Petition for Writ of Certiorari — Airline Service Providers Association, et al., Petitioners v. Los Angeles World Airports, et al.

APPENDIX

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APPENDIX A

873 F.3d 1074

United States Court of Appeals,

Ninth Circuit.

AIRLINE SERVICE PROVIDERS ASSOCIATION,

Plaintiff–Appellant,

and

Air Transport Association of America, Inc.,

DBA Airlines of America, Plaintiff,

v.

LOS ANGELES WORLD AIRPORTS;

City of Los Angeles, Defendants–Appellees.

Airline Service Providers Association, Plaintiff,

and

Air Transport Association of America, Inc.,

DBA Airlines for America, Plaintiff–Appellant,

v.

Los Angeles World Airports;

City of Los Angeles, Defendants–Appellees.

No. 15–55571, No. 15–55572

|

Argued and Submitted

January 13, 2017 Pasadena, California

|

Filed October 16, 2017

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ORDER

Appellants’ petitions for panel rehearing are

GRANTED with respect to their request that the

court amend its opinion to affirm the district court’s

denial of leave to amend but DENIED in all other

respects. The petitions for rehearing en banc are

DENIED. No future petitions will be entertained.

The opinion filed on August 23, 2017 is withdrawn and

a new opinion is filed concurrently with this order.

Dissent by Judge Tallman

OPINION

FRIEDLAND, Circuit Judge:

We must decide whether the City of Los Angeles,

which operates Los Angeles International Airport

(“LAX”), can require businesses at the airport to accept

certain contractual conditions aimed at preventing

service disruptions. 1

Two air transport trade

associations argue that the conditions are, in effect,

municipal regulations preempted by federal labor law.

We hold that the City may impose the conditions in its

capacity as proprietor of LAX and thus affirm

dismissal of the Complaint.

I. Background

Airlines that operate out of LAX hire third-party

businesses to refuel and load planes, take baggage and

tickets, help disabled passengers, and provide similar

services. The City licenses those service providers

using a contract that imposes certain conditions. One

such condition, section 25, requires service providers

1 Because the City of Los Angeles operates LAX, we refer in

this opinion to both entities collectively as “the City.”

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to enter a “labor peace agreement” with any employee

organization that requests one. 2 If such an agreement

is not finalized within sixty days, then the dispute

must be submitted to mediation and, if mediation is

unsuccessful, to binding arbitration. Any labor peace

agreement that results from this process must include

“binding and enforceable” provisions that prohibit

picketing, boycotting, stopping work, or “any other

economic interference.”

It might seem at first glance that a labor peace

agreement would be detrimental to employees’

interests because it deprives them of labor rights. In

practice, however, if an employer may not operate

without such an agreement, the employer may need to

give benefits to its employees to induce them to enter

the agreement. Employees have an incentive to

trigger negotiations toward labor peace agreements to

obtain such benefits. Indeed, here, at least one

organization of service employees advocated for

inclusion of section 25 when the City was revising its

standard LAX licensing contract.

Two trade associations who have members that

operate at LAX brought suit in the United States

District Court for the Central District of California to

challenge section 25:

Airline Service Providers

Association (“ASPA”), an association of third-party

service providers; and the Air Transport Association of

America (“Airlines”), an association of American

airlines. The associations argue that, because the City

of Los Angeles operates LAX, the contractual

2

Section 25 describes broadly the type of employee

organization that can make this request and does not require the

employees to be unionized.

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conditions in LAX’s standard licensing agreement are

effectively municipal regulations. The associations

contend that section 25, as one such “regulation,” is

preempted by two federal labor statutes—the National

Labor Relations Act (“NLRA”) and the Railway Labor

Act (“RLA”)—and by the Airline Deregulation Act

(“ADA”).

The district court dismissed the Complaint without

leave to amend. It dismissed the labor law preemption

claims for failure to state a claim and the ADA claim

for lack of standing.

II. Standing

The City challenges aspects of Plaintiffs’ standing,

and, in any event, we have an independent obligation

to ensure that we have subject matter jurisdiction.

See, e.g., United States v. McIntosh, 833 F.3d 1163,

1173 (9th Cir. 2016). For the reasons that follow, we

hold that the ASPA has standing to pursue all of its

claims. 3

An association like the ASPA has standing if (1) its

individual members would have standing in their own

right, (2) the interests at stake in the litigation are

germane to the organization’s purposes, and (3) the

case may be litigated without participation by

individual members of the association. Friends of the

Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528

U.S. 167, 181, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000)

3 So long as one plaintiff has standing, an appellate court has

jurisdiction to address his claims regardless of whether other

plaintiffs have standing. See, e.g., Rumsfeld v. Forum for Acad. &

Inst’l Rights, Inc., 547 U.S. 47, 52 n.2, 126 S.Ct. 1297, 164 L.Ed.2d

156 (2006). Given our conclusion that the ASPA has standing, we

need not evaluate the Airlines’ standing.

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(citing Hunt v. Wash. State Apple Advert. Comm’n, 432

U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)).

To have standing in their own right, an association’s

members must have “suffered an injury in fact,” that

injury must be “fairly traceable to the challenged

conduct of the defendant,” and the injury must be

“likely to be redressed” by a decision in their favor.

Spokeo, Inc. v. Robins, –––U.S. ––––, 136 S.Ct. 1540,

1547, 194 L.Ed.2d 635 (2016).

The ASPA has alleged a sufficient injury in fact. It

alleges that its members will be forced into unwanted

negotiations that must terminate in either an

agreement or arbitral award—something virtually

certain to occur given that an organization of service

employees advocated for section 25, suggesting that

employees plan to make use of the provision. We have

recognized that “[t]he economic costs of complying

with a licensing scheme can be sufficient for standing,”

Mont. Shooting Sports Ass’n v. Holder, 727 F.3d 975,

980 (9th Cir. 2013), even if “the extent of [the alleged]

economic harm is not readily determinable,” Cent.

Ariz. Water Conservation Dist. v. EPA, 990 F.2d 1531,

1538 (9th Cir. 1993). Here, ASPA members will at

least have to devote resources, and thus incur

economic costs, to participate in negotiations,

mediation, and possibly even binding arbitration over

a labor peace agreement, which they would not

otherwise be required to discuss. The time spent in

those negotiations is itself a concrete injury. 4

4 Because this injury is sufficient to support standing, we need

not consider whether the ASPA’s allegations that its members

will be forced to accede to employee demands during negotiations

triggered under section 25 could support standing.

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Second, the ASPA has shown a sufficient “line of

causation” between the City’s actions and this injury.

See Allen v. Wright, 468 U.S. 737, 757, 104 S.Ct. 3315,

82 L.Ed.2d 556 (1984), abrogated on other grounds by

Lexmark Int’l, Inc. v. Static Control Components, Inc.,

––– U.S. –––, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014).

The injuries it claims are directly linked to the City’s

conduct: The City has made section 25 a mandatory

component of its standard licensing contract for

service providers at LAX, and section 25 will force

service providers to spend time negotiating about a

labor peace agreement. This is a sufficient causal

connection. See Cent. Ariz., 990 F.2d at 1538 (holding

that economic injury caused by contractual obligations

that stemmed from compliance with a regulation were

sufficiently caused by the regulation to support

standing).

Finally, the remedies the ASPA seeks would redress

the harm it alleges. See Spokeo, 136 S.Ct. at 1547. If,

as the Complaint requests, section 25 were enjoined on

the basis of preemption by federal labor law or the

ADA, the ASPA’s members would not suffer any

adverse consequences of complying with it. See Cent.

Ariz., 990 F.2d at 1538 (“[The plaintiff’s] economic

injury is likely to be redressed by a favorable decision

since elimination of the [rule in question] would

necessarily eliminate the increased financial burden

the rule causes.”).

The ASPA’s individual members would therefore have

standing in their own right, and the first prong of the

test for associational standing is satisfied.

The second and third prongs are satisfied as well. The

ASPA alleges that it has an organizational interest “in

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the consistent enforcement of unitary federal

regulation of airline industry labor relations.” The

association’s asserted purpose is therefore related to

its legal claims in this action—namely, that section 25

is preempted by federal statutes that regulate

airlines—satisfying the germaneness prong. As to the

third prong, the parties have identified no reason that

the ASPA’s members must participate individually in

this case, and neither have we. The ASPA thus meets

all the requirements for associational standing. 5

III. Lack of Preemption

Having concluded that the ASPA has standing, we

now turn to whether its preemption arguments state

a claim on which relief may be granted. We evaluate

this question de novo. Associated Gen. Contractors of

Am. v. Metro. Water Dist. of S. Cal., 159 F.3d 1178,

1181 (9th Cir. 1998).

“In deciding whether a federal law pre-empts a state

[or local] statute, our task is to ascertain Congress’[s]

intent in enacting the federal statute at issue.” Metro.

Life Ins. Co. v. Massachusetts, 471 U.S. 724, 738, 105

S.Ct. 2380, 85 L.Ed.2d 728 (1985) (quoting Shaw v.

Delta Air Lines, Inc., 463 U.S. 85, 95, 103 S.Ct. 2890,

77 L.Ed.2d 490 (1983)). The Supreme Court has

emphasized, however, that generally “pre-emption

5 The district court’s contrary decision with respect to the

ASPA’s ADA claim rested largely on its conclusion that the

ASPA’s members are not subject to the ADA and, thus, that it

could not assert claims that rely on the ADA. A plaintiff’s ability

to state a claim under a particular statute is not a question of

federal subject matter jurisdiction, however, but rather a

question of the merits of that claim. See, e.g., Lexmark, 134 S.Ct.

at 1387 n.4.

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doctrines apply only to state [or local] regulation.”

Bldg. & Constr. Trades Council of Metro. Dist. v.

Associated Builders & Contractors of Mass./R.I., Inc.

(Boston Harbor), 507 U.S. 218, 227, 113 S.Ct. 1190,

122 L.Ed.2d 565 (1993). When a state or local

government buys services or manages property as a

private party would, it acts as a “market participant,”

not as a regulator, and we presume that its actions are

not subject to preemption. See id. at 229, 113 S.Ct.

1190. Only if a statute evinces an intent to preempt

such proprietary actions by a state or local government

is the presumption overcome and the action

preempted. See Engine Mfrs. Ass’n v. S. Coast Air

Quality Mgmt. Dist., 498 F.3d 1031, 1041–42 (9th Cir.

2007).

For the reasons that follow, we hold first that the City

was acting as a market participant and not a regulator

when it adopted section 25. Second, because nothing

in the NLRA, RLA, or ADA shows that Congress

meant to preempt states or local governments from

actions taken while participating in markets in a nonregulatory capacity, we conclude that section 25 is not

preempted by those federal statutes.

A. The City Is Acting as a Market Participant

To decide whether a state or local government is acting

as a market participant or instead as a regulator, we

apply the two-prong test first articulated in Cardinal

Towing & Auto Repair, Inc. v. City of Bedford, 180 F.3d

686 (5th Cir. 1999). See Johnson v. Rancho Santiago

Cmty. Coll. Dist., 623 F.3d 1011, 1023 (9th Cir. 2010);

accord, e.g., Engine Mfrs. Ass’n, 498 F.3d at 1041.

First, is the challenged governmental action

undertaken in pursuit of the “efficient procurement of

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needed goods and services,” as one might expect of a

private business in the same situation? Johnson, 623

F.3d at 1023 (quoting Cardinal Towing, 180 F.3d at

693). Second, “does the narrow scope of the challenged

action defeat an inference that its primary goal was to

encourage a general policy rather than [to] address a

specific proprietary problem”? Id. at 1023–24 (quoting

Cardinal Towing, 180 F.3d at 693). If the answer to

either question is “yes,” the governmental entity is

acting as a market participant. Id. at 1024.

Johnson offers an example of how this test works.

There, a community college district had sold bonds to

fund construction projects. Id. at 1016. As the City

did here, the college adopted an agreement governing

labor conditions for contractors working on those

construction projects that prohibited strikes,

picketing, and similar labor disruptions. Id. at 1017.

The agreement also made those unions the exclusive

bargaining representatives for workers on the project,

required the use of union “hiring halls” for staffing,

established mechanisms for resolving disputes, and

required the unions to create an apprenticeship

program. Id. at 1016–17.

Several non-union apprentices and apprenticeship

committees challenged those restrictions as

preempted by the NLRA and the Employee

Retirement Income Security Act (“ERISA”). Id. We

held that the college was acting as a market

participant under both prongs of the Cardinal Towing

test. Id. at 1024–29. Specifically, we determined that

the college had a proprietary interest in the efficient

procurement of construction services, including in

avoiding labor disruptions. This was true even though

the college may have spent some of its money

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unwisely, and even though a private actor may not

have accepted terms as unfavorable as the college had.

Id. at 1025–27. We also concluded that the scope of

the challenged agreement was narrow in that it

applied only to construction projects worth more than

$200,000 funded by the bond initiative during a

certain time period. Id. at 1028–29. Accordingly, we

held that the college was acting as a market

participant and that the restrictions were not

preempted. See id. at 1024–29.

Applying that precedent here, we hold that the City

satisfies both prongs of the Cardinal Towing test and

so was acting as a market participant when it added

section 25 to the LAX licensing contract.

1. Efficient Procurement of Goods and Services

First, like the college in Johnson, the City is

attempting to avoid disruption of its business: If a

private entity operated LAX, that entity would have a

pressing interest in avoiding strikes, picket lines,

boycotts, and work stoppages. Those interests are not

any less pressing simply because the City rather than

a private business operates the airport, and labor

peace agreements are one way to protect those

interests. See Boston Harbor, 507 U.S. at 231–32, 113

S.Ct. 1190 (holding that Boston’s requiring a no-strike

provision

in

subcontractor

agreements

was

permissible market participation because the city was

“attempting to ensure an efficient project that would

be completed as quickly and effectively as possible”

and because “analogous private conduct would be

permitted”).

Plaintiffs urge the opposite conclusion on the ground

that the City has not directly participated in the

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market and has instead dictated contract terms to

others who do. The City does, however, participate

directly in a market for goods and services. “[A]irports

are commercial establishments ... [that] must provide

services attractive to the marketplace.” Int’l Soc’y for

Krishna Consciousness, Inc. v. Lee, 505 U.S. 672, 682,

112 S.Ct. 2701, 120 L.Ed.2d 541 (1992) (citations

omitted). If the City operates the airport poorly, fewer

passengers will choose to fly into and out of LAX, fewer

airlines will operate from LAX, and the City’s business

will suffer. It must avoid commercial pitfalls as the

proprietor of a commercial enterprise.

That fact makes this case distinguishable from, for

example, Golden State Transit Corp. v. City of Los

Angeles, 475 U.S. 608, 106 S.Ct. 1395, 89 L.Ed.2d 616

(1986). In Golden State, a plaintiff taxi company

alleged that Los Angeles had interfered with labor

negotiations by withholding the company’s license

until a strike against the company ended. See id. at

611–12, 106 S.Ct. 1395. The plaintiff argued that Los

Angeles’s license decision was preempted by the

NLRA, and the Supreme Court agreed. Id. at 615–19,

106 S.Ct. 1395. The Court rejected Los Angeles’s

argument that its decision was justified by its general

interest in ensuring “uninterrupted [citywide taxi]

service to the public by prohibiting a strike.” Id. at

618, 106 S.Ct. 1395. Los Angeles did not operate the

taxi service at issue in Golden State, nor did it use the

taxi company for any city functions or services. By

contrast, here, a department of the City of Los Angeles

does operate LAX, and it has taken action to protect

its proprietary interest in running the airport

smoothly. Cf. Boston Harbor, 507 U.S. at 227, 113

S.Ct. 1190 (“[A] very different case would have been

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presented had the city of Los Angeles purchased taxi

services from Golden State in order to transport city

employees.”). The City is thus participating in the air

transportation market. 6

To the extent Plaintiffs argue more broadly that the

City, as the operator of an airport, is not participating

in a private market at all, we disagree. At first blush,

that argument has some intuitive appeal because most

airports in the United States are run by or affiliated

with a governmental entity. But the same is not true

internationally. See generally, e.g., David L. Bennett,

Airport Privatization After Midway, 23 Air & Space

Law. 22, 22 (2010) (noting the “trend toward private

participation in airport ownership and operation in

most other parts of the world”); Zane O. Gresham &

Brian Busey, “Do As I Say and Not As I Do”—United

States Behind in Airport Privatization, 17 Air. & Space

Law. 12, 13–14 (2002) (describing airport privatization

6

Plaintiffs relatedly argue that the City is not actually

procuring any goods or services but is instead essentially offering

licenses, which they describe as a “purely regulatory function.”

But a private contracting condition may be proprietary even

though it could also be called a licensing scheme. See, e.g.,

Johnson, 623 F.3d at 1017 (holding that the challenged

contractual provisions in a project labor agreement were not

preempted by the NLRA even though the defendant college

district restricted contractors on the project to employing only

members of a particular union, effectively offering a license to

only one group). Nor does it matter that the City would not be a

party to the contracts that included a labor peace agreement. The

challenged municipal action in Boston Harbor also involved

requiring a no-strike condition in contracts between third parties.

507 U.S. at 220–21, 113 S.Ct. 1190. That did not stop the

Supreme Court from concluding that Boston was acting as a

market participant. Id. at 230–32, 113 S.Ct. 1190.

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internationally and experimentation with airport

privatization in the United States).

And, even

domestically, Congress has enacted a “pilot program”

for privatization of airports. See 49 U.S.C. § 47134.

Moreover, the Supreme Court and other federal

appellate courts have recognized the inherently

competitive and commercial nature of airport

operations. See Int’l Soc’y for Krishna Consciousness,

505 U.S. at 682, 112 S.Ct. 2701; see also Four T’s, Inc.

v. Little Rock Mun. Airport Comm’n, 108 F.3d 909,

912–13 (8th Cir. 1997) (holding, in response to a

Commerce Clause challenge, that a city that operated

an airport was acting as a participant in the market

for airport rental car services). Airports also compete

against private modes of transportation, like longdistance travel by train, car, or bus. See, e.g., Randall

O’Toole, Cato Inst., Pol’y Analysis No. 680, Intercity

Buses: The Forgotten Mode, (2011), available at

https://www.cato.org/publications/policy-analysis/inte

rcity-buses-forgotten-mode (noting that intercity

buses were “America’s fastest growing transportation

mode” between 2007 and 2010 (citation and internal

quotation marks omitted)).

