Johnson v. Rancho Santiago Community College District

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MATT JOHNSON; MICHAEL SPIERING; 

JAMES BIRMINGHAM,

Plaintiffs,

and

KEVIN CHAVEZ; JOSEPH NIGBOR;

TRAVIS BARRETT; WES BERTALAN;

ASSOCIATED BUILDERS AND

CONTRACTORS OF SAN DIEGO, INC.

ELECTRICAL UNILATERAL

APPRENTICESHIP COMMITTEE;

SOUTHERN CALIFORNIA

CHAPTER OF THE ASSOCIATED

BUILDERS AND CONTRACTORS, INC. No. 08-56963

ELECTRICAL UNILATERAL D.C. No.

APPRENTICESHIP COMMITTEE,

Plaintiffs-Appellants,

 8:04-cv-00280-JVS-

MLG

v. OPINION

RANCHO SANTIAGO COMMUNITY

COLLEGE DISTRICT; THE LOS

ANGELES AND ORANGE COUNTIES

BUILDING AND CONSTRUCTION

TRADES COUNCIL,

Defendants-Appellees,

and

INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS UNION LOCAL

441, ELECTRICAL APPRENTICESHIP

PROGRAM,

Defendant.



16967

16968 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

Appeal from the United States District Court

for the Central District of California

James V. Selna, District Judge, Presiding

Argued and Submitted

May 4, 2010—Pasadena, California

Filed October 8, 2010

Before: Betty B. Fletcher and Richard A. Paez,

Circuit Judges, and Donald E. Walter, District Judge.*

Opinion by Judge Paez

*The Honorable Donald E. Walter, Senior United States District Judge

for the Western District of Louisiana, sitting by designation.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16973

COUNSEL

Carole M. Ross and Richard M. Freeman (argued), Sheppard,

Mullin Richter & Hampton LLP, San Diego, California, for

plaintiffs-appellants Kevin Chavez; Joseph Nigbor; Travis

Barrett; Wes Bertalan; Associated Builders and Contractors of

San Diego, Inc., Electrical Unilateral Apprenticeship Com-

mittee; and Southern California Chapter of the Associated

Builders and Contractors, Inc., Electrical Unilateral Appren-

ticeship Committee.

Ray Van der Nat (argued), Los Angeles, California, for

defendant-appellee Los Angeles and Orange Counties Build-

ing and Construction Trades Council and Glenn S. Goldby

and Gregory A. Wille (argued), Declues, Burkett & Thomp-

son LLP, Huntington Beach, California, for defendant-

appellee Rancho Santiago Community College District.

OPINION

PAEZ, Circuit Judge:

In 2003, Rancho Santiago Community College District

(“the District”) entered into a project labor agreement with the

Los Angeles and Orange Counties Building and Construction

Trades Council (“the Council”) and its affiliated construction

unions that governed labor relations for many District con-

struction projects over a three-to-five-year period. The agree-

ment required, among other things, that contractors use union

“hiring halls” to obtain workers, that all workers on covered

16974 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

projects become union members within seven days of their

employment, and that all contractors and subcontractors

working on covered projects agree to the project labor agree-

ment and to the master labor agreement negotiated by the

union for each craft. Seven individual non-union apprentices

and two non-union apprenticeship committees filed suit chal-

lenging the agreement as preempted by the National Labor

Relations Act (“NLRA”) and the Employee Retirement

Income Security Act (“ERISA”) and as violative of their

rights to substantive and procedural due process and to equal

protection. The district court granted the defendants summary

judgment on all claims.

Reviewing de novo, we hold that entering into the agree-

ment constitutes market participation not subject to preemp-

tion by the NLRA or ERISA, and that the agreement did not

violate the plaintiffs’ rights to substantive or procedural due

process or to equal protection. As a preliminary matter, we

also reject the District’s mootness and Eleventh Amendment

sovereign immunity defenses. Specifically, we conclude that

this appeal falls within the “capable of repetition, yet evading

review” exception to mootness, and that the District waived

any sovereign immunity defense by failing to pursue it while

extensively litigating this suit on the merits. Accordingly, we

affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2002, voters in the Rancho Santiago Community College

District approved Ballot Measure E, which authorized the

District to issue $337 million in general obligation bonds to

fund improvements to the District’s facilities. After voters

approved the Measure, unions that had supported the Measure

E campaign encouraged the District to enter into a project

labor agreement,1 which would govern labor conditions for

1

A project labor agreement is a pre-hire agreement between a construc-

tion project owner and a union or unions that a contractor must agree to

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16975

the subsequent construction. The District agreed and entered

into a “Project Stabilization Agreement” (“PSA” or “the

Agreement”) with the Council and affiliated craft unions.

Before entering into the Agreement, the District did not con-

duct any formal studies to determine its costs and benefits, but

the District’s Board of Directors heard testimony from many

people in the community. According to the District’s former

construction manager, Robert Brown, the Board heard esti-

mates that the PSA could increase costs by zero to thirty per-

cent.

The PSA that the District ultimately executed covered all

of the District’s construction projects funded with Measure E

funds that cost over $200,000. The Agreement applied to all

covered projects initiated in a three-year period and would

remain in effect for two additional years if neither party termi-

nated it. According to the District, the PSA applied to twenty-

seven projects, but the plaintiffs contend that these twenty-

seven projects actually represent twenty-seven categories cov-

ering many more discrete projects.

Among other things, the PSA made the signatory unions

the exclusive bargaining agents for all employees; established

dispute-resolution mechanisms; required use of union “hiring

halls” to obtain workers; required all workers on covered

projects to start paying union dues within seven days of their

employment; and prohibited strikes, picketing, and other dis-

ruptions. The Agreement further required all contractors and

subcontractors working on a covered project to agree to the

PSA and to the craft unions’ master labor agreements, which

required contractors to use the unions’ apprenticeship pro-

before accepting work on the project and that establishes the terms and

conditions of employment for the project. 51 Corpus Juris Secundum,

Labor Relations § 311. Such agreements are common in the construction

industry, where the short-term nature of employment impedes post-hire

collective bargaining, and where contractors need predictable costs and a

steady supply of skilled labor. Id.

16976 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

grams and to contribute to union vacation, pension, and health

plans. Finally, the PSA established a Work Opportunities Pro-

gram that required the unions to establish an apprenticeship

program for District residents, to encourage the referral and

utilization of District residents as workers on covered proj-

ects, and to maximize opportunities for minority- and women-

owned businesses.

