# Sierra Northern Railway v. Port of West Sacramento

> District Court, E.D. California · August 7, 2024

URL: https://www.frixlaw.com/law-library/cases/10636360

## Case

- **Court:** District Court, E.D. California
- **Decided:** August 7, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10636360

## How later opinions describe it (automated extraction)

- holding that rail lines cannot be removed without 23 authorization even if their underlying leases have terminated

## Opinion text

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8 UNITED STATES DISTRICT COURT
9 FOR THE EASTERN DISTRICT OF CALIFORNIA
10
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.,
16
Defendants.
17
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
25

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.
28
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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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10636360. Public record. Not legal advice.