We therefore conclude that the City is acting as a

market participant under the first prong of the

Cardinal Towing test.

2. Narrow Scope

The City’s actions independently qualify as market

participation under Cardinal Towing’s second prong.

The decision to adopt section 25 is narrowly tied to a

“specific proprietary problem,” Johnson, 623 F.3d at

1024 (quoting Cardinal Towing, 180 F.3d at 693):

service disruptions at LAX, which the City manages as

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proprietor. Nothing in the text of section 25 or in the

Complaint’s allegations suggests that section 25 will

be enforced throughout the rest of the City’s

jurisdiction or that section 25 will hamper service

providers’ operations elsewhere.

Plaintiffs argue otherwise, asserting that section 25 is

in reality a preempted labor regulation because it

gives labor unions a powerful bargaining chip, applies

broadly to all service providers at LAX, and governs

any organization that requests a labor peace

agreement. 7 We find these arguments unpersuasive

for reasons that become apparent in considering the

three cases Plaintiffs primarily rely upon to support

their position. Compared to the regulations imposed

in those decisions, section 25 reaches a much narrower

swath of commercial activity and focuses on specific

proprietary needs.

First, Plaintiffs rely on Wisconsin Department of

Industry, Labor & Human Relations v. Gould Inc., 475

U.S. 282, 106 S.Ct. 1057, 89 L.Ed.2d 223 (1986). In

that case, the Supreme Court affirmed a decision

enjoining a Wisconsin law that barred all state

procurement agents from transacting with repeat

NLRA violators. See id. at 283–84, 106 S.Ct. 1057.

The Court held that Wisconsin’s spending policy swept

too broadly to constitute a permissible exercise of

market participation, particularly given the lack of an

obvious proprietary concern animating the debarment

scheme. Id. at 289–91, 106 S.Ct. 1057. By contrast,

7

The ASPA also argues that the Service Employees

International Union lobbied for section 25, demonstrating a prounion motivation for its adoption. As discussed infra in Part IV,

such motive does not matter to the preemption analysis.

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section 25 does not govern all of the City’s contractual

relationships, 8 and the City has a clear proprietary

interest in avoiding labor disruptions of airport

services.

Second, Plaintiffs cite Chamber of Commerce of the

United States of America v. Brown, 554 U.S. 60, 128

S.Ct. 2408, 171 L.Ed.2d 264 (2008). There, the

Supreme Court analyzed a preemption challenge

against a California law that prohibited employers

who received state funds from using those funds to

“assist, promote, or deter union organizing.” Id. at 63,

128 S.Ct. 2408. The Court held that the law did not

represent permissible market participation because it

was “neither ‘specifically tailored to one particular job’

nor a ‘legitimate response to state procurement

constraints or to local economic needs.’ ” Id. at 70, 128

S.Ct. 2408 (quoting Gould, 475 U.S. at 291, 106 S.Ct.

1057). The law’s preamble even explicitly declared

that its purpose was to prevent employers from

supporting or opposing union organization. Id. at 62–

63, 128 S.Ct. 2408. The law also imposed onerous

requirements for segregating funds and record

keeping, and created a right of action for any private

taxpayer to sue suspected violators. Id. at 72, 128

S.Ct. 2408. 9 Section 25, by comparison, is limited to

8 The dissent suggests that section 25 may affect employment

relationships outside LAX, but, as discussed further below,

Plaintiffs have not alleged any such effects.

9 The dissent suggests that the broad effects the Supreme

Court discussed in Brown may have been discerned through

discovery, but the Supreme Court’s analysis focused solely on the

text of the challenged law. See 554 U.S. at 71–73, 128 S.Ct. 2408.

The Supreme Court made clear that effects the law would have

were obvious on its face. See Id. Here, the text of section 25

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addressing the needs of LAX and does not announce

any sort of regulatory policy, require complicated

recordkeeping, or create litigation risks.

Third, Plaintiffs point to Metropolitan Milwaukee

Association of Commerce v. Milwaukee County

(Metropolitan Milwaukee II), 431 F.3d 277 (7th Cir.

2005). That case involved a Milwaukee County

ordinance governing businesses the county had hired

to provide transportation and other services to elderly

and disabled residents. Id. at 277–78. Like section 25,

the Milwaukee ordinance required those businesses to

sign labor peace agreements, but unlike section 25, it

imposed several additional conditions favorable to

union organizing and did little to avoid service

interruptions. See id. at 278, 281; see also Metro.

Milwaukee Ass’n of Commerce v. Milwaukee County

(Metropolitan Milwaukee I), 325 F.3d 879, 880–81 (7th

Cir. 2003).

The Seventh Circuit held that the ordinance was

preempted by the NLRA. Metropolitan Milwaukee II,

431 F.3d at 282. It rejected the county’s argument

that the ordinance was proprietary, in large part

because the ordinance’s impact would not be restricted

to contracts with the county. See id. at 279–82. For

example, the ordinance prohibited contractors from

scheduling meetings designed to discourage any of

their employees from joining a union, regardless of

whether those employees worked on county contracts.

Id. at 280. The Seventh Circuit also reasoned that the

county could have achieved its goal of avoiding service

interruptions by other means, see id. at 282, and that

suggests no obvious overbroad effects, and Plaintiffs have alleged

none.

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several of the requirements it imposed focused on

union organizing in particular, see id. at 278, 280–81;

see also Metropolitan Milwaukee I, 325 F.3d at 880–

81. Here, by contrast, there is no allegation that the

purposes of section 25 could be achieved by other

means or that the licensing provision will have

spillover effects on the service providers’ operations

beyond their work for LAX. Rather, the nature of the

businesses at issue—services performed at LAX—by

definition allows for natural divisions between work

for the City and work for private parties: A job is

either performed at LAX or it is not, and a strike or

other disruption either occurs at LAX or it does not. 10

These arguments are more specific instances of

Plaintiffs’ broader allegation that section 25 cannot

truly be aimed at minimizing service disruptions

because it is a poor fit for that job. Under our previous

decisions, evidence that an alternative strategy could

more effectively or cheaply accomplish the same goals

“bears only on whether [a state or local government]

made a good business decision, not on whether it was

pursuing regulatory, as opposed to proprietary, goals.”

Johnson, 623 F.3d at 1025. Similarly, we have held

that a state or local government may entertain noneconomic purposes and yet rely on the market

participant doctrine. See Engine Mfrs. Ass’n, 498 F.3d

10 We disagree with the dissent that section 25 is written so

broadly as to reach the entirety of a given labor organization’s

membership. In context, it is clear that the provision in question,

which refers to “binding and enforceable provision(s) prohibiting

the Labor Organization and its members from engaging in”

certain disruptive action, is meant to govern service providers at

LAX. Section 25 repeatedly refers to operations at LAX,

employees at LAX, and the LAX licensing program specifically.

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at 1046 (“That a state or local governmental entity

may have policy goals that it seeks to further through

its participation in the market does not preclude the

doctrine’s application, so long as the action in question

is the state’s own market participation.”).

And

although, as the dissent points out, the Seventh

Circuit decided Metropolitan Milwaukee II partially in

reliance on an obvious mismatch between the county’s

asserted purpose and its means of achieving that

purpose, the same court later emphasized that lurking

political motives are an inevitable part of a public

body’s actions and are not “a reason for invalidity.” N.

Ill. Chapter of Associated Builders & Contractors, Inc.

v. Lavin, 431 F.3d 1004, 1007 (7th Cir. 2005).

This is not to say that a state’s supposedly proprietary

actions cannot become regulatory if enacted or

enforced overbroadly. Preventing such overbreadth is

the purpose of the second prong of the Cardinal

Towing test. See Johnson, 623 F.3d at 1023–24.

Concerns about overbreadth were largely what led the

Supreme Court to strike down the state-wide spending

restrictions at issue in Brown and Gould. See Brown,

554 U.S. at 70–71, 128 S.Ct. 2408; Gould, 475 U.S. at

289–91, 106 S.Ct. 1057.

But no state-wide

restrictions—or, indeed, city-wide restrictions—are

even alleged to be at issue here. The City has merely

imposed a contract term on those who conduct

business at LAX, which the City operates, and that

contract term serves a cabined purpose. 11

We

11

We briefly note our disagreement with two additional

arguments Plaintiffs advance. First Plaintiffs (and the dissent)

argue that section 25 does not specifically address disruptions by

non-union employees. That omission alone does not suggest that

the City has advanced a pro-union regulatory policy rather than

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therefore conclude that the second prong of the

Cardinal Towing test is satisfied, and that, in

imposing section 25, the City has acted as a market

participant, not as a regulator.

B. The Presumption Is Not Rebutted

by the NLRA, the RLA, or the ADA

Having concluded that the City is acting as a market

participant, we must next consider whether there is

“any express or implied indication,” Engine Mfrs.

Ass’n., 498 F.3d at 1042 (quoting Boston Harbor, 507

U.S. at 231, 113 S.Ct. 1190), that Congress intended

the NLRA, the RLA, or the ADA to preempt actions

taken by states and local governments in their

capacity as market participants. Absent such an

indication, the presumption that preemption applies

only to regulatory conduct remains in place. See id.

We begin with the NLRA. In Boston Harbor, the

Supreme Court held that the NLRA does not preempt

a proprietary interest. The LAX licensing scheme includes other

protections against non-union disruptions. For example, if the

airport believes it is necessary to hire police or to take other steps

to protect the “efficient operation of LAX” in the event of a

violation of section 25 or some other legal or regulatory violation,

the service providers may have to reimburse the airport

regardless of what or who caused the disruption. Service

providers also guarantee the quality of their work, and the City

may demand the removal of a service provider’s employees or

agents.

Second, Plaintiffs argue that section 25 is overbroad because it

applies to all operations at LAX. But LAX would hardly avoid

service disruptions by requiring labor peace agreements from

some service providers and not others. A contract term that

applied to fewer than all of the service providers at LAX would

risk disruptions attributable to whatever service providers were

not required to accept section 25.

20a

state or local government actions taken as a market

participant. See 507 U.S. at 231–32, 113 S.Ct. 1190

(“In the absence of any express or implied indication

by Congress that a State may not manage its own

property when it pursues its purely proprietary

interests, and where analogous private conduct would

be permitted, this Court will not infer such a

restriction.”); see also id. at 227, 113 S.Ct. 1190 (“We

have held consistently that the NLRA was intended to

supplant state labor regulation, not all legitimate

state activity that affects labor.”). Because the City is

acting as a market participant here, Plaintiffs have

thus not stated a claim for preemption under the

NLRA.

We likewise conclude that Plaintiffs have failed to

state a claim for preemption under the RLA. We look

to decisions interpreting the NLRA to ascertain the

RLA’s preemptive extent. See Bhd. of R.R. Trainmen

v. Jacksonville Terminal Co., 394 U.S. 369, 383, 89

S.Ct. 1109, 22 L.Ed.2d 344 (1969); Air Transp. Ass’n v.

City & Cty. of San Francisco, 266 F.3d 1064, 1075–76

& n.4; Beers v. S. Pac. Transp. Co., 703 F.2d 425, 428

(9th Cir. 1983); see also, e.g., Hull v. Dutton, 935 F.2d

1194, 1197– 99 (11th Cir. 1991); McCall v. Chesapeake

& Ohio Ry. Co., 844 F.2d 294, 301–02 (6th Cir. 1988).

For that reason, relying on the fact that the NLRA

does not preempt market participation by state or local

governments, we have stated that the RLA likewise

does not preempt such conduct. See Air Transp. Ass’n,

266 F.3d at 1076 n.4 (explaining that the “RLA would

not preempt actions taken by [a municipal government

operating an airport] as a proprietor” (citing

Dillingham Const. N.A., Inc. v. Cty. of Sonoma, 190

21a

F.3d 1034, 1037 (9th Cir. 1999) (addressing NLRA

preemption))).

Finally, we reach the same conclusion about the ADA.

Congress enacted the ADA to deregulate “the airline

industry through ‘maximum reliance on competitive

market forces and on actual and potential

competition.’ ” Northwest, Inc. v. Ginsberg, –––

U.S. —, 134 S.Ct. 1422, 1428, 188 L.Ed.2d 538 (2014)

(quoting 49 U.S.C. § 40101(a)(6)).

The statute

expressly preempts states and their subdivisions from

“enact[ing] or enforc[ing] a law, regulation, or other

provision having the force and effect of law related to

a price, route, or service of an air carrier.” 49 U.S.C.

§ 41713(b)(1).

We and the Supreme Court have interpreted the

phrases “force and effect of law” or “effect of law” in

preemption clauses in other statutes as applying to

governmental action that is regulatory in nature and

thus as not preempting market participation. See, e.g.,

Am. Trucking Ass’ns v. City of Los Angeles, 569 U.S.

641, 133 S.Ct. 2096, 2102–03, 186 L.Ed.2d 177 (2013)

(interpreting the Federal Aviation Administration

Authorization Act of 1994); Associated Gen.

Contractors, 159 F.3d at 1182–83 (interpreting

ERISA).

Under these cases, we conclude that

Congress did not intend the ADA to upset proprietary

conduct like that at issue here. 12 See Am. Trucking

Ass’ns, 133 S.Ct. at 2102. Plaintiffs therefore have not

stated a claim under the ADA.

12 Our conclusion is bolstered by the inclusion of an express

statutory carve-out in the ADA that preserves the ability of a

governmental actor to “carry[ ] out its proprietary powers and

rights.” 49 U.S.C. § 41713(b) (3).

22a

***

In sum, given the allegations presented in Plaintiffs’

Complaint, we conclude that the City was acting as a

market participant when it added section 25 to its LAX

licensing contract, and that the preemption provisions

of the NLRA, the RLA, and the ADA do not apply to

state and local governmental actions taken as a

market participant. 13

We therefore affirm the

dismissal of Plaintiffs’ preemption claims for failure to

state a claim on which relief may be granted.

IV. Leave to Amend

Having concluded that dismissal of the Complaint was

appropriate, all that is left for us to consider is

whether the district court erred by denying leave to

amend. Plaintiffs have represented that remand for

the purpose of amendment would, in their view, serve

no purpose. Specifically, Plaintiffs have represented

that nothing has occurred in the years since section 25

took effect that would enable them to amend their

Complaint to add allegations of spillover effects or

other indications that section 25 operates in practice

as a regulation. In light of these representations, we

conclude that “the complaint could not be saved by any

amendment,” Ariz. Students’ Ass’n v. Ariz. Bd. of

Regents, 824 F.3d 858, 871 (9th Cir. 2016).

V. Conclusion

The district court’s rulings are AFFIRMED.

13 In addition to its preemption arguments, the ASPA argues

that section 25 is an unconstitutional condition. But the ASPA

does not explain what constitutional right has been affected. Nor

have Plaintiffs appealed the dismissal of their constitutional

claims.

23a

Dissent by Judge Tallman

TALLMAN, Circuit Judge, concurring in part and

dissenting in part:

I agree with the majority that the ASPA has standing

to assert its claims. But that is where the majority

and I part ways. Even as is, the Complaint states a

plausible claim that the City enacted section 25 as a

regulatory measure rather than a proprietary one. At

this stage, we must say that this overly broad and

facially suspect regulation of labor relations at Los

Angeles International Airport (“LAX”)—issued by the

City’s airport commission ostensibly to promote labor

peace—contravenes the delicate congressional

balancing of national labor relations policy affecting

key facilities of interstate commerce. I respectfully

dissent.

I

A

It is well established that, in enacting the National

Labor Relations Act (“NLRA”), “Congress largely

displaced state regulation of industrial relations.”

Wis. Dep’t of Indus., Labor, & Human Relations v.

Gould Inc., 475 U.S. 282, 286, 106 S.Ct. 1057, 89

L.Ed.2d 223 (1986). “The purpose of the [NLRA] was

to obtain ‘uniform application’ of its substantive rules

and to avoid the ‘diversities and conflicts likely to

result from a variety of local procedures and attitudes

toward labor controversies.’” NLRB v. Nash–Finch

Co., 404 U.S. 138, 144, 92 S.Ct. 373, 30 L.Ed.2d 328

(1971) (quoting Garner v. Teamsters Local Union No.

776, 346 U.S. 485, 490, 74 S.Ct. 161, 98 L.Ed. 228

(1953)). To these ends, through the NLRA, Congress

24a

erected “a complex and interrelated federal scheme of

law, remedy, and administration” and “entrusted

administration of the labor policy for the Nation to a

centralized administrative agency.” San Diego Bldg.

Trades Council v. Garmon, 359 U.S. 236, 242–43, 79

S.Ct. 773, 3 L.Ed.2d 775 (1959).

Two complementary preemption doctrines serve to

preserve uniformity in national labor policy. The first,

Garmon preemption, “forbids States to ‘regulate

activity that the NLRA protects, prohibits, or arguably

protects or prohibits.’” Chamber of Commerce v.

Brown, 554 U.S. 60, 65, 128 S.Ct. 2408, 171 L.Ed.2d

264 (2008) (quoting Gould, 475 U.S. at 286, 106 S.Ct.

1057). The second, Machinists preemption, “prohibits

state and municipal regulation of areas that have been

left ‘to be controlled by the free play of economic

forces.’” Bldg. & Constr. Trades Council of Metro. Dist.

v. Associated Builders & Contractors of Mass./R.I.,

Inc. (Boston Harbor), 507 U.S. 218, 225, 113 S.Ct.

1190, 122 L.Ed.2d 565 (1993) (quoting Lodge 76, Int’l

Ass’n of Machinists & Aerospace Workers v. Wis. Emp’t

Relations Comm’n, 427 U.S. 132, 140, 96 S.Ct. 2548,

49 L.Ed.2d 396 (1976)). Together, Garmon and

Machinists preempt state and local policies that would

otherwise balkanize the “integrated scheme of

regulation” and disrupt the balance of power between

labor and management embodied in the NLRA.