In response to the District’s approval of the PSA, seven

individual apprentices not affiliated with a union (“the indi-

vidual apprentices” or “the named apprentices”) and two non-

union apprenticeship committees (collectively, “the plain-

tiffs”) filed suit in March 2004 against the District, the Coun-

cil, and the International Brotherhood of Electrical Workers

Union 441’s Electrical Apprenticeship Program (“Local 441”)

(collectively, “the defendants”) in the federal district court for

the Central District of California. The suit challenged the PSA

on the grounds that it violated various state laws, that it was

preempted by ERISA and the NLRA, and that it violated the

named apprentices’ rights to substantive and procedural due

process and to equal protection as guaranteed by the U.S.

Constitution. The original complaint sought declaratory and

injunctive relief and attorney’s fees and costs.

On the defendants’ motion, the district court dismissed the

state law claims against all defendants and dismissed all but

the NLRA preemption claim against Local 441. The parties

later agreed to dismiss Local 441 completely.

The defendants later moved for summary judgment on the

merits or, in the alternative, partial summary judgment against

five of the named apprentices whose claims were allegedly

moot because they had graduated from their apprenticeship

programs. In response, the plaintiffs amended their complaint

to include a request for nominal damages to prevent the grad-

uated apprentices’ claims from becoming moot. Three of the

named apprentices, however, agreed to dismiss all of their

claims from the action.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16977

The district court held that the prayer for nominal damages

prevented the graduated apprentices’ due process and equal

protection claims from becoming moot, but granted the defen-

dants’ motion for summary judgment on those claims. After

additional briefing, the district court also granted the defen-

dants summary judgment on the ERISA and NLRA preemp-

tion claims, concluding that the PSA was exempt from

preemption because it constituted state market participation,

not regulation. The plaintiffs appealed.

II. JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C.

§ 1331, and we have jurisdiction under 28 U.S.C. § 1291. We

review de novo the district court’s grant of summary judg-

ment. Mortimer v. Baca, 594 F.3d 714, 721 (9th Cir. 2010).

Summary judgment is warranted when “the pleadings, the dis-

covery and disclosure materials on file, and any affidavits

show that there is no genuine issue as to any material fact and

that the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c)(2). In deciding whether to affirm the

grant of summary judgment, we must determine whether,

“viewing the evidence in the light most favorable to the non-

moving party, . . . there are any genuine issues of material fact

and whether the district court correctly applied the relevant

substantive law.” Mortimer, 594 F.3d at 721 (internal quota-

tions and citation omitted).

III. DISCUSSION

Before reaching the merits of the plaintiffs’ claims, we

must first address the defendants’ contentions that this appeal

is moot and that the District is entitled to sovereign immunity.

A. Mootness

The District contends that this appeal is moot because the

PSA has expired and the District is not likely to enter into a

16978 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

new PSA, and because all the named apprentices have gradu-

ated. In general, a case is moot if there is no longer any “pres-

ent controversy as to which effective relief can be granted.”

Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d

895, 900 (9th Cir. 2007) (internal quotations and citation

omitted). A case is not moot, however, if the challenged

action is “capable of repetition, yet evading review.” Bio-

diversity Legal Found. v. Badgley, 309 F.3d 1166, 1173 (9th

Cir. 2002). We conclude that the plaintiffs’ challenge to the

PSA falls within this exception to mootness.

As an initial matter, we note that the plaintiffs’ prayer for

nominal damages for their substantive due process, procedural

due process, and equal protection claims prevents those

claims from becoming moot.2 See Bernhardt v. County of Los

Angeles, 279 F.3d 862, 872 (9th Cir. 2002) (“A live claim for

nominal damages will prevent dismissal for mootness.”). We

therefore need only consider whether the expiration of the

PSA or the graduation of the named apprentices renders moot

the ERISA and NLRA preemption claims for injunctive and

declaratory relief.

2

The District contends that our decision in Seven Words LLC v. Network

Solutions, 260 F.3d 1089 (9th Cir. 2001), prevents the prayer for nominal

damages from saving the constitutional claims from mootness because the

plaintiffs did not amend their complaint to request those damages until

after the District moved to dismiss based on mootness. The District reads

Seven Words too expansively. In Seven Words, we dismissed the plain-

tiff’s appeal as moot where the plaintiff “never sought damages . . . (until

a few days before argument in [the appeals] court),” “never [made] an

effort to amend the complaint to include a damages claim,” and had “ef-

fectively disavowed damages for tactical reasons.” Id. at 1095, 1097.

Here, by contrast, the plaintiffs amended their complaint to include a

request for damages and never made any tactical decision not to request

damages. Their failure to seek nominal damages in their original com-

plaint therefore does not preclude the nominal damages request from pre-

serving a live controversy over their constitutional claims.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16979

1. Expiration of the PSA

[1] Despite the expiration of the PSA, we conclude that

this appeal is not moot because the challenged conduct is “ca-

pable of repetition yet evading review.” The “capable of repe-

tition, yet evading review” exception to mootness applies

“only where ‘(1) the duration of the challenged action is too

short to allow full litigation before it ceases, and (2) there is

a reasonable expectation that the plaintiffs will be subjected

to it again.’ ” Biodiversity Legal Found., 309 F.3d at 1173

(quoting Greenpeace Action v. Franklin, 14 F.3d 1324, 1329

(9th Cir. 1993)). The challenged PSA satisfies both of these

criteria.

[2] First, the duration of the challenged PSA was “too

short” to permit full litigation. The duration of a challenged

action is “too short” where it is “almost certain to run its

course before either this court or the Supreme Court can give

the case full consideration.” Id. The PSA had a term of three

years, but remained in force for two additional years because

neither party exercised its right to terminate it after the first

three years. For purposes of determining whether the PSA’s

duration was so short as to evade review, we consider only the

Agreement’s mandatory three-year term. We have applied

“the evading-review doctrine where the ‘duration of the con-

troversy is solely within the control of the defendant.’ ”

Anderson v. Evans, 371 F.3d 475, 479 (9th Cir. 2004) (quot-

ing Biodiversity Legal Found., 309 F.3d at 1174). Similarly,

here, because the PSA’s extension for an additional two years

was solely within the District’s control, we will apply the

evading-review doctrine if the duration not within its sole

control—three years—would be too short to allow for full

judicial review.

[3] We have acknowledged that three years is generally too

short to allow a case “seeking a declaratory judgment regard-

ing the legality of [an agreement’s] provisions [to] proceed

beyond district court review.” Int’l Ass’n of Machinists &

16980 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

Aerospace Workers, Local Lodge 964 v. B.F. Goodrich Aero-

space Aerostructures Grp., 387 F.3d 1046, 1050 (9th Cir.

