

7 present suit against the Sacramento-Yolo Port District (which appears to have been

8 erroneously sued as the Port of West Sacramento) (“the Port”), a governmental

9 independent special district, and the Port’s tenant, Ramcon Engineering &

10 Environmental Consulting, Inc. (“Ramcon”) (collectively “Defendants”) over

11 Defendants’ decision to revoke Plaintiff’s alleged license to access its property via a

12 route through the property leased by Ramcon, the “North Access route.” (Compl.

13 (ECF No 1) ¶¶ 3–5.) Plaintiff operates a railway transloading service in West

14 Sacramento where it stores and transfers freight between railroads and other means

15 of transportation. (Id. ¶ 12.) In order to effect its transloading services, Plaintiff alleges

16 that it has historically used the North Access route. (Id. ¶¶ 16–17.)

17 Plaintiff acquired a parcel of land from the Port in 2012 where it houses its rail

18 facilities. (Id. ¶ 13.) While the parcel included a deeded easement for an access route

19 on the southern portion of the property, the “South Access route,” the Port, through its

20 General Manager Rick Toft, granted Plaintiff a license to access the property via the

21 contested North Access route. He told Plaintiff’s CEO, Kennan H. Beard, that SNR

22 could use the route without restriction, removed the lock on the gate securing the

23 road, and allowed Plaintiff to install its own lock on the gate. (Id. ¶¶ 1, 15.) In reliance

24 on the license to utilize the North Access route, Plaintiff improved its land and built its

25 rail facilities at the northern portion of its property, expending nearly $2,000,000. (Id.

26 ¶ 16.) Plaintiff alleges that it thereafter began to use the North Access route to

27 conduct its operations. (Id. ¶¶ 16–17.)

28 ////

1 After constructing the rail facilities, and in apparent reliance on the use of the

2 North Access route, in 2023 Plaintiff leased a parcel of land at the southern portion of

3 its property to a construction company, Flatiron Contractors, Inc. (“Flatiron”). (Id.

4 ¶ 18.) The lease contract between Flatiron and Plaintiff grants Flatiron exclusive use of

5 the southern portion of Plaintiff’s property, including a pathway that connects the

6 South Access route to Plaintiff’s rail facilities on the north end of the property. (Beard

7 Decl., (ECF No. 21-1) Ex. A at 1.) Accordingly, Plaintiff alleges, it cannot access its rail

8 facilitates or carry out its operation except through the North Access route. (Id. ¶ 21.)

9 In May 2024, Defendants purported to revoke Plaintiff’s license to use the North

10 Access route, which became effective on July 10, 2024. (Ex Parte Appl. for TRO (“TRO

11 App”) (ECF No. 2) at 10 –11.) Without use of the North Access route, Plaintiff claims

12 that it is unable to access its rail facilities and alleges that the lack of access will cause

13 Plaintiff to substantially cease its shipping activities. (Id. at 17.) Plaintiff has filed the

14 present suit requesting a declaratory judgement that Defendants’ actions are

15 preempted by the Interstate Commerce Commission Termination Act (“ICCTA”), 49

16 U.S.C. §§10101 et seq., seeking to quiet title to the route and equitably estop

17 Defendants from revoking the license, and asserting violation of 42 U.S.C. § 1983

18 against the Port for unlawful taking in violation of the Fifth and Fourteenth

19 Amendments.

20 B. Procedural Background

21 On July 11, 2024, Plaintiff filed an Ex Parte Application for a Temporary

22 Restraining Order to restore Plaintiff’s movement through the North Access route.

23 (TRO App. at 1.) The Court held a hearing on July 12, 2024, with David Diepenbrock

24 appearing for Plaintiff and Lauren Jones and Jeff Mitchell appearing for the Port.

25 Defendant Ramcon did not appear at the hearing. At the conclusion of the hearing,

26 the Court granted the Application for a Temporary Restraining Order, (ECF No. 11),

27 and later issued a written order (ECF No. 13).

28 ////

1 Pursuant to the briefing schedule set by the Court, Plaintiff filed the instant

2 Motion for Preliminary Injunction (Mot. Prelim. Inj. (“PI Mot.”) ECF No. 14), Defendants

3 filed Oppositions (Def. the Port’s Opp’n (ECF No. 16); Def. Ramcon’s Opp’n (ECF No.