Golden State Transit Corp. v. City of Los Angeles

(Golden State I), 475 U.S. 608, 613–14, 106 S.Ct. 1395,

89 L.Ed.2d 616 (1986).

Similarly, the Railway Labor Act (“RLA”) established

a centralized system of labor dispute resolution for the

railway and airline industries to promote the free flow

of interstate commerce. Aircraft Serv. Int’l, Inc. v. Int’l

25a

Bhd. of Teamsters, Local 117, 779 F.3d 1069, 1073 (9th

Cir. 2015). Machinists and Garmon preemption also

apply in the RLA context. Bhd. of R.R. Trainmen v.

Jacksonville Terminal Co., 394 U.S. 369, 380–81, 89

S.Ct. 1109, 22 L.Ed.2d 344 (1969).

B

As the majority correctly notes, a “market

participation” exception allows state and local policies

to avoid preemption analysis altogether if those

policies serve to protect a proprietary interest rather

than regulate the labor market. Boston Harbor, 507

U.S. at 229–30, 113 S.Ct. 1190. But by focusing solely

on the market participant exception, the majority

glosses over a glaring reality: if the City had no

proprietary interest in LAX, section 25 would plainly

be preempted by the NLRA.

Section 25 requires service providers to enter into a

“labor peace agreement” (“LPA”)—a “binding and

enforceable” agreement that prohibits affected

employees “from engaging in picketing, work

stoppages, boycotts, or any other economic

interference”—with any labor organization that

requests one. If a service provider and requesting

labor organization cannot reach a no-strike agreement

within sixty days, section 25 requires the parties to

submit to binding arbitration. If a service provider

refuses to abide by the terms of section 25, the City

may revoke its license to do business at the airport.

Section 25 represents precisely the type of local

interference in labor-management relations that

Machinists preemption forbids. In Golden State I, the

Supreme Court held that while the NLRA “requires an

employer and a union to bargain in good faith, ... it

26a

does not require them to reach agreement,” nor does it

demand a particular outcome from labor negotiations.

475 U.S. at 616, 106 S.Ct. 1395; see also 29 U.S.C.

§ 158(d) (providing that the duty to bargain in good

faith “does not compel either party to agree to a

proposal or require the making of a concession”). The

substance of labor negotiations, and the results

therefrom, are among those areas Congress

intentionally left to the free play of economic forces

when it legislated in the field of federal labor law. See

Golden State I, 475 U.S. at 616, 106 S.Ct. 1395

(describing the NLRA as providing only “a framework

for the negotiations”).

The facts of Golden State I are instructive—and Los

Angeles has been in trouble before for flouting federal

labor laws. In that case, the Supreme Court found

that Machinists preempted the City of Los Angeles’

refusal to renew a taxi cab company’s license when it

failed to reach an agreement with striking union

members. Id. at 618, 106 S.Ct. 1395. By conditioning

the renewal of the taxi cab franchise on the acceptance

of the union’s demands, the City effectively imposed a

timeline on the parties’ negotiations and undermined

the taxi cab company’s ability to rely on its own

economic power to resist the strike. Id. at 615, 106

S.Ct. 1395. The Supreme Court held that the City

could not pressure the taxi cab company into reaching

a settlement and thereby “destroy[ ] the balance of

power designed by Congress, and frustrate[ ]

Congress’ decision to leave open the use of economic

weapons.” Id. at 619, 106 S.Ct. 1395.

Like the taxi cab company in Golden State I, service

providers here face a Hobson’s choice plausibly

inferred from the allegations of the Complaint. If a

27a

service provider refuses to negotiate an LPA with a

requesting labor organization, it loses its right to do

business at LAX. But if the service provider negotiates

an LPA, the union knows full well that it can hold out

for significant concessions in exchange for its members

giving up one of their most valuable economic

weapons—the power to go on strike. If the union is

unsatisfied with the terms the service provider offers,

the union can request mediation and binding

arbitration. Once forced to arbitrate, the tribunal will

dictate the result the service provider must accept.

The threat of binding arbitration thus seriously limits

service providers’ ability to rely on their own

“economic weapons of self-help” to resist a union’s

demands.

By forcing unwilling service providers to negotiate and

accept LPAs, section 25 compels a result Congress

deliberately left to the free play of economic forces.

The NLRA does not allow state and local governments

to “introduce some standard of properly balanced

bargaining power ... or to define what economic

sanctions might be permitted negotiating parties in an

ideal or balanced state of collective bargaining.”

Golden State I, 475 U.S. at 619, 106 S.Ct. 1395

(alteration in original) (quoting Machinists, 427 U.S.

at 149–50, 96 S.Ct. 2548). Yet that is exactly what

section 25 does. In doing so, it directly contravenes

federal law.

II

A

Whether the City can enforce section 25 thus hinges

entirely on the applicability of the market participant

exception. The majority is willing to conclude—with

28a

little examination of what the full effects of section 25

will be—that the City’s proprietary interest in LAX

immunizes section 25 from preemption. Supreme

Court precedent cautions us against drawing such

hasty conclusions, particularly when serious questions

persist about whether section 25 advances the City’s

proprietary interest.

As a preliminary matter, the Supreme Court has made

clear that not every government action escapes

preemption simply because it touches a proprietary

interest. Gould, 475 U.S. at 287, 106 S.Ct. 1057

(calling “an exercise of the State’s spending power

rather than its regulatory power.... a distinction

without a difference”). The animating concern of

Gould, in the words of Judge Posner, was that “[t]he

[state’s] spending power may not be used as a pretext

for regulating labor relations.” Metro. Milwaukee

Ass’n of Commerce v. Milwaukee County (Metropolitan

Milwaukee II), 431 F.3d 277, 279 (7th Cir. 2005)

(emphasis added).

The fact that the City of Los Angeles owns and

operates LAX through its municipal airport

commission, and thus has an interest in minimizing

disruptions to air travel, cannot alone qualify section

25 for the market participant exception. Instead we

must determine, by examining section 25’s “actual

content and its real effect on federal rights,” Livadas

v. Bradshaw, 512 U.S. 107, 108, 114 S.Ct. 2068, 129

L.Ed.2d 93 (1994), whether section 25’s “manifest

purpose and inevitable effect” is to do more than

protect the City’s proprietary interest in running the

29a

airport, see Gould, 475 U.S. at 291, 106 S.Ct. 1057. 14

Because our inquiry is informed by how section 25

might actually work in practice, it “inevitably is factspecific,” Roger C. Hartley, Preemption’s Market

Participant

Immunity—A

Constitutional

Interpretation: Implications for Living Wage and

Labor Peace Policies, 5 U. Pa. J. Lab. & Emp. L. 229,

252 (2003), and deserves more than the surface-level

review undertaken by the majority.

The Supreme Court’s decision in Chamber of

Commerce v. Brown, 554 U.S. 60, 128 S.Ct. 2408, 171

L.Ed.2d 264 (2008), illustrates the fact-sensitive

nature of our analysis. At issue in Brown was

California’s Assembly Bill 1889 (AB 1889), which

prohibited certain private employers from using state

funds to “assist, promote, or deter union organizing.”

Id. at 63, 128 S.Ct. 2408 (quoting Cal. Gov’t Code

§§ 16645.1–16645.7). The Court found it “beyond

dispute that California enacted AB 1889 in its capacity

as a regulator rather than a market participant.” Id.

at 70, 128 S.Ct. 2408. As one obvious example, the

preamble to AB 1889 announced an explicit regulatory

purpose. Id.

The heart of the Court’s market participation analysis,

however, focused not on AB 1889’s official purpose but

on its practical consequences. Significantly, although

14 To be clear, examining a challenged policy’s purpose does

not involve an investigation into policymakers’ “subjective

reasons for adopting a regulation or agreement.” Johnson v.

Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011, 1026 (9th Cir.

2010); see also Chamber of Commerce v. Reich, 74 F.3d 1322, 1336

(D.C. Cir. 1996) (clarifying that it was unnecessary “to question

the President’s motivation in order to determine whether the

[Executive] Order” demonstrated a regulatory purpose).

30a

AB 1889 purported to affect only state funds, the

statute’s combination of compliance burdens and

litigation risks effectively deterred employers from

using any funds, state or otherwise, to exercise speech

rights protected under the NLRA. Id. at 72–73, 128

S.Ct. 2408. In light of these realities, the Court held

that although California had a “legitimate proprietary

interest in ensuring that state funds are spent in

accordance with the purposes for which they are

appropriated,” in operation, AB 1889 “effectively

reache[d] far beyond the use of funds over which

California maintains a sovereign interest.” 15 Id. at

70–71, 128 S.Ct. 2408.

With respect to section 25, we must be similarly

sensitive to the ordinance’s real-world impacts. We

must also construe the allegations in the Complaint in

the light most favorable to the party resisting

dismissal. Syed v. M–I, LLC, 853 F.3d 492, 499 (9th

Cir. 2017). Yet the majority seems content to decide,

with little examination of how section 25 might

15 The majority mischaracterizes my analysis of Brown. The

critical lesson from Brown is that preemption analysis requires a

careful inquiry into the actual effects of a challenged policy.

Contrary to the majority’s interpretation, the Court’s analysis did

not focus “solely on the text of AB 1889.” Rather, its ultimate

preemption holding rested on how the statute, once

operationalized, would affect the real-world choices of entities

receiving state funds, and the use of funds over which the state

could claim no proprietary interest. Id. at 73, 128 S.Ct. 2408 (“AB

1889’s enforcement mechanisms put considerable pressure on an

employer either to forgo his ‘free speech right to communicate his

views to his employees,’ or else refuse the receipt of any state

funds. In so doing, the statute ... chills one side of the ‘robust

debate which has been protected under the NLRA.’ ” (citation

omitted)).

31a

actually operate, that section 25 serves a purely

proprietary function. Applying the Cardinal Towing

test, the majority makes a conclusory finding that,

“like the college in Johnson, the City is attempting to

avoid disruption of its business.” And with similarly

scant analysis, the majority decides that section 25 is

“narrowly tied to [the City’s] specific proprietary

problem.” Distinguishing between government as

market participant and government as regulator,

however, requires a closer look at section 25’s “actual

content” and “real effect[s].” See Livadas, 512 U.S. at

108, 114 S.Ct. 2068.

B

Under the first prong of Cardinal Towing, we cannot

say that section 25 reflects the City’s interest in the

“efficient procurement of needed goods and services,”

as we might expect from a private entity. Johnson,

623 F.3d at 1023 (quoting Cardinal Towing & Auto

Repair, Inc. v. City of Bedford, 180 F.3d 686, 693 (5th

Cir. 1999)). At the risk of stating the obvious, the City

here is not directly procuring goods and services to

execute a discrete project, but rather providing

ongoing licenses permitting a host of service providers

handling baggage, assisting passengers, refueling

aircraft, serving food and beverages, and otherwise

keeping planes operating on schedule to do business at

the airport. The City’s proprietary interest here is

thus markedly different in kind than that in cases like

Boston Harbor and Johnson, where local governments

required project labor agreements that were

“specifically tailored to one particular job.” See Boston

Harbor, 507 U.S. at 232, 113 S.Ct. 1190.

32a

Furthermore, unlike the project labor agreements in

Boston Harbor and Johnson, there is no evidence that

a private operator of LAX would use LPAs as a means

of ensuring labor peace. See Metro. Milwaukee II, 431

F.3d at 282. Section 8(e)–(f) of the NLRA specifically

authorizes the type of project labor agreements at

issue in Boston Harbor and Johnson, indicating that

such agreements “are a tried and true remedy for

construction stoppages owing to labor disputes.” Id. at

281–82. Nothing in the record suggests the same is

true for LPAs in the private marketplace.

Indeed, if the City’s true purpose here is to minimize

work stoppages at LAX, section 25 seems an ill-fitted

tool for the job. Section 25 is both too narrow and too

broad as a means of achieving its purported objective.

It is too narrow because, by its own terms, section 25

does not even apply to service providers’ employees,

but only to the members of a labor organization that

requests an LPA. Therefore, if a service provider’s

employees currently have no recognized collective

bargaining representative, those employees will not be

covered by an LPA at all. Nor does section 25 apply to

other classes of airport workers who may threaten

work stoppages. Section 25 also applies only partial

deterrence: it penalizes service providers, but not

labor organizations, for violating an LPA.

At the same time, section 25 sweeps more broadly than

necessary to achieve its goal. In order for unions to

forgo their right to strike, common sense and long

experience in labor negotiations tell us we would

reasonably expect that service providers will have to

make concessions favorable to the unions. These

concessions may be totally unrelated to preventing

strikes, and may or may not actually promote labor

33a

peace. Instead of forcing service providers and labor

organizations into LPA negotiations, the City could

have used other, more targeted mechanisms to

prevent labor strife. In Metropolitan Milwaukee II,

Judge Posner observed that

[t]he usual way of dealing with [service

interruptions] is to include contract terms that

by adding sticks or carrots or both give the

provider of the service a compelling incentive to

take effective measures to avoid stoppages.

The buyer can offer a premium for timely

performance and insist on the inclusion of a

stiff liquidated-damages provision as a sanction

for untimely performance; there is also, as a

further incentive to good performance, the

implicit threat of refusing to renew the contract

if performance is unsatisfactory.

431 F.3d at 280. 16

Section 25 is far less

straightforward. To summarize, it only covers a

service provider’s employees if: (1) those employees

are already represented by a labor organization; (2)

that labor organization requests an LPA; (3) the labor

organization and service provider enter into LPA

negotiations; and (4) the service provider makes

concessions acceptable to the union, which may be

16 The majority distinguishes Metropolitan Milwaukee II on

the grounds that the county ordinance at issue in that case “did

little to avoid service interruptions” and “imposed several

additional conditions favorable to union organizing,” Nothing in

the record establishes, however, that section 25 would achieve

labor peace any more effectively. And for reasons explained infra,

it is reasonable to assume that section 25’s practical effect is to

impose conditions on service providers aimed at facilitating union

organizing.

34a

totally unrelated to preventing strikes. If a service

provider’s employees are not already unionized, once a

labor organization secures an LPA, the labor

organization must then (5) become the certified

bargaining representative of the service provider’s

employees through NLRB elections. Compared to

simple, contract-based incentives, see id., section 25

certainly seems a roundabout way to minimize labor

disruptions at LAX.

These tailoring problems suggest that section 25’s

“manifest purpose and inevitable effect” may not be to

protect the City’s proprietary interest in the airport at

all. 17 See id. (holding that tailoring problems may

indicate a regulatory purpose); see also Hotel Emps. &

Rest. Emps. Union, Local 57 v. Sage Hosp. Res., LLC,

390 F.3d 206, 214 (3d Cir. 2004) (noting that “[o]ther

appellate

courts

that

have

examined

the

regulator/market-participant distinction also focus on

the fit between the challenged state requirement and

the state’s proprietary interest in a particular project

or transaction” (citing Chamber of Commerce v. Reich,

74 F.3d 1322 (D.C. Cir. 1996))). If section 25 does not

directly advance the City’s proprietary interest, is it

17 The majority suggests that the poor fit between section 25’s

actual effects and its purported goals should play no role in our

preemption analysis. But tailoring issues are highly relevant to

our evaluation of the first prong of the Cardinal Towing test—

whether a challenged policy “reflect[s] the [government] entity’s

interest in its efficient procurement of needed goods and

services.” Johnson, 623 F.3d at 1023 (quoting Cardinal Towing,

180 F.3d at 693). This inquiry is distinct from examining

policymakers’ motives, which does not play a role in our analysis,

and the narrowness of the challenged policy’s scope, which is

relevant to Cardinal Towing prong two.

35a

instead a pretext for regulating labor relations? The

complaint plausibly alleges as much.

Historical experience with LPAs, which the majority

does not bother to consider, also provides useful

insight into whether section 25 reflects a proprietary

interest or a regulatory one. That experience suggests

that section 25’s true purpose is to alter the balance

between labor and management. In typical LPAs, in

exchange for relinquishing their right to strike, unions

gain concessions from employers to support

unionization of the employer’s employees.

See

Hartley, supra, at 246 (summarizing study of over one

hundred LPAs). For example, LPAs often require an

employer to remain neutral during union organizing

drives. Id. LPAs also often require employers to

provide unions with employees’ contact information

and access to the employer’s physical premises to

assist with organizing efforts. 18 Id. at 246–47. A

review of LPAs in California similarly found that, in

most LPAs, “employers must grant workplace access,

provide employee information (names, job titles,

contact information, etc.) early in the organizing

campaign,” “refrain from making disparaging

statements about the union,” and/or “require that

18 Under

the NLRA, by contrast, employers may publicly

oppose unionization and refuse to give labor organizations access

to workplace facilities. 29 U.S.C. § 158(c) (permitting noncoercive

employer speech regarding unionization); Lechmere, Inc. v.

NLRB, 502 U.S. 527, 538, 112 S.Ct. 841, 117 L.Ed.2d 79 (1992)

(upholding general rule that employer may not be compelled to

allow nonemployee union organizers onto the employer’s property

for the distribution of union literature). Section 25 thus forces

service providers to give up statutory rights that would otherwise

be protected.

36a

employers assent to card check recognition and

neutrality.” 19 Indeed, in this case, counsel for the City

admitted at oral argument that unions would likely

seek neutrality from service providers as part of LPA

negotiations. We should therefore be unsurprised

that, as the ASPA has alleged, the Service Employees

International Union (SEIU) lobbied heavily for section

25 after it tried unsuccessfully to unionize service

provider employees at LAX.

Given that LPAs are generally used to promote union

organizing, and given counsel’s own admission at oral

argument, we cannot conclude at this stage that

section 25 simply reflects the City’s proprietary

interest in preventing work stoppages. Moreover, the

City has failed to establish that it enacted section 25

to respond to legitimate concerns about work

disruptions at LAX, as we might expect from a private

operator of the airport. The “manifest purpose and

inevitable effect” of section 25 thus appears to be

aimed at altering the balance of power between service

providers and organized labor. See Gould, 475 U.S. at

291, 106 S.Ct. 1057.

C

Turning to the second prong of the Cardinal Towing

test, we again cannot say conclusively at this stage

that section 25’s real-world impacts will be sufficiently

narrow to qualify for the market participant exception.