2004). Indeed, the course of this litigation demonstrates that

three years is too short for us or the Supreme Court to give

the case full consideration; it has already been pending for

nearly six and a half years. Even without counting the three

years in which the district court stayed the case pending Ninth

Circuit and Supreme Court decisions, this litigation has taken

over three years to reach us, and the Supreme Court has not

yet had a chance to consider it. This case therefore satisfies

the “evading review” portion of the “capable of repetition, yet

evading review” doctrine.

[4] Second, this case also satisfies the “capable of repeti-

tion” requirement. The defendants have not met their burden

to show that there is no reasonable expectation that the plain-

tiffs will be subjected to a PSA again. See Ackley v. W. Con-

ference of Teamsters, 958 F.2d 1463, 1469 (9th Cir. 1992) (“It

is the defendant, not the plaintiff, who must demonstrate that

the alleged wrong will not recur.”). In support of its claim that

it will never enter into a PSA again, the District offers only

a declaration by its Vice Chancellor attesting that seventy-five

percent of Measure E funds have been expended, that the

remaining funds have been committed to projects that cannot

be completed because of insufficient funds, that the District

does not anticipate entering into a new PSA due to “present

economic conditions,” and that the passage of Measure E was

“unprecedented” and, in his opinion, a “once in a lifetime

event.”3 This declaration does not adequately demonstrate that

3

The defendants moved to supplement the record on appeal to include

a declaration attesting to these facts, which were not before the district

court. Although the court denied the motion in a clerk’s order, we recon-

sider that decision sua sponte and grant the motion. Because the new facts

that the defendants seek to establish bear on whether the controversy

before us is moot, we exercise our discretion to supplement the record on

appeal so that we may determine whether we have jurisdiction over the

ERISA and NLRA claims for declaratory and injunctive relief. See Lowry

v. Barnhart, 329 F.3d 1019, 1024 (9th Cir. 2003) (explaining that we may

supplement the record on appeal where “developments [might] render a

controversy moot and thus divest us of jurisdiction”).

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16981

the District will not enter into a PSA again. Indeed, twenty-

five percent of Measure E funds remain, and it would be

unreasonable to assume that the District will never use those

funds just because they currently lack sufficient funding to

complete the projects to which those funds have been com-

mitted. Moreover, the Vice Chancellor’s assertion that the

District does not anticipate entering into a new PSA

“[b]ecause of present economic conditions” implies that it

may resume construction, and accordingly enter into a new

PSA, once the economic situation improves.

[5] Because the District has not shown that it will not enter

into another PSA in the future, and because the duration of the

PSA is too short to allow for full judicial review, the expira-

tion of the PSA does not render the plaintiffs’ claims for

declaratory and injunctive relief moot.

2. Graduation of the Named Apprentices

We next consider whether the fact that the individual

apprentices have graduated from their apprenticeship pro-

grams renders the ERISA and NLRA preemption claims moot

as to them. At the outset, however, we note that whether the

apprentices remain in this suit will not affect our analysis of

the preemption issues or any relief we grant or deny. The

plaintiff apprenticeship committees’ claims of ERISA and

NLRA preemption are identical to the individual apprentices’

claims, and the apprentices’ identities and particular circum-

stances are irrelevant to our analysis.

[6] A case is moot when the “parties lack a legally cogni-

zable interest in the outcome.” U.S. Parole Comm’n v.

Geraghty, 445 U.S. 388, 396 (1980) (quoting Powell v.

McCormack, 395 U.S. 486, 496 (1969)). The apprentices

retain a cognizable interest in the outcome of their NLRA pre-

emption claim because that claim does not depend on their

status as apprentices. The plaintiffs contend that sections 7

and 8 of the NLRA preempt the PSA under San Diego Build-

16982 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

ing Trades Council v. Garmon, 359 U.S. 236 (1959). Sections

7 and 8 protect all employees, not just apprentices. See 29

U.S.C. §§ 157, 158 (NLRA §§ 7, 8). Because the named

apprentices continue to work in the construction industry,

they continue to enjoy the NLRA’s protections and continue

to have a cognizable interest in whether the NLRA preempts

the PSA. Their NLRA preemption claim therefore is not moot

as to them.

[7] The individual apprentices’ ERISA preemption claim,

by contrast, does depend on their status as apprentices. They

therefore lack a cognizable interest in the outcome of that

claim, and the claim is accordingly moot as to them, unless

their claim falls within the “capable of repetition, yet evading

review” exception to mootness. To establish that their claim

falls within that exception, however, the plaintiffs must dem-

onstrate that there is a “reasonable expectation” that they will

be subject to a PSA again in their capacity as apprentices. See

Murphy v. Hunt, 455 U.S. 478, 482 (1982) (quoting Weinstein

v. Bradford, 423 U.S. 147, 149 (1975)). While the defendants

have the burden to show they will not engage in the chal-

lenged conduct again, the plaintiffs have the burden to show

that they will be subject to the complained-of conduct in the

future. See Sample v. Johnson, 771 F.2d 1335, 1342 (9th Cir.

1985). The plaintiffs have not met that burden. They do not

allege that they intend to go through another apprenticeship

program for another craft, but only that they “may” do so.

Because this alleged possibility does not demonstrate a “rea-

sonable expectation” that they will be subject to a PSA as

apprentices again, we conclude that the named apprentices’

ERISA preemption claim does not fall within the “capable of

repetition, yet evading review” exception to mootness, and we

accordingly dismiss that claim as to them.

B. Sovereign Immunity

The District contends that the Eleventh Amendment entitles

it to sovereign immunity from the plaintiffs’ claims seeking

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16983

nominal damages. We conclude that the District has waived

its sovereign immunity and therefore reject its Eleventh

Amendment defense.4

[8] A state waives its Eleventh Amendment immunity if it

“unequivocally evidence[s its] intention to subject itself to the

jurisdiction of the federal court.” Hill v. Blind Indus. & Servs.

of Md., 179 F.3d 754, 758 (9th Cir. 1999). A state may waive

its sovereign immunity through “conduct that is incompatible

with an intent to preserve that immunity.” Id. We have found

that state defendants engaged in conduct “incompatible with”

an intent to preserve sovereign immunity when they raised a

sovereign immunity defense only belatedly, after extensive

proceedings on the merits. For example, in Hill, we deter-

mined that the state waived sovereign immunity when the

state did not raise the defense until the opening day of trial,

after it had filed two motions to dismiss and an answer that

did not assert the defense, consented to have a magistrate

judge try the case, conducted discovery, moved to compel dis-

covery and for sanctions, participated in a pre-trial confer-

ence, and filed trial materials. Id. at 756. Similarly, in In re

Bliemeister, 296 F.3d 858 (9th Cir. 2002), we found that the

state waived immunity when it filed a limited response, an

answer, and a motion for summary judgment; attended an oral

hearing and argued the merits; and heard the court announce

its preliminary leanings, all without raising the sovereign

immunity defense. Id. at 862.