4 18)), and Plaintiff filed a Reply (ECF No. 21). The Court held oral argument on the

5 Motion on July 25, 2024 with David Diepenbrock and William Scott Cameron

6 appearing for Plaintiff, Lauren Jones appearing for Defendant the Port, and Kristen

7 Renfro appearing for Defendant Ramcon. At the conclusion of the hearing, the Court

8 extended the Temporary Restraining Order for an additional fourteen (14) days and

9 took the matter under submission.

10 II. Legal Standard for Preliminary Injunction

11 “A plaintiff seeking a preliminary injunction must establish that he is likely to

12 succeed on the merits, that he is likely to suffer irreparable harm in the absence of

13 preliminary relief, that the balance of equities tips in his favor, and that an injunction is

14 in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

15 The Ninth Circuit also recognizes the “serious questions” test which is a type of sliding

16 scale test. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).

17 Under the sliding scale, “a stronger showing of one element may offset a weaker

18 showing of another.” Id. “For example, a stronger showing of irreparable harm to

19 plaintiff might offset a lesser showing of likelihood of success on the merits.” Id.

20 Accordingly, “[a] preliminary injunction is appropriate when a plaintiff demonstrates

21 . . . that serious questions going to the merits were raised and the balance of

22 hardships tips sharply in the plaintiff's favor.” Id. at 1134–35. After Winters, in order to

23 meet the serious questions test, the Plaintiff must also make a showing of irreparable

24 injury and public interest. Id.

25 ////

26 ////

27 ////

28 ////

1 III. Discussion

2 A. Likelihood of Success on the Merits

3 i. Plaintiff’s License to the North Access

4 As an initial matter, at this stage of the proceedings the evidence supports a

5 finding that General Manager Toft granted a license to Plaintiff to use the North

6 Access route. A license is a grant of authority “to perform an act or acts on the

7 property of another pursuant to the express or implied permission of the owner”

8 which would otherwise be considered trespassing. 6 Miller & Starr Cal. Real Est. (4th

9 ed.) § 15:2. While he does not use the word “license,” in his declaration, Toft states

10 that he granted Plaintiff permission to use the North Access route. (Toft Decl. (ECF

11 No. 16) ¶ 11.) Toft does not dispute that he then proceeded to remove the lock on

12 the gate to the North Access route and allow Plaintiff to replace the lock with a rail

13 lock. This was an express grant of permission for Plaintiff to use the North Access

14 route, i.e., a license to use the route.

15 Even if Toft did not have the authority to grant a license on behalf of the Port, a

16 license may be found without the express permission of the licensor where it is

17 “exercised with the licensor's knowledge and under such circumstances as would

18 prompt a reasonable person to object.” 6 Miller & Starr Cal. Real Est. (4th ed.) § 15:2.

19 As Plaintiff asserts, it used the access route openly and regularly, and Defendants did

20 not object to Plaintiff’s use of the route for a number of years. While Defendants

21 dispute the frequency and exclusively of Plaintiff’s use of the license, Defendants have

22 not disputed that Plaintiff did utilize the route openly and maintained their own lock

23 on the gate since 2019. Accordingly, the Port had knowledge that Plaintiff was

24 exercising a license, and effectively ratified the license by failing to object to it.

25 Irrevocable License

26 While a license is ordinarily revocable at will, it becomes irrevocable as an

27 equitable remedy “when the licensee, acting in good faith under the terms of the

28 instrument, constructs valuable improvements on the property, making it unjust to

1 permit the cancellation [of the license] . . . .” Belmont Cnty. Water Dist. v. State of

2 California, 65 Cal. App. 3d 13, 17 (1976). In order for a license to be considered

3 irrevocable under these equitable estoppel principles, it must be unjust to allow the

4 license to be revoked. Gamerberg v. 3000 E. 11th St., LLC, 44 Cal. App. 5th 424, 430

5 (2020). Similarly, the license is only irrevocable “for so long a time as the nature of it

6 calls for.” Stoner v. Zucker, 148 Cal. 516, 520, 83 P. 808, 810 (1906); accord

7 Richardson v. Franc, 233 Cal. App. 4th 744, 757–58 (2015).

8 It follows from these principles that where the licensee would suffer no

9 substantial loss, or where the circumstances no longer necessitate the license, the

10 licensee would not be entitled to the equitable remedy. Broads v. Mead, 159 Cal.

11 765, 768, 116 P. 46, 47 (1911). Defendants argue that Plaintiff’s license should not be

12 considered irrevocable because it would not be unjust to revoke the license for two

13 related reasons: (1) the improvements were not made to the licensed land itself, and

14 (2) Plaintiff maintains the ability to access the improvements it made to its own land

15 through the South Access route such that it is not losing the value of the

16 improvements it made.