19

John Logan, Innovations in State and Local Labor

Legislation: Neutrality Laws and Labor Peace Agreements in

California, in The State of California Labor 2003 157, 184 (Ruth

Milkman ed., 2003), available at http://www.iir.ucla.edu/

publications/documents/StateofCALabor2003.pdf.

37a

Even on cursory facial examination, section 25 does

not appear narrowly drawn. In Johnson, we found

that the challenged project labor agreement condition

in that case was narrow in scope because it was both

limited in time and limited to construction projects

costing over $200,000. 623 F.3d at 1028. By contrast,

section 25 applies to any service provider at LAX, no

matter how big or small the service provider’s

operations there. And section 25 is unlimited in

duration; service providers must comply with its terms

as long as they want to remain licensed to do business

at LAX.

The practical effects of section 25 must also inform our

determination of whether its scope is narrow. A

challenged policy exceeds a state’s proprietary interest

if the policy effectively reaches employer conduct

“unrelated to the employer’s performance of

contractual obligations to the state.” Boston Harbor,

507 U.S. at 228–29, 113 S.Ct. 1190; see also Brown,

554 U.S. at 71, 128 S.Ct. 2408. In Metropolitan

Milwaukee II, for example, the court held that a

Milwaukee County ordinance was preempted because

it affected government contractors’ employees

regardless of whether they performed work on

government contracts. 431 F.3d at 279. The ordinance

required government contractors to secure LPAs that

would apply to the contractors’ “employees,” without

specifying whether “employees” within the meaning of

the ordinance was limited to bargaining units that

worked on county contracts. Id. The unrestricted

language left open the possibility that an employee

who performed only some or no work for the county

would be covered by an LPA, even for a labor dispute

arising out of non-county work. Id.

38a

Here, we have no assurances—besides the word of the

City—that section 25 will have no similar spillover

effects. The majority confidently asserts that section

25 will not “hamper service providers’ operations

elsewhere.” That conclusion apparently rests on the

fact that section 25 as a whole is aimed at operations

at LAX. But we should be unsurprised that section 25

focuses on LAX, given that the airport authority lacks

jurisdiction to directly regulate service providers

beyond LAX; the City clearly cannot impose

contracting conditions on service providers with whom

it has no contractual relationship. The key point,

however, is that nothing in section 25 limits private

agreements between service providers and unions

from extending beyond LAX. Nothing in section 25,

for example, dictates that LPAs shall cover only LAX

bargaining units. The ordinance provides only that an

LPA must apply to a labor organization’s “members,”

regardless of whether they perform only some or none

of their work at LAX. In LPA negotiations, therefore,

labor organizations may seek concessions that affect

service provider employees well beyond LAX. And,

depending

on

service

providers’

business

arrangements, it may be impracticable for service

providers to segregate their workforces so that only

employees who work exclusively at LAX are covered

by an LPA. 20 See Metro. Milwaukee II, 431 F.3d at

279–80.

20 Contrary to the majority’s suggestion, we have no indication

that any “natural division” between labor performed at and

outside LAX exists. It may be, for example, that some service

provider employees perform work both at LAX and at one of the

many other regional airports in the greater Los Angeles area.

Should such an employee become involved in a labor dispute, she

39a

The sheer scale of LAX may also result in spillover

effects. According to the City, “LAX is the fourth

busiest passenger airport in the world,” and the second

busiest in the U.S. L.A. World Airports, General

Information, LAX:

Los Angeles World Airports,

http://www.lawa.org/welcome_lax.aspx?id=40

(last

visited July 14, 2017). Last year, LAX handled over

80.9 million passengers and nearly 700,000 aircraft

takeoffs and landings. Id. In Reich, the D.C. Circuit

held that an Executive Order affecting all federal

contracts over $100,000 served as a regulation, and

not market participation, in part because the federal

government is such a large purchaser of goods and

services. 74 F.3d at 1338. Here, “given the size of

[LAX’s] portion of the economy,” labor negotiations at

LAX may similarly “alter ... behavior” in the wider

market for worldwide airline services. See id. The

ASPA should at least be allowed to prove these

potential effects.

III

If we are to give effect to Congress’ intent to “avoid the

‘diversities and conflicts likely to result from a variety

of local procedures and attitudes toward labor

controversies,’ ” Nash–Finch Co., 404 U.S. at 144, 92

S.Ct. 373, we cannot allow the market participation

exception to become too broad. It is not enough to

simply accept state and local governments’ assurances

that they only seek to enforce labor policies as market

participants, particularly when those policies would

would be bound by an LPA entered into pursuant to section 25

regardless of whether the dispute arose at LAX or elsewhere. This

type of spillover concern was central in Metropolitan Milwaukee

II, 431 F.3d at 279–80.

40a

directly interfere with core rights protected by the

NLRA, itself the product of careful congressional

balancing of national labor policy in industries

affecting interstate commerce. Even at this early

stage of litigation, an inquiry into section 25’s “real

effect on federal rights,” Livadas, 512 U.S. at 108, 114

S.Ct. 2068, raises serious doubts that the City’s

interest in enforcing section 25 is merely about

protecting its proprietary interest in running Los

Angeles International Airport. Plaintiffs have pled

enough to proceed to discovery. I respectfully dissent.

41a

APPENDIX B

869 F.3d 751

Withdrawn for N.R.S. bound volume

United States Court of Appeals,

Ninth Circuit.

AIRLINE SERVICE PROVIDERS ASSOCIATION,

Plaintiff–Appellant,

and

Air Transport Association of America, Inc.,

DBA Airlines of America, Plaintiff,

v.

LOS ANGELES WORLD AIRPORTS; City of Los

Angeles, Defendants–Appellees.

Airline Service Providers Association, Plaintiff,

and

Air Transport Association of America, Inc.,

DBA Airlines for America, Plaintiff–Appellant,

v.

Los Angeles World Airports;

City of Los Angeles, Defendants–Appellees.

No. 15–55571, No. 15–55572

|

Argued and Submitted

January 13, 2017 Pasadena, California

|

Filed August 23, 2017

42a

Editor’s Note: The opinion of the United States

Court of Appeals, Ninth Circuit, in Airline Service

Providers Association v. Los Angeles World Airports,

published in the advance sheet at this citation, 869

F.3d 751, was withdrawn from the bound volume

because it was withdrawn and superseded on

rehearing in part October 16, 2017. For superseding

opinion, see 2017 WL 4582735.

43a

APPENDIX C

United States District Court,

C.D. California

AIRLINE SERVICE PROVIDERS ASSOCIATION,

et al.

v.

LOS ANGELES WORLD AIRPORTS, et al.

Case No. CV 14-8977-JFW (PJWx)

|

Filed 03/18/2015

PROCEEDINGS (IN CHAMBERS): ORDER

GRANTING MOTION TO DISMISS

COMPLAINT BY DEFENDANTS LOS ANGELES

WORLD AIRPORTS AND CITY OF LOS

ANGELES [filed 1/6/15; Docket No. 30]

JOHN F. WALTER, UNITED STATES DISTRICT

JUDGE

On January 6, 2015, Defendants Los Angeles World

Airports and the City of Los Angeles (collectively,

“Defendants”) filed a Motion to Dismiss Complaint

(“Motion”). On February 13, 2015, Plaintiffs Airline

Service Providers Association and Air Transport

Association of America, Inc., d/b/a Airlines for America

(collectively, “Plaintiffs”) filed their Opposition. On

February 23, 2015, Defendants filed a Reply.

44a

Pursuant to Rule 78 of the Federal Rules of Civil

Procedure and Local Rule 7-15, the Court found the

matter appropriate for submission on the papers

without oral argument. The matter was, therefore,

removed from the Court’s March 9, 2015 hearing

calendar and the parties were given advance notice.

After considering the moving, opposing, and reply

papers, and the arguments therein, the Court rules as

follows:

I. Factual and Procedural Background 1

In this case, the Airline Service Providers Association

(“ASPA”), which is the principle trade association for

airport

services

providers 2,

and

the

Air

Transportation Association of America, Inc., d/b/a

Airlines of America (“A4A”), which represents

passenger and cargo air carriers in the United States 3,

1 Defendants’ unopposed January 6, 2015 Request for Judicial

Notice in Support of Motion to Dismiss Complaint [Docket No.

31] is granted.

2 The airport service providers are typically retained by the

airlines to provide airline related services at Los Angeles

International Airport (“LAX”). The Airline Service Providers are

sometimes referred to by the parties as “ASPs,” but the Court

concludes that they are more appropriately referred to as

Certified Service Providers (“CSPs”). ASPA members include Air

Serv Corporation, Aviation Safeguards, Calop Aeroground

Services, G2 Secure Staff LLC, Gateway Group One, Hallmark

Aviation Services, L.P., Integrated Airline Services, Menzies

Aviation, PLC, Pacific Aviation Corporation, SAS Airline

Services Group, Scientific Concepts, Inc., Servisair, Swissport

USA Inc., Total Airport Services Inc., US Aviation Services and

World Service West, LLC. Complaint, ¶ 7.

3 A4A members are Alaska Airlines, Inc., American Airlines

Group, Inc. (American Airlines and US Airways), Atlas Air, Inc.,

Delta Air Lines, Inc., Federal Express Corporation, Hawaiian

45a

challenge on preemption and vagueness grounds

Section 25 of the Certified Service Provider License

Agreement, which was approved on May 5, 2014 by

Defendant City of Los Angeles (the “City”) through its

Board of Airport Commissioners of Los Angeles World

Airport (“LAWA”).

According to the Complaint, for many years, airlines

operating out of LAX have retained or hired CSPs to

provide a wide variety of services including aircraft

fueling, aircraft cleaning, baggage sorting and

handling, aircraft cooling and heat, aircraft loading

and unloading, and counter and gate functions.

Beginning in 1985, the CSPs working at LAX were

required to enter into Non-Exclusive License

Agreements (“NELA”) with LAWA which set license

fees and imposed various requirements on the CSPs

working at LAX.

In 2008, negotiations commenced for a Certified

Service Provider License Agreement (“CSPLA”) that

was intended to replace the NELAs. The CSPLA was

designed to establish eligibility criteria, service

classifications,

and

various

monitoring

and

enforcement procedures for companies providing

services at LAX.

In August 2012, LAWA approved and adopted the

terms of the first CSPLA. The 2012 CSPLA4 included

Airlines, Inc., JetBlue Airways Corp., Southwest Airlines Co.,

United Continental Holdings, Inc. (United Airlines), and United

Parcel Service Co. All A4A members that operate at LAX have

contracts with ASPA members that are covered by Section 25.

Complaint, ¶ 8.

4 A copy of the 2012 CSPLA is attached as Exhibit A to the

Complaint.

46a

a “Labor Harmony” section which required the CSPs

to “abide by the requirements of all applicable labor

laws and regulations including the City of Los Angeles

Living Wage Ordinance.” 5

2012 CSPLA, § 24

(Complaint, Exh. A (p. 22)).

According to Plaintiffs, in March 2014, LAWA

presented the CSPs with a completely rewritten

“Labor Harmony” section, which contained a provision

requiring a “Labor Peace Agreement” (“LPA”).

Although Plaintiffs raised numerous questions and

objections to the Labor Harmony section of the CSPLA

in the brief time allowed for comment, on May 5, 2014,

LAWA approved the revised CSPLA. 6 In this action,

Plaintiffs challenge Section 25 of the 2014 CSPLA,

which provides as follows: 7

Section 25. Labor Harmony. Licensee

covenants that its employees at LAX shall be

able to work in labor harmony in order to

protect LAWA’s proprietary and economic

interests.

In order to comply with this

provision:

5

The City’s Living Wage Ordinance (“Ordinance”) was

challenged on many of the same grounds relied on by Plaintiffs in

this action. Those challenges were rejected and the Ordinance

was held constitutional. Calop Business Systems, Inc. v. City of

Los Angeles, 984 F.Supp. 2d 981, 989 (C.D. Cal. 2013). An appeal

of that decision is pending in the Ninth Circuit.

6 Plaintiffs suggest that as a result of lobbying by SEIU, the

CSPLA was adopted by LAWA. However, Plaintiffs’ suggestions

are based on mere speculation.

7 A copy of the May 5, 2014 CSPLA is attached as Exhibit B to

the Complaint.

47a

25.1 Licensee shall have in place, at all

required times, a labor peace agreement

(“Labor Peace Agreement”) with any

organization of any kind, or an agency or

employee representation committee or plan,

in which employees participate and which

exists for the purpose, in whole or in part, of

dealing with service providers at LAX

concerning grievances, labor disputes,

wages, rates of pay, hours of employment, or

conditions of work (“Labor Organization”),

which requests a Labor Peace Agreement.

25.2 The Labor Peace Agreement shall

include a binding and enforceable

provision(s)

prohibiting

the

Labor

Organization and its members from

engaging in the picketing, work stoppages,

boycotts, or any other economic interference

for the duration of the Labor Peace

Agreement, which must include the entire

term of any CSPLA.

25.3 Licensee shall, upon LAWA’s request,

submit to LAWA a certification, signed by

Licensee and any Labor Organizations,

indicating the parties have entered into a

Labor Peace Agreement.

25.4 In the event that Licensee and a Labor

Organization are unable to agree to a Labor

Peace Agreement within 60 days of the

Labor Organization’s written request, they

shall submit the dispute to a mutually

agreed upon mediator to assist the parties

in reaching a reasonable Labor Peace

48a

Agreement. In the event that Licensee and

a Labor Organization are unable to reach a

reasonable Labor Peace Agreement through

mediation, the parties shall submit the

dispute to the American Arbitration

Association …

25.5 Licensee may continue to operate at

LAX during any negotiation, mediation or

arbitration related to a Labor Peace

Agreement conducted pursuant to Section

25.

25.6 In the event LAWA determines it

necessary for public safety or the efficient

operation of LAX to post police details or

take other actions resulting from Licensee’s

violation of Section 25 or Section 26, LAWA

shall have the authority to require that

Licensee

reimburse

LAWA for all

reasonable costs incurred by doing so.

25.7 Nothing in Section 25 shall be

construed as requiring Licensee, through

arbitration or otherwise, to change terms

and conditions of employment for its

employees, recognize a Labor Organization

as the bargaining representative for its

employees, adopt any particular recognition

process, or enter into a collective bargaining

agreement with a Labor Organization.

On November 20, 2014, Plaintiffs filed their

Complaint, seeking to invalidate Section 25 of the

CSPLA. Specifically, Plaintiffs allege claims for: (1)

violation of the National Labor Relations Act and the

Railway Labor Act (Preemption); (2) violation of the

49a

Airline Deregulation Act of 1978 (Preemption); and (3)

Due Process (Void for Vagueness) (Fifth and

Fourteenth Amendments of the United States

Constitution).

Defendants now move to dismiss

Plaintiffs’ Complaint.

II. Legal Standard

A. Federal Rule of Civil Procedure 12(b)(1)

The party mounting a Rule 12(b)(1) challenge to the

Court’s jurisdiction may do so either on the face of the

pleadings or by presenting extrinsic evidence for the

Court’s consideration. See White v. Lee, 227 F.3d 1214,

1242 (9th Cir. 2000) (“Rule 12(b)(1) jurisdictional

attacks can be either facial or factual”). “In a facial

attack, the challenger asserts that the allegations

contained in a complaint are insufficient on their face

to invoke federal jurisdiction.” Safe Air for Everyone

v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In

ruling on a Rule 12(b)(1) motion attacking the

complaint on its face, the Court accepts the allegations

of the complaint as true. See, e.g., Wolfe v. Strankman,

392 F.3d 358, 362 (9th Cir. 2004). “By contrast, in a

factual attack, the challenger disputes the truth of the

allegations that, by themselves, would otherwise

invoke federal jurisdiction.” Safe Air, 373 F.3d at 1039.

“With a factual Rule 12(b)(1) attack ... a court may look

beyond the complaint to matters of public record

without having to convert the motion into one for

summary judgment. It also need not presume the

truthfulness of the plaintiff[’s] allegations.” White, 227

F.3d at 1242 (internal citation omitted); see also

Thornhill Pub. Co., Inc. v. General Tel & Electronics

Corp., 594 F.2d 730, 733 (9th Cir. 1979) (“Where the

jurisdictional issue is separable from the merits of the

50a

case, the judge may consider the evidence presented

with respect to the jurisdictional issue and rule on that

issue, resolving factual disputes if necessary... ‘[N]o

presumptive truthfulness attaches to plaintiff’s

allegations, and the existence of disputed material

facts will not preclude the trial court from evaluating

for itself the merits of jurisdictional claims.’ ”) (quoting

Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d

884, 891 (9th Cir. 1977)). “However, where the

jurisdictional issue and substantive issues are so

intertwined that the question of jurisdiction is

dependent on the resolution of factual issues going to

the merits, the jurisdictional determination should

await a determination of the relevant facts on either a

motion going to the merits or at trial.” Augustine v.

U.S., 704 F.2d 1074, 1077 (9th Cir. 1983). It is the

plaintiff who bears the burden of demonstrating that

the Court has subject matter jurisdiction to hear the

action. See Kokkonen v. Guardian Life Ins. Co., 511

U.S. 375, 377 (1994); Stock West, Inc. v. Confederated

Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).

B. Rule 12(b)(6)

A motion to dismiss brought pursuant to Federal Rule

of Civil Procedure 12(b)(6) tests the legal sufficiency of

the claims asserted in the complaint. “A Rule 12(b)(6)

dismissal is proper only where there is either a ‘lack of

a cognizable legal theory’ or ‘the absence of sufficient

facts alleged under a cognizable legal theory.’ ”

Summit Technology, Inc. v. High-Line Medical

Instruments Co., Inc., 922 F. Supp. 299, 304 (C.D. Cal.

1996) (quoting Balistreri v. Pacifica Police Dept., 901

F.2d 696, 699 (9th Cir. 1988)). However, “[w]hile a

complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a

51a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitlement to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements

of a cause of action will not do.” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (internal citations

and alterations omitted). “[F]actual allegations must

be enough to raise a right to relief above the

speculative level.” Id.