[9] Like the defendants in Hill and Bliemeister, the District

engaged in extensive proceedings in the district court without

seeking dismissal on sovereign immunity grounds. Although

it baldly asserted in its Answer that it was “immune from lia-

bility pursuant to the provisions of the Eleventh Amendment

4

Absent a waiver, the District would be entitled to sovereign immunity

because California community college districts constitute arms of the state

entitled to sovereign immunity under the Eleventh Amendment. See Cer-

rato v. S.F. Cmty. Coll. Dist., 26 F.3d 968, 972 (9th Cir. 1994).

16984 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

of the United States Constitution,” the District litigated the

suit on the merits, participated in discovery, and filed a

motion to dismiss and a summary judgment motion without

pressing a sovereign immunity defense. Although the District

asserted its sovereign immunity in its opposition to the plain-

tiffs’ application to file an amended complaint to include a

prayer for nominal damages, it did not assert a sovereign

immunity defense in the summary judgment briefing filed

after the plaintiffs amended their complaint.5 In circumstances

like these, we deem the defendant to have made a tactical

decision to delay asserting the sovereign immunity defense.

See Bliemeister, 296 F.3d at 862. Such tactical delay “under-

mines the integrity of the judicial system[,] . . . wastes judicial

resources, burdens jurors and witnesses, and imposes substan-

tial costs upon the litigants.” Hill, 179 F.3d at 756. Having

chosen “to defend on the merits in federal court,” the District

will “be held to that choice.” See id. at 758. We accordingly

hold that the District has waived its sovereign immunity

defense.

C. Merits

Having concluded that this appeal is not moot, and that the

District has waived its sovereign immunity, we proceed to

consider the merits of the plaintiffs’ claims.

5

The District contends that it was “not required” to raise its Eleventh

Amendment defense until the plaintiffs sought retrospective damages

relief, and that the proceedings on the merits before the plaintiffs sought

that relief therefore were not inconsistent with an intent to preserve its

sovereign immunity. This argument appears to stem from an erroneous

belief that the District could not have asserted immunity from the plain-

tiffs’ claims for prospective relief. Although state officers sued in their

official capacities are immune only from suits for retrospective relief, Por-

ter v. Jones, 319 F.3d 483, 491 (9th Cir. 2003) (explaining the doctrine of

Ex parte Young, 209 U.S. 123 (1908)), state entities are immune from suit

“regardless of the nature of the relief sought,” Pennhurst State Sch. &

Hosp. v. Halderman, 465 U.S. 89, 100 (1984). As a state entity, the Dis-

trict thus could and should have asserted sovereign immunity before the

plaintiffs amended their complaint to request nominal damages.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16985

1. ERISA and NLRA Preemption Claims

[10] Whether federal law preempts a particular state action

is fundamentally a question of congressional intent. See

Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 498

F.3d 1031, 1039-40 (9th Cir. 2007). Federal law will preempt

state laws that “interfere with, or are contrary to, federal law”

only if “that was the clear and manifest purpose of Congress.”

Id. at 1039-40 (internal quotations and citation omitted). The

so-called “market participant doctrine” offers us a presump-

tion about Congress’s purposes. In general, Congress intends

to preempt only state regulation, and not actions a state takes

as a market participant. See Bldg. & Constr. Trades Council

v. Associated Builders and Contractors of Mass./R.I., Inc.

(“Boston Harbor”), 507 U.S. 218, 227 (1993); Engine Mfrs.,

498 F.3d at 1042. This doctrine applies to claims of NLRA

and ERISA preemption. See Boston Harbor, 507 U.S. at 227

(NLRA); Associated Gen. Contractors of Am. v. Metro. Water

Dist. of S. Cal. (“MWD”), 159 F.3d 1178, 1182 (9th Cir.

1998) (ERISA). In assessing the plaintiffs’ preemption

claims, we therefore must first determine whether the District

acted as a regulator or as a market participant when it entered

into the PSA. Because we conclude that the District acted as

a market participant, the plaintiffs’ ERISA and NLRA pre-

emption claims fail at the threshold.6

[11] In general, state action falls within the market partici-

pant exception to preemption when the state entity directly

participates in the market by purchasing goods or services.

See Engine Mfrs., 498 F.3d at 1040 (describing the “single

inquiry” in market participant cases as “whether the chal-

lenged program constituted direct state participation in the

market”). But the line between non-preempted market partici-

pation and preempted regulation is not always so clear, and a

state’s direct participation in the market will not always

6

We therefore need not decide whether the NLRA or ERISA would pre-

empt the PSA if it were regulation.

16986 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

escape preemption. If a state’s direct participation in the mar-

ket is “tantamount to regulation,” the market participant doc-

trine will not exempt the state’s action from preemption. Wis.

Dep’t of Indus., Labor & Human Relations v. Gould, 475 U.S.

282, 289 (1986). Thus, in Gould, the Supreme Court held that

the NLRA preempted a state law forbidding state procurement

agents from using state funds to do business with companies

that had repeatedly violated the NLRA, even though the law

constrained only the state’s own participation in the market.

Id. at 283-84, 287. The Court explained that the state law “on

its face . . . serves plainly as a means of enforcing the

NLRA,” and that “[n]o other purpose could credibly be

ascribed.” Id. at 287. Because the law imposed a “supplemen-

tal sanction” on NLRA violations, it contravened Congress’s

intent to bar states from “providing their own regulatory or

judicial remedies for conduct prohibited or arguably prohib-

ited by the Act.” Id. at 286-89 (describing the preemption rule

of Garmon, 359 U.S. 236).