17 While Defendant is correct that many cases have found an irrevocable license

18 where the improvements were made to the licensed land itself, that is not a

19 requirement for an irrevocable license. A licensee must expend valuable resources in

20 furtherance of and in reliance on the license, but not necessarily on the licensed

21 property. Gamerberg, 44 Cal. App. 5th at 430. Courts have found irrevocable

22 licenses where licensees made improvements to their own land in reliance on the

23 license because revocation of the license would prevent the licensee from enjoying

24 the benefit of their expenditure. As one California court put it, “[i]n the paradigmatic

25 case, a landowner allows his neighbor the right to use some portion of his property —

26 often a right-of-way or water from a creek — knowing that the neighbor needs the right

27 to develop his property. The neighbor then builds a house, digs an irrigation ditch,

28 paves the right-of-way, plants an orchard, or farms the land in reliance on the

1 landowner's acquiescence.” Richardson v. Franc, 233 Cal. App. 4th 744, 751–52

2 (2015); see, e.g., Higgins v. Kadjevich, 186 Cal. App. 2d 520, 521 (1960) (plaintiff

3 established irrevocable license to use a pipeline where plaintiff built an extension of

4 the pipeline running to the well on plaintiff’s property in reliance on the license to use

5 the main pipeline).

6 Here, Plaintiff has provided evidence that it made valuable improvements on its

7 property in reliance on the license to use the North Access facility. After being

8 granted the license, Plaintiff spent nearly $2 million on installation of its rail facilities on

9 the northern portion of its property close to the North Access route. That Plaintiff

10 chose to install the facilities there instead of installing them on the southern portion of

11 the property near the South Access route evinces its reliance on the license. These

12 improvements are sufficient to support a finding of irrevocable license. 1

13 That the valuable improvements are on Plaintiff’s property and not on the

14 licensed route does, however, factor into whether Plaintiff will be able to enjoy the

15 benefit of its expenditures if the license were revoked. The parties fundamentally

16 disagree about whether Plaintiff maintains access to the rail facilities through the

17 South Access route. In his declaration, Rollo Stephens, the Construction Manager for

18 Defendant Ramcon, attests that he is regularly on the property adjacent to Plaintiff’s

19 property, and has observed Plaintiff’s activities on the property over the years.

20 (Stephens’s Decl. (ECF No. 17) ¶ 3.) He states that Plaintiff did not historically use the

21 North Access route, and that only recently, in May 2024, did it begin to use the North

22 Access route as a regular means of ingress. (Id. ¶¶ 3, 7–9.) To facilitate this route, SNR

23 placed signs directing SNR traffic to the North Access route for the first time in May

24 2024. (Id. ¶ 8.) Stephens stated that he has not observed any physical barrier to

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26 1 In his declaration, Beard attests that Plaintiff did make improvements to the North Access route as

well, stating that “SNR removed the weeds, graded the road to remove the potholes, and then added

27 road base so it would not become muddy” and that SNR continues to maintain the road. (Beard Decl.

¶ 12.) However, Plaintiff fails to allege that these improvements were valuable sufficient to support its

28 claim to an irrevocable license.

1 accessing the northern portion of Plaintiff’s property from the South Access route and

2 through the portion of the property leased by Flatiron. (Id. ¶ 10.) Defendants have

3 also provided photographs of the southern portion of Plaintiff’s property which Toft

4 has declared accurately depict the current state of the property. (Toft Decl. ¶ 30; Exs.

5 H and I (ECF No. 25).) These photographs depict a physically unencumbered pathway

6 from the South Access through the portion of the property leased by Flatiron to

7 Plaintiff’s rail facilities. At oral argument, Plaintiff did not contest that the pathway is

8 physically unencumbered with the exception of movable construction equipment.

9 Plaintiff disputes Stephens’s and Toft’s assertions that Plaintiff’s use of the North

10 Access is new, and disputes whether the route through the Flatiron property provides

11 a means of access. Beard attests that Plaintiff has exclusively used the North Access

12 route to conduct its operations since it installed its rail facilities on the property in

13 2019. (Beard Decl. ¶ 11.) Beard attests that the loop described by Stephens —

14 wherein both SNR and Flatiron have used the North Access route as a means of

15 ingress and the South Access route as a means of egress — was only temporary and is

16 not a feasible option for Plaintiff’s continued operations. (Id. ¶ 10.) He declares that

17 the route was used in a limited capacity while the Port made improvement on the

18 South Access road, describing the path as a "temporary route that ran through the

19 area Flatiron has leased from SNR,” which “is narrow and ungraded, uncompacted,

20 and is mostly just dirt, without any gravel.” (Id.) Beard further attests that “[s]ignificant

21 work would have to be performed to make it a viable route for SNR’s employees and

22 customers." (Id.) Accordingly, this route may not be a feasible means for Plaintiff to

23 access and enjoy the benefit of the improvements it made to the northern portion of

24 its property.