In deciding a motion to dismiss, a court must accept as

true the allegations of the complaint and must

construe those allegations in the light most favorable

to the nonmoving party. See, e.g., Wyler Summit

Partnership v. Turner Broadcasting System, Inc., 135

F.3d 658, 661 (9th Cir. 1998). “However, a court need

not accept as true unreasonable inferences,

unwarranted deductions of fact, or conclusory legal

allegations cast in the form of factual allegations.”

Summit Technology, 922 F. Supp. at 304 (citing

Western Mining Council v. Watt, 643 F.2d 618, 624

(9th Cir. 1981) cert. denied, 454 U.S. 1031 (1981)).

“Generally, a district court may not consider any

material beyond the pleadings in ruling on a Rule

12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard

Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990)

(citations omitted). However, a court may consider

material which is properly submitted as part of the

complaint and matters which may be judicially noticed

pursuant to Federal Rule of Evidence 201 without

converting the motion to dismiss into a motion for

summary judgment. See, e.g., id.; Branch v. Tunnel,

14 F.3d 449, 454 (9th Cir. 1994).

Where a motion to dismiss is granted, a district court

must decide whether to grant leave to amend.

52a

Generally, the Ninth Circuit has a liberal policy

favoring amendments and, thus, leave to amend

should be freely granted. See, e.g., DeSoto v. Yellow

Freight System, Inc., 957 F.2d 655, 658 (9th Cir. 1992).

However, a Court does not need to grant leave to

amend in cases where the Court determines that

permitting a plaintiff to amend would be an exercise

in futility. See, e.g., Rutman Wine Co. v. E. & J. Gallo

Winery, 829 F.2d 729, 738 (9th Cir. 1987) (“Denial of

leave to amend is not an abuse of discretion where the

pleadings before the court demonstrate that further

amendment would be futile.”).

III. Discussion

A. Section 25 Does Not Violate the National

Labor Relations Act or the Railway Labor

Act.

In their Complaint, Plaintiffs allege that the

provisions of Section 25 constitute an impermissible

attempt by Defendants to regulate labor relations of

the CSPs in violation of the National Labor Relations

Act (“NLRA”) and the Railway Labor Act (“RLA”), and

that those efforts are preempted under the Garmon or

Machinists preemption doctrines.

Specifically,

Plaintiffs allege that Section 25 violates federal labor

policy because it impermissibly requires a CSP to

agree to negotiate and enter into a LPA with a labor

organization that does not represent the employees of

the CSPs, regardless of the wishes of its employees.

According to Plaintiffs, this would effectively result in

the labor organization becoming the bargaining

representative of the CSP’s employees, which would

circumvent the processes and requirements of the

NLRA and RLA. In addition, Plaintiffs allege that

53a

Section 25 requires a “binding and enforceable”

agreement preventing the labor organization and its

members from striking or engaging in any type of

economic interference during the term of the CSPLA,

and thereby allowing the labor organization to become

the representative of the employees without the

requisite certification of the National Mediation Board

(“NMB”) or the National Labor Relations Board

(“NLRB”).

In their Motion, Defendants argue that Plaintiffs’

NLRA and RLA preemption claim fails as a matter of

law based on a simple reading of the plain language of

Section 25, which merely mandates a single

substantive provision prohibiting a labor organization

and its members from engaging in picketing, work

stoppages, boycotts, or any other economic

interference for the duration of the agreement.

Contrary to and in response to Plaintiffs’ preemption

claim, Defendants argue that Section 25 does not

mandate any provision in a LPA that binds a CSP, and

Section 25.7 expressly provides that it does not require

a CSP to alter the terms of its employee’s employment,

recognize labor organizations, or agree to any

particularized process for recognizing a labor

organization.

1. Article III Standing.

Before addressing the preemption arguments under

the NLRA and the RLA, the Court must resolve

Defendants’ claim that Plaintiffs have no standing to

challenge Section 25.

54a

a. The Legal Standard for Article III

Standing.

To establish standing, Plaintiffs must demonstrate:

“(1) he or she has suffered an injury in fact that is

concrete and particularized, and actual or imminent;

(2) the injury is fairly traceable to the challenged

conduct; and (3) the injury is likely to be redressed by

a favorable court decision.” Salmon Spawning &

Recovery Alliance v. Gutierrez, 545 F.3d 1220, 1225

(9th Cir. 2008); Los Angeles Haven Hospice, Inc. v.

Sebelius, 638 F.3d 644, 654–55 (9th Cir. 2011) (“To

invoke the jurisdiction of the federal courts, a plaintiff

must demonstrate that it has Article III

standing— i.e., that it has suffered an injury-in-fact

that is both ‘concrete and particularized,’ and ‘actual

or imminent, not conjectural or hypothetical’; that the

injury is ‘fairly ... traceable to the challenged action of

the defendant’; and that it is ‘likely, as opposed to

merely speculative, that the injury will be redressed

by a favorable decision’ on the plaintiff’s claims for

relief); see also Davis v. Fed. Election Comm’n, 554

U.S. 724, 733 (2008) (“To qualify for standing, a

claimant must present an injury that is concrete,

particularized, and actual or imminent; fairly

traceable to the defendant’s challenged behavior; and

likely to be redressed by a favorable ruling”).

Article III standing is a “threshold question in every

federal case, determining the power of the court to

entertain the suit.” Warth v. Seldin, 422 U.S. 490

(1975). Hence, “a defect in standing cannot be waived;

it must be raised, either by the parties or by the court,

whenever it becomes apparent.” U.S. v. AVX Corp.,

962 F.2d 108, 116 n. 7 (1st Cir.1992).

55a

The inquiry into Article III standing “involves both

constitutional limitations on federal-court jurisdiction

and prudential limitations on its exercise.” Warth, 422

U.S. at 498 (1975). “In its constitutional dimension,

standing imports justiciability: whether the plaintiff

has made out a ‘case or controversy’ between himself

and the defendant within the meaning of Art[icle] III.”

Id.

Beyond the “irreducible constitutional minimum of

standing” (Lujan v. Defenders of Wildlife, 504 U.S.

555, 560 (1992)), the Supreme Court recognizes other

prudential limitations on the class of persons who may

invoke the courts’ decisional remedial powers,

including the requirement that a party must assert its

own legal interest as the real party in interest. 8

Warth, 422 U.S. at 499. To obtain relief in federal

court, a party must meet both the constitutional and

prudential requirements for standing. Morrow v.

Microsoft Corp., 499 F.3d 1332, 1339 (Fed. Cir.2007);

see also In the Matter of Village Rathskeller, Inc., 147

B.R. 665, 668 (S.D.N.Y. 1992) (holding that “[t]he

concept of standing subsumes a blend of constitutional

requirements and prudential considerations”).

8

These prudential limitations are self-imposed rules of

judicial restraint, and principally concern whether the litigant (1)

asserts the rights and interests of a third party and not his or her

own, (2) presents a claim arguably failing outside the zone of

interests protected by the specific law invoked, or (3) advances

abstract questions of wide public significance essentially

amounting to generalized grievances more appropriately

addressed to the representative branches. See In re Newcare

Health Corp. 244 B.R. 167, 170 (1st Cir. BAP 2000).

56a

b. A4A Does Not Have Standing to

Challenge Section 25 Under the

NLRA or the RLA.

In this case, neither A4A nor its members are covered

by the NLRA, and, thus, neither A4A nor its members

have any legally protected interests under the NLRA

with which the CSPLA could interfere. In addition,

even though the airlines are subject to the RLA,

Section 25 establishes requirements solely for the

CSPs, not for A4A or its members, the airlines.

Because Section 25 does not apply to A4A or its

members, A4A cannot demonstrate that it will suffer

any injury as a result of the enactment of Section 25.

However, the Court recognizes that “when the plaintiff

is not himself the object of the government action or

inaction he challenges, standing is not precluded, but

it is ordinarily ‘substantially more difficult’ to

establish.” Lujan, 504 U.S. at 562. In attempting to

establish standing, A4A alleges that the airlines will

be harmed through a theoretical and tenuous chain of

causation. For example, A4A alleges Section 25 will

cause unnamed CSPs to cease conducting business at

LAX and discourage new CSPs from conducting any

business at LAX. Complaint, ¶ 44. A4A speculates

that this will result in fewer CSPs at LAX, and that

the remaining CSPs will raise their prices for their

services which will be passed on to the airlines which

will necessarily face higher costs. 9 Id.

9 A4A has alleged other speculative scenarios in an attempt to

demonstrate its standing, but those allegations simply ignore the

plain language of Section 25. For example, A4A alleges that

unnamed CSPs will “fail to reach an agreement,” at some

undetermined point in the future, with a labor organization,

57a

The Court concludes that A4A has failed to

demonstrate that it has standing to challenge

Section 25. In addition, even if A4A or the airlines had

some legally protected—albeit tenuous—interest with

which Section 25 might possibly interfere, the harms

that the airlines allege are neither imminent nor

concrete.

“Although imminence is concededly a

somewhat elastic concept, it cannot be stretched

beyond its purpose, which is to ensure that the alleged

injury is not too speculative for Article III

purposes-that the injury is certainly impending.”

Clapper v. Amnesty International USA, — U.S. —,

133 S. Ct. 1138, 1147 (2013) (internal quotation

omitted).

The Supreme Court has “repeatedly

reiterated that ‘threatened injury must be certainly

impending to constitute injury in fact,’ and that

leading those CSPs to be decertified, which again will result in

the airlines absorbing higher prices that might be charged by the

remaining CSPs. ¶ 45. However, these allegations conveniently

ignore Section 25.4 of the CSPLA, which provides that if a CSP

and a labor organization are unable to negotiate or mediate terms

of an agreement, an arbitrator will set the initial terms of the

LPA, thereby preventing the loss of any qualified CSPs. In

addition, A4A alleges that requiring CSPs to enter into a LPA

with a labor organization will result in the labor organization

seeking some unspecified “something in return” or will somehow

alter the terms of employment for the CSP’s employees, which

again will result in increased costs that will be passed on to the

airlines. Id., ¶¶ 28 and 43. However, Plaintiffs again ignore

Section 25.7 of the CSPLA, which specifically states that Section

25 does not require recognition of a labor organization as a

bargaining representative or require a CSP to alter its employees’

terms and conditions of employment. Because each of Plaintiffs’

hypothetical scenarios is impossible when viewed in the context

of the clear language of Section 25, the Court concludes that they

do not establish A4A’s standing.

58a

‘[a]llegations of possible future injury’ are not

sufficient.” Id. In this case, A4A’s allegations of highly

speculative future harms resulting from Section 25’s

implementation are plainly insufficient to establish

standing. 10

Accordingly, the Court grants Defendants’ Motion

with respect to A4A’s first count alleging that

Section 25 violates the NLRA and the RLA because

A4A lacks standing, and, because amendment is futile,

it is dismissed without leave to amend.

2. The NLRA and the RLA.

Although A4A does not have standing to challenge

Section 25 , the parties appear to agree that ASPA has

the requisite standing to challenge Section 25 under

the NLRA.

a. Garmon and Machinists Preemption

Under the NLRA and the RLA.

The NLRA’s primary effect is to require collective

bargaining and reduce labor disruptions.

St.

Elizabeth Community Hospital v. NLRB, 708 F.2d

1436, 1441 (9th Cir.1983). Congress passed the NLRA

to minimize industrial strife by protecting employees’

rights to organize and bargain collectively. NLRB v.

Jones & Laughlin, 301 U.S. 1, 42–43 (1937). Thus,

when Congress enacted the NLRA, it took away from

the courts much of the power to regulate “the relations

between employers of labor and workingmen” by

granting authority to an administrative agency.

10 As Defendants point out, there are no allegations in the

Complaint that any CSP has actually entered into a LPA or, more

importantly, Plaintiffs have not and undoubtedly cannot

plausibly allege what they mean by “something in return.”

59a

Duplex Printing Press Co. v. Deering, 254 U.S. 443, 486

(1921) (Brandeis, J., dissenting).

The RLA regulates the negotiation of collective

bargaining agreements in the railway and airline

industries. Hawaiian Airlines, Inc. v. Norris, 512 U.S.

246, 252 (1994). Congress passed the RLA “to promote

stability in labor-management relations by providing

a comprehensive framework for resolving labor

disputes.” Id. It “imposes a duty on employers and

employees ‘to exert every reasonable effort to make

and maintain agreements concerning rates of pay,

rules, and working conditions.’ ” Air Transport

Association of America v. City and County of San

Francisco, 266 F.3d 1064, 1075 (9th Cir. 2001) (citing

45 U.S.C. § 152).

Neither the NLRA nor the RLA contain express

preemption provisions. Building and Constr. Trades

Council v. Associated Builders & Contractors of

Mass/RI, Inc. (“Boston Harbor”), 507 U.S. 218, 224

(1993). However, the Supreme Court has articulated

two distinct preemption principles that apply to both

the NLRA and the RLA, known as Garmon

preemption and Machinists preemption. Id.; Beers v.

Southern Pacific Transportation Co., 703 F.2d 425,

428–29 (9th Cir. 1983) (holding that Garmon

preemption applies to the RLA); Brotherhood of

Railroad Trainmen v. Jacksonville Terminal Co., 394

U.S. 369 (1969) (holding that a state court could not

enjoin a union from picketing a railroad where that

union was involved in a dispute governed by the RLA);

Lodge 76, Int’l Assoc. of Machinists v. Wisconsin

Employment Relations Comm’n, 427 U.S. 132, 147–48

(1976) (citing Jacksonville Terminal as precedent for

its holding that state and municipalities are

60a

preempted by the NLRA from regulating those areas

that have been left by Congress to be controlled by the

free play of economic forces).

Garmon preemption precludes several kinds of state

intrusions on the NLRA’s and RLA’s “integrated

scheme of regulation,” including “potential conflict of

rules of law, of remedy, and of administration.” 11 San

Diego Bldg. Trades Council v. Garmon, 359 U.S. 236

(1959). To protect against such conflicts, Garmon

preemption prohibits states from regulating activity

that the NLRA and RLA protects, prohibits, or

arguably protects or prohibits. Wis. Dep’t of Indus.,

Labor & Human Relations v. Gould, Inc., 475 U.S. 282,

286 (1986). The purpose of Garmon preemption is to

preserve the integrity of the “comprehensive and

integrated

regulatory

framework”

Congress

established in the NLRA and the RLA. Garmon, 359

U.S. at 239–40. Under the NLRA, “Congress did not

merely lay down a substantive rule of law to be

enforced by any tribunal competent to apply law

generally to the parties.” Garner v. Teamsters,

Chauffeurs & Helpers Local Union No. 776, 346 U.S.

485, 490 (1953).

Rather, “Congress evidently

11 Different dangers attend each conflict: (1) “[t]he danger from

the first kind of conflict is that the State will require different

behavior than that prescribed by the NLRA (the substantive

concern)”; (2) “the danger from the second is that the State will

provide different consequences for the behavior (the remedial

concern)”; and (3) “the danger from the third is that Congress’s

design to entrust labor questions to an expert tribunal—the

NLRB—would be defeated by state tribunals exercising

jurisdiction over labor questions (the primary jurisdiction

concern).” Healthcare Ass’n of New York State, Inc. v. Pataki, 471

F.3d 87, 94–95 (2nd Cir. 2006).

61a

considered the NLRB, with its centralized

administration and specially designed procedures,

necessary to obtain uniform application of its

substantive rules and to avoid these diversities and

conflicts likely to result from a variety of local

procedures and attitudes toward labor controversies.”

Garmon, 359 U.S. at 239–40.

Garmon preemption does not apply when the activity

a state seeks to regulate falls beyond the reach of the

NLRA or the RLA. However, this does not mean that

activities ungoverned by the NLRA or the RLA can be

controlled by the states.

More than indicating

Congress’ desire for centralized administration and

uniformity in the application of its provisions, the

NLRA and RLA reveal that Congress intended certain

concerted activities to remain unfettered by any

governmental interference, including the NLRB.

“Congress formulated a code whereby it outlawed

some aspects of labor activities and left others free for

the operation of economic forces.” Weber v. AnheuserBusch, Inc., 348 U.S. 468, 480 (1955). Thus, the

Supreme Court recognized a second line of preemption

analysis known as Machinists preemption, which

forbids both the NLRB and the states from regulating

conduct or activities that Congress intended to leave

to “the free play of economic forces.” Machinists, 427

U.S. at 140. Machinists preemption reflects the

NLRA’s and RLA’s broader purposes of restoring equal

bargaining power between labor and management,

and it prevents both the states and the NLRB from

“picking and choosing which economic devices of labor

and management shall be branded as unlawful.” Nat’l

Labor Relations Bd. v. Ins. Agents’ Internat’l. Union,

AFL-CIO, 361 U.S. 477, 498 (1960); Alameda

62a

Newspapers, Inc. v. City of Oakland, 95 F.3d 1406,

1413 (9th Cir. 1996) (holding that the doctrine “is

based on the premise that ‘the use of economic

pressure by the parties to a labor dispute is ... part and

parcel of the process of collective bargaining,’ ” which

means that “neither a state nor the National Labor

Relations Board is ‘afforded flexibility in picking and

choosing which economic devices of labor and

management shall be branded unlawful’ ”) (quoting

Machinists, 427 U.S. at 144). Therefore, Machinists

preemption preserves Congress’ intentional balance

between the uncontrolled power of management and

labor to further their respective interests” in an area

free from regulation. Boston Harbor, 507 U.S. at 226

(internal quotation marks and citation omitted).

b. Section 25 Is Not Preempted

Under the NLRA or the RLA.

As stated above, Plaintiffs’ preemption claim under

the NLRA or the RLA is primarily based on Plaintiffs’

argument that Section 25 requires CSPs to recognize

labor organizations as the representatives of the CSP’s

employees, and, thus, Plaintiffs claim that it makes

that

labor

organization

the

“bargaining

representative” of the CSP’s employees “without

regard to the [RLA’s and NLRA’s] processes and

requirements.” 12 Complaint, ¶¶ 24–25. However,

12

Plaintiffs also allege that the “NMB and NLRB have

exclusive jurisdiction to resolve disputes over whether and by

whom employees are represented for collective bargaining

purposes.” Complaint, ¶ 22. However, both the NLRA and the

RLA have long allowed the voluntary recognition of labor

organizations, without the necessity of resorting to NLRB or

NMB procedures. NLRB v. Gissel Packing Co., Inc., 395 U.S. 575,

600 (1969); Texas & New Orleans R.R. Co. v. Brotherhood of Ry.