[12] In light of Gould, to determine whether a state entity’s

direct participation in the market falls within the market par-

ticipant exception to preemption, we must determine whether

the state action is simply proprietary or “tantamount to regula-

tion.” As a guide to making this determination, we have

adopted the two-prong test that the Fifth Circuit established in

Cardinal Towing & Auto Repair, Inc. v. City of Bedford, 180

F.3d 686, 693 (5th Cir. 1999). See Engine Mfrs., 498 F.3d at

1041; Olympic Pipe Line Co. v. City of Seattle, 437 F.3d 872,

881 (9th Cir. 2006). The Cardinal Towing test offers two

questions to help determine whether state action constitutes

market participation not subject to preemption:

First, does the challenged action essentially reflect

the entity’s own interest in its efficient procurement

of needed goods and services, as measured by com-

parison with the typical behavior of private parties in

similar circumstances? Second, does the narrow

scope of the challenged action defeat an inference

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16987

that its primary goal was to encourage a general pol-

icy rather than address a specific proprietary prob-

lem?

Id. As the Fifth Circuit explained, these questions “seek to

isolate a class of government interactions with the market that

are so narrowly focused, and so in keeping with the ordinary

behavior of private parties, that a regulatory impulse can be

safely ruled out.” Id.

[13] In applying this test, we have not yet conclusively set-

tled whether a state action must satisfy both prongs, or only

one, to qualify as market participation exempt from preemp-

tion. We held in Lockyer that “a state need not satisfy both

questions,” but we subsequently vacated that opinion after the

Supreme Court reversed it on other grounds. See Chamber of

Commerce v. Lockyer, 463 F.3d 1076, 1084 (9th Cir. 2006)

(en banc), rev’d on other grounds sub nom. Chamber of Com-

merce v. Brown, 128 S. Ct. 2408 (2008) and vacated by 543

F.3d 1117 (2008). Although we are not bound by our vacated

decision in Lockyer, we find its reasoning persuasive and

accordingly hold that a state action need only satisfy one of

the two Cardinal Towing prongs to qualify as market partici-

pation not subject to preemption. As we pointed out in Lock-

yer, the first Cardinal Towing question “looks to the nature

of the expenditure” and “protects comprehensive state poli-

cies with wide application from preemption, so long as the

type of state action is essentially proprietary.” Id. at 1084

(emphasis added). The second question looks to the “scope of

the expenditure” and “protects narrow spending decisions that

do not necessarily reflect a state’s interest in the efficient pro-

curement of goods or services, but that also lack the effect of

broader social regulation.” Id. (emphasis added). The Cardi-

nal Towing test thus offers two alternative ways to show that

a state action constitutes non-regulatory market participation:

(1) a state can affirmatively show that its action is proprietary

by showing that the challenged conduct reflects its interest in

efficiently procuring goods or services, or (2) it can prove a

16988 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

negative—that the action is not regulatory—by pointing to the

narrow scope of the challenged action. We see no reason to

require a state to show both that its action is proprietary and

that the action is not regulatory.

In any event, we conclude that the PSA challenged here

satisfies both prongs of the Cardinal Towing test and accord-

ingly is not subject to preemption by the NLRA and ERISA.

a. Efficient procurement of goods and services, as measured

by comparison to private market behavior

The plaintiffs contend that the PSA does not meet the first

Cardinal Towing prong both because it does not reflect the

District’s interest in “efficient procurement” of goods and ser-

vices and because it is not comparable to private market

behavior. In particular, they first contend that a state entity

can have no interest in “efficient procurement” when it spends

federal funds and that the Agreement as a whole simply pays

off political supporters without actually providing the District

with any benefits in terms of “efficient procurement.” Second,

they contend that no private party would have entered into an

agreement providing so few benefits and that no private party

in the District’s position could have lawfully entered into such

an agreement.

These contentions rely on too narrow an understanding of

what counts as an interest in “efficient procurement” and of

how similar a challenged state action must be to private mar-

ket behavior to qualify as non-preempted market participation

under Cardinal Towing’s first prong. Even if the plaintiffs’

contentions were true, they would not render the District’s

direct participation in the market essentially regulatory. Under

a proper understanding of Cardinal Towing’s first prong, we

conclude that the PSA reflects the District’s interest in the

efficient procurement of goods and services, as measured by

comparison to typical private market behavior.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16989

i. Efficient procurement

[14] At the outset, we reject the plaintiffs’ suggestion that

the PSA cannot reflect the District’s interest in “efficient pro-

curement” to the extent it applies to a construction project

funded in part by federal monies. In support of this conten-

tion, the plaintiffs point to the Second Circuit’s decision in

Healthcare Association of New York State, Inc. v. Pataki, 471

F.3d 87 (2d Cir. 2006), which held that a state regulation bar-

ring the use of state-appropriated funds to encourage or dis-

courage union organizing was preempted to the extent it

applied to federal funds that merely passed through the state.

Id. at 90-91, 109. Contrary to the plaintiffs’ reading, however,

Pataki does not suggest that a state can never have a propri-

etary interest in the efficient procurement of goods and ser-

vices when it uses federal money. Rather, Pataki holds that,

although a state has a proprietary interest in “sav[ing] money”

and “getting what [it] paid for” with its own funds, it does not

have a similar interest in saving another government entity’s

money. Id. at 109. Here, the District does not claim a propri-

etary interest in “getting what [it] paid for,” but rather in com-

pleting construction projects without labor disruptions. We

have no doubt that this is a legitimate interest in “efficient

procurement” whether the state agency expends its own funds

or funds that the federal government has given it.

The plaintiffs further contend that the PSA does not

advance an interest in efficient procurement because it pre-

sents several downside risks while offering no benefits in

terms of costs, labor availability, or timeliness for the con-

struction. Whether the PSA’s benefits outweighed its costs,

however, bears only on whether the District made a good

business decision, not on whether it was pursuing regulatory,

as opposed to proprietary, goals. We must keep in mind that

congressional intent is the touchstone of our preemption anal-

ysis, Engine Mfrs., 498 F.3d at 1040, and we have no reason

to think that Congress intended to allow beneficial state con-

16990 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

tracts while preempting similar contracts in which the state

got a bad deal.

Moreover, we have made clear that “efficient procurement”

under Cardinal Towing’s first prong does not necessarily

mean “cheap” procurement, but rather “procurement that

serves the state’s purposes.” Engine Mfrs., 498 F.3d at 1046.

Thus, in Engine Manufacturers, we upheld as lawful market

participation a state rule requiring state and local government

entities to ensure that any new street sweepers, garbage

trucks, and other vehicles that they procured met specified

emissions standards. Id. at 1035, 1048. Even though the state

entity pursued environmental, as opposed to economic, goals

through its participation in the market, the market participant

doctrine still applied.