25 Defendants further contest Plaintiff’s assertion that it is legally precluded from

26 using the South Access route under the terms of its lease with Flatiron. Defendants

27 include the application submitted by Flatiron to the City of West Sacramento for a

28 temporary use permit in February 2024 which states that, per the terms of the lease

1 agreement between Flatiron and Plaintiff, Flatiron is not allowed to operate when the

2 railway is operating at the entrance, and is required to coordinate with Plaintiff’s

3 activities. (Toft Decl., Ex. E at 4.) Defendant argues that this representation by Flatiron

4 contradicts Plaintiff’s allegations that Flatiron has exclusive use of the leased portion of

5 the property.

6 In response Plaintiff includes the agreement between Flatiron and SNR which

7 states that Flatiron was granted exclusive use of the property by the leasing

8 instrument. (Beard Decl., Ex. A at 1.) At the hearing, Plaintiff’s counsel argued that

9 Flatiron’s representation in the use permit application refers to section 6 of the

10 agreement which states that Flatiron will not interfere with Plaintiff’s operations. (See

11 id. at 2–3.) The Court does not see an inconsistency between the application to West

12 Sacramento, which states that the lease prohibits Flatiron from operating when the

13 railway is operating at the entrance, and Plaintiff’s position that the lease does not

14 permit it to drive across the leased property on a regular basis.

15 In sum, while Plaintiff has satisfactorily established reliance on the license, there

16 is a factual dispute as to whether Plaintiff has a meaningful ability to access and enjoy

17 the benefit of the improvements it made to the land, and whether revocation of the

18 license would therefore be unjust such that the license is irrevocable. Given the

19 factual showing at this stage, the Court concludes that Plaintiff has shown a serious

20 question on the merits of its claim that it possesses an irrevocable license to the North

21 Access route.

22 Statute of Frauds

23 Defendants argue that any license Plaintiff purports to possess is invalid under

24 the statute of frauds. The statute of frauds requires the conveyance of any interest in

25 land for more than a period of a year to be made in writing, otherwise such agreement

26 is unenforceable. See Cal. Civ. Code § 1624(a)(3). All parties concede that any

27 agreement for the use of the North Access road was made orally and not in writing.

28 A license, however, is not a conveyance of land to which the statute of frauds

1 applies. Instead, as stated above, it is a grant of authority to use property for a

2 purpose. 6 Miller & Starr Cal. Real Est. (4th ed.) § 15:2. A license is granted to an

3 individual and does not run with the land. Id. It may be granted orally, and may even

4 be granted without any express authorization of the licensor. Id. Thus, a license is not

5 subject to the statute of frauds in the first instance.

6 An irrevocable license, which is finding based in equitable estoppel principles,

7 is similarly not subject to the statute of frauds. 6 Miller & Starr Cal. Real Est. (4th ed.)

8 § 15:2. Equitable estoppel is by its nature an exception to the statute of frauds:

9 The doctrine of estoppel to assert the statute of frauds has been

consistently applied by the courts of this state to prevent fraud that

10 would result from refusal to enforce oral contracts in certain

circumstances. Such fraud may inhere in the unconscionable injury that

11 would result from denying enforcement of the contract after one party

has been induced by the other seriously to change his position in

12 reliance on the contract.

13 Monarco v. Lo Greco, 35 Cal. 2d 621, 623, 220 P.2d 737 (1950). A license becomes

14 irrevocable when the licensee can make this showing of reliance on the license and an

15 injury if it is revoked. Belmont Cnty. Water Dist., 65 Cal. App. 3d at 17 (a licenses

16 becomes irrevocable “when the licensee, acting in good faith under the terms of the

17 instrument, constructs valuable improvements on the property, making it unjust to

18 permit the cancellation . . . .”). Thus, an irrevocable license is not within the purview of

19 the statute of frauds. See id.; Colvin v. S. Cal. Edison Co., 194 Cal. App. 3d 1306, 1312

20 (1987), abrogated on other grounds by Ornelas v. Randolph, 4 Cal. 4th 1095 (1993).