63a

Plaintiffs ignore the plain language of Section 25,

which states that no CSP is required to “recognize a

Labor Organization” or to agree to “any particular

recognition process.” Moreover, Section 25 clearly

provides that there is no obligation, through

negotiation, mediation, arbitration, or otherwise,

imposed on a CSP to “change terms and conditions of

employment” or to “enter into a collective bargaining

agreement.” 13 In fact, Section 25 does not require a

CSP to seek out a union to obtain a LPA, but only

applies when a labor organization represents or seeks

to represent a CSP’s employees. It is not uncommon

for labor organizations and employers to negotiate

enforceable agreements prior to a labor organization’s

recognition as the employees’ representative, and such

agreements frequently address issues related to the

labor organizations’ waiver of its right to strike,

boycott, or picket; ground rules applicable to any

organization drive; and arbitration of disputes. See,

& S.S. Clerks, 281 U.S. 548, 555 (1930). Even assuming arguendo

that Plaintiffs were correct, it would not mean that Section 25

was preempted because Section 25 makes clear that it does not

require a CSP to “recognize a Labor Organization as the

bargaining representative of its employees” or to “adopt any

particular recognition process.” 2014 CSPLA, § 25.7.

13

Plaintiffs also allege that Section 25 will enable labor

organizations to obtain “significant concessions, either through

negotiation, mediation or arbitration” from CSPs, and, therefore,

alter “the terms of employment for the [CSP’s] employees.”

Complaint,¶¶ 28 and 43. Once again, Plaintiffs ignore Section

25’s plain language which specifically states, among other things,

that there is no obligation, through negotiation, mediation,

arbitration, or otherwise, imposed on a CSP to “change terms and

conditions of employment” or to “enter into a collective bargaining

agreement.” 2014 CSPLA, § 25.7.

64a

e.g., Retail Clerks v. Lion Dry Goods, 369 U.S. 17, 20

(1962); Hotel Employees Local 2 v. Marriott Corp., 961

F.2d 1464 (9th Cir. 1992); Hotel Employees &

Restaurant Employees, Local 57 v. Sage Hospitality

Resources, LLC, 390 F.3d 206, 219 (3d Cir. 2004). No

court has ever held that such pre-recognition

agreements interfere with the election and

certification processes overseen by the NLRB or the

NMB.

In addition, Plaintiffs allege that Section 25 requires

the negotiation of a LPA that would cover all

employees of a CSP, and then argue that this

requirement mandates recognition of a labor

organization’s representation of all of the employees of

the CSP, whether all the employees are members of

that labor union or not. Complaint, ¶¶ 25 and 43(f).

However, Section 25.2 specifically states that it only

requires a LPA that covers “the Labor Organization

and its members,” and, thus, no labor organization will

negotiate a LPA on behalf of CSP employees who are

not represented by that labor organization. 14

14 As Defendants correctly argue in their Reply, there is no

contradiction between a labor organization only being able to

negotiate a LPA on behalf of its members and Section 25’s general

requirement that a CSP covenant “that its employees at LAX

shall be able to work in labor harmony.” In fact, it is what is

required by federal labor law. Metropolitan Edson Co. v. NLRB,

460 U.S. 693, 705–06 (1983) (holding that unions have no ability

under federal law to waive the right of unrepresented employees

to take economic action). Thus, although Plaintiffs are correct

that Section 25 only offers Defendants incomplete protection

against labor actions, Defendants, in apparent recognition of that

limitation, have carefully crafted Section 25 to extend as far as

the federal labor laws allow. Moreover, the scope of Section 25.2

reflects Defendants’ belief that disruptive labor disputes are most

65a

Accordingly, Section 25 does not ignore or attempt to

modify the protections given to CSP employees under

the RLA and NLRA with respect to collective

bargaining, but, instead, it was carefully drafted to fit

well within the contours of those protections. NLRB

v. Magnavox Co., 415 U.S. 322, 325–26 (1974) (holding

that federal law recognizes that labor organizations

may waive their own and their members right to take

economic action, prior to and separate from

certification under the NLRA); Sage Hospitality, 390

F.3d at 208 (upholding pre-recognition agreement

containing “a no-picketing promise”). At the same

time, there is no requirement in Section 25 that CSPs

must give up a federally protected right or regulate an

employer’s economic weapons of self-help. Instead,

Defendants are merely seeking to protect their

proprietary interest in ensuring that labor disputes do

not interfere with the efficient, revenue-generating

operations of LAX to the extent allowable under the

existing federal labor laws. International Society for

Krishna Consciousness, Inc. v. Lee, 505 U.S. 672, 682

(1992) ( “[A]irports are commercial establishments

funded by users fees and designed to make a regulated

profit ... As commercial enterprises, airports must

provide services attractive to the marketplace”).

Finally, Plaintiffs allege that Section 25 is preempted

because it “does not appear to provide any sanction

against a Labor Organization that violates a no-strike

provision entered into as part of a Labor Peace

Agreement.” Complaint, ¶ 29. However, federal labor

likely to occur when a labor organization represents, or seeks to

represents, the workforce of a CSP, rather than by individual

employees.

66a

law already provides a CSP with ample remedies

against a labor organization that breaches a no-strike

clause. For example, a CSP can seek an injunction

against the labor organization and its members (Boys

Markets, Inc. v. Retail Clerks, 398 U.S. 235 (1970)), or

damages against the labor organization under 29

U.S.C. § 185. 15

Plaintiffs fail to explain why

Defendants’ reliance on private incentives and preexisting legal mechanisms to enforce a LPA’s no-strike

pledge is preempted.

In fact, any attempt by

Defendants to add their own penalties for a labor

organization’s violation of its contractual no-strike

pledge would be preempted by Section 301 of the

LMRA, 29 U.S.C. § 185, and by the RLA, because it

would add extra-contractual remedies and require

interpretation of the LPA to determine if a violation

had occurred. Livadas v. Bradshaw, 512 U.S. 107,

121–23 (1994); Espinal v. Northwest Airlines, 90 F.3d

1452, 1459 (9th Cir. 1996) (holding that RLA preempts

state breach-of-contract claims because they require

interpretation of labor-management agreement);

Aguilera v. Pirelli Armstrong Tire Corp., 223 F.3d

1010, 1013–14 (9th Cir. 2000) (holding that LMRA

preempts state breach-of-contract claims because they

require

interpretation

of

labor-management

agreement).

The Court concludes that Section 25 does not frustrate

the purpose of the NLRA or the RLA, and, thus,

Section 25 is not preempted by the NLRA or the RLA.

Accordingly, the Court grants Defendants’ Motion

15 Damages for violating the no-strike pledge would not be

available against individual employees. Complete Auto Transit,

Inc. v. Reis, 451 U.S. 401, 415–16 (1981).

67a

with respect to Plaintiffs’ first count alleging that

Section 25 violates the NLRA and the RLA, and,

because amendment is futile, it is dismissed without

leave to amend.

B. The Airline Deregulation Act of 1978.

Plaintiffs also allege that Section 25 is preempted by

the Airline Deregulation Act of 1978 (“ADA”) because

it effectively targets entities that are hired by airlines

to provide air carrier services to the airlines, and, thus,

is substantially related to and connected with air

carrier services in violation of the ADA. In their

Motion, Defendants argue that Plaintiffs lack

standing to raise the ADA preemption claim.

Defendants also argue that the ADA claim fails as a

matter of law because the ADA does not preempt the

enforcement of local rules like the CSPLA that only

govern the providers of services to airlines and do not

bind or otherwise affect the airlines’ operations related

to prices, routes, or services.

1. Plaintiffs Do Not Have Standing

Under the ADA.

As discussed in detail above, standing “requires

federal courts to satisfy themselves that ‘the plaintiff

has alleged a personal stake in the outcome of the

controversy’ as to warrant [their] invocation of federalcourt jurisdiction.” Summers v. Earth Island Institute,

555 U.S. 488, 493 (2009). Standing is more than a

mere pleading requirement; it is an indispensable part

of a plaintiff’s case. Lujan, 504 U.S. at 561.

In this case, ASPA does not have standing to assert a

claim that Section 25 violates the ADA because

neither the ASPA nor its members are subject to the

ADA, and, thus, they do not have a legally protected

68a

interest under the ADA.

See, e.g., 49 U.S.C.

§ 41713(b)(1) (ADA preempts only local laws “related

to a price, route or service of an air carrier”) (emphasis

added); Branche v. Airtran Airways, Inc., 342 F.3d

1248, 1256 (11th Cir. 2003) (holding that preempting

local laws relating to other aspects of airline

operations outside the air carrier-passenger

relationship does “not further the goal of promoting

competition in the airline industry” and, therefore, is

outside the zone of interests protected by the ADA).

Thus, any injury ASPA and its members may suffer as

a result of Section 25 will not be based on their rights

and interests under the ADA.

With respect to A4A, the Court easily concludes that it

has no standing to assert a claim that Section 25

violates the ADA because neither A4A nor its

members are subject to or governed by Section 25. As

discussed above, Section 25 only establishes or

imposes requirements for the CSPs, not for A4A or its

members. Because Section 25 does not apply to A4A

or its members, A4A cannot demonstrate that it

suffered an injury as a result of Section 25.

Accordingly, the Court grants Defendants’ Motion

with respect to Plaintiffs’ second count alleging that

Section 25 violates the ADA because Plaintiffs lack

standing, and, because amendment is futile, it is

dismissed without leave to amend.

2. Preemption Under the ADA.

Although the Court concludes that Plaintiffs do not

have standing, the Court will also address Plaintiffs’

preemption claim under the ADA so that the parties

will have a complete resolution of the issues raised by

Defendants’ Motion.

69a

a. Legal Standard for Preemption

Under the ADA.

Congress enacted the ADA after “determining that

maximum reliance on competitive market forces

would best further efficiency, innovation, and low

prices as well as variety [and] quality ... of air

transportation services.” Morales v. Trans World

Airlines, Inc., 504 U.S. 374, 378 (1992) (internal

quotations and citations omitted); see also Rowe v.

N.H. Motor Trans. Assoc., 552 U.S. 364, 367–68 (2008).

To determine whether the ADA preempts a particular

state law, the court must “start with the assumption

that the historic police powers of the States [are] not

to be superseded by the [ADA] unless that was the

clear and manifest purpose of Congress.” Air

Transport Association of America v. City and County

of San Francisco, 266 F.3d 1064, 1070 (9th Cir.2001).

“Congress’s ‘clear and manifest purpose’ in acting the

[ADA] was to achieve ... the economic deregulation of

the airline industry.” Charas v. Trans World Airlines,

Inc., 160 F.3d 1259, 1265 (9th Cir.1998) (en banc). The

statute includes an express preemption provision,

which states that “a State ... may not enact or enforce

a law, regulation or other provision having the force

and effect of law related to a price, route, or service of

an air carrier.” 49 U.S.C. § 41713(b)(1). The word

“service” means “the prices, schedules, origins and

destinations of the point-to-point transportation of

passengers, cargo, or mail. In the context in which it

was used in the Act, ‘service’ was not intended to

include an airline’s provision of in-flight beverages,

personal assistance to passengers, the handling of

luggage, and similar amenities.” Charas, 160 F.3d at

1261.

70a

The “key phrase” in the ADA’s preemption provision

—“related to”— means having a connection with, or

reference to, the prices, routes, or services of an air

carrier. Id. “[S]tate enforcement actions [that have

such a] connection with, or reference to, airline rates,

routes, or services are [thus] pre-empted [.]” Id. at 384

(internal quotations and citations omitted). A state

law may “relate to” the subject matter of the ADA, and

“run afoul of the [Deregulation Act’s] preemption

clause, even though such law has only an indirect

effect on the rates, routes, or services of an air carrier.”

Californians for Safe & Competitive Dump Truck

Transp. v. Mendonca, 152 F.3d 1184, 1188 (9th

Cir.1998) (citing Morales, 504 U.S. at 385-86); 16 see

also Rowe, 552 U.S. at 370–71 (holding that a state law

may be preempted even if its effect on rates, routes, or

services “is only indirect”). However, some state laws

affect an air carrier’s fares in “too tenuous, remote, or

peripheral a manner” to trigger preemption.

Mendonca, 152 F.3d at 1188 (citing Morales, 504 U.S.

at 390). Where a state law has an indirect effect on

the rates, routes, or services of an air carrier, it will be

preempted only where that interference is acute. Id.

at 1189. In fact, courts have regularly upheld local

16 Mendonca concerned the Federal Aviation Administration

Authorization Act (“FAAA”) rather than the Airline Deregulation

Act. See Mendonca, 152 F.3d at 1185. However, the FAAA

contains a preemption provision that is “identical to an existing

provision deregulating air carriers (the Airline Deregulation Act

(“ADA”)).” Id. at 1187. In addition, Mendonca interpreted the

FAAA’s preemption provision by looking to cases that had

interpreted the preemption provision of the Airline Deregulation

Act. Id. at 1188. Thus, the scope of the preemption under both

statutes is virtually identical.

71a

laws affecting the employment conditions of airport

workers, even where airports were singled out for

regulation and even when the effect of the local laws

on the costs of airport service providers was immediate

and direct. See, e.g., Calop, 984 F.Supp. 2d at 989

(upholding Los Angeles’s living wage ordinance even

though it bound only “certain employers,” including

“airport employers and subcontractors of airport

employers who perform work on contracts subject to

the” living wage ordinance); Amerijet International,

Inc. v. Miami-Dade County, 7 F. Supp. 3d 1231, 1238

(S.D. Fla. 2014) (holding that the ADA did not preempt

the application of the living wage ordinance to ground

service providers at Miami International Airport

because it did not reach the “air carrier-air passenger

relationship” and cautioned that the excessively broad

reading of the ADA preemption clause “would preempt

every law that regulates a business providing services

to airlines ... even though the business has some

remote or tenuous affect [sic] on airlines’ rates, routes

or services”).

b. Section 25 Is Not Preempted

Under the ADA.

In their Complaint, Plaintiffs allege that because

Section 25 specifically and exclusively targets entities

that provide core airline services at LAX, it is, by

definition, “related to” airline services, and, therefore,

is preempted by the ADA. See, e.g., Complaint ¶¶ 31–

37. In their Opposition, Plaintiffs argue that because

the “related to” language of the ADA’s preemption

provision should be given a “broad scope” and an

“expansive sweep,” Section 25 certainly falls within

the preemption provision of the ADA. Opposition,

p. 11. Defendants disagree and argue that the ADA’s

72a

preemption provision should be narrowly and strictly

construed in the context of the ADA’s stated object and

policy.

The Court agrees with Defendants and concludes that

Section 25 does not reach, nor is it intended to reach,

the air carrier-air passenger relationship. See, e.g,

Branche, 342 F.3d at 1255 (holding that “through the

ADA Congress sought to leave the bargained for

aspects of the air carrier-air passenger relationship to

the workings of the market”). There is nothing in the

language of Section 25 which makes it even remotely

applicable to A4A’s members. Instead, Section 25

applies only to the CSPs, who are third party service

contractors that provide various ground services to the

airlines, not the airlines themselves. Because none of

the services provided by the CSPs, covered by

Section 25, have anything to do with the “price, route,

or service of an air carrier,” Section 25 is not

preempted by the ADA. 49 U.S.C. § 41713(b)(1).

In addition, notwithstanding Plaintiffs’ efforts to

allege some undefined causal relationships between

Section 25 and perceived harm to the “price, route, or

service of an air carrier,” any connection is “too

tenuous, remote, or peripheral” to trigger preemption.

Calop, 984 F. Supp. 2d at 1007–1008 (ADA does not

preempt City’s LWO where plaintiffs produced no

evidence to support allegations that LWO “increases

the price of labor, and therefore has an impact on an

air carrier’s prices, routes, or services”); see also

California Division of Labor Standards Enforcement

v. Dillingham Construction, N.A., Inc., 519 U.S. 316,

329 (1997) (provision that merely “alters the

incentives, but does not dictate the choices,” will

survive preemption); Dilts v. Penske Logistics, LLC,

73a

769 F.3d 637, 643 (9th Cir. 2014) (“Nor does a state

law meet the ‘related to’ test for FAAA preemption just

because it shifts incentives and makes it more costly

for motor carriers to choose some routes or services

relative to others, leading the carriers to reallocate

resources or make different business decisions”);

Californians for Safe & Competitive Dump Truck

Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir.

1998) (rejecting FAAA preemption argument based on

claim that wage laws increased prices by 25%, noting

that “the effect is no more than indirect, remote, and

tenuous”).

Plaintiffs have failed to allege, nor could they, that

Section 25 has had an acute or any direct impact on

the prices the CSPs charge the air carriers, or that

there has been any impact on the prices, routes, or

services of those carriers. Mendonca, 152 F.3d at

1188–89 (holding, although plaintiffs alleged that

their rates for services were based on labor costs,

including prevailing wage requirements, that a wage

law was only indirectly related to plaintiff trucking

company’s prices, routes, and services, that it did not

“frustrate[ ] the purpose of deregulation by acutely

interfering with the forces of competition,” and that it

was therefore not preempted by the FAAA); Air

Transport Association of America v. City and County

of San Francisco, 992 F.Supp. 1149, 1183 (N.D. Cal.

1998) (holding that an ordinance that prohibited the

city from contracting with companies whose provision

of employee benefits discriminated between employees

with spouses and employees with domestic partners

was not preempted by the ADA because any effect on

service was too tenuous, and stating that “[i]f any

string of contingencies is sufficient to establish a

74a

connection with price, route or service, there will be no

end to ADA preemption ... Congress did not [ ] through

the [ADA], exempt the airlines from generally

applicable employment laws”), aff’d, 266 F.3d 1064

(9th Cir.2001); see also Alim v. Aircraft Service Intern.,

Inc., 2012 WL 3647403, (N.D. Cal. Aug. 23, 2012)

(stating, without deciding whether various California

wage and hours laws were preempted by the ADA,

that “[b]ecause ASII is not itself an airline, but rather

a provider of contract services to airlines, it is possible

that the application of California meal-and-rest break

regulations to ASII’s employees would affect airline

services ‘in too tenuous, remote or peripheral a

manner to have a preemptive effect’ ”).