Gould, however, necessarily places limits on what can

qualify as an interest in “efficient procurement” under Cardi-

nal Towing’s first prong. Although “efficient procurement”

means “procurement that serves the state’s purposes,” id.,

pursuit of some purposes will make a state’s participation in

the market “tantamount to regulation.” Gould, 475 U.S. at

289. In Gould, the state enacted a statute forbidding govern-

ment procurement agencies from doing any business with

labor law violators. Id. at 283-84. Despite the state’s assertion

that it was acting as a market participant, the Supreme Court

concluded that the law “unambiguously” acted as a “supple-

mental sanction” for violations of the NLRA, and was pre-

empted. Id. at 288. Gould establishes that, where the state

seeks to affect private parties’ conduct unrelated to the perfor-

mance of contractual obligations to the state, the state’s direct

participation in the market does not reflect its interest in “effi-

cient procurement” of goods and services. See id. at 189

(explaining that “[i]t is the conduct being regulated . . . that

is the proper focus of concern” (internal quotations and cita-

tion omitted)); see also Boston Harbor, 507 U.S. 228-29

(describing the statute in Gould as “address[ing] employer

conduct unrelated to the employer’s performance of contrac-

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16991

tual obligations to the state”); see also Bldg. and Constr.

Trades Dep’t, AFL-CIO v. Allbaugh, 295 F.3d 28, 36 (D.C.

Cir. 2002) (“A condition that the Government imposes in

awarding a contract or in funding a project is regulatory only

when, as the Supreme Court explained in Boston Harbor, it

‘addresse[s] employer conduct unrelated to the employer’s

performance of contractual obligations to the [Govern-

ment].’ ” (alterations in original) (quoting Boston Harbor, 507

U.S. at 228-29)).

[15] Unlike the regulation in Gould, nothing on the face of

the PSA indicates that it serves purely regulatory purposes

unrelated to the performance of contractual obligations to the

state. The PSA does not reward or sanction private parties for

their conduct in the private market, but rather addresses only

how construction contractors and subcontractors will perform

work on the District’s projects. Plaintiffs contend that the

PSA’s primary purpose was to reward the unions that sup-

ported the Measure E campaign. Yet, the District intended for

the PSA to serve legitimate proprietary goals, including con-

taining costs, optimizing productivity, and boosting the econ-

omy. Private parties undertaking large construction projects

commonly enter into pre-hire project labor agreements like

the PSA challenged here. Whether or not plaintiffs are correct

that the District had ulterior motives in adopting the PSA, we

are quite certain that Congress did not intend for the NLRA’s

or ERISA’s preemptive scope to turn on state officials’ sub-

jective reasons for adopting a regulation or agreement. Cf. N.

Ill. Chapter of Associated Builders and Contractors, Inc. v.

Lavin, 431 F.3d 1004, 1007 (7th Cir. 2005) (“Federal preemp-

tion doctrine evaluates what legislation does, not why legisla-

tors voted for it or what political coalition led to its

enactment.” (emphasis in original)).

ii. Comparison to private market behavior

The plaintiffs next contend that the PSA cannot satisfy

Cardinal Towing’s first prong because it is not sufficiently

16992 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

comparable to private market behavior. In particular, they

contend that no private party would have entered into a proj-

ect labor agreement providing so few benefits and that no pri-

vate party in the District’s position could have lawfully

entered into such an agreement. However, even if true, those

considerations would not preclude the PSA from being suffi-

ciently analogous to private market behavior to satisfy Cardi-

nal Towing’s first prong.

First, the plaintiffs’ contention that no private party would

have entered into a deal with so few benefits again reflects its

misunderstanding that Congress intended to allow state mar-

ket participation to escape preemption only where the state

gets a good deal. As explained above, whether the PSA was

a good deal for the District does not bear on whether the

Agreement is regulatory or proprietary. Indeed, we cannot

credibly ascribe to Congress an intent to use preemption to

impose economic rationality on state contracting decisions.

Second, the plaintiffs also miss the mark in contending that

a private purchaser in the District’s position could not have

lawfully entered into the PSA because the NLRA bars such

pre-hire agreements unless the contracting party is an “em-

ployer engaged primarily in the building and construction

industry,” which a school district is not.7 See 29 U.S.C.

§ 158(f). This provision of the NLRA does not mean that the

District’s entry into the PSA is not market participation; it

simply means that the District can participate in the market in

a way in which private parties cannot. The NLRA itself

creates this disparity by explicitly excluding states and their

political subdivisions from the NLRA’s prohibitions. See id.

§ 152(2) (“the term ‘employer’ . . . shall not include . . . any

State or political subdivision thereof”); § 158(a) (providing

7

The parties dispute whether a private owner-developer could lawfully

enter into an agreement like the PSA here. Because we conclude that the

legality of analogous private party conduct is not relevant to the question

before us, we need not resolve this dispute.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16993

that “[i]t shall be an unfair labor practice for an employer” to

engage in certain enumerated actions (emphasis added)).

Were we to hold, as the plaintiffs urge, that a state’s direct

participation in the market becomes “regulation” subject to

preemption whenever a private party could not lawfully par-

ticipate in the market in the same way, we would effectively

subject state employers to the NLRA’s proscriptions. This

would conflict with the clear congressional intent to exempt

state employers from the NLRA’s reach.

Contrary to the plaintiffs’ suggestion, the Supreme Court’s

statement in Boston Harbor that Congress does not preempt

state proprietary action “where analogous private conduct

would be permitted” does not suggest otherwise. See Boston

Harbor, 507 U.S. at 231-32. In Boston Harbor, the Court

upheld as lawful market participation a state agency’s require-

ment that all contractors working on the cleanup of Boston

Harbor agree to a project labor agreement that the agency’s

construction management company had negotiated with a

labor union. Id. at 221-22, 232. The agreement in Boston Har-

bor, unlike the PSA here, fell squarely within NLRA provi-

sions exempting construction industry employers from the

prohibition of pre-hire agreements because the state agency’s

project management company, rather than the agency itself,

entered into the agreement with the union. Id. at 221-22. But

the Court in no way suggested that the fact that the project

manager, rather than the agency, entered into the agreement

was dispositive. To the contrary, the basis for the Court’s

holding was Congress’s clear intent to “accommodate condi-

tions specific to [the construction] industry,” including the

short-term nature of employment that impeded post-hire col-

lective bargaining and the contractor’s need for predictable

costs and a steady labor supply. Id. at 231. In light of the

“general goals behind the passage of [these provisions],” the

Court concluded that Congress did not intend to preempt state

entities from adopting such agreements for state construction

projects, while allowing such agreements in the construction

industry generally. Id. at 231-32.