21 Accordingly, the statute of frauds is not a defense to the finding of an irrevocable

22 license.

23 ii. ICCTA Preemption

24 Plaintiff contends that ICCTA preempts Defendant from revoking Plaintiff’s

25 license to use the North Access route because it would effectively cause an

26 abandonment of a rail line and unreasonably interfere with railway transportation.

27 “ICCTA contains an express preemption clause, which grants the U.S. Surface

28 Transportation Board (“STB”) exclusive jurisdiction over “transportation by rail carrier”

1 “as part of the interstate rail network.” 49 U.S.C. § 10501(a); Levin Richmond Terminal

2 Corp. v. City of Richmond, 482 F. Supp. 3d 944, 960 (N.D. Cal. 2020).

3 The statute defines rail transportation expansively to encompass any property,

4 facility, structure, or equipment “related to the movement of passengers or property,

5 or both, by rail, regardless of ownership or an agreement concerning use.” 49 U.S.C.

6 § 10102(9). (emphasis added) “Moreover, 49 U.S.C. § 10501(6) defines “railroad”

7 broadly to include track, terminal facility, ground, etc., used or necessary for

8 transportation.” Jie Ao and Xin Zhouf, Petition for Declaratory Ord., No. FD 35539,

9 2012 WL 2047726, at *4 (June 4, 2012). Transloading facilities, like those operated by

10 Plaintiff, are considered to be “rail carriers” and part of the rail transportation system

11 under ICCTA. See Levin Richmond Terminal Corp., 482 F. Supp. 3d at 961 (collecting

12 cases); Valero Ref. Company Petition for Declaratory Order, No. FD 36036, 2016 WL

13 5904757, at *3 (S.T.B., Sept. 20, 2016) (“The [STB]’s jurisdiction extends to rail-related

14 activities that take place at transloading (or, as here, off-loading) facilities if the

15 activities are performed by a rail carrier . . . .”).

16 ICCTA preemption may be categorical, preempting state laws that have “the

17 effect of managing or governing rail transportation” or as applied, where the law

18 “would have the effect of unreasonably burdening or interfering with rail

19 transportation.” Levin, 482 F. Supp. 3d at 961 (quoting Franks Inv. Co. LLC v. Union

20 Pac. R. Co., 593 F.3d 404, 413-14 (5th Cir. 2010)). ICCTA does not “preempt state or

21 local laws if they are laws of general applicability that do not unreasonably interfere

22 with interstate commerce.” Ass'n of Am. Railroads v. S. Coast Air Quality Mgmt. Dist.,

23 622 F.3d 1094, 1098 (9th Cir. 2010). Similarly, “[r]outine non-conflicting uses, such as

24 non-exclusive easements for at-grade crossings, are not preempted, as long as they

25 would not impede rail operations or pose undue safety risks.” Whether a law

26 unreasonably burdens rail transportation “involves a fact-bound case-specific

27 determination.’” Franks, 593 F.3d at 413-14.

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1 Although “general principles of state property and contract law [] cannot be

2 said to [categorically] ‘have the effect of manag[ing] or govern[ing] rail

3 transportation,’” Burgoyne, LLC v. Chicago Terminal R.R. Co., 169 N.E. 3d 815, 824 (Ill.

4 App. 2020), “[t]he agency's broad and exclusive jurisdiction over railroad operations

5 and activities prevents application of state laws that would otherwise be available”

6 where the application of these laws would effectively cause an abandonment of rail

7 lines or otherwise interfere with the railway’s use of the land. Jie Ao and Xin Zhouf,

8 2012 WL 2047726, at *5. “ICCTA preemption does not depend upon the source of a

9 state law claim” but on whether the “requested remedy will, in the words of the STB's

10 governing test, ‘impede rail operations . . . .’” City of Ozark, Arkansas v. Union Pac. R.R.

11 Co., 843 F.3d 1167, 1172 (8th Cir. 2016). “Whether that interference with rail

12 transportation arises from a public or private easement, or from opening a new

13 crossing or restoring an abandoned crossing, is irrelevant to the federal preemption

14 analysis.” Id.

15 A rail line cannot be removed without authorization from the STB even if doing

16 so would otherwise be warranted under the applicable state law because “a rail carrier

17 cannot lawfully ‘abandon any part of its railroad lines’ or ‘discontinue operation of all

18 rail transportation over any part of its railroad lines’ unless the STB ‘finds that the

19 present or future public convenience and necessity’ are satisfied.” Ass'n of Am.