Finally, there are no provisions in Section 25 that

could be rationally construed to require air carriers

either directly or indirectly to change their prices,

routes or services. Section 25 merely requires CSPs to

reach an agreement if they can with labor

organizations. However, Section 25 does not dictate

the terms of those agreements—other than that they

must contain a LPA—and certainly does not require

the air carriers to alter their operations in any way.

Therefore, Section 25 does not “force” air carriers to do

anything with respect to “price, route or service,” and

is not preempted by the ADA.

Accordingly, the Court grants Defendants’ Motion

with respect to Plaintiffs’ second count alleging that

Section 25 violates the ADA, and, because amendment

is futile, it is dismissed without leave to amend.

75a

C. Vagueness in Violation of the Fifth or

Fourteenth Amendment Right to Due

Process.

In the Complaint, Plaintiffs allege that Section 25 is

impermissibly vague and, thus, violates the Due

Process Clauses of the Fifth and Fourteenth

Amendments of the United States Constitution. In

their Motion, Defendants acknowledge that ASPA has

standing to assert the claim, but argue that A4A does

not have standing because Section 25 does not apply

or cover A4A or its members. Defendants also argue

that this constitutional challenge should be dismissed

on the merits because Section 25 establishes

standards of conduct that easily satisfy constitutional

standards.

1. A4A Does Not Have Standing to

Challenge Section 25 on

Vagueness Grounds.

In this case, A4A does not have standing to challenge

Section 25 on vagueness grounds. As discussed above,

Section 25 establishes requirements applicable to the

CSPs, not A4A or its members. Because Section 25

does not apply to A4A or its members, A4A cannot

demonstrate that it suffered an injury as a result of

Section 25.

In addition, due process claims “are personal and

cannot be asserted vicariously.” Johns v. Cnty. of San

Diego, 114 F.3d 874, 876 (9th Cir. 1997); NAACP v.

Alabama, 357 U.S. 449, 459 (1958). Only entities

whose conduct is directly implicated have standing to

challenge state enactments as void for vagueness.

United States v. Dischner, 974 F.2d 1502, 1510 (9th

Cir. 1992) (“Outside the first amendment context,

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however, a defendant has standing to raise a

vagueness challenge only if the statute is vague as

applied to his or her specific conduct.”), overruled on

other grounds by United States v. Morales, 108 F.3d

1031 (9th Cir.1997) (en banc). Therefore, A4A does not

have standing to challenge Section 25 on behalf of the

ASPA or the CSPs.

Accordingly, the Court grants Defendants’ Motion

with respect to A4A’s third count alleging that

Section 25 is impermissibly vague and, thus, violates

the Due Process Clauses of the Fifth and Fourteenth

Amendments of the United States Constitution

because A4A lacks standing, and, because amendment

is futile, it is dismissed without leave to amend.

2. Section 25 Is Not Unduly Vague

In Violation of Due Process.

Because the parties agree that ASPA has the requisite

standing, the Court will address the merits of

Plaintiffs’ claim that Section 25 is impermissibly

vague and, thus, violates the Due Process Clauses of

the Fifth and Fourteenth Amendments of the United

States Constitution.

a. Legal Standard for Vagueness.

“It is a basic principle of due process that an

enactment is void for vagueness if its prohibitions are

not clearly defined.” Grayned v. City of Rockford, 408

U.S. 104, 108 (1972). The Supreme Court has stated

in relevant part:

Vague laws offend several important values.

First, because we assume that man is free to

steer between lawful and unlawful conduct, we

insist that laws give the person of ordinary

intelligence a reasonable opportunity to know

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what is prohibited, so that he may act

accordingly. Vague laws may trap the innocent

by not providing fair warning. Second, if

arbitrary and discriminatory enforcement is to

be prevented, laws must provide explicit

standards for those who apply them. A vague

law impermissibly delegates basic policy

matters to policemen, judges, and juries for

resolution on an ad hoc and subjective basis,

with the attendant dangers of arbitrary and

discriminatory application.

Id. at 108–109.

In addition, where a law does not implicate First

Amendment rights, it “may nevertheless be challenged

on its face as unduly vague in violation of due process.”

Village of Hoffman Estates v. Flipside, Hoffman

Estates, Inc., 455 U.S. 489, 497 (1982). “To succeed,

however, the complainant must demonstrate that the

law is impermissibly vague in all of its applications.”

Id.

Courts examining whether the language of an

ordinance is unconstitutionally vague on its face

frequently begin their analysis by referring to the

dictionary definition of the terms used in the

ordinance that are allegedly vague. See, e.g., Village

of Hoffman Estates, 455 U.S. at 500–01 (looking to

Webster’s New International Dictionary of the English

Language to determine the meaning of the term

“design”); Hunt v. City of Los Angeles, 638 F.3d 703,

711 (9th Cir. 2011) (looking to the dictionary definition

of “ideology” after concluding an ordinance was

ambiguous because “it fails to define or provide any

examples of when merchandise carries a ‘religious,

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political, philosophical or ideological’ message, and

these terms have such amorphous meanings that it

makes it difficult, if not impossible, for an individual

to determine whether his conduct is proscribed by the

ordinance”). However, where the terms are clear, the

court need not look to the dictionary, but can

determine from the plain words of the ordinance that

the language is not vague. Hoffman Estates, 455 U.S.

at 500–01 (“Whatever ambiguities the ‘design ...’

standard may engender, the alternative ‘marketed for

use’ standard is transparently clear: it describes a

retailer’s intentional display and marketing of

merchandise. The guidelines refer to the display of

paraphernalia and to the proximity of covered items to

otherwise uncovered items”); Cameron v. Johnson, 390

U.S. 611, 616 (1968) (“the statute prohibits only

‘picketing … in such a manner as to obstruct or

unreasonably interfere with free ingress or egress to

and from any ... county ... courthouses ...’ The terms

‘obstruct’ and ‘unreasonably interfere’ plainly require

no ‘guess[ing] at [their] meaning.’ Appellants focus on

the word ‘unreasonably.’ It is a widely used and well

understood word and clearly so when juxtaposed with

‘obstruct’ and ‘interfere.’ We conclude that the statute

clearly and precisely delineates its reach in words of

common understanding. It is ‘a precise and narrowly

drawn regulatory statute evincing a legislative

judgment that certain specific conduct be ...

proscribed’ ”).

b. Section 25 Is Not Vague.

In their Complaint, Plaintiffs allege that many of the

terms used in Section 25 are vague, including “Labor

Organization,” “Labor Peace Agreement,” “reasonable

Labor Peace Agreement,” and arbitration conducted in

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accordance with the AAA rules.” See, e.g., Complaint,

¶ 39. Plaintiffs also allege that there are “missing

terms” in Section 25 that render it unconstitutional.

Id., ¶ 43.

In response to Plaintiffs’ vagueness

challenge, Defendants argue that Section 25 uses well

understood words and phrases, and that there are no

“missing terms,” and, therefore, easily survives a

vagueness challenge.

The Court agrees with Defendants that the suspect

terms are clear and unambiguous. For example,

Plaintiffs claim that the term “labor organization” is

vague is patently frivolous. Section 25 defines a labor

organization as: “any organization of any kind, or an

agency or employee representation committee or plan,

in which employees participate and which exists for

the purpose, in whole or in part, of dealing with service

providers at LAX concerning grievances, labor

disputes, wages, rates of pay, hours of employment, or

conditions of work.” 2014 CSPLA, § 25.1.

This

definition of “labor organization” is taken verbatim

from the definition of a “labor organization” in § 2(5) of

the LMRA, 29 U.S.C. § 152(5), and is also mirrors this

term in countless other federal and state statutes. See,

e.g., 29 U.S.C. § 402(I) (Labor Management Reporting

and Disclosure Act); 42 U.S.C. § 2000e(d) (Title VII);

Cal. Lab. Code § 1140.4(f) (Agricultural Labor

Relations Act). Thus, the term “labor organization”

has been interpreted many times, and is a wellunderstood legal term of art.

In addition, despite Plaintiffs’ argument to the

contrary, Section 25 contains adequate guidance on

what a “reasonable Labor Peace Agreement” should

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look like. 17 Specifically, Section 25.2 defines a “Labor

Peace Agreement” and Section 25.7 clarifies that an

arbitrator may not require a CSP to change

employment terms and conditions, recognize a labor

organization, or enter into a collective bargaining

agreement. Moreover, reasonableness standards have

long been upheld over vagueness challenges. Rath

Packing Co. v. Becker, 530 F.2d 1295, 1309 (9th Cir.

1975) (holding that the reasonableness standard “is of

ancient provenance in English and American law and

is not obnoxious in itself to the Fifth Amendment of

the Constitution”).

Furthermore, Plaintiffs’ argument that Section 25 will

create confusion in its application is unpersuasive.

For example, Plaintiffs argue that Section 25 is vague

because it is missing terms, and, thus, does not

explicitly state whether Section 25.4’s arbitration

process is “final and binding” or what happens after

arbitration. Opposition, p. 25. But under the AAA’s

rules, which will guide any arbitration under Section

25, any arbitration will be final and binding. See, e.g.,

McKee v. Home Buyers Warranty Corp. II, 45 F.3d 981,

983 (5th Cir. 1995) (“The decisions holding that

reference to AAA rules as permitting entry of

judgment are longstanding. Consequently, all parties

are on notice that resort to AAA arbitration will be

deemed both binding and subject to entry of judgment

unless the parties expressly agree otherwise.”).

17 If a labor organization requests a LPA from a CSP, and the

parties are unable to agree to terms and a mediation is

unsuccessful, Section 25 requires that an arbitrator resolve the

dispute and determine the contents of a “reasonable Labor Peace

Agreement.”

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Importantly, CSPs and labor organizations retain

their normal rights to challenge any arbitration award

under the Labor–Management Relations Act § 301, 29

U.S.C. § 185(a), and the Federal Arbitration Act, 9

U.S.C. § § 1 et seq.

Moreover, maintaining the same or similar number of

CSPs offering services at LAX and at the current

ground–service prices-even if those prices were

affected by Section 25—are not issues the void-forvagueness doctrine is intended to safeguard. HSH,

Inc. v. City of El Cajon, 2014 WL 4385475, at (S.D.

Cal. Sept. 4, 2014) (“[T]he allegation that Plaintiffs’

businesses suffer ‘diminution in value’ is not an injury

that the void for vagueness doctrine aims to prevent.”);

see also Individuals for Responsible Gov’t, Inc. v.

Washoe Cnty., 110 F.3d 699, 703 (9th Cir. 1997).

Finally, as discussed above, there is no inconsistency

between Section 25’s general requirement that a CSP

covenant that “its employees at LAX shall be able to

work in labor harmony” and the fact that a “Labor

Peace Agreement” only binds on a “Labor

Organization and its members.”

Therefore, the Court concludes that the Section 25 is

not impermissibly vague in all of its applications, or

even in a single application as argued by Plaintiffs.

Accordingly, the Court grants Defendants’ Motion

with respect to Plaintiffs’ third count alleging that

Section 25 is impermissibly vague and, thus, violates

the Due Process Clauses of the Fifth and Fourteenth

Amendments of the United States Constitution, and,

because amendment is futile, it is dismissed without

leave to amend.

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IV. Conclusion

For all the foregoing reasons, Defendants’ Motion is

GRANTED. Because the findings with respect to

standing, preemption, and vagueness render

amendment futile, the Complaint is DISMISSED

without leave to amend. The Court appreciates and

commends counsel for their excellent briefs and finds

that this important question is now ready for appellate

review, and, thus, this action is DISMISSED with

prejudice.

IT IS SO ORDERED.

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APPENDIX D

CERTIFIED SERVICE PROVIDER LICENSE

AGREEMENT

BETWEEN

CITY OF LOS ANGELES

AND

______________________________________________

AT

LOS ANGELES INTERNATIONAL AIRPORT

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TABLE OF CONTENTS

ARTICLE 1. STANDARD TERMS AND

PROVISIONS

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Page

Licensee’s Services ............................ [86a]

Term of Agreement ........................... [86a]

Incorporation by Reference .............. [87a]

Payments to City .............................. [87a]

Notice. ............................................... [88a]

Subcontracting .................................. [89a]

ARTICLE 2. STANDARD TERMS AND

PROVISIONS

Section 1

Section 2

Limitations on Use of Airport .......... [89a]

Late Charge and Interest for

Delinquent Payment ......................... [91a]

Section 3 Default and Right of Termination.... [92a]

Section 4 Performance Guarantee ................... [93a]

Section 5 Reports .............................................. [95a]

Section 6 Audits ................................................ [96a]

Section 7 Agreement Rights and Motor Vehicle

Operating Rights .............................. [97a]

Section 8 Insurance .......................................... [99a]

Section 9 City Held Harmless ........................ [102a]

Section 10 Attorneys’ Fees ............................... [102a]

Section 11 Hazardous and Other Regulated

Substances ...................................... [103a]

Section 12 Airfield Security .............................. [106a]

Section 13 Assignments and Encumbrances ... [108a]

Section 14 Nondiscrimination and Equal

Employment Practices/Affirmative

Action Program ............................... [109a]

Section 15 Living Wage Ordinance .................. [114a]

Section 16 Service Contract Worker Retention

Ordinance ........................................ [118a]

85a

Section 17 Alternative Fuel Vehicle Requirement

Program ........................................... [119a]

Section 18 Compliance with All Applicable

Laws ................................................ [119a]

Section 19 Business Tax Registration ............. [121a]

Section 20 Taxes, Fees and Licenses ............... [122a]

Section 21 Disabled Access ............................... [123a]

Section 22 Child Support Orders ..................... [124a]

Section 23 Contractor Responsibility Program [125a]

Section 24 Training........................................... [125a]

Section 25 Labor Harmony ............................... [126a]

Section 26 Labor Compliance ........................... [128a]

Section 27 Whistleblower Protection ............... [128a]

Section 28 First Source Hiring Program for

Airport Employers (LAX only) ....... [129a]

Section 29 City’s Right to Contract With Others

Regarding Agreement Rights ......... [129a]

Section 30 Warranty’ and Quality of Licensee’s

Services ........................................... [129a]

Section 31 Waiver ............................................. [130a]

Section 32 Miscellaneous Provisions................ [131a]

SIGNATURE BLOCKS ..................................... [136a]

EXHIBITS

EXHIBIT A Scope of Services

EXHIBIT B Licensee’s Submitted Documents

EXHIBIT C Payments to City

EXHIBIT D Motor Vehicle Operating Permit

EXHIBIT E Insurance

EXHIBIT F Alternative Fuel Vehicle Requirement

EXHIBIT G First

Source

Hiring

For Airport Employers (LAX only)

Program

86a

CERTIFIED SERVICE PROVIDER LICENSE

AGREEMENT

BETWEEN THE CITY OF LOS ANGELES AND

[INSERT LICENSEE’S NAME] FOR

ENTRY ONTO AND USE OF THE AIRFIELD

AT LOS ANGELES INTERNATIONAL AIRPORT

THIS

CERTIFIED

SERVICE

PROVIDER

LICENSE AGREEMENT (the “Agreement”) is made

and entered on __________, 20__, by and between the

CITY OF LOS ANGELES, acting by order of and

through its Board of Airport Commissioners (“Board”)

of Los Angeles World Airports (“LAWA”), and

[INSERT LICENSEE’S NAME] (“Licensee”).

The parties hereto, for and in consideration of the

covenants and conditions hereinafter contained to be

kept and performed, DO HEREBY AGREE AS

FOLLOWS:

ARTICLE 1. SPECIFIC TERMS AND

PROVISIONS

Section 1.

Licensee’s Services. Licensee

agrees to provide the services described and set forth

in Exhibit A (“Scope of Services”) in strict compliance

with the conditions and specifications contained under

the Certified Service Licensee Program (“CSPP”).

Licensee shall provide such services to its airlines, or

other clients, at Los Angeles International Airport

(“LAX”) on a non-exclusive basis.

Section 2.

Term of Agreement. The term of

this License shall commence on [INSERT DATE] and

terminate no later than [INSERT DATE] (the

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“Term”), subject, however, to prior termination, with

or without cause, by either party, upon giving to the

other a thirty (30) day advance written notice thereof

and further subject to prior termination as provided

herein.

Section 3. Incorporation by Reference. It is

expressly understood and agreed that the CSPP Policy,

CSPP

Administrative

Processes,

and

CSPP

Requirements

including

all

forms,

plans,

specifications, and addenda thereto, and the

Licensee’s submitted documents including all

applications and responses required for certification

under the CSPP and all forms, plans, specifications,

and addenda or amendments thereto, shall constitute

and are hereby incorporated, and made a part of this

Agreement, and each of the parties hereto does hereby

expressly covenant and agree to carry out and fully

perform each and all of the provisions of said

documents upon its part to be performed. Licensee also

expressly acknowledges that this Agreement is based

upon the performance requirements in the CSPP. If

there is a conflict between the City’s CSPP

requirements and the Licensee’s agreement with its

airline or client, the City’s CSPP requirements will

prevail. Licensee’s submitted documents are attached

hereto as Exhibit B.

Section 4.

Payments to City.

4.1

Fees. For the license rights granted herein,

Licensee shall pay to City (i) an Application Fee, (ii) a

Monthly Administrative Fee, and (iii) all other

applicable fees required under the CSPP, all of which

are fully described and set forth in Exhibit C

(“Payments to City”).

88a

4.2

Payment. All fees and compensation payable

hereunder shall be paid to the City of Los Angeles,

LAWA, P.O. Box 54078, Los Angeles, California

90054-0078, unless and until City designates some

other party or place to receive fees and compensation.

All payments shall be made in legal tender of the

United States.

4.3

The Board reserves the right, power, and

duty to fix, determine, revise, and readjust all fees and

charges required under the CSPP at any time

throughout the Term of this Agreement.

Section 5.

Notice.