16994 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

Indeed, the identity of the parties who signed the project

labor agreement in Boston Harbor only formally distinguishes

that agreement from the PSA here. The agreements’ practical

effects are the same. Here, as in Boston Harbor, a pre-hire

agreement binds all contractors and subcontractors working

on covered projects. Moreover, the agency in Boston Harbor

“approved and adopted” the labor agreement, which the proj-

ect manager had entered into “on [the agency’s] behalf,” and,

like the District, required all bidders to submit to the agree-

ment as a condition of accepting work on the project. Id. at

222. Boston Harbor makes clear that congressional intent

controls our preemption analysis, see id. at 224, 231, and we

find no indication in the NLRA that Congress intended to

allow state entities to adopt project labor agreements only if

they use a construction-industry middleman exempt from the

NLRA’s proscriptions.

[16] In sum, we hold that the District’s PSA reflects its

interest in the efficient procurement of goods and services, as

measured by comparison to typical private market behavior.

It therefore qualifies as market participation exempt from pre-

emption under Cardinal Towing’s first prong.

b. Narrow scope

We further conclude that the PSA challenged here is suffi-

ciently narrow in scope that it qualifies as non-preempted

market participation under Cardinal Towing’s second prong.

Despite covering many individual construction projects, the

PSA limited its reach to construction projects costing over

$200,000 that were paid for with the $337 million of Measure

E funds and that were initiated during the three-year term of

the agreement. This is undoubtedly narrower than the agree-

ment approved in Boston Harbor, which covered $6.1 billion

of spending over ten years. Id. at 221. Although the agree-

ment approved in Boston Harbor covered the “one particular

job” of cleaning up Boston Harbor, that one job almost cer-

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16995

tainly could have been characterized as many component

projects. Boston Harbor, 507 U.S. at 232. Likewise, here, the

PSA could be characterized as covering the single project of

improving campus facilities.

Moreover, the PSA’s substantive scope is very similar to

the Boston Harbor agreement’s. See id. at 232. Like the Dis-

trict’s PSA, the Boston Harbor agreement recognized one

exclusive bargaining agent, specified dispute-resolution

mechanisms, required all employees to become union mem-

bers within seven days of their employment, required use of

the union’s hiring halls to supply the labor force, prohibited

strikes for the term of the agreement, bound all contractors

and subcontractors to the agreement, and prescribed the bene-

fits that workers would receive for the duration of the project.

Id. at 221-22; see also Brief for Petitioners at 7, Boston Har-

bor, 507 U.S. 218 (1993) (No. 91-261), 1992 WL 511837.

[17] The District’s Agreement does, however, contain one

set of provisions that the Boston Harbor agreement did not

appear to have: provisions requiring the parties to maximize

work opportunities for the District’s residents and for

minority- and women-owned businesses. Specifically, the

Agreement required signatory unions to establish apprentice-

ship programs for District residents, to encourage District res-

idents to enter those programs, and to encourage the

utilization of District residents on the projects covered by the

PSA. These provisions do not render the PSA too broad to

qualify as market participation under Cardinal Towing’s “nar-

row scope” test; they are simply part of the consideration that

the unions provided in exchange for the benefits they received

under the Agreement. This conclusion accords with the

Supreme Court’s decision in White v. Massachusetts Council

of Construction Employers, Inc., 460 U.S. 204 (1983), that a

city acted as a market participant not subject to the dormant

Commerce Clause when it adopted an executive order requir-

ing that certain percentages of workers on city-funded public

16996 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

construction projects be city residents, minorities, and

women. Id. at 206, 214.

[18] We therefore conclude that the District’s PSA is suffi-

ciently narrow to qualify as market participation exempt from

preemption under Cardinal Towing’s second prong. Because

entering into the PSA qualifies as market participation—

under both prongs of the Cardinal Towing test—it is not sub-

ject to preemption by ERISA or the NLRA. We accordingly

affirm the grant of summary judgment for the defendants on

the preemption claims.

2. Substantive and Procedural Due Process Claims

The plaintiffs contend that the PSA violated their rights to

substantive and procedural due process by depriving them of

liberty and property interests protected by the Fourteenth

Amendment. To succeed on a substantive or procedural due

process claim, the plaintiffs must first establish that they were

deprived of an interest protected by the Due Process Clause.

See Shanks v. Dressely, 540 F.3d 1082, 1087 (9th Cir. 2008)

(substantive due process); Kildare v. Saenz, 325 F.3d 1078,

1085 (9th Cir. 2003) (procedural due process). We conclude

that the plaintiffs cannot make this threshold showing and

accordingly affirm the grant of summary judgment to the

defendants on the due process claims.

a. Claimed Liberty Interest

[19] The plaintiffs first contend that the PSA deprived

them of their protected liberty interest in pursuing careers as

electricians by “categorically disqualif[ying] them and render-

[ing] them ineligible for virtually any Rancho Santiago con-

struction work for three years.” The Due Process Clause does

indeed protect the plaintiffs’ liberty interest in pursuing their

careers as electricians. See Bd. of Regents v. Roth, 408 U.S.

564, 573 (1972) (holding that the Due Process Clause protects

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16997

the right to “engage in the common occupations of life”). The

PSA, however, did not deprive the plaintiffs of that interest.

[20] The Supreme Court made clear in Board of Regents

v. Roth that merely declining to rehire someone does not

infringe on his liberty interest in pursuing a career because the

person “remains free as before to seek another” job. Id. at

575. Rather, the government violates this liberty interest only

when it “foreclose[s the person’s] freedom to take advantage

of other employment opportunities,” for instance by barring

him or her from “all other public employment.” Id. at 573-74.

By extension, then, declining to hire someone in the first

instance does not infringe any protected liberty interest so

long as the decision does not bar the person from all public

employment or otherwise foreclose him from seeking other

job opportunities.

[21] The plaintiffs contend that the PSA violated their lib-

erty by effectively barring them from working on a significant

portion of the District’s construction projects for three years.