20 Railroads v. Hudson, No. 1:23-CV-815-DJN, 2024 WL 1626105, at *2 (E.D. Va. Apr. 15,

21 2024) (citing 49 U.S.C. § 10903(d)) (emphasis added); see Thompson v. Texas Mexican

22 Ry. Co., 328 U.S. 134, 145 (1946) (holding that rail lines cannot be removed without

23 authorization even if their underlying leases have terminated). For example, in

24 Burgoyne, the plaintiff attempted to terminate the railway’s easement pursuant to the

25 terms of the deed which provided that the easement would automatically terminate if

26 not in use for twelve (12) consecutive months. 169 N.E. 3d at 821. The court found

27 that termination of the easement would be an abandonment of the rail line because it

28 would make it impossible for the railway to conduct rail services on the line, and that

1 ICCTA therefore preempted the action. Id. at 82. This was true even though the rail

2 line was not actively in use. Id.; see also Jie Ao and Xin Zhouf, 2012 WL 2047726, at *5

3 (holding that adverse possession claim was preempted by ICTAA even though the rail

4 line was not in current use because it would prevent potential future use of the rail

5 line). Similarly, in B & S Holdings, LLC v. BNSF Railway Company, the plaintiff’s adverse

6 possession claim was preempted because the possession would “interfere with

7 railroad operations, [and] would divest the railroad of the very property with which it

8 conducts its operations.” 889 F. Supp. 2d 1252, 1258 (E.D. Wash. 2012).

9 Defendant’s revocation of the license to use the North Access route would be

10 preempted by ICCTA if Plaintiff can prove that its operations are unreasonably

11 burdened by the revocation. Plaintiff asserts that it has been using the licensed area

12 to conduct its transloading operations (though the Parties disagree about whether it

13 has been doing so exclusively), and has effectively established the route as a rail line

14 over which it conducts its transloading activities. By revoking the license to use the rail

15 line, Defendants’ actions could have the effect of removing that portion of the rail line

16 and discontinuing Plaintiff’s operation over that rail line.

17 As discussed above, the parties disagree about whether Plaintiff is able to

18 access its rail facilities and conduct its operation via the South Access road. The lease

19 with Flatiron contemplates that Flatiron will comply with the laws, regulations,

20 enactments, and rules of, among other entities, the STB, suggesting that the STB

21 could order access over Flatiron’s property rather than that of the Port, which might be

22 a more equitable result given that Plaintiff acted to release its legal right to the South

23 Access route. Even so, this appears to be an issue for the STB, and weighs in favor of

24 finding ICCTA preemption. Further, even if Plaintiff is able to conduct operations

25 using the South Access route, Plaintiff claims the route will need to be improved for

26 year-round use, and therefore moving the operations may burden, at least

27 temporarily, the railway’s operations. Therefore, while the facts still need to be

28 developed, the revocation of the license to use the North Access route may cause

1 unauthorized abandonment or unreasonably interfere with rail transportation such

2 that the action falls under the preemptive scope of ICCTA.

3 iii. Section 1983 Claim

4 To establish a section 1983 cause of action against a municipality, the plaintiff

5 must prove “(1) that [the plaintiff] possessed a constitutional right of which he was

6 deprived; (2) that the municipality had a policy; (3) that this policy amounts to

7 deliberate indifference to the plaintiff's constitutional right; and, (4) that the policy is

8 the moving force behind the constitutional violation.” Dougherty v. City of Covina,

9 654 F.3d 892, 900 (9th Cir. 2011) (quoting Plumeau v. Sch. Dist. No. 40 Cnty. of

10 Yamhill, 130 F.3d 432, 438 (9th Cir. 1997)). “[A] plaintiff seeking to impose liability on

11 a municipality under § 1983 [must] identify a municipal ‘policy’ or ‘custom’ that caused

12 the plaintiff's injury,” Bd. of Cnty. Comm'rs of Bryan Cnty., Okl. v. Brown, 520 U.S. 397,

13 403 (1997) because “a local government may not be sued under § 1983 for an injury

14 inflicted solely by its employees or agents,” Monell v. Dep't of Soc. Servs. of City of

15 New York, 436 U.S. 658, 694 (1978). Liability under Monell may be premised on the

16 decision of a decision-making official who was, as a matter of state law, a final

17 policymaking authority whose edicts or acts may fairly be said to represent official

18 policy in the area of decision. See Price v. Sery, 513 F.3d 962, 966 (9th Cir. 2008);

19 Thomas v. Cnty. of Riverside, 763 F.3d 1167, 1170 (9th Cir. 2014).

20 Plaintiff argues that the Port deprived Plaintiff of its Fifth Amendment rights by

21 revoking the license to use the North Access route without compensation because

22 Plaintiff holds an irrevocable license to the North Access route. An irrevocable license

23 to enter and use land is the functional equivalent of an easement, see Gramerberg, 44

24 Cal. App. 5th at 433, and would therefore be a property interest for purposes of the

25 Fifth Amendment, see Leisnoi, Inc. v. United States, 170 F.3d 1188, 1191 (9th Cir.

26 1999). As discussed above, there are serious factual questions about whether the

27 license to the North Access route is irrevocable.

28

1 Further, there is a serious question about whether Toft’s actions can be imputed

2 to the Port. The evidence provided by Defendants suggests that General Manager

3 Toft, is not the “final policymaking authority whose edicts or acts may fairly be said to

4 represent official policy in the area of decision.” The Port is controlled by a governing

5 body, the Port Commission, and operates according to a policy manual. The manual

6 specifies that any contracts or agreement must be executed by the Chairman of the

7 Port Commission, the CEO, or the designee of those entities. Specifically, only the

8 Port CEO or designee “is authorized to grant rights, licenses, and/or permits for use of

9 port facilitates and/or property in an amount not to exceed $100,000, (revenue), nor

10 for a period exceeding five (5) years.” (Toft Decl., Ex. J, at 1.) Any grant of a license

11 for a term of more than five years must be approved by the Port Commission. (Id.)

12 Accordingly, under the Port’s official policies, General Manager Toft is not entrusted

13 with the authority to grant licenses, and is therefore also unlikely to be the final

14 authority with respect to revoking such a license.

15 Plaintiff contends that Toft’s conduct shows that he is the designee of the Port

16 CEO or Commission on the issue of granting licenses. Toft initially held himself out as

17 having authority to grant the license to use the North Access route, and was able to

18 remove the lock from the gate. Toft also negotiated the terms of a possible lease

19 agreement for the access route. Prior to the revocation of the license, Beard and Toft

20 had reached a tentative agreement on potential monthly rent for the North Access

21 route. (Beard Decl. ¶ 9.) During these discussions, Toft did not mention that he

22 needed any permission from the Commission or the CEO to enter into such an

23 agreement. Toft was then the only party from the Port to communicate to Plaintiff

24 about the decision to revoke the license. Further, in communications between Plaintiff

25 and the Port concerning the revocation, the Port’s counsel indicated that it would

26 need to wait until Toft was back from vacation to provide a response to Plaintiff’s

27 cease and desist letter. (Diepenbrock Decl. (ECF No. 2-2) ¶ 3.) Counsel for the Port

28 later proposed a 48-hour standstill after speaking with Toft. (Id., Ex. B.) At no point

1 did counsel indicate that the Port CEO or Commission would need to approve any

2 decisions related to the revocation of the license, but instead treated Toft as the final

3 decision-making authority. This evidence suggests that Toft makes final decisions on

4 behalf of the Port with respect to granting and revoking licenses, or at least with

5 respect to decisions about the use of this specific property. It is therefore plausible

6 that Toft was the CEO or Commission’s designee, and that his actions constitute the

7 policy of the Port.

8 If Plaintiff is able to establish that it had an irrevocable license and that Toft had

9 the authority to make policy on behalf of the Port, then it is likely to succeed on the

10 merits of its section 1983 claim.

11 B. Irreparable Harm

12 Plaintiff has established that there is a likelihood of irreparable harm if the

13 injunction is not issued. Plaintiff has alleged that it will not be able to reach its rail

14 facilities or operate its transloading activities if it cannot use the Northern Access

15 route. While there is an outstanding factual issue as to whether Plaintiff can physically

16 access the facilities, Plaintiff has no legal right to do so under the terms of its lease.

17 Plaintiff has also established that it would be forced to change its current operations if

18 the license to use the North Access is revoked, which would reduce or cease Plaintiff’s

19 operations for a period of time.

20 Further, if Plaintiff is able to establish that its constitutional rights were violated,

21 such a continuing violation of those rights is an irreparable harm. Hernandez v.

22 Sessions, 872 F.3d 976, 995 (9th Cir. 2017) (a finding of irreparable harm “follows

23 inexorably” from a “conclusion that the government's current policies are likely

24 unconstitutional”). And, as explained in the Court’s Order issuing the Temporary

25 Restraining Order, if in fact Plaintiff has a property interest in the licensed area, “[i]t is

26 well-established that the loss of an interest in real property constitutes an irreparable

27 injury.” Park Vill. Apartment Tenants Ass'n v. Mortimer Howard Tr., 636 F.3d 1150,

28 1159 (9th Cir. 2011).

1 C. Balance of Hardships

2 In contrast, Defendants have not articulated a hardship that outweighs Plaintiff’s

3 potential harm. First, while Defendant Ramcon has stated that it intends to install

4 drainage on the North Access route, it stated in its Opposition and at oral argument

5 that it does not plan to begin any construction until after a final adjudication on the

6 merits of Plaintiff’s claims. Accordingly, Ramcon will not be harmed by a preliminary

7 injunction while the claims are adjudicated.

8 Next, the Port purports that it will be harmed by not generating income through

9 leasing the North Access route. As an initial matter, the Port does not show how it will

10 receive any additional funds if the Court denies the Preliminary Injunction; it is not as

11 though there is another entity willing to pay for the North Access route. Moreover, the

12 Port has not charged for the use of the route since at least 2017 when the license was

13 granted and there is no indication that the Port has a ready leasee. Prior to this

14 litigation, the Parties engaged in discussions whereby Plaintiff agreed to pay the Port’s

15 asking rent price of $750, and the Port ultimately reneged on this agreement. (Beard

16 Decl. ¶ 9.) The fact that the Port declined to lease the route to Plaintiff is evidence that

17 the Port does not imminently require those funds.

18 Because the preservation of the status quo will not harm Defendant Ramcon,

19 and will impose at most a minimal hardship on the Port, the balance of hardships

20 clearly tips in favor of granting the preliminary injunction.

21 D. Public Interest

22 The public interest also weighs in favor of granting the preliminary injunction.

23 Plaintiff is a common carrier which ships supplies for various companies, including for

24 other common carriers. If Plaintiff must substantially cease it shipping activities

25 Plaintiff’s customers will be harmed, and the interruption in services may cause other

26 supply stream issues which will affect the public. Further, the tenant leasing Plaintiff’s

27 property is performing a public works project on a major California highway. If

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1 Plaintiff is forced to route through the property occupied by Flatiron, it may disrupt

2 Flatiron’s operations and impact Flatiron’s work on the project.

3 Defendant the Port argues that its inability to monetize the North Access route

4 will impact its ability to carry out its major operations — rice exports and cement

5 imports — and will affect the employment of 50 employees, both of which will harm the

6 public. As the Court noted above, the potential revenue for the North Access route is

7 minimal, and the Port has thus far not collected income on the property. Accordingly,

8 it is not credible that the preliminary injunction will impact the Port’s financial status to

9 such an extent that it will be unable to operate or retain its employees.

10 The public interest factor therefore favors maintaining the status quo while the

11 merits of the case are adjudicated so that Plaintiff can continue its common carrier

12 shipping activities without impacting Flatiron’s involvement in the public works

13 project.

14 IV. Conclusion

15 Plaintiff has established that it is entitled to a preliminary injunction. While

16 there are factual questions, Plaintiffs have provided sufficient evidence to establish, at

17 a minimum, serious questions on the merits, if not a likelihood of success on the

18 merits. Plaintiff has shown that absent the preliminary injunction, it will suffer

19 irreparable injury, that the public interest favors imposing a preliminary injunction,

20 and that the balance of hardships “tips sharply” in Plaintiff’s favor. All. for the Wild

21 Rockies, 632 F.3d at 1134–35. Accordingly, IT IS HEREBY ORDERED that Plaintiff’s

22 Motion for Preliminary Injunction is hereby GRANTED as follows:

23 Pending the ultimate disposition of this matter, Defendants Sacramento-Yolo Port

24 District (sued here as the Port of West Sacramento) and Ramcon Engineering &

25 Environmental Consulting, Inc., and all those acting in concert with each or both of

26 them, are hereto ordered to cease and desist from preventing or impeding Plaintiff

27 Sierra Northern Railway, its employees, or any of its customers from using the

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1 | Northern Access route to SNR’s West Sacramento rail yard in order to effect Plaintiff's

2 | transloading operation.

3 This order shall take effect immediately.

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5 IT IS SO ORDERED.

6 | Dated: _ August 7, 2024 “Dane J CoO □□□□

Hon. Daniel alabretta

/ UNITED STATES DISTRICT JUDGE

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