5.1

Notice to City. Written notices to City

hereunder, shall be sent to the Executive Director with

a copy to the City Attorney of the City of Los Angeles,

must be given by registered or certified mail, postage

prepaid, and addressed to:

Executive Director

of the Department of

Airports

c/o LAX APS

1 World Way

Post Office box 92216

Los Angeles, CA

90009-2216

City Attorney

Department of

Airports

1 World Way

Post Office Box 92216

Los Angeles, CA 900092216

or to such other address as City may designate by

written notice to Licensee.

5.2

Notice to Licensee. Written notices to

Licensee hereunder shall be given by registered or

certified mail, postage prepaid, and addressed to:

[INSERT CONTACT PERSON FOR LICENSEE]

89a

or to such other address as Licensee may designate by

written notice to City.

5.3

The execution of any such notice by the

Executive Director shall be as effective as to Licensee

as if it were executed by the Board, or by resolution or

order of said Board, and Licensee shall not question

the authority of Executive Director to execute any

such notice.

5.4

All such notices, except as otherwise

provided herein, may either be delivered personally to

Executive Director with a copy to the Office of the City

Attorney, Airport Division, in the one case, or to

Licensee in the other case, or may be deposited in the

United States mail, properly addressed as aforesaid

with postage fully prepaid by certified or registered

mail, return receipt requested, and shall be effective

five (5) days after deposit in the mail. Such notice may

also be delivered by a nationally recognized overnight

commercial courier service that requires the

recipient’s signature for delivery, and shall be effective

one (1) business day after delivery by such courier.

Section 6. Subcontracting. During the term of

this Agreement, Licensee shall not subcontract any

certified services to a service provider that does not

have a valid CSBP License Agreement.

ARTICLE 2. STANDARD TERMS AND

PROVISIONS

Section 1.

Limitations on Use of Airport.

1.1.

Licensee shall not use the Airport, nor any

portion thereof, for any purpose other than that set

forth above, without first having had and obtained the

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written consent of the Executive Director, which

consent may be withheld in the Executive Director’s

sole discretion, and which written consent is approved

as to form by the City Attorney.

1.2.

There is hereby reserved to City, its

successors and assigns, for the use and benefit of the

public, a right of flight for the passage of aircraft in the

airspace above the surface of Airport. This public right

of flight shall include the right to cause in said

airspace any noise inherent in the operation of any

aircraft used for navigation or flight through said

airspace or landing at, taking off from, or operating on

Airport. Licensee agrees not to make any claim or

institute legal action against City under any theory of

recovery for any interference with Licensee’s use and

enjoyment of the Airport which may result from noise

emanating from the operation of aircraft to, from, or

upon Airport except for claims or actions brought by

third parties against Licensee arising from City’s

operation of Airport [USE GUIDE, paragraph 5] 1.

1.3.

Licensee, by accepting this Agreement,

agrees for itself and its successors and assigns that it

will not make use of Airport in any manner which

might interfere with the landing and taking off of

aircraft from Airport or otherwise constitute a hazard

to such operations. In the event the aforesaid covenant

is breached, City reserves the right to take all action

it deems necessary to cause the abatement of such

1 The paragraph references are to mandatory requirements

contained in a document entitled, “LEASE AND USE

AGREEMENT GUIDE”, dated June 6, 1984, revised May 2011,

published by the Federal Aviation Administration.

91a

interference at the expense of Licensee [USB GUIDE,

paragraph 8].

1.4.

Licensee shall conduct its operations on

Airport in such manner as to reduce as much as is

reasonably practicable, considering the nature and

extent of said operations, any and all activities which

interfere unreasonably with the use of other premises

at Airport, including, but not limited to, the emanation

from Airport of’ noise, vibration, movements of air,

fumes, and odors.

1.5.

Licensee is prohibited from installing or

using any wireless workstations, access control

equipment, wireless internet servers, application or

system software such as transceivers, modems, or

other interface units that access frequencies from 2.0

Gigahertz to 6.0 Gigahertz, inclusive, without first

obtaining approval from the Executive Director.

1.6.

Licensee has no rights under this Agreement

to install or use any antennae or telecommunications

equipment on the roof or exterior of any building or

structure on the Airport, unless such installation or

use is directly related to the conduct of Licensee’s

business and in full compliance with City’s permit

process and telecommunications policies as- they may

be modified from time to time at the sole discretion of

the Executive Director. Licensee may not license or

sublicense to others the right to install or use

antennae or other telecommunications equipment on

the Airport.

Section 2.

Late Charge and Interest for

Delinquent Payment.

2.1.

Licensee hereby acknowledges that late

payment by Licensee of compensation, fees and

92a

charges provided herein will cause City to incur costs

not contemplated by this Agreement, the exact

amount of which will be extremely difficult to

ascertain. Such costs include, but are not limited to,

processing and accounting charges. Accordingly, if any

amount due City is not received by City within 10 days

after such amount shall be due, then, without any

requirement for notice to Licensee, Licensee shall

immediately pay to City a one-time late charge equal

to 10% of such overdue amount or $200, whichever is

greater. The parties agree that such late charge

represents a fair and reasonable estimate of the costs

the City will incur by reason of such late payment.

Acceptance of such late charge by City shall in no

event constitute a waiver of Licensee’s default or

breach with respect to such overdue amount, nor

prevent the exercise of any other rights and remedies

granted herein.

2.2.

Any monetary payment due City hereunder

shall bear interest from the date when due. The

interest rate shall be 10% per annum, compounded

monthly, but shall not exceed the maximum rate

allowed by law. The interest that applies shall be in

addition to the late charge.

Section 3.

Default

and

Termination.

Right

of

3.1.

In the event Licensee falls to abide by the

terms, covenants and conditions of this Agreement,

including, but not limited to, any default in payment(s)

by Licensee of the fees or other compensation provided

for herein, City may give Licensee written notice to

correct the defect or default, and if the same is not

93a

corrected in accordance with the City’s notice, City

may terminate this Agreement forthwith.

3.2.

In case of the bankruptcy of Licensee, or the

appointment of a receiver for Licensee, or if a receiver

is appointed to take possession of Licensee’s business

operations as a result of any act or omission of

Licensee, or if Licensee makes an assignment of this

Agreement for the benefit of creditors, City, at its

election, may, without notice, terminate this

Agreement.

3.3.

Cross Default. A material default or breach

of the terms of any other lease, license, permit, or

contract held by Licensee with City shall constitute a

material breach of the terms of this Agreement and

shall give City the right to terminate this Agreement

tor cause in accordance with the procedures set forth

herein.

3.4.

Notwithstanding anything herein to the

contrary, either party may terminate this Agreement,

with or without cause, upon thirty (30) days advance

written notice to the other party.

Section 4.

Performance Guarantee.

4.1.

Licensee shall furnish to City and maintain

throughout the term of this Agreement a Faithful

Performance Guarantee to secure the faithful

performance by Licensee of all the terms, provisions,

and covenants contained herein including, but not

limited to, the payment of fees and any other specified

compensation. Such Guarantee shall be separate from

any other Guarantee(s) required by City. The initial

amount of said Guarantee shall be three (3) times

Licensee’s initial Monthly Administrative Fee.

94a

4.2.

If Licensee has previously provided such

Guarantee to City and if, for any reason, Licensee’s

monthly monetary obligation to City is thereafter

increased in excess of ten percent (10%), then the

amount of Licensee’s Guarantee shall, within thirty

(30) days after receiving written notice from City,

correspondingly be increased to a sum three (3) times

the new amount.

4.3.

If Licensee has previously provided such

Guarantee to City and if, for any reason, Licensee’s

monthly monetary obligation to City is thereafter

decreased in excess of ten percent (10%), then the

amount

of

Licensee’s

Guarantee

may

be

correspondingly decreased to a sum three (3) times the

new amount thirty (30) days following written notice

to City by Licensee.

4.4.

Performance Guarantees of Five Thousand

Dollars ($5,000) or less shall be in the form of a

Cashier’s Check, Company Check, Money Order,

Certificate of Deposit or Irrevocable Letter of Credit.

Performance Guarantees in excess of Five Thousand

Dollars ($5,000) shall be in the form of an Irrevocable

Letter of Credit. Letters of Credit shall be selfrenewing from year-to-year and subject to termination

upon sixty (60) days written notice. All Performance

Guarantees must be approved as to form by the City

Attorney.

4.5.

Licensee shall furnish such Guarantee in

duplicate prior to die commencement of this

Agreement, or within thirty (30) days following notice

of adjustment of payments to City. If, for any reason,

said Guarantee is not provided by Licensee and/or is

not thereafter maintained in sufficient amount

95a

throughout the term hereof, City, subject to the notice

requirements of Article 2, Subsection 3.1, City may

terminate this Agreement forthwith. Upon the

expiration or earlier termination of this Agreement,

and if Licensee has satisfied all of its obligations to

City hereunder, City shall relinquish to Licensee said

Guarantee following such expiration or earlier

termination and satisfaction of all obligations to City.

The Guarantee shall be submitted to:

Los Angeles World Airports

Attn: Accounting Revenue FPG

Administrator

PC Box 92216

Los Angeles, CA 90009-2216

For overnight mail and private

Guarantee shall be submitted to:

carriers,

the

Los Angeles World Airports

60S3 West Century Boulevard, Suite 500

Los Angeles, CA 90045

Section 5.

Reports.

5.1.

Monthly Accounting Report. Licensee shall

establish and maintain such accounting and recording

systems and practices at Airport as will correctly

reflect the gross amount billed by Licensee for all

Services provided at Airport. During the Term,

Licensee shall transmit to City a monthly accounting

report of the gross amount billed by it for all Services

provided at the Airport in such manner and detail and

upon such forms as are prescribed by City. Further,

said report shall list the names of the persons or

entities served and the precise services provided to

each person or entity during the prior month. Said

accounting report shall reach City within ten (10) days

96a

after the last day of the month covered by said

accounting report. Licensee shall furnish this

accounting report to City each month whether or not

any amount has been received by Licensee for any

Services. A FIFTY DOLLAR ($50) late fee shall apply

to all accounting reports that are not received by City

within ten (10) days after the last day of the month

covered by said accounting report.

Section 6.

Audits.

6.1.

City, or its duly authorized representatives,

shall, at all reasonable times, have the right of access

to and the right to examine and audit all records of

Licensee pertaining to the operation of its business

under this Agreement for the purpose of ascertaining

the correctness of said accounting. Licensee hereby

authorizes its officers, agents and employees to

disclose to City any and all information pertaining to

its operations under the license rights herein granted,

including all account books, ledgers, journals,

accounts, records and things done or performed by

Licensee in connection therewith during the term of

this Agreement. Such books, ledgers, journals,

accounts, and records necessary to conduct the audit

must be made available to City in the greater Los

Angeles metropolitan area at Licensee’s expense, upon

notice by City.

6.2.

It is agreed that examinations of the books,

ledgers, journals and accounts of Licensee will be

conducted in accordance with generally accepted

auditing standards applicable to the circumstances

and that as such, said examinations do not require a

detailed, audit of all transactions. Testing and

sampling methods may be used in verifying reports

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submitted by Licensee. Deficiencies ascertained by the

use of such testing and sampling methods by applying

the percentages of error obtained from such testing

and sampling to the entire period of reporting under

examination will be binding upon Licensee and to that

end shall be admissible in court to prove any amounts

due City from Licensee. In the event there is any net

deficiency in the amount of two percent (2%) or greater

of the compensation payable to City hereunder,

Licensee agrees to pay City for the cost of the audit as

well as any other deficiencies, payments and

liquidated damages due under this or any other

provision of this Agreement.

6.3.

City’s right to access such records and

information shall survive three (3) years beyond the

expiration or early termination of this Agreement.

Licensee shall retain all records and other information

necessary to perform an audit as described above for a

minimum of seven (7) years.

Section 7

7.1

Agreement Rights and Motor

Vehicle Operating Rights.

Agreement Rights.

7.1.1 City grants to Licensee, during the

Term and on a non-exclusive basis at Airport,

the right to conduct the Services. It is

understood that City will not require any of the

users of such type of services to use Licensee.

7.1.2 This Agreement does not include the

right or privilege to deliver petroleum products

including aviation fuels, lubricants or solvents,

to Airport premises. In order to deliver

petroleum products to Airport, including

aviation fuels, lubricants and/or solvents, a fuel

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delivery permit is required to be obtained from

City authorizing the person(s) to conduct such

business at Airport.

7.1.3 This Agreement does not include the

right or privilege to conduct any business or

activity other than the Services, Licensee does

not have the right to enter onto the restricted

area of the airfield, unless in possession of, and

fully compliant with, a valid “City of Los

Angeles Department of Airports Motor Vehicle

Operating

Permit

For

Los

Angeles

International Airport.” In order to conduct any

activity other than that specifically provided for

herein, Licensee will be required to obtain

separate authorization through the appropriate

license, permit or agreement authorizing such

activity.

7.2

Motor Vehicle Operating Rights. If all

applicable conditions are met, City grants to Licensee,

subject to all the terms, conditions and covenants of

the “City of Los Angeles Department of Airports Motor

Vehicle Operating Permit For Los Angeles

International Airport” attached hereto as Exhibit D

and which is incorporated by reference to this

Agreement, the motor vehicle operating rights

contained therein. Licensee acknowledges and agrees

that the obligations contained therein are in addition

to the obligations set forth in this Agreement. If

applicable, Licensee shall pay fees for both the nonexclusive license rights and the motor vehicle

operating rights granted by this Agreement and the

issuance of the “City of Los Angeles Department of

Airports Motor Vehicle Operating Permit For Los

Angeles international Airport”.

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Section 8.

Insurance.

8.1.

Licensee shall procure at its expense, and

keep in effect at all times during the term of this

Agreement, the types and amounts of insurance

specified on Exhibit E, attached hereto and

incorporated by reference herein. The specified

insurance shall also, either by provisions in the

policies, by City’s own endorsement form or by other

endorsement attached to such policies, include and

insure City, LAWA, its Board and all of City’s officers,

employees, and agents, their successors and assigns,

as additional insureds, against the areas of risk

described on Exhibit E, hereof with respect to

Licensee’s acts or omissions in its operations, use, and

occupancy of the Airport or other related functions

performed by or on behalf of Licensee in, on or about

Airport.

8.2.

Each specified insurance policy other than

workers’ compensation and employers’ liability and

fire and extended coverages) shall contain a

severability of interest (cross liability) clause which

states, “It is agreed that the insurance afforded by this

policy shall apply separately to each insured against

whom claim is made or suit is brought except with

respect to the limits of the company’s liability,” and a

contractual endorsement which shall state, “Such

insurance as is afforded by this policy shall also apply

to liability assumed by the insured under this

Agreement with the City of Los Angeles.”

8.3.

All such insurance shall be primary and

noncontributing with any other insurance held by

LAWA where liability arises out of or results from the

acts or omissions of Licensee, its agents, employees,

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officers, assigns, or any person or entity acting for or

on behalf of Licensee. Such policies may provide for

reasonable deductibles and/or retentions acceptable to

the Executive Director based upon the nature of

Licensee’s operations and the type of insurance

involved.

8.4.

City shall have no liability for any premiums

charged for such coverage(s). The inclusion of City,

LAWA, its Board and all of City’s officers, employees,

and agents, their successors and assigns, as insureds

is not intended to, and shall not, make them, or any of

them, a partner or joint venturer with Licensee in

Licensee’s operations at Airport. In the event Licensee

falls to furnish City evidence of insurance and

maintain the insurance as required, City, upon ten (10)

days prior written notice to comply, may (but shall not

be required to) procure such insurance at the cost and

expense of Licensee, and Licensee agrees to promptly

reimburse City for the cost thereof plus fifteen percent

(15%) for administrative overhead. Payment shall be

made within thirty (30) days of invoice date.

8.5.

At least ten (10) days prior to the expiration

date of the above policies, documentation showing that

the insurance coverage has been renewed or extended

shall be filed with City. If such coverage is canceled or

reduced, Licensee shall, within fifteen (15) days of

such cancellation of coverage, file with City evidence

that the required insurance has been reinstated or

provided through another insurance company or

companies.

8.6.

Licensee shall provide proof of all specified

insurance and related requirements to City either by

production of the actual insurance policy(ies), by use

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of City’s own endorsement form(s), by broker’s letter

acceptable to the Executive Director in both form and

content in the case of foreign insurance syndicates, or

by other written evidence of insurance acceptable to

the Executive Director. The documents evidencing all

specified coverages shall be filed with City in duplicate

and shall be procured and approved in strict

accordance with the provisions in Sections 11.47

through 11.56 of City’s Administrative Code prior to

Licensee’s use of Airport. The documents shall contain

the applicable policy number, the inclusive dates of

policy coverages, and the insurance carrier’s name,

shall bear an original signature of an authorized

representative of said carrier, and shall provide that

such insurance shall not be subject to cancellation,

reduction in coverage, or nonrenewal except after

written notice by certified mail, return receipt

requested, to the City Attorney of the City of Los

Angeles at least thirty (30) days prior to the effective

date thereof. City reserves the right to have,

submitted to it, upon request, all pertinent

information about the agent and carrier providing

such insurance.

8.7.

City and Licensee agree that the insurance

policy limits specified herein shall be reviewed for

adequacy annually throughout the term of this

Agreement by the Executive Director who may,

thereafter, require Licensee, on thirty (30) days prior,

written notice, to adjust the amounts of insurance

coverage to whatever reasonable amount said

Executive Director deems to be adequate.

8.8.

Submission of insurance from a nonCalifornia admitted carrier is subject to the provisions

of California Insurance Code Sections 1760 through

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1780, and any other regulations and/or directives from

the State Department of Insurance or other regulatory

board or agency. Licensee agrees, except where

exempted, to provide City proof of said insurance by

and through a surplus lines broker licensed by the

State of California.

Section 9.

City Held Harmless. In addition

to the provisions of Section 8 herein, Licensee shall

indemnify, defend, keep, and hold City, including

Board, and City’s officers, agents, servants, and

employees, harmless from any and all costs, liability,

damage, or expense (including costs of suit and fees

and reasonable expenses of legal services) claimed by

anyone by reason of injury to or death of persons,

including Licensee, damage to or destruction of

property, including property of Licensee, sustained in,

on, or about the Airport or arising out of Licensee’s use

or occupancy of Airport or arising out of the acts or

omissions of Licensee

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