This contention fails for two reasons. First, the plaintiffs were

not excluded from all public employment on the District’s

projects; they still had the opportunity to work on non-

Measure E-funded projects and on Measure E projects costing

less than $200,000. Second, and more importantly, the plain-

tiffs were not actually excluded from working on the projects

covered by the PSA: the non-union apprentices remained free

to join a union apprenticeship program qualified to provide

workers for those projects. The PSA therefore did not violate

the plaintiffs’ liberty interest in pursuing their careers as elec-

tricians.

b. Claimed Property Interests

The plaintiffs also contend that the PSA deprived them of

three protected property interests: (1) their interest in remain-

ing eligible to work on the District’s construction projects, (2)

their interest in a state-funded education, and (3) their interest

16998 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

in the credits, job hours, and training they had earned through

their non-union apprenticeship programs. We conclude that

the PSA did not deprive the plaintiffs of any such protected

property interests.

First, the plaintiffs have not even made the threshold show-

ing that the Due Process Clause protects their interest in

remaining eligible to work on the District’s construction proj-

ects. Protected property interests “are not created by the Con-

stitution[, but r]ather . . . they are created and their dimensions

are defined by existing rules or understandings that stem from

an independent source such as state law.” Roth, 408 U.S. at

577. State law creates a property interest protected by the Due

Process Clause where it creates a “legitimate claim of entitle-

ment” to a particular benefit. Id. A legitimate claim of entitle-

ment “is determined largely by the language of the statute and

the extent to which the entitlement is couched in mandatory

terms.” Wedges/Ledges of Cal., Inc. v. Phoenix, 24 F.3d 56,

62 (9th Cir. 1994) (quoting Ass’n of Orange Co. Deputy Sher-

iffs v. Gates, 716 F.2d 733, 734 (9th Cir. 1983)). Although the

plaintiffs contend, without explanation, that the “net effect” of

a variety of California laws confers on them an entitlement to

remain eligible for work on the District’s projects, they point

to no law that even comes close to mandating that non-union

apprentices remain eligible for all construction projects. We

therefore conclude that the plaintiffs have no protected prop-

erty interest in remaining eligible to work on the District’s

projects.

Second, even if California law confers a protected property

interest in a state-funded education, the plaintiffs do not

explain how the PSA deprived them of that interest. Indeed,

the plaintiffs clearly could not show that they suffered a depri-

vation of their purported right to an education, as they have

all graduated. We accordingly reject this claim.

Third, even if California law creates protected property

interests in the credits, job hours, and training that the named

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 16999

apprentices earned through their non-union apprenticeship

programs, the PSA did not deprive them of those interests.

The PSA did not kick the plaintiffs out of their apprenticeship

programs or strip them of their credits and training hours. At

most, the PSA required the plaintiffs to put some of their

credits and training hours in jeopardy if they chose to transfer

to another apprenticeship program so that they could work on

PSA-covered projects. This loss would have resulted from the

apprentices’ choice to transfer programs, not from the PSA

itself.

[22] In sum, the PSA did not deprive the plaintiffs of any

liberty or property interest protected by the Due Process

Clause. We accordingly affirm the grant of summary judg-

ment to the defendants on the plaintiffs’ due process claims.

3. Equal Protection Claim

Finally, the plaintiffs contend that the PSA violated their

rights to equal protection because it treated them differently

than union-affiliated apprentices. The parties agree, as they

must, that rational basis scrutiny applies to this claim.8 See

City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976)

(explaining that rational basis scrutiny applies to equal protec-

tion claims “[u]nless a classification trammels fundamental

personal rights or is drawn upon inherently suspect distinc-

tions such as race, religion, or alienage”). State action will

survive rational basis scrutiny if it is “rationally related to a

legitimate state interest.” City of Cleburne v. Cleburne Living

Ctr., 473 U.S. 432, 440 (1985). Under rational basis review,

the state actor “has no obligation to produce evidence to sus-

8

The District contends that the PSA does not constitute state action sub-

ject to the Equal Protection Clause because it constitutes market participa-

tion, not regulation. The market participation doctrine, however, applies

only to the Commerce Clause and preemption. See Engine Mfrs., 498 F.3d

at 1040. The District offers no authority suggesting that states need not

abide by the Equal Protection Clause when they are acting as market par-

ticipants.

17000 JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE

tain the rationality of a statutory classification; rather, the bur-

den is on the one attacking the legislative arrangement to

negative every conceivable basis which might support it.”

Kahawaiolaa v. Norton, 386 F.3d 1271, 1280 (9th Cir. 2004)

(internal quotations, alteration, and citation omitted).

The plaintiffs have not met this burden. The plaintiffs con-

tend that the PSA fails the rational basis test because it was

not rationally related to the District’s claimed legitimate inter-

est in avoiding labor disruptions. In support of this contention,

they point to evidence that the District did not analyze the

PSA’s “true cost impact.” This contention misses the mark.

First, the Equal Protection Clause “allows the States wide lati-

tude” with economic decisions, and “presumes that even

improvident decisions will eventually be rectified by the dem-

ocratic processes.” City of Cleburne, 473 U.S. at 440 (internal

citations omitted). Thus, even if the District’s purported fail-

ure to fully analyze the PSA’s costs resulted in an improvi-

dent decision, the Equal Protection Clause will not invalidate

it. Second, to survive rational basis scrutiny, a state action

need not actually further a legitimate interest; it is enough that

the governing body “could have rationally decided that” the

action would further that interest. See Minnesota v. Clover

Leaf Creamery Co., 449 U.S. 456, 466 (1981) (emphasis in

original). Here, even if the PSA did cost the District more

than it was worth, the District could have rationally believed

that the PSA would promote its legitimate interest in avoiding

labor disruptions. Indeed, the PSA plainly contains provisions

that serve that goal by prohibiting work stoppages, strikes,

and other disruptions.

[23] Because we conclude that the PSA was rationally

related to the District’s legitimate interest in preventing labor

disruptions, we affirm the grant of summary judgment to the

defendants on the plaintiffs’ Equal Protection Claim.

IV. CONCLUSION

In sum, we conclude that this appeal is not moot and that

the District has waived any claim to sovereign immunity.

JOHNSON v. RANCHO SANTIAGO COMMUNITY COLLEGE 17001

Because we conclude that the PSA falls within the market

participant exception to preemption, we affirm the grant of

summary judgment to the defendants on the ERISA and

NLRA preemption claims. We also affirm the grant of sum-

mary judgment to the defendants on the plaintiffs’ substantive

and procedural due process claims because the plaintiffs have

not shown that the District deprived them of any constitution-

ally protected liberty or property interest. Finally, we con-

clude that the PSA was rationally related to the District’s

legitimate interest in avoiding labor disruptions and accord-

ingly affirm the grant of summary judgment to the defendants

on the Equal Protection claim.

DISMISSED in part; AFFIRMED